Dallas - Record subscriber growth and rising data revenues from smartphone and tablet use drove up AT&T's 2010 wireless revenues in the fourth quarter and full year.
AT&T posted its best-ever increase in net new wireless subscribers in the fourth quarter of 2010 and full year, and it boosted wireless revenues for the two respective periods by 9.9 percent to $15.2 billion and 9.3 percent to $58.5 billion.
Net subscriber additions hit 2.8 million in the fourth quarter and 8.9 million for the full year, putting the company's year-end subscriber base at 95.5 million. AT&T's subscriber base moved ahead of that of Verizon Wireless, whose year-end subscriber base hit 94.1 million. Subscriber gains came in all segments, including retail prepaid and postpaid activations and activations through resellers.
Rising revenues were driven by the subscriber gains as well as by double-digit growth in data-service revenues as more subscribers opt for data-capable devices such as smartphones and keyboard-equipped feature phones.
In devices, the company reported that iPhone sales slipped sequentially to 4.1 million in the fourth quarter from the previous quarter's 5.2 million, which was the first full quarter of sales for the new iPhone 4. iPhone sales were nonetheless the second highest of any quarter and exceeded fourth-quarter 2009 sales of 4.1 million. The best-ever iPhone-sales quarter was the third quarter.
Overall fourth-quarter sales of more than 7.4 million integrated devices, which include iPhones and other smartphones, were the second highest of any quarter ever, said chairman/CEO Randall Stephenson. The devices, defined as any phone with a QWERTY or virtual keyboard, accounted for 80 percent of postpaid phone sales in the quarter, bringing the percentage of the carrier's 68 million postpaid subscribers with integrated devices to 61 percent, up from a year-ago 46.8 percent.
In announcing sales of other data-capable devices, the carrier said fourth-quarter sales of iPad and Galaxy tablet hit 442,000 through company-owned outlets and the company's website. All are equipped with 3G for use with prepaid data plans. The carrier doesn't sell Wi-Fi-only models through its outlets.
Tablets, said chairman/CEO Randall Stephenson, will be a "significant driver" of revenue growth. "This thing has a lot of room to run," he said in an investors' conference call.
Data usage by users of tablets, smartphones, and other integrated devices drove a fourth-quarter 27.4 percent gain in data revenues to $4.9 billion, or 35.5 percent of wireless service revenues of $13.8 billion. Service revenues exclude $1.38 billion in sales from handsets and other hardware to end users.
Operating income from wireless slipped 3.2 percent in the quarter to $3.47 billion as wireless margins declined to 22.9 percent from a year-ago 25.9 percent. The full-year operating income, however, rose 10.3 percent to $15.3 billion compared with full-year 2009.
Another factor raising revenues was the continued growth in the number of connected devices, which include e-readers, netbooks and other devices with embedded cellular as well as cellular-equipped telematics systems. The number of connected devices rose to 1.5 million in the quarter. Connected-device growth is "going to accelerate as we move into 4G capabilities," Stephenson said.
As for the first-quarter outlook Stephenson said the loss of iPhone exclusivity "is going to create some volatility" during the first part of the year and that the impact could be hard to predict, but he said he was optimistic that AT&T's wireless business "will grow over the course of the year." He pointed to an aggressive expansion of Android phones, the addition of Windows smartphones, and BlackBerry phones that he said are "getting traction." AT&T is "really starting to feel good about the network situation," he added, referring to capacity enhancements.