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AT&T Adds 500K Connected Cars in Q3

Dan Jones
10/22/2014

Connected cars are starting to rev up for AT&T, the operator said on its third-quarter earnings call on Wednesday afternoon.

Automakers such as Audi and General Motors started this summer to deliver cars that connect to AT&T's LTE network, and act like a "hotspot on wheels" for the driver and passengers. AT&T Inc. (NYSE: T) CFO John Stephens said on the call that the operator is now seeing "significant impact" from connected cars.

"In the third quarter, We added more than 500,000 connected cars, as the 2015 models started to roll off the production lines," Stephens said. (See GM: 10 Car Models on Road With AT&T's LTE.)

Ralph de la Vega, president and CEO of AT&T's Mobile and Business Solutions, predicted in September that by 2017 there will be 10 million cars with embedded cellular connectivity on the road. (See Driving Miss 4G: Execs Talk LTE Cars at CTIA.)

For the third quarter, AT&T added more than 2 million wireless subscribers in total. Of those, 785,000 were postpaid subscribers that sign up for two-year monthly contracts. Tablets accounted for 450,000 of the postpaid adds. The operator also added 192,000 prepaid customers.

Stephens said that "about two thirds" of its smartphone user base are now on its 4G LTE network. The operator has now completed deployment of its 4G Long-Term Evolution (LTE) network in the US. This is one of the pillars upon which the operator is building its "Project VIP" plan to convert to an all-IP network across wireless and wireline.

"We reached our 4G LTE build target in the third quarter, four months ahead of schedule," said Stephens. The operator now covers more than 300 million potential customers in the US.

Stephens reiterated that he expects capex on wireless and wireline networks to keep to the operator's previous predictions. Stephens had said in July that he expected spending for 2014 to be around $21 billion. (See AT&T: Capex Freeze? What Capex Freeze?.)

"We're still committed to the $21 billion range for '14," said Stephens. He said there is some moderate wiggle-room in that capex range, which currently suggests that AT&T will spend around $4 billion on network updates in the fourth quarter.

AT&T plans to provide an update on its capex plans for 2015 in January next year.


Hey big spender, spend a little time with 4G. Check out our dedicated LTE channel here on Light Reading.


For the quarter, AT&T reported revenue of $33 billion, up 2.5% compared to the year before. Net income totaled $3 billion, or $0.58 earnings per diluted share, compared to $3.8 billion, or $0.72, in the year-ago quarter.

Adjusted for $0.03 per share Leap and Alltel integration expenses and DirecTV merger costs, and $0.02 of costs for early debt redemption, earnings per share (EPS) was $0.63, compared to an adjusted $0.66 in the year-ago quarter. Wall Street had expected an EPS of $0.64.

— Dan Jones, Mobile Editor, Light Reading

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Phil_Britt
Phil_Britt
10/31/2014 | 2:29:43 PM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
You're right about the need for large diameter hotspots. While the connected car seems cool, the problems with dropped signals are likely to be commonplace, particularly in the beginning. any additional buildout of the infrastucture to support these vehicles doesn't make sense until there are enough of them on the road.
SachinEE
SachinEE
10/25/2014 | 3:21:48 PM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
"I can see Audi owners not minding the added costs of redundancy, but I still doubt most consumers are going to want to pay an additional per device connection fee to make the car a hotspot -- as opposed to using the phone itself as a hotspot the car connects to.

Mazda's new vehicles do a nice job in that regard, just letting you use your phone as the hotspot with the car using the phone itself as the modem."

Maybe the increased cost of the mobile data can be added to the car at the time of purchase, with discounts it can probably lower the data costs. This kind of technology is obsolete in countries like Hungary where you have to pay taxes for using the internet. Can connected cars be a business there?
SachinEE
SachinEE
10/25/2014 | 3:19:59 PM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
AT&T is connecting cars alright, but what about the coverage of high speed wireless internet? Hotspots are cool, as long as they are hundreds of kilometres in diameter.
DanJones
DanJones
10/24/2014 | 3:47:40 PM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
Yeah, I've seen a couple of ads pushing the "hotspot on wheels" type concept from GM recently.
kq4ym
kq4ym
10/24/2014 | 9:32:46 AM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
I too wonder if at first, consumers will be ready to spend the extra bucks to get the connected car. But, I suspect there's going to be some heavy marketing and incentives to fan the fire at first. I'm see Chevy ads that promote the cars, and the marketing is certainly getting me primed to want to buy into it.  But, although it's not a sure thing, I predict eventually all cars are going to be "connected" whether we want or need it or not.
KBode
KBode
10/24/2014 | 8:25:54 AM
Re: I perceive AT&T as being in the lead in the connected car sector as the moment.
Curious: were those sold cars, or cars that are available to be sold?

I can see Audi owners not minding the added costs of redundancy, but I still doubt most consumers are going to want to pay an additional per device connection fee to make the car a hotspot -- as opposed to using the phone itself as a hotspot the car connects to.

Mazda's new vehicles do a nice job in that regard, just letting you use your phone as the hotspot with the car using the phone itself as the modem.

Maybe I'm wrong, but I think many educated consumers are going to avoid AT&T's version of this idea. I was certainly wrong on how much success carriers were going to have selling and connecting tablets with LTE radios, which now seem to comprise most of their quarterly adds.
DHagar
DHagar
10/22/2014 | 10:54:41 PM
Re: AT&T in the Lead
DanJones, it certainly sounds like they have a running start!

The numbers and evolution are interesting.  I am wondering if this pattern for adoption mirrors the evolution of GPS systems?

AT&T is truly smart to carve out this niche and drive the market!

Interesting numbers!

 
DanJones
DanJones
10/22/2014 | 6:09:14 PM
I perceive AT&T as being in the lead in the connected car sector as the moment.
What could Verizon or any other carrier do to catch AT&T's connected car lead I wonder?
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