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Tablets, Android power AT&T Mobility growth

Following up on its pre-release of select second quarter results last month, AT&T continued to show robust growth across its wireless operations thanks to industry-leading additions from tablet devices and increased sales of Android-powered devices.

AT&T reported that it added 632,000 net customers to its wireless operations during the quarter, which was half the 1.266 million the carrier added during the second quarter of 2012. The latest results included 551,000 postpaid net additions, which was ahead of its previous forecast, and 11,000 direct prepaid net additions. The postpaid growth was significantly more than the 320,000 customers added last year, while prepaid net additions dropped from the 92,000 net additions posted for the second quarter of 2012.

AT&T Mobility’s growth during the quarter was also just half of what Verizon Wireless posted for the quarter, which included more than one million direct net customer additions.

Among its postpaid net additions, tablet devices accounted for 398,000 net customer additions during the quarter, showing continued strong growth from that new device segment. AT&T’s management noted that it sold 6.8 million smartphones during the quarter, with approximately three million devices powered by Google’s Android operating system and 3.8 million iPhone devices. AT&T Mobility President Ralph de la Vega noted that the Android sales were a company record, which is significant for a carrier that has traditionally been dependant on growth from Apple’s product line.Analysts noted that iPhone sales matched those of Verizon Wireless, with AT&T’s management noting new trade-in initiatives led to robust iPhone upgrades.

AT&T is looking to bolster its presence in the prepaid space, having announced its Aio Wireless service targeting smartphone users, bringing LTE devices to its legacy GoPhone platform and more recently announcing plans to acquire no-contract service provider Leap Wireless.

A significant portion of AT&T Mobility’s net addition shortfall came from its reseller partners, which saw growth plunge from adding 472,000 net customers last year to losing 414,000 net customers this year. Overall, AT&T ended the second quarter with nearly 107.9 million connections on its network.

Also impacting customer growth was an increase in customer churn from 1.18% during the second quarter of 2012 to 1.36% this year.

Wireless revenues increased 5.7% year-over-year to $17.3 billion for the quarter despite a 2.7% dip in revenues from “voice, text and other services.” Data services accounted for nearly 31% of wireless revenues during the quarter, while wireless services accounted for just under 54% of AT&T’s total revenues for the quarter.

AT&T also reiterated plans to have 270 million potential customers covered by its LTE network by the end of this year, adding that it expected its entire network to be “substantially” covered with LTE coverage by the middle of next year. Rival Verizon Wireless recently noted it had reached 99% coverage of its legacy CDMA network with LTE services with plans to have full coverage later this year.

Bolstering its LTE growth plans, AT&T reported a 20.8% year-over-year increase in capital expenditures to $5.4 billion during the second quarter, which was just ahead of analyst expectations. That increased investment is also part of AT&T’s Project VIP that was announced last year and calls for the carrier to invest $14 billion across its network through 2015.

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