In a play to regain its market position, AT&T has slashed rates for family plans consuming large amount of data. Under the operator’s new “best-ever prices” plan, a family using four smart phones can now pay $160 a month instead of the earlier fees of $200 a month.
Users will be able to access 10-gigabytes of shared data, unlimited calling and text messaging under the newly introduced plan. This is aimed at aggressively regaining market share lost to rival T-Mobile.
The After Effect & Market Reaction
The price cut is sending jitters among investors, as they fear the recent move by AT&T will prompt market leader Verizon (VZ) and rival telecom operators to follow suit. Verizon currently charges $100 more for the same plan, while T-Mobile charges $20 more per month (read: 3 Telecom ETFs to Watch on Huge Verizon Deal).
The price war is expected to drag down margins and profitability in the telecom industry. The fear of an ongoing pricing war caused all the major telecom stocks to take a beating in recent trading sessions.
ETF Impact in the session
All the eight telecom ETFs closed the trading session in the red. iShares MSCI ACWI ex US Telecommunication Services Sector Index Fund (AXTE) was the biggest loser in yesterdays trading session shedding more than 4%.
Moreover, other telecom and technology ETFs having double-digit exposure in AT&T, such as, Vanguard Telecommunication Services ETF (VOX), Fidelity MSCI Telecommunication Services Index ETF (FCOM) and iShares Global Telecom ETF (IXP) lost around 3%.