AT&T Doubles Down on Bundling as Customer Defections Mount in Competitive Telecom Market

In the fiercely competitive U.S. telecom arena, AT&T is grappling with a persistent challenge: keeping its customers from walking out the door. The company's latest financial results reveal a mixed picture, underscoring the urgency behind its renewed focus on bundling services as a primary defense against subscriber attrition.

While AT&T reported a net addition of 421,000 postpaid phone subscribers in Q4 2025, a key metric told a more concerning story. Its postpaid phone churn rate climbed to 0.98%, a 13-basis-point increase from the prior year. The pressure extended to its prepaid segment, which shed 255,000 customers, driving churn there up to 2.89%.

Analysts point to a series of recent company decisions that may have eroded customer loyalty. Last April, AT&T reduced its autopay discount for debit card users from $10 to $5 and eliminated it entirely for credit card payments. Later in the year, it increased a monthly line fee from $3.49 to $3.99. These moves, coupled with customer complaints about bill surprises after switching, have occurred against a backdrop of widespread consumer frustration with rising costs.

"There's a clear shift in the market towards smaller, more agile wireless carriers who are delivering superior customer experiences," noted David Murray of Market Force Information, highlighting the broader industry dynamic.

On a recent earnings call, CEO John Stankey acknowledged the intense "switching activity" between competitors. In response, AT&T is placing a massive bet on the power of convergence—bundling wireless phone service with its home internet products, Fiber and Internet Air (5G home internet).

"We estimate that our share of postpaid phone subscribers is 10 percentage points higher in areas where we offer fiber than in areas where we don't," Stankey stated, calling the strategy's effectiveness "evident across our business." The numbers support the push: AT&T added 283,000 Fiber and 221,000 Internet Air customers in the same quarter.

This bundling tactic, successfully employed by cable giants like Spectrum and Comcast to lure customers away from telecom providers, now forms the cornerstone of AT&T's retention playbook. The strategy capitalizes on a dual market trend: cable companies are losing broadband subscribers to telcos, while telecom firms fight to keep their wireless users. For instance, Spectrum and Comcast collectively lost over 200,000 internet customers in Q3 2025.

AT&T's financial leadership projects wireless service revenue to grow 2-3% annually, driven largely by this convergence strategy. The company plans to expand its fiber network by 5 million locations annually, aiming to create more opportunities for bundled sales.

However, some industry observers caution that bundling is not a panacea. "Bundling phone and internet can absolutely slow churn in the short term because it raises the friction to leave," said Dominick Miserandino, CEO of RTMNexus. "The risk is that customers are increasingly savvy and have more options than ever. It's a defensive move, not a long-term customer delight strategy."

Morningstar analyst Michael Hodel echoed the need for balance, warning that while AT&T's network investments have strengthened its position, "maintaining pricing discipline will be crucial" in a market where "competitive intensity is ratcheting up."

User Reactions

Michael R., Telecom Analyst, Boston: "AT&T's data clearly shows the 'stickiness' of converged offerings. This is a logical, data-driven response to market saturation. Their fiber expansion is the real key; without that infrastructure, the bundle loses its anchor."

Sarah Chen, Small Business Owner, Austin: "As a customer, I switched to their fiber and phone bundle last year. The price was good initially, but the creeping fees are frustrating. I feel locked in now because unravelling both services is a hassle. It works for them, but it feels manipulative."

David Park, Tech Blogger: "This is a desperate move from a legacy giant. They're trying to use the old cable TV playbook in the 5G era. Customers today want flexibility and transparency, not being trapped in a bundle. Reducing discounts and then raising fees to push people into a more expensive bundle isn't innovation—it's coercion."

Lisa G., Former Cable Subscriber, Denver: "I actually left Spectrum's expensive internet for AT&T Fiber and brought my phones over. Having one bill and a reliable connection is worth it for me. The cable companies started this bundling war; it's only fair the telcos fight back."

This analysis is based on AT&T's Q4 2025 earnings report and associated commentary. It was originally reported by TheStreet on January 30, 2026.