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AT&T Reports Record Low Churn In Q2

7/22/2010 09:47:08 AM Eastern
Dallas - AT&T reported its second-quarter financial results, which included double-digit earnings growth, an increase in consolidated revenues, improved margins, and record low churn rates.  

These results were driven by continued growth in mobile broadband, including a record quarter for iPhone activations, gains in IP-based and strategic business services and disciplined execution on cost initiatives, AT&T said in a statement.

For the quarter, ended June 30, AT&T's consolidated revenues totaled $30.8 billion, up $194 million, or 0.6 percent, vs. the prior-year quarter. AT&T said this marked its second consecutive quarter with a year-over-year revenue increase. Quarter over quarter, consolidated revenues were up $278 million, or 0.9 percent.

Compared with results for the second quarter of 2009, operating expenses were $24.7 billion vs. $25.1 billion; operating income was $6.1 billion, up from $5.5 billion; and AT&T's operating income margin expanded to 19.8 percent, up from 18.0 percent. Total employee force is down by more than 10,000 since year-end 2009, the company said.

In its wireless business, AT&T reported an organic net gain in total wireless subscribers of 1.6 million, to reach 90.1 million in service.

"Second-quarter net add growth reflects rapid adoption of smartphones, increases in prepaid subscribers and growth in a host of connected devices such as e-readers, global positioning systems and alarm monitoring systems," AT&T said. Connected devices net adds were 896,000 in the quarter to reach 6.7 million, and retail postpaid net adds totaled 496,000 to reach 67.0 million.

The company said it had record lows in both total and postpaid wireless churn -- 1.29 percent and 1.01 percent, respectively. 

Wireless data revenues increased $936 million, or 27.2 percent, from the year-earlier quarter to $4.4 billion. AT&T wireless subscribers on data plans increased more than 24 percent over the past year, it added.

Postpaid subscriber ARPU increased 3.4 percent vs. the year-earlier quarter to $62.63, despite including 1.6 million subscribers from the acquisition of properties from Verizon Wireless. This marked the sixth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU, according to the company.

Postpaid data ARPU reached $21.07, up 18.6 percent vs. the year-earlier quarter, and total postpaid subscriber revenues continued recent trends, with solid double-digit growth, reflecting increases in both voice and data.

AT&T said that key drivers of wireless data growth are increased penetration of integrated devices (handsets with QWERTY or virtual keyboards) and greater usage of the company's mobile broadband network. The number of 3G postpaid integrated devices on its wireless network increased by 2.9 million to 29.7 million, an increase of 98.2 percent year over year and 10.8 percent sequentially.

At the end of the quarter, 53.2 percent of AT&T's 67 million postpaid subscribers had integrated devices, up from 36.3 percent one year earlier.

For the full second quarter, AT&T iPhone activations totaled 3.2 million, the most quarterly iPhone activations ever, it said. Approximately 27 percent of those activations were for customers who were new to AT&T.

AT&T's wireless operating income margin was 28.8 percent vs. 24.9 percent in the year-earlier quarter, and AT&T's wireless operating income before depreciation and amortization (OIBDA) service margin was 43.1 percent, up from 40.1 percent in the second quarter of 2009.

Wireless service revenues increased 10.3 percent to $13.2 billion in the second quarter, it said and total wireless revenues, which include equipment sales, were up 7.7 percent to $14.2 billion. Second-quarter wireless operating expenses totaled $10.1 billion, up 2.1 percent vs. the year-earlier quarter, and wireless operating income was $4.1 billion, up 24.7 percent year over year.
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