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AT&T Predicts 'Blockbuster' Wireless Q4

AT&T Inc. (NYSE: T)'s mobile boss, Ralph de la Vega, is expecting great things from smartphones and tablets in the fourth quarter, but metrics revealed on the company's latest earnings call suggest that lower-end mobile growth could also be on the cards.

AT&T reported an overall drop in third-quarter profits this Thursday. De la Vega ascribed the drop to the summer months being an "iPhone refresh quarter," which is to say that people were waiting for the new device from Apple Inc. (Nasdaq: AAPL). (See AT&T Profit Falls in Q3, Passes 100M Wireless Subs.)

"We expect a blockbuster quarter for smartphones," de la Vega said on the call.

The numbers seem to bear this out. AT&T activated 2.7 million iPhones in the third quarter and added 319,000 new monthly subscribers. Mizuho Securities USA Inc. says that AT&T sold over 1 million of the new 4S iPhones over the launch weekend. (See Apple Sells 4M iPhones in First Weekend.)

Tablets are another bright spot for AT&T, helping to increase data revenues, as 290,000 users bought tablets in the quarter. More than 35 percent were on monthly contracts.

"This tablet revolution is continuing," de la Vega said, adding that he's really excited about growth as new models come to market. Some of these tablets are likely to run faster in AT&T's new LTE markets.

Katie Price at Technology Business Research Inc. (TBR) , however, put out a note Thursday morning saying that AT&T's initial five-market LTE launch is "too little, too late" compared to Verizon's 165-market footprint.

Nonetheless, de la Vega remains sunny on the 4G deployment, which falls back to fast HSPA+ 3G in many markets, saying that the launch is going more smoothly than AT&T's early 3G efforts. "I'm thrilled by what I'm seeing," he said. "It's a home run, right off the bat."

LTE handsets will launch in the fourth quarter, de la Vega said, promising "super screens and good batteries."

In what might be a sign of the economic times, however, AT&T is also seeing growth in pay-as-you go services and phones that are free with a monthly contract. In particular, AT&T is sold out of the iPhone 3GS now that it comes free with a two-year contract.

"We're getting more new subscribers coming on the 3GS than other devices, on average," de la Vega commented.

He said that the growth in pre-paid is down to new $50 Go Phone plans and fresh devices, as well as tablets. Pay-as-you-go net adds were 293,000 for the quarter.

— Dan Jones, Site Editor, Light Reading Mobile

Turn-light-on 12/5/2012 | 4:50:46 PM
re: AT&T Predicts 'Blockbuster' Wireless Q4

One possible explanation might be all those midnight data feeds (read data usage out of the users control) that put you over the top ifyou have the 200Mb iPhone data plan. That is $15 a pop a month times about 5 million subscribers hit with those overages every other month or so.  Arithmetic says it adds up to $150M. That is a good chunck of cash they sucked out of everyone's pockets.

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