- AT&T's CEO said the potential costs of tariffs on handsets will be passed onto Ma Bell's customers
- John Stankey believes that customers will spend on handsets rather than other consumer goods, even if upgrades don't happen as often
- The exec backed Trump's actions as in service of a "laudable goal"
AT&T's CEO said on an earnings call this week that consumers will be forced to swallow potential price increases on smartphones driven by President Donald Trumps import tariffs.
“I think that if ultimately costs are passed to us from those that we buy handsets [from], unfortunately for the customer, we’re going to have to come up with some new ways for them to figure out how to digest that increase in pricing,” CEO John Stankey said in response to questions about the impact of tariffs. He added that he didn’t see subsidy levels drastically changing from where they are at now.
The CEO is gambling that customers won’t cut off their phone service - which seems like a reasonable bet - but will possibly wait longer between handset upgrades. That means upgrade cycles, which have already stretched to more than three years, could get even longer.
According to Stankey, “handsets are just one part of a broader ecosystem of decisions that consumers are going to have to make on goods and services.”
For the record, AT&T isn't the only one planning to pass tariff costs on to consumers. Verizon execs recently outlined plans to do the same.
Less visibility, more costs
That said, tariffs are forcing AT&T and others to operate in a much more murky environment.
“All companies in the U.S. are now operating with less visibility as the administration pursues policies that are intended to facilitate its laudable goal of creating more equitable global trade and improve domestic manufacturing capabilities,” Stankey said.
Still, Stankey said AT&T thinks it can manage higher-than-expected costs within the 2025 guidance it previously laid out.
In Q1 2025, capital expenditures (capex) on wireless and wireline equipment – like the $15 billion Ericsson 5G contract announced in December 2023 – was $4.3 billion. Despite all the tariff talk, executives on the call didn’t touch much on how equipment costs might rise from telecom vendors.
AT&T reported a net income of $4.7 billion compared to $3.8 billion a year ago, with revenue up 2% to $30.6 billion. AT&T’s shares were trading flat to slightly down (0.037%) today at $26.95.