Consumers, Businesses Trim Spending on Phones as Economy Slows

Consumers and businesses are trimming their spending on phones in response to the slowing economy.

So said AT&T CEO, President and Director John T. Stankey on Thursday (April 20) during the company’s quarterly earnings call, according to an AT&T transcript.

On the consumer side, especially among lower-income consumers, some are keeping their current phone longer than they would have otherwise because money is tight. They are keeping the wireless service but delaying their upgrade to a new phone, which is a discretionary purchase, Stankey said during the call.

“So, we’ve seen a little bit of a drop-off relative to some of the traditional upgrade rates and the shopping rates associated with that,” Stankey said.

On the business side, some companies that had equipped their employees with phones for working remotely during the pandemic are now eliminating those wireless products and services because employees have returned to the office.

“There’s a little bit of that going on where people are making their businesses more efficient and trimming,” Stankey said.

In addition, as some businesses have reduced their headcounts recently, that has also reduced some demand for wireless products and services.

AT&T had anticipated these moves, and the company remains on track to deliver on its full-year guidance, Stankey said.

“We started the year with the expectation that we’d be operating against a less-predictable macro backdrop,” Stankey said. “This belief has proven true thus far. And what we’re seeing is in line with the expectations we built into our guidance in January, including a moderation of growth for wireless services.”

Companies across industries have reported consumers cutting costs by trading down to less expensive options or delaying discretionary purchases.

For example, Molson Coors said in February that consumers are adjusting their alcohol purchasing in response to inflation, with many buying in smaller amounts.

Colgate-Palmolive said in January that in the consumer packaged goods (CPG) category, while trade down to private label has flatlined in certain categories, it continues to grow in others.

Similarly, healthcare giant Johnson & Johnson said in January that even medical purchases are being affected as consumers rein in their spending.