AT&T offering 7-a-minute long-distance package

Wireless plan also introduced


August 31, 1999|By BLOOMBERG NEWS

NEW YORK -- AT&T Corp., the largest U.S. telephone company, introduced its cheapest-ever wireless and long-distance plans yesterday, including a 7 cents-a-minute package for long-distance calls anytime, after rivals slashed prices.

AT&T also said it expects to meet earnings estimates of $2.13 to $2.20 a share in 1999 and $2.10 to $2.15 in 2000. In 1998, AT&T earned $2.31, excluding the purchase of cable- television company Tele-Communications Inc.

Even with the cut in long-distance rates, AT&T's new plan is more than the 5 cents-a-minute rate that MCI WorldCom Inc. and Sprint Corp. offer on weekday nights and on weekends. AT&T, which said consumer long-distance revenue will fall more than previously thought, is betting that customers will pay more for a rate that is good anytime.

"Seven cents is consistent with their strategy to have a simplistic message for consumers," said Brian Adamik, an analyst at the Yankee Group in Boston. "Key to their success, however, is proving to consumers why 7 cents is better than 5 cents."

For the past three years, AT&T has been pushing discount plans that offer customers one price no matter what time a call is placed. More than 23 million consumers use AT&T One Rate plans.

Most phone companies offer consumers cheaper rates in the evenings and on weekends when most businesses aren't open and there's less traffic on networks. Weekday daytime rates can cost about three times more, or as much as 25 cents a minute.

AT&T said a third of consumer long-distance calls are made between 7 a.m. and 7 p.m.

The AT&T One Rate 7 Cents plan charges customers 7 cents a minute day or night for interstate long-distance phone calls. Customers will pay $4.95 per month if AT&T also provides their service for intrastate long-distance calls. If not, the fee is $5.95. The 5 cents-per-minute plans from MCI WorldCom and Sprint are for evening and weekends. They also have a monthly fee.

Under the AT&T Family Plan, up to five family members can make unlimited wireless calls to each other and to their home phone within a designated area.

With the wireless plan, customers will pay $24.99 a month for 60 minutes of nonfamily calls, $49.99 for 400 minutes of nonfamily calls and $69.99 for 600 minutes of nonfamily calls. At least one family member must choose the $49.99 or the $69.99 plan. All members must have digital phones that work on different networks.

AT&T shares have dropped about 25 percent since their record high of $64.08 on Jan. 20, hurt by some investors' concerns that decreasing long-distance rates may affect revenue and profits.

AT&T tried to allay those concerns yesterday by updating investors on its outlook for 1999. AT&T said it expects cash flow -- or earnings before interest, taxes, depreciation and amortization -- of $18 billion to $20 billion this year. Selling, general and administrative costs will fall to less than 21 percent of revenue. That's below the previous estimate of 23 percent, AT&T said.

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