Update, July 18, 2018 (3:55PM EST): According to The Wall Street Journal, Sprint also quietly increased its administrative fee.
In the past few months, users on Reddit reported that the fee increased from $1.99 to $2.50 per month on their bills. The change happened as early as March of this year and seems to only affect postpaid customers.
Because Sprint has 30 million postpaid customers, the increased administrative fee could lead to an additional $200 million in annual revenue. That might become a moot point, however, if Sprint’s merger with T-Mobile goes through without a hitch.
Sprint’s administrative fee supposedly covers property taxes, payments to local telephone companies, and other legal expenses.
Original article, June 28, 2018 (9:42AM EST): With AT&T’s acquisition of Time Warner now complete, AT&T is back in the headlines over an “administrative fee” increase that could see the carrier bring in a significant amount of money.
According to Fortune, the administrative fee went from around 76 cents to $1.99. Because this seemingly small increase would affect about 85 percent of AT&T’s 64.5 million postpaid subscribers, AT&T could see around an additional $800 million for its annual revenue. The fee does not apply to prepaid subscribers, though that could change in the future
Reached for comment, AT&T confirmed the administrative fee increase. “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,” said an AT&T spokesperson.
The reasoning does not make much sense, however, when you consider that the administrative fee only went from 61 cents per month in 2013 to around 76 cents per month in March 2018. AT&T then reportedly bumped the fee by 50 cents to $1.26 in April, and again by another 73 cents to $1.99 today.
The real reason behind the administrative fee increase might have to do with AT&T’s $85 billion Time Warner acquisition that the carrier fought for since October 2016. According to BTIG Research analyst Walter Piecyk, AT&T took on $60 billion of net debt when a judge approved the acquisition.
Combined with the $108 billion in stock, cash, and assumed debt that AT&T reportedly spent to acquire Time Warner, and you have a carrier that might be under pressure to find a new source of revenue. In addition to an extra $800 million in revenue, the administrative fee increase could be enough to finance $10 billion in debt.
However you want to slice this, this is a slimy move from a company that was recently called out over alleged unethical sales tactics. AT&T also tacked on an extra $5 per month for single-line Unlimited & More customers compared to the existing Unlimited Choice Enhanced plan.
Earlier in June, AT&T performed its yearly price hike for grandfathered unlimited plans.