AT&T Mobility continued its steady growth during the first quarter of the year, reporting customer additions on par with the previous year and gains in customer revenue that helped push the carrier’s revenues up more than 17%.
For the quarter, the industry’s No. 1 carrier said it added 1.295 million net wireless customers, which was an 8.7% increase compared with the 1.191 million it added during the first quarter of 2007. The numbers pushed the carrier’s customer base to more than 71.3 million subscribers.
Customer churn remained at 1.7% per month during the quarter, though AT&T Mobility did note that it lost around 330,000 customers during the quarter as it shut down its TDMA network in late February and that impacted its churn results by up to seven basis points.
Cowen and Co. analyst Tom Watts noted continued strong sales of Apple Inc.’s iPhone as well as continued weakness at Sprint Nextel Corp. helped boost AT&T Mobility’s growth during the quarter. AT&T Inc. CFO Rick Lindner also noted in a conference call with analysts following the earnings release that the carrier was seeing the most port-ins coming from Sprint Nextel.
ARPU on the rise
Continuing recent trends, AT&T Mobility also reported an increase in average revenue per user, which hopped 2% year-over-year to $50.18 during the first quarter. The growth pushed the carrier’s service revenues to $10.6 billion for the quarter; AT&T Mobility noted data services accounted for $2.3 billion, or 21.5%, of total service revenues. Lindner noted iPhone users were generating ARPUs nearing $100 per month and that more than 40% of customers purchasing the iPhone were porting from another carrier. Lindner also addressed any concern regarding a drop in ARPUs related to the recently launched unlimited calling plans.
Lindner noted that prior to the launch of the plans around 1.5% of new customers signed up for rate plans at or in excess of $100 per month. Since the new plans were introduced, the carrier has seen about 4% of new customers signing up for the $100 per month plan. “So, the number of new customers coming in on those price points is up to 2.5 and almost 3 times,” Lindner explained. “. new customers are choosing to buy up to get the peace of mind of the unlimited pricing.”
The carrier also witnessed a 30% increase in equipment revenues during the quarter, which pushed total revenues up more than 18% to $11.8 billion during the quarter. The strong growth boosted the carrier’s income from $1.5 billion during the first quarter of 2007 to $2.9 billon this year.
3G set to expand
During the conference call, Lindner noted that the shutdown of AT&T Mobility’s TDMA network was allowing the carrier to expand the use of its 850 MHz spectrum for its 3G network, which is expected to enhance coverage and in-building penetration. Lindner also noted the carrier was currently using HSPA Release 6 for its 3G network, which he said provides a DSL-like data experience, and that the carrier expects to update its network to Release 7 sometime in 2009, and finally move to Long Term Evolution in 2010 and beyond.
The carrier expects 3G adoption to pick up through the rest of the year as it expands network coverage. At the end of the quarter AT&T Mobility said it had only 11 million 3G devices on its network and that only 16% of customers were using smartphones, which shows room for substantial growth.
