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.
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