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AT&T's iPhone Growth Continues

AT&T Inc. (NYSE: T)'s first-quarter profits climbed 39 percent as it continued to gain smartphone subscribers and increase its data revenue. But competition from other carriers intensified during the quarter and AT&T responded by broadening its efforts with Android and other operating systems.

The first quarter of 2011 was also the first time AT&T had to compete with another iPhone distributor; Verizon began selling the iPhone in February. So far, Verizon's iPhone presence hasn't hurt AT&T's ability to attract new iPhone customers. (See Verizon Finally Gets the iPhone 4 , OS Watch: Verizon Bests AT&T With iPhone 4 and AT&T Beats Verizon on iPhone Speed.)

AT&T sold 1 million more iPhones in the quarter ending in March than it did in the same period last year. Twenty-three percent of its iPhone subs were new customers and churn was unchanged. The carrier activated 3.6 million iPhones in the first quarter, 33 percent more than this time last year, but down slightly from the 4.1 million it turned on in the previous quarter.

Not all about iPhone
It's not just the iPhone driving growth for AT&T, however. AT&T added to its Android smartphone lineup, stepped up marketing and lowered its prices prior to losing its iPhone exclusivity. (See AT&T SVP: We're A-OK Post Verizon iPhone.)

The company sold more than 5.5 million smartphones (including iPhones) in the first quarter, a 60 percent rise year-on-year. Now, 46.2 percent of its 68.1 million postpaid subs are using the higher-end devices, up from 34.7 percent last year.

The growth in smartphones brought postpaid subscriber average revenue per user (ARPU) up 2.4 percent to US$63.39, its ninth consecutive quarter of ARPU growth. Wireless data revenues grew by 23.9 percent, up nearly $1 billion from the previous year's corresponding quarter.

Overall, AT&T added 2 million new subscribers during the quarter, bringing its total to 97.5 million. That's down from 2.8 million new additions in the previous quarter, but that figure will shoot back up again if AT&T's acquisition of T-Mobile US Inc. is approved by the U.S. regulators. (See AT&T to Buy T-Mobile USA for $39B and Regulatory Scrutiny Escalates for AT&T/T-Mobile.)

We'll have a better picture of the iPhone's effect after Apple reports its first-quarter earnings on Wednesday evening and Verizon Wireless reports on Thursday morning.

— Sarah Reedy, Senior Reporter, Light Reading Mobile

DCITDave 12/5/2012 | 5:07:06 PM
re: AT&T's iPhone Growth Continues

I have a couple of questions:

1) How does AT&T define "smartphone"? I say we keep an eye on the definition itself because if I know AT&T, we should expect that as soon as smartphone growth starts to slow they'll shift their definition to include just about everything.

2) I assume that postpaid customers are the most profitable types of customers for a wireless carrier to have. Is AT&T able to grow its postpaid accounts as quickly as everything else? Seems that should be a mark of how well the competition is doing.


sarahthomas1011 12/5/2012 | 5:07:05 PM
re: AT&T's iPhone Growth Continues

Right now, AT&T defines smartphones as "voice and data devices with an advanced operating system to better manage data and mobile Internet access." So, the voice and OS part should exclude M2M and other devices.

I think postpaid accounts have higher upfront costs, but over time they are the customers with the highest ARPU and are, therefore, the most valuable. AT&T's growth is slowing here, which should concern it. Competition is only going to get steeper, but that's why they're moving to LTE and acquiring T-Mobile.

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