AT&T Posts Q4, Full-Year Wireless Gains

By Joseph Palenchar -- TWICE, 1/28/2010

Dallas - AT&T's wireless segment ended the year on a high note, posting its second highest quarterly net subscriber gain in the fourth quarter, its second highest quarterly number of iPhone activations in the quarter, and a full-year net subscriber gain that matched its previous record.

The carrier also posted a quarterly record in activations of emerging devices such as e-readers and portable navigation devices (PNDs).

In announcing its financial results, AT&T executives also confirmed that, in contrast to its iPhone post-paid business model, it is not subsidizing Apple's new iPad media tablet, nor is it sharing revenues from the iPad's prepaid data plans with Apple. The economics of the strategy will "be very positive" because of lower acquisition costs compared to the iPhone and lower setup costs, given that consumers will activate the device on-line and pay for service with a credit card, said chief financial officer Rick Lindner. The company did not mention whether the iPad, like the iPhone, would be sold through AT&T-owned stores.

AT&T also revealed that 3.1 million iPhones were activated in the fourth quarter, down from the previous' quarter's 3.2 million, but the previous quarter was the first full quarter in which the new iPhone 3G S and reduced-price iPhone 3G were available. Despite the sequential slide, iPhone activations in the fourth quarter exceeded the year-ago quarter's 1.9 million and represented the second highest quarterly number of iPhone activations to date, AT&T said. More than a third of the activations came from users new to the AT&T network, compared with almost 40 percent in the third quarter, AT&T's reports show.

For the quarter, AT&T's wireless service revenues were up 9.2 percent year over year to $12.6 billion. They were up 9.6 percent for the year to $48.7 billion, with year-over-year wireless operating income up 27.7 percent for the quarter to $3.43 billion, and 19.7 percent for the year to $13.3 billion. By comparison, Verizon Wireless's latest financial report shows service revenues growing 5 percent year over year in the fourth quarter, to $13.6 billion and 7.6 percent for the full year to $53.5 billion.

AT&T's net subscriber additions came to 2.7 million in the fourth quarter, up from the year-ago 2.1 million, and hit 7.3 million for the full year, up from 2008's 7 million. Verizon's were up 43 percent in the quarter to 2.24 million, but down 21 percent for the full year to 5.97 million.

AT&T ended the year with a subscriber base of 85.1 million compared to Verizon's 91.3 million

Helping fuel AT&T fourth-quarter activations were activations of more than 1 million emerging devices on the network, marking the strongest quarter in emerging-device activations to date and bringing the number of emerging devices on the network to more than 2 million, the company said.

The number of 3G postpaid integrated devices, which feature a hard or virtual QWERTY keyboard, almost tripled during the year. By year's end, 46.4 percent of AT&T's 65.1 million postpaid subscribers had integrated devices, up from a year-ago 27 percent.