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Tablets Help Bolster AT&T’s Postpaid Net Adds In Q3

Dallas – The number of net new AT&T wireless postpaid subscribers grew 116 percent in the third quarter to 785,000, but the gains fell behind the second quarter’s 1.03 million, which represented the company’s best quarterly gain in almost five years.

Almost 45 percent of the postpaid net adds – or 434,000 – were cellular-equipped tablet net adds.

The company also reported that the share of smartphone gross adds and upgrade phones purchased without subsidy on Next installment-payment plans came to only 50 percent, the same share as in the second quarter. CFO John Stephens, however, expects Next take rates to grow in the fourth quarter for two main reasons. One is that in the third quarter, AT&T stores suffered from inventory shortages, which sent consumers to other retail channels where Next take rates are lower. Second, he said, as AT&T rolled out Next to national retailers and manufacturer stores, learning curves hampered Next take rates, but the rates are improving with time, he said.

Stephens denied that unsubsidized-phone sticker shock played a role, noting that Next is accompanied with lower cost service plans and much lower up-front costs of $50 compared to subsidized-phone purchases.

The Next take rate was 40 percent in the first quarter and only 15 percent in the fourth quarter of last year.

For the quarter, AT&T’s total net adds grew 103 percent to 2 million, up from the previous year’s 989,000 and up sequentially from the second quarter’s 634,000. Total net adds include connected-device net adds, which soared 77.3 percent to 1.28 million compared to the year-ago 719,000. The third quarter’s connected-device net adds included 500,000 connected cars put into service as new 2015 models rolled off the assembly lines, Stephens said.

Also in the quarter, AT&T’s prepaid subscriber base shrank by 140,000 compared to a year-ago gain of 192,000, mainly due to declines in the number of tablets on session-based plans.

For the nine-month period, postpaid net adds were up 101 percent to 2.44 million, but prepaid subscribers fell 595,000. Connected-device net adds for the nine-month period grew 31.2 percent to 2.14 million. And total net adds were up 93.7 percent to 3.7 million in the three-quarter period.

In other metrics, the company said:

–91 percent of phones sold in the quarter were smartphones.

–81 percent of postpaid-phone subscribers were using smartphones, or 55.8 million, up from a year-ago 75 percent.

–Mobile Share and Mobile Share Value plans, in which families share data buckets, accounted for 62 percent of the postpaid-phone subscriber base, or 47 million, up from a year-ago 16 million.

–and a record number of customers brought their own phone to the AT&T network, or more than 460,000 postpaid smartphone gross adds.