twice connect
careers

AT&T Posts Wireless Income Gains

4/24/2012 10:04:03 AM Eastern
Dallas - AT&T expanded its wireless operating margin and began to grow its wireless operating income once again despite its continued heavy reliance on sales of heavily subsidized iPhones, AT&T's quarterly financial report shows.

AT&T continued to activate more iPhones than rival Verizon Wireless in the first quarter, and iPhones accounted for a larger share of AT&T's smartphone activations than Verizon smartphone activations, the report also showed.

Out of 5.5 million smartphones activated on AT&T postpaid retail plans in the quarter, 4.3 million were iPhones, or 78 percent of all smartphones activated by AT&T. That compares with the iPhone's fourth-quarter 81 percent share of AT&T smartphone activations, or 7.6 million iPhones out of 9.4 million total smartphones.

In contrast, Verizon activated more postpaid retail smartphones than AT&T at 6.3 million, but only 51 percent were iPhones.

For AT&T, smartphone activations hit a record for any first quarter and represented more than 78 percent of postpaid retail activations, close to the 82 percent posted by AT&T in the fourth quarter.

Despite its reliance on heavily subsidized iPhones, AT&T nonetheless posted an 11 percent gain in wireless operating income to $4.37 billion, compared with a fourth-quarter 27 percent drop in operating income and a mere 0.3 percent gain in all of 2011.

AT&T's wireless margin grew to 27.2 percent from a year-ago 25.8 percent and from the fourth quarter's 24.2 percent.

AT&T's wireless operating income and wireless revenues, nonetheless, grew more slowly that they did at Verizon, whose wireless operating income grew 28 percent to $5.2 billion in the quarter.

In wireless revenue, AT&T posted a gain of 5.4 percent to $16.1 billion, while Verizon's wireless revenues grew 8.2 percent to $18.3 billion.

AT&T's wireless margins improved despite the sale of heavily subsidized iPhones and smartphones, AT&T said, because of "improved operating efficiencies and further revenue gains from the company's 41 million high-quality smartphones subscribers [who pay for data plans]."

Total data revenues grew 19.9 percent to $6.1 billion, representing 38 percent of total wireless-segment revenues. Data revenues were slightly lower than Verizon's $6.61 billion, which accounted for 42.9 percent of that carrier's first-quarter wireless-segment revenues.

In other financial metrics, AT&T said:

--Seventy-eight percent of postpaid retail phones activated in the quarter were smartphones, expanding the carrier's smartphone-using postpaid retail customer base to 59.3 percent of all retail postpaid subscribers.

-- About 30 percent of retail postpaid smartphone subscribers are using 4G devices.

-- Total wireless net additions fell 63.4 percent from the year-ago quarter to 726,000 because gains in retail postpaid and retail prepaid net adds did not offset net-add declines of connected devices, such as telematics systems and e-readers, and net-add declines in activations through resellers.

--The number of retail postpaid net adds grew 202 percent to 187,000 from a year-ago 62,000, and retail prepaid net adds grew 47 percent to 125,000.

-- Net adds through resellers fell 67 percent to 184,000, while connected-device net adds fell 82 percent to 230,000 from a year-ago 1.27 million.

--The company posted its highest-ever first-quarter activations of branded-computing devices such as tablets, USB modems, portable Wi-Fi hot spots and other data-only devices, adding 460,000 in the quarter to reach 5.8 million in use. Of the 460,000 data devices sold, 240,000 were tablets, and of those, about three-quarters were activated on postpaid plans.

 The report also shows that AT&T's retail postpaid and retail prepaid net adds were lower than Verizon's 501,000 postpaid retail net adds and 233,000 prepaid retail net adds.
Want to read more stories like this?
Get our Free Newsletter Here!

Curated By Logo