AT&T has been sued by the SEC for allegedly disclosing nonpublic information to analysts in 2016

AT&T
People walk past the AT&T store in New York’s Times Square, June 17, 2015.

  • AT&T was accused of revealing nonpublic data to avoid missing analysts’ revenue estimates in 2016.
  • The SEC is seeking permanent injunctive relief and civil monetary penalties against each defendant.
  • AT&T said that the allegations it revealed material information are “meritless.”
  • Visit the Business section of Insider for more stories.

The Securities and Exchange Commission filed a lawsuit against AT&T and three of its investor relations executives for allegedly revealing nonpublic information to analysts to avoid missing revenue estimates in 2016. 

The SEC filed the lawsuit in a federal court in Manhattan on Friday, and said in the complaint that AT&T violated Regulation FD, which requires that firms disclosing material information do so broadly to the investing public, not just to select people. 

The SEC is seeking permanent injunctive relief and civil monetary penalties against each defendant.

AT&T didn’t respond to Insider’s request for comment but maintains the SEC claims are meritless. 

“We look forward to having our ‘day in court’ to demonstrate conclusively that our investor relations employees complied with Regulation FD, and that the allegations in the SEC’s complaints are meritless,” AT&T said in a statement in response to the allegations.

The SEC argues that AT&T knew that it could miss analysts’ revenue estimates for its first-quarter in 2016 due to its larger-than-expected decline in its smartphone sales. To avoid missing estimates for the third consecutive quarter, the company’s investor relations executives, Christopher Womack, Michael Black, and Kent Evans, privately called analysts in around 20 separate firms, the SEC said.

During the phone calls, all three executives allegedly shared AT&T’s internal smartphone sales data and its impact on internal revenue metrics.

Following those calls, analysts reduced their revenue forecasts which led to a slightly lower overall revenue estimate than the one the company reported in April 2016, according to the SEC complaint.

AT&T said that there wasn’t any material  disclosure made, and cited the lack of any market reaction to the company’s first-quarter results in 2016. 

The company added that the material discussed was about the impact of removing subsidy programs on smartphone upgrade rates. Those subsidy programs allowed customers to upgrade their phones and without them, they were buying phones less frequently which as a result reduced equipment revenue. 

AT&T said it disclosed this trend on multiple occasions and clarified that it will not impact its earnings.

The telecommunications company has been hit with other lawsuits since the beginning of 2021. 

Last month, Washington D.C. Attorney General Karl Racine sued AT&T Mobility National Accounts for charging the city huge sums of money for cellphone and internet services when it was contractually supposed to provide the city the cheapest services available, Reuters reported. The company responded saying that the allegations were “entirely without merit.”

In January, Seattle company Network Apps LLC filed a lawsuit against AT&T accusing the company of patent theft of a technology that allows smart devices to respond to calls assigned to one phone number, Reuters reported. The company is facing a potential payout of at least $1.35 billion.  AT&T said it would review the lawsuit and respond in court.

 

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Led by CEO Ian Watson, Cellcard is building on its rollout of Cambodia’s first 5G use case by tapping into the country’s youth-driven mobile market

IAN WATSON   Cellcard
Ian Watson, CEO of Cellcard

  • Led by CEO Ian Watson, Cellcard is one of Cambodia’s largest and most innovative telco firms
  • Cellcard is tapping into the youth market — and gamers in particular — to help drive mobile penetration
  • This year the company launched its dedicated esports division, hosting competitions and live-streaming events
  • In a short time, Cellcard has already increased its proportion of the youth segment among its customer base by more than 50%
  • Because of his work, Business Insider named Watson to our annual list of the 10 leaders transforming consumer tech in Asia.
  • Visit Business Insider’s Transforming Business homepage for more stories.

Despite the ongoing impact of COVID-19, 2020 was a historic year for Cambodian telco Cellcard. Led by CEO Ian Watson, Cellcard rolled out Cambodia’s first 5G use case – a telemedicine service introduced across four key health facilities in the capital of Phnom Penh to help cope with the pandemic. 

This was a significant milestone for both Cellcard and Cambodia, a country with one of the least developed digital infrastructures in the Southeast Asia region. When Watson joined the company in 2012, Cambodia was still very much playing catch up to some of its more developed neighbors. However, by 2018, and with an investment of over US$300 million, Cellcard had established a 4G LTE network that covered 90% of the country. 5G will be the next stage of this evolution.

Technological development aside, 2020 has also represented a transformation in Cellcard’s business strategy, with more emphasis being placed on the large Cambodian youth market to help drive digital adoption, with a particular focus on growing and supporting the country’s young gamer community. 

Cambodian demographics favour the youth market

The attraction of the youth segment in Cambodia is clear. Out of a population of roughly 17 million, it is estimated that close to 50% are under the age of 25. As these young people start to come online and access the internet, mobile is the dominant platform. Cambodia now has roughly 21 million mobile connections, with over 14 million enjoying 3G or 4G broadband access. 

Cellcard has launched various youth-focused initiatives over the past 12 months. In May, it brought together a number of its musical ambassadors for a Cellcard 4U Virtual Concert to entertain Cambodian families at home during COVID-19. More than 1.7 million viewers watched the concert live on the night on the local MYTV channel, with an additional 5 million online video views of the concert highlights. 

In July, the company announced its support to local education infrastructure by establishing an e-learning platform for continued education in a joint collaboration with the Ministry of Education, Youth and Sport (MoEYS) and Ministry of Posts (MPTC). The app allowed students across Cambodia to continue their studies online, with Cellcard providing free data access between select hours.

But it is one youth demographic sub group in particular where Cellcard has been concentrating its marketing and customer engagement activities this year, and that is gamers. Over the past three years, Cellcard has been investing in promoting and facilitating a mobile gaming culture, and these efforts were ramped up significantly in 2020 with the formal launch of an esports division 

“In a market where 48% of the population are under the age of 25, operators and  brands have to be youth focused,” says Watson. “There is enormous growth potential for Cellcard in the youth segment. Previously it has been known as the operator for the older business and professional segment, but this is changing as we evolve our digital offerings to be youth centric, especially our move to lead esports in Cambodia.”

Using gaming and esports to drive smartphone penetration

Cellcard’s gaming legacy began just three years ago, with the launch in 2017 of Super Data Race, a Pokémon-style mobile game. Several other popular mobile games followed, but what really transformed Cellcard’s youth appeal has been how it has tapped into the emergence of a hugely popular esports community. 

Cambodia has seen a rapid rise in demand for gaming and esports among its youth, not only domestically but also internationally as gamers connect with their peers in the wider region through regional competitions and livestreamed matches. Cellcard was Cambodia’s first telco to stage an esports tournaments back in 2018 and since then has been nurturing the gaming community across the country.

Earlier this year Cellcard launched PlayGame, Cambodia’s first gamer platform, supported by PlayGame Unlimited, a data plan created exclusively for gamers. PlayGame, which partners with leading global game developers such as Tencent, Netease and Moonton, gives customers access to a full range of gaming experiences including online esports tournaments that offer cash prizes and in-game incentives. This year, Cellcard has held almost 200 esport and arcade tournaments and live-stream events, garnering 75.9 million impressions on the PlayGame platform

The company is also working closely with gaming influencers, with 20 dedicated gamer influencers on its roster. Leveraging these relationships, the company this year developed its own esports-focused TV Show called PlayGame TV. The show is dedicated to celebrating and sharing the gamer lifestyle in Cambodia and  features its influencer talent pool as hosts.  The first season of eight episode aired simultaneously on local free-to-air TV and Facebook and reached over 9 million viewers.

“We have some of Cambodia’s best performing social media channels including one million-plus fans on TikTok,” says Watson. “Our engagement rates are high as we are very active with social influencers and content creators which is driving more youth customers to Cellcard.”

Youth engagement  is already delivering results

The investment in youth and in particular the promotion of esports and gaming is already having a positive result on Cellcard’s business. The company says that gaming helping it drive smartphone penetration and data usage, particularly in provincial areas. Cellcard has increased the mobile data traffic over its network by 32% this year, while the proportion of young consumers on its customer base has grown from 26% to 40% 

Cellcard says it is confident it is on the right track and will continue to lead the esports agenda and grow the gamer and Esports community in the country. The company says it will continue to add more billing and payment choices to give gamers more convenient transaction options. 

At the same time Cellcard is continuing to expand its 4G LTE network – as well as beginning to open its 5G network – which it says will further improve speeds and counter latency and jittering issues for gamers. Ultimately, Cellcard argues that increased digital access will benefit not just gamers or young people, but Cambodia as a whole.

“We have entered the digital age, and telecommunication companies such as Cellcard are playing a key role in driving transformation of the people, of companies and of the nation,” says Watson. “Digital empowerment will transform people’s lives for the better by advancing education, health, agriculture and manufacturing, and deliver to all Cambodians, access to the world.”

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