AT&T Inc. (T) counted on connected devices to drive first-quarter growth, with 1.3 million connected devices added in the period, compared to only 62,000 postpaid retail net additions. The nationwide operator now counts 97.5 million wireless subscribers on its network.
In a quarter where the operator was tested as Verizon Wireless (VZ) began selling Apple Inc.’s (AAPL) iPhone, AT&T said its wireless business remained strong. “In many ways, we had our strongest first quarter ever,” said AT&T President Ralph de la Vega in the company’s earnings conference call. The company said it had its best-ever first-quarter increase in total wireless subscribers and its best-ever first quarter of smartphone sales, totaling more than 5.5 million. IPhone activations increased nearly 1 million from the previous year to3.6 million, with 23% of those subscribers new to the carrier; iPhone subscriber churn was unchanged year over year.
The company posted consolidated revenues of $31.2 billion, up 2.3% from a year ago, leading to net income of $3.4 billion, up 38.9% from the year-ago period. Wireless service revenues increased 8.6% to $14 billion in the first quarter. Wireless data revenues increased 23.9% from a year ago to $5.1 billion. Postpaid average revenue per user (ARPU) increased 2.4% to $63.39; postpaid data ARPU was up 16% from the year-ago period to $23.35. Postpaid churn stood at 1.15%.
Of the 2 million customers added in the quarter, 1.3 million were connected devices; 62,000 were postpaid retail net adds; 85,000 prepaid net adds and 561,000 reseller net adds. AT&T had a strong quarter with branded computing subscribers, a new growth area for the company that includes tablets, aircards, MiFi devices, tethering plans and other data-only devices. AT&T said it added 421,000 branded computing devices, with most of those (322,000) tablets. Drilling down further into the tablet category, the company said 80% of those tablets were prepaid.
AT&T noted that 46.2% of its postpaid customers have smartphones, and more than 80% of them are on family plans or discounted business plans. Smartphone ARPU is 1.8 times greater than ARPU from feature phones.
First-quarter wireless operating income margins were down 4.2 percentage points to 25.8%, due to subsidies from smartphone sales and customer upgrades and the Alltel and Centennial merger costs, AT&T said.
On the wireline side, the company cut 6,000 people as part of its ongoing wireline operating plan.
