AT&T: Q3 shatters previous records
WIRELESS PROVIDER ADDS RECORD NUMBER OF SUBSCRIBERS
October 22 2008 - 1:03 pm ET | Allie Winter | RCR Wireless News
AT&T MOBILITY POSTED A COMPANY RECORD 2 million net customer additions during the third quarter, fueled by strong sales of Apple Inc.’s 3G iPhone, but that growth also took a bite out of the carrier’s bottom line.
The industry’s No. 1 carrier reported that its strong growth included 1.7 million postpaid subscribers, a 40% increase from third-quarter 2007. A big chunk of that growth was due to the 3G iPhone launch during the timeframe. The carrier posted 2.4 million iPhone activations during the quarter with 40% of those activations from new customers. The carrier also said having the iPhone in its ranks brought in more higher-value customers with a 1.6-times higher average monthly revenues per user (ARPU). In fact, Ralph de la Vega, President and CEO of AT&T
Mobility, said the high sales of the 3G iPhone happened much quicker than with the original iPhone last year.
“This was 2.4-times our pace with the original iPhone through September of last year,” de la Vega said. “It took us nine months to reach the 2.4 million mark (with the original iPhone).”
The carrier also reported that more than two-thirds of the carrier’s net adds during the quarter came from customers choosing an integrated device like the iPhone. AT&T Mobility said iPhone activations have created a halo effect and has driven more traffic into the store, promoting sales of other devices.
More traffic
“Traditionally what happens in October in the wireless industry, at least from our perspective, is that you have a downturn in store traffic,” de la Vega said. “Traffic begins to pick up in mid-November and it really goes strong in December.
Same store traffic for the carriers was up 4% and total traffic rose 7% versus traffic from October 2007.
With the 3G iPhone and other smartphones a big part of AT&T Mobility’s success, it was no surprise that the carrier also saw improvement in wireless data revenues, growing 50.5% from last year to $2.7 billion. Total wireless revenues increased as well by 15.4% to $12.6 billion. Total monthly subscriber churn stayed consistent at 1.7%, while postpaid churn dropped slightly to 1.2%, down from the 1.3% in the third quarter, last year at this time.
However, AT&T Mobility did note that earnings and results were impacted by both the 3G iPhone and hurricane-related expenses. The subsidies which AT&T Mobility was required to pay to Apple for each iPhone sold reduced pretax third-quarter earning by $900 million or 10 cents per share. Hurricane costs, on the other hand, reduced pretax earnings by $145 million or 2 cents per share.
Economic impact
Although the 3G iPhone and other integrated devices tend to bring in higher value customers, de la Vega did say that during rough economic times, AT&T Mobility has noticed some changes with its customers.
“We are seeing customers watch their bundles to make sure they don’t exceed their plans,” he said. “We are seeing a little bit of a downturn on international roaming and long distance, but those are the only two areas that we have seen really any ARPU weakness.”
Looking to the fourth quarter, AT&T Mobility said it expects less dilution from the iPhone than in the third quarter, but does expect to at least sell more than previously anticipated. However, Seth Wallis-Jones, telecoms analyst with Global Insight, said the carrier might have bigger concerns up ahead.
“The rapid fall in wireline voice continues to be a major concern, while slowing growth in video and broadband with net addition well down on the year-earlier period are worrying signs that may be indicative of both rising penetration and lower demand in a tougher economy,” Wallis-Jones said. “Betting on the iPhone is risky as new competitors emerge and Verizon consolidates with Alltel.”
Addressing the downfall of wireline, de la Vega said AT&T Inc. has recognized this and has integrated the trend into its latest business plan for customers, merging both wireline and wireless services together.
“That’s where our technology is headed,” he said. “It’s a direction that customers are moving and it’s the thinking behind our decision to combine wireline consumer and wireless into a single organization.”
Updated Oct. 29 to include analysis, details.
October 24, 2008 09:36 am
phonefreak check your numbers, Verizon spent more on their network in the third quarter, and they have four times the coverage area for 3G. They had 1.5 million adds in the second quarter without a trendy device and with the launch of the storm in november 1.7 will be a number to laugh at.
October 23, 2008 04:04 pm
its funny how every keeps comparing the biggest 2 carriers...one is better blah blah...well i say they are by far the two best and i know one works better than the other somewhere it depends on where you are. they both spend billions on network. they both have great phones. they both want happy customers...i laugh at fools who think big companies dont care about customers. if they didnt they will go out of business. now that doesnt mean they are perfect. so as the tv says every company is going out of business and no one has any money its nice to see a company exceeding...oh yeah the tv is lying. proud american!!!
October 22, 2008 11:32 pm
Most of their adds cam from the Sprint corp. Sprint is done. Sprint corp is managed by a bunch of goobers and imbiciles.
October 22, 2008 01:29 pm
Just want to get the facts straight here. A short lesson in this carrier history. It is very convoluded. Cingular was a joint venture between Bellsouth(40%) and SBC(60%). They(joint venture)bought ATT wireless. Seperately, SBC bought ATT and assumed the ATT name. While the joint venture manitained the Cingular name. Until, ATT formerly SBC bought Bellsouth and cobined all of the companies under one name. AT&T.
October 22, 2008 01:29 pm
One important factor they failed to mention was how many of the iphone users are actually satisfied. I bet the 4th Quarter churn will be pretty high and correlate with how many iphone users (such as myself) cancel AT&T service. Don't get stuck with the iphone. The HTC Fuze looks like a good buy, as well as the Samsung Epix. Apple still needs to come a long way before they get all the glitches and bugs out of the iphone.
October 22, 2008 01:29 pm
Keep an eye on T-Mobile everyone seems to dismiss them easily but every year they continue to grow,grow,grow. The release of the G1 w/google should continue to help the growth this year.
October 22, 2008 01:29 pm
Finally at&t is doing something. If they have that many adds than VZW will definitely have more. Why would it change? I challenge all of you to compare TRUE 3G coverage. VZW has known network trumps all, and has since day 1. Funny at&t's claim for best coverage is "global" in the fine print. Too bad the Storm won't work globally, oh wait-it will, and on Japans data network also. Go figure, a device that can handle multiple networks seamlessly, while actually keeping a 3G signal where 85% of the US population works and plays.
October 22, 2008 01:29 pm
Alltel needs the VZW merger WAY more then VZW needs Alltel's customers. Goldman Sachs is having enough trouble with the investment banking meltdown over the last 2 months. They want to get out of the cellular business in a big, big way to remain solid as a financial institution.Also, if AT&T's GSM network is so great, why has the RIM Bold been delayed SIX MONTHS due to the fact that AT&T's network can't handle the new HSPA+ technology built into the handset? It's laughable! They had to stop for half a year and re-tool their entire software configuration from the ground up just to support a new device.Winnar...
October 22, 2008 01:29 pm
AT&T has invested more money on their network than any other wireless carrier in the last few quarters an it shows. The "coolness" factor is also something that moves the technology market, wireless included. Coolness is something Verizon will never have with a CDMA backbone and with phones that look like they were taken from a popular mechanics magazine from 10 years ago!
October 22, 2008 01:29 pm
Yeah, VZW's stats soon to come out should eclipse AT&T. It will be even bigger once the Blackberry Storm gets released & blows away the iPhone crowd....who will wish they waited!