Similar to Q3 results from Verizon, AT&T posted slowing wireless growth and impact from planned 2G decommission, while T-Mobile and Sprint surge
Goosed by its proposed $80 billion acquisition of Time Warner, AT&T bumped up the release of its third-quarter financial and operating results, showing a significant across-the-board drop in wireless customer growth.
The carrier said it added more than 1.5 million new connections to its mobile network during the quarter, which was a 39% drop from the 2.5 million net connections added for the same period last year. The decline was spread across its operations, showing broad competitive issues during the quarter.
Branded postpaid growth dipped 26.6% year-over-year to 212,000 net additions in Q3, but that included the loss of 268,000 postpaid phone connections, which the carrier said was made up mostly of feature phones. Direct postpaid growth was bolstered by 299,000 net tablet additions during the quarter, and the carrier noted it managed to add around 700,000 smartphones to its network during the quarter through new connections and conversion of existing customers.
On the prepaid side, AT&T Mobility reported a 34.8% year-over-year drop in growth, with its GoPhone and Cricket Wireless divisions leading the carrier in posting 304,000 net connection additions for the quarter. Combined, the carrier’s branded efforts added 516,000 connections in Q3, which was down 31.7% year-over-year.
Reseller partners lost 315,000 net connections during the latest quarter, compared to a gain of 156,000 connections last year, while AT&T Mobility’s “connected devices” segment witnessed a near 17% dip in growth to more than 1.3 million net connection additions.
AT&T Mobility appeared to be in a similar boat to rival Verizon Wireless in terms of the impact smaller competitors T-Mobile US and Sprint had on growth during the latest quarter. Verizon Wireless had previously reported a sharp drop in direct connection growth and an overall loss in high-value “phone” connections, compared with net growth led by the segment at T-Mobile US and Sprint.
The carrier attributed the reseller drop to the loss of disconnects for its 2G network, which AT&T said it is still on track to decommission by year-end. The carrier noted it still has around 4 million connections on its GSM/GPRS/EDGE network, including 2.8 million connected devices, 673,000 reseller connections, 335,000 direct postpaid customers and 210,000 prepaid customers. AT&T said it has managed to migrate around 2 million customers off of the 2G network during Q3, but that the upcoming shutdown is likely to impact fourth-quarter net additions and churn.
Customer churn was a mixed bag for the carrier during the latest quarter, with direct postpaid results improving from 1.16% last year to 1.05% this year, though overall churn surged from 1.33% to 1.45%. AT&T again cited the impending 2G network decommission as a reason for the churn increase.
Similar to recent results from Verizon Wireless, the migration by AT&T Mobility of customers from legacy phone-subsidized rate plans to new monthly installment plans showed mixed average revenue per user results. Taking out phone payments, ARPU dropped a claimed 1.9%, but increased 1.7% with the monthly phone payments included.
In terms of its bottom line, AT&T Mobility posted a .7% drop in operating revenue to just under $18.2 billion for the quarter. So far through the first nine months of the year, wireless operating revenue is down 1.4% compared with last year to nearly $54.1 billion.
The carrier did manage to trim wireless spending by a similar amount, which resulted in basically flat year-over-year operating income at around $5.4 billion and a constant 29.6% operating income margin for the quarter.
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