AT&T Banks on Broadband, Cries for Spectrum
Despite the $6.7 billion hit AT&T Inc. (NYSE: T) took for its breakup with T-Mobile US Inc. , the carrier's mobile broadband growth leaves little doubt it will bounce back. (See T-Mobile Breakup Causes $6.7B Q4 Loss for AT&T .)
AT&T had its best quarter yet for mobile broadband growth, and CEO Randall Stephenson used its conference call on the results to reassure investors that growth will continue -- provided it's allowed to acquire more spectrum.
AT&T sold 9.4 million smartphones in the quarter, of which 80 percent were iPhones, as Apple Inc. (Nasdaq: AAPL)'s record-breaking quarter seems to have rubbed off on its first partner. (See Apple: the Numbers Behind the (Huge) Numbers and AT&T Predicts 'Blockbuster' Wireless Q4.)
"Our mobile broadband sales were nothing short of incredible," said John Stephens, AT&T's senior EVP and CFO, breaking it down to 100,000 devices sold for every single day of the quarter, nearly twice as many as it sold in the third quarter and twice as high as its previous record.
The stellar smartphone sales helped AT&T increase its post-paid average revenue per subscriber (ARPU) for its 12th consecutive quarter. At $63.76 per month, AT&T says its ARPU is $6 higher than the nearest competitor, and Stephens promised it will continue to drive more from its recent data price increases and smartphone sales. (See Wi-Fi Usage Drives AT&T to Raise Prices.)
In total, AT&T added 717,000 wireless postpaid subs, its largest increase in five quarters, and 2.5 million total net wireless subscribers, including 571,000 branded computing devices like tablets and air cards. AT&T finished out the fourth quarter with 5.1 million total subscribers, up nearly 70 percent from last year.
AT&T didn't spend a lot of time talking up its nascent Long Term Evolution (LTE) network, but Stephenson said the carrier would move forward aggressively. It has turned on 26 markets, and he said he expects AT&T will double its LTE coverage in 2012 with continued improvements in capacity and enhanced backhaul. (See AT&T Promises Superfast 'Blended 4G' and AT&T Turns Up 11 More LTE Markets.)
More T-Mobile fallout
The one big limiting factor to all this growth, Stephenson said, is spectrum. He told investors that AT&T has the most robust backhaul infrastructure in the industry, but can't put it to use without more spectrum.
The CEO did a lot of Federal Communications Commission (FCC) bashing on the call, saying the government agency wants to pick winners and losers, rather than let the market do it. AT&T's biggest issue for 2012 is that it cannot keep growing without more spectrum, he said, even suggesting that it's one reason AT&T has to make moves like data caps, raising prices and throttling as a result. He also said that AT&T cannot cover rural America without T-Mobile's spectrum. (See AT&T: What It Loses Without T-Mobile.)
“It’s clearly time for Congress and the FCC to step up,” Stephenson challenged. He said AT&T has enough spectrum for LTE through 2013, but will need more after that. And, he knows where to get it, but not who the FCC will allow it to buy from and how much it can buy, he added, noting that the FCC evaluated the T-Mobile deal with different spectrum cap limits from the ones it used for the Qualcomm Inc. (Nasdaq: QCOM) spectrum buy. (See AT&T Gets Approval for Qualcomm Deal.)
"Our issue is not identifying what spectrum we go after, but finding out what the rules are and who we can do business with," he said.
— Sarah Reedy, Senior Reporter, Light Reading Mobile