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AT&T Mobility shows diverse Q4 growth

Signaling the changing face of its wireless operations, AT&T Mobility (T reported record customer growth for the fourth quarter of 2010 led by non-traditional operations including prepaid, resale partners and connected devices.
The carrier said it added a company record 2.8 million new connections to its network during the final three months of 2010 pushing its total connection base to 95.5 million at the end of the year. The results surpassed the nearly 2.7 million connections added during the fourth quarter of 2009.
That growth was propelled by 1.5 million net “connected” device additions – a 7.7% increase compared with the 1.4 million added in 2009 – and 595,000 net additions through resellers. The carrier’s direct growth included 400,000 postpaid net customer additions and 307,000 subscribers added through the carrier’s prepaid offerings. (That direct prepaid growth was bolstered by the addition of around 400,000 tablet devices that the carrier booked through its prepaid service, which indicates that it lost nearly 100,000 traditional prepaid customers.) The postpaid growth was a significant drop from the 841,000 customers it added during the fourth quarter of 2009, while prepaid growth surged from the loss of 58,000 customers during the same time frame.
AT&T Mobility’s overall growth overshadowed the 955,000 connections added by larger rival Verizon Wireless during the quarter, though the more lucrative postpaid growth fell well short of the 872,000 net customers that the nation’s largest operator posted. AT&T Mobility’s growth also fell short of the roughly 500,000 net customer additions expected by analysts, which sent parent company AT&T Inc.’s stock price down more than 3% in early Thursday trading.
AT&T Mobility also noted that customer churn dropped year-over-year from 1.42% to 1.32%, while postpaid churn remained flat at 1.15%.
AT&T Mobility said it sold 7.4 million “integrated” devices on contract plans during the quarter, including 4.1 million Apple Inc. iPhones. (Integrated devices to the carrier include any handset with a real or virtual QWERTY keyboard and typically require a data or messaging package.) The carrier noted that at the end of 2010 61% of its 68 million postpaid customers had integrated devices and that these devices generated average revenue per user 1.7-times higher than non-integrated devices.
That continued influx of integrated devices helped pushed postpaid ARPU up 2.2% year-over-year to $62.88, with postpaid data ARPU surging 17.8% to $22.64.
Wireless revenues increased nearly 10% from $13.8 billion during the fourth quarter of 2009 to $15.2 billion in 2010. Full-year revenues surged 9.3% from $53.5 billion in 2009 to $58.5 billion last year.
A spike in wireless expenses during the fourth quarter of 2010 resulted in the segment’s operating income dropping from nearly $3.6 billion in 2009 to just under $3.5 billion last year.

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