AT&T raises prices on wireless plans to address higher costs

AT&T is raising prices on mobile-service plans in an effort to squeeze more revenue from customers and blunt the effects of quickening inflation.

The price increases mark a high-profile reversal for an industry that has mostly competed for new customers with discounts, free phones and low-priced family plans -- even after shrinking to a three-player market with the purchase of Sprint Corp. by T-mobile US Inc. in 2020.

The price increases are the first for such plans in three years. Dallasbased AT&T is raising the monthly fees by up to $6 a month for singleline customers and up to $12 a month for families, an AT&T spokesman confirmed Tuesday. Staffers in multiple stores were informed of the changes this week and are telling customers to call the company’s consumer service line for help on choosing new plans.

Shares of AT&T rose as much as 2.9% to $19.68 on the news. Verizon Communications Inc. added 2.1% and T-mobile narrowed its loss for the day.

Subscribers will have the option to avoid the price hike by switching to new unlimited plans, the carrier said.

“We are encouraging our customers to explore our newer plans which offer many additional features, more flexibility for each line on their account and, in many cases, a lower monthly cost,” the carrier said Tuesday in an emailed response to questions.

AT&T has been warning investors of inflationary pressures. On an earnings call last month, Chief Executive Officer John Stankey said rising wages could add about $1 billion to the company’s overhead this year.

The price hike will test whether carriers can join other industries like food and energy in passing on higher costs. The plan could backfire if disgruntled AT&T customers defect to Verizon and T-mobile.