AT&T Mobility shows gains in revenue from wireless, 1.3M net adds

AT&T Mobility’s second-quarter numbers were buoyed by a 52% jump in wireless data sales over the same quarter last year, and the carrier’s overall revenues from wireless popped by 15.8% over the same period. The carrier reported a gain of 1.3 million new customers in the quarter, up by 38,000 customers compared with this year’s first quarter but down 123,000 from the same quarter a year ago.
AT&T Mobility’s new customer additions sit just shy of the 1.5 million net adds posted by rival Verizon Wireless for the quarter.
Nonetheless, AT&T Mobility crowed of its results, and its efforts to integrate its wireless and wireline services.
“The Apple iPhone 3G is a dramatic example of this transformation,” said Randall Stephenson, chairman and CEO of AT&T Mobility’s parent company AT&T Inc. “In the days following our exclusive U.S. launch of this new device, powered by the nation’s fastest 3G wireless network, customer response has been everything we had anticipated and more. This strengthens our wireless business, and it reinforces our positive view of the opportunities ahead for AT&T and the industry.”
AT&T Mobility introduced the 3G iPhone earlier this month, and sales results were not included in the carrier’s report.
The carrier’s wireless operating expenses totaled $9 billion, and operating income grew to $3.1 billion, up 91% from the $1.6 billion reported in the second quarter of 2007. The carrier also saw increased wireless operating income margins this quarter and this year.
AT&T Mobility’s customer churn also moved down to 1.1%, which the carrier said is the lowest level in the company’s history and a significant drop from the 1.6% posted during the second quarter of 2007.
AT&T Mobility’s average revenue per user also improved slightly from $50.63 during the second quarter of 2007 to $50.75 this year, which the carrier attributed to greater adoption of data services.
“We do see continued reductions in voice, primarily [because of] the overages charges associated with voice usage and customers simply managing their plans and making sure they don’t have significant overage costs,” he said. “That’s an ongoing process and primarily over the past few years is what has driven lower voice revenues in wireless. On the other hand, we continue to see data growth.”
Linder said he expects to see continued growth, strengthened and supported by the carrier’s iPhone.
Sustaining the iPhone gain
Todd Day, industry analyst in the mobile and wireless group at Frost & Sullivan, said AT&T Mobility will have its work cut out in maintaining its growth.
“How do they continue that momentum without another iPhone launch?” Day said.
Day said AT&T Mobility does however have a leg up based on support from its wide-ranging business units, including its wireline operation. He said AT&T is doing the right thing by focusing its efforts on wireless, the company’s top segment.
In regards to recent complaints of a sluggish AT&T Mobility network, Day said the carrier, and all carriers, will have to hone in on the problem more directly. He also said churn may increase slightly with the high demand customers have for an upgraded 3G network.
“Right now, these upgrades are all carriers are talking about,” Day said. “They have to put a lot of focus into their back call and the technology that communicates from the towers to the phones, but upgrades don’t help if there isn’t enough bandwidth to support the data services.”
“People don’t want to pay for newer, faster data services if once they start getting them, they don’t really work properly,” Day said.
AT&T as a whole reported consolidated revenues of $30.9 billion, up 4.7% from the second quarter of last year. Net income came in at $3.8 billion, with an operating income margin of 21.3%; the numbers were up from last year’s $2.9 billion income alongside a 16.8% operating income margin. Reported operating expenses were down to $24.3 billion from $24.5 billion last year.
In response to the carrier’s results, Cowen and Company Research Connection said AT&T came out with excellent results, and that only the carrier’s higher level of DSL customer churn cast a shadow.