After a costly acquisition of Time Warner, AT&T may have found a new source of revenue. The telecommunications carrier quietly bumped customers’ fees by about $1.23 each since April, which could mean an estimated $800 million in additional revenue per year for the company. The company booked $160.5 billion in revenue last year.
BTIG Research analyst Walter Piecyk noticed on Wednesday that the telecommunications carrier had bumped its “administrative fee,” a tiny line item at the bottom of customers’ bills, from 76 cents to $1.99. The change is estimated to impact about 85 percent of AT&T’s 64.5 million postpaid phone lines in service, making for about $800 million in additional annual revenue for the telecom provider. The fee does not apply to prepaid lines, according to Piecyk.
AT&T’s administrative fee has not changed much since it was first introduced in 2013 at 61 cents per month. Subsequent bumps went unnoticed, but Piecyk wrote in the note that BTIG suspects the fee has been hovering around 76 cents for the past year. Then AT&T bumped the fee twice in the past three months. In April the administrative fee climbed by about 50 cents to $1.26. It was bumped again to $1.99 in June.
In a statement, AT&T told CNBC, “This is a standard administrative fee across the wireless industry, which helps cover costs we incur for items like cell site maintenance and interconnection between carriers.”
AT&T may be under pressure to find new sources of revenue after its $85.4 billion purchase of Time Warner. The timing of AT&T’s fee bump conveniently coincides with the closure of the deal, “which increased net debt by over $60 billion,” Piecyk wrote. He added that the additional revenue could help finance $10 billion in debt.
“Presumably the Administrative Fee is another way to help AT&T fund its network build and Time Warner acquisition going forward,” Piecyk wrote.