Spend Matters welcomes this guest article by Matt West, director of telecommunication services at NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.
On March 19, telecom giant AT&T will lose its spot on the Dow Jones Industrial Average – Apple will replace the carrier on the landmark stock index. For telecom industry veterans, this is a stark reminder that giants fall hard. AT&T was one of the nation’s most powerful companies until increased regulation and divestiture changed the telecom landscape in 1984. Fast-forward to the date of the Dow announcement, when the carrier had one of the lowest prices in the index trading at $33-$34 – hard to believe. Year-over-year growth was up just 3.2%, compared to Apple’s 70%.
One reason cited for the swap-out is that the Dow is over-weighted in telecom. CenturyLink, Frontier, Level(3), Verizon and Windstream are also listed on the index. David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, spoke further to the rationale behind the decision by saying, "AT&T and Verizon are quire similar, though AT&T has a smaller market capitalization.” (Note: Verizon will remain on the DJIA.)
While being dropped from the stock harbinger elite certainly stings, this change doesn’t really signal anything brand new for AT&T customers. But it’s an important reminder of the current state: AT&T needs to adapt in order to thrive and grow in a fiercely competitive telecom marketplace. The carrier is under pressure to increase margin and market share – and that combination often leads to added complexity and cost for large customers during the purchasing and renewal process.
Enterprises need to make sure they are on top of changes in the carrier’s pricing and programs and continually optimizing their wireless and wireline utilization. This starts with:
- Maintaining accurate visibility into the inventory of AT&T services and equipment across the enterprise
- Eliminating overbuying and underutilization of assets
- Aligning usage with best-fit plans
- Securing fair-market-value pricing, discounts and terms for all investments.
Depending on how AT&T navigates the competitive landscape, it may make sense for some enterprises to move volume to other carriers in order to balance risk. It’s also important to note that this may actually be an opportunity for customers to gain more leverage in their purchases and contract renewals.