AT&T Posts Best-Ever Smartphone Sales In Q4

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Dallas - AT&T posted its best-ever quarter in smartphone and computing-device activations in the fourth quarter, when it posted a 10 percent year-over-year gain in wireless revenues despite a 10.9 percent decline in net new subscriber additions.

In reporting fourth-quarter results, AT&T chairman/CEO Randall Stephenson also took time to blast the FCC for not making new spectrum available to capacity-constrained carriers. "Despite all of the speeches from the FCC, we're still waiting," he complained.

AT&T's conversion to 4G LTE will boost network efficiency by 30 to 40 percent, but that gain represents only about a year's worth of data-usage growth, due in large part to smartphone growth, he said.

And smartphone activations grew markedly in the fourth quarter, with AT&T activating 9.4 million smartphones, with 7.6 million of them being iPhones to best Verizon's fourth-quarter iPhone sales of 4.3 million. AT&T's Android sales doubled over the year-ago quarter.

The carrier's smartphone unit sales were 50 percent higher than the company's previous record for any quarter and were almost double that of the third quarter, the company reported. Eighty-two percent of postpaid activations were smartphone activations.

At the end of the quarter, 56.8 percent of AT&T's 69.3 million postpaid subscribers had smartphones, up from 42.7 percent a year earlier and 32.8 percent two years ago.

The company sees further expansion in smartphone penetration, with Stephenson contending that smartphones are platforms for new services such as home monitoring.

Nonetheless, in 2012, Stephenson expects new smartphone activations to flatten at 2011's level of around 25 million unless "some new iconic device comes out."

In branded computing devices, AT&T posted its best-ever quarter with activations of 571,000 tablets, USB data modems, and the like for a year-over-year increase of almost 70 percent. That brings AT&T's computing-device subscriber base to 5.1 million, up from a year ago 3 million.

Overall, the carrier expanded its subscriber base by 2.5 million net new subscriptions in the quarter, down 10.9 percent from a year-ago 2.8 million net new adds. AT&T ended the year with 103.3 million subscriptions, nearing Verizon's 108.7 million, including such connected devices as vehicle-telematics systems.

In wireless revenues, AT&T posted a 10 percent gain to $16.7 billion in the quarter, driven in part by a 19.4 percent gain in data revenues to $5.9 billion. For the year, wireless revenues were up 8.1 percent to $58.5 billion.

Growing smartphone sales had an impact on wireless operating margins, with segment operating income falling 27 percent to $2.52 billion for the quarter but rising 0.3 percent for the year to $15.3 billion. Though full-year wireless operating margin fell to 24.2 percent from 2010's 26.1 percent, AT&T forecasts margin growth to 40 percent in 2012, in part due to flattening sales of smartphones, which are more highly subsidized by carriers than feature phones.

In combining wireless, wireline, advertising solutions, and other business segments, AT&T posted a consolidated net loss of $6.7 million in the quarter compared to a year-ago net profit of $1.1 billion. For the year, consolidated net profits were $3.94 billion, down 80.1 percent.

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