AT&T Quarterly iPhone Sales Break Record

By Joseph Palenchar -- TWICE, 10/22/2009

Dallas - AT&T activated a record number of iPhones and other integrated 3G devices in its fiscal third quarter, with iPhone activations hitting 3.2 million and integrated-device activations hitting 4.3 million.

Integrated devices feature hard or virtual QWERTY keyboards.

iPhone activations have surged following the late-second-quarter launch of the 16GB and 32GB iPhone 3G S at $199 and $299, respectively, and a reduction in the price of the 8GB iPhone 3G to $99 from $199. The 3G S models launched June 19 double cellular-download speeds and double memory capacity over their predecessors.

In the company's second quarter, iPhone activations numbered more than 2.4 million, following 1.6 million activations in the first quarter, 1.9 million in the fourth quarter of 2008, and 2.4 million in the third quarter of 2008, written statements by the company show. AT&T hasn't disclosed the number of iPhone activations during 2008's first and second quarters.

Almost 40 percent of iPhones activated in the quarter were sold to consumers new to the AT&T wireless network, the company said.

Also in the third quarter, integrated-device activations of 4.3 million exceeded the second quarter's 3.5 million integrated-device activations, bringing the percentage of AT&T's 43.4 million postpaid subscribers using integrated devices to 41.7 percent. Average revenues per integrated-device subscriber was 1.8 times that of the company's other subscribers.

Overall revenues from selling wireless devices fell slightly in the third quarter by 6.7 percent to $1.26 billion but was up for the first three quarters by 2.8 percent to $3.71 billion. Nonetheless, rising service revenues pushed up total wireless operating revenues by 10 percent in the third quarter to $12.4 billion and 9 percent during the first three quarters to $39.8 billion. Wireless operating income margin rose in the third quarter to 24.6 percent from the year-ago 18.9 percent and to 24.8 percent for the nine-month period from the year-ago 23 percent.

The number of wireless subscribers (prepaid and postpaid combined) grew in the quarter by 2 million for what the company called the highest third-quarter net gain in AT&T history. That number was up 2.5 percent from the year-ago quarter, but the gain was attributable solely to growth in net prepaid customers. For the quarter, the number of postpaid subscriber net additions fell 18.2 percent to 1.39 compared to the year-ago quarter. Nonetheless, the company enjoyed its second highest third quarter in the number of postpaid net adds, and post-paid net adds were up for the nine-month period by 3.7 percent to 3.41 million.

AT&T's subscriber base was 81.6 million at the end of the quarter, up 6.7 million from the year-ago quarter. Of those, 63.4 million were more profitable postpaid subscribers.