Dallas – AT&T’s wireless operating income rose 3.4 percent in the third quarter to $4.6 billion on a 5.1 percent gain in operating revenues to $17.5 billion.
The wireless operating margin slipped to 26.4 percent from the year-ago 26.9 percent because of the cost to build out the LTE network and record smartphone sales, which are heavily subsidized.
The income and revenue gains came in part from a 46 percent spike in net new subscribers in the quarter to 989,000 from the year-ago quarter, though for the first nine months of the fiscal year, the number of net new subscribers fell 28.4 percent to 1.91 million.
AT&T also attributed much of the revenue and income gains to wireless data, which helped drive up average revenue per user by 3.1 percent in the quarter. Wireless-data revenue grew 17.6 percent to $5.5 billion out of total service revenues of $15.5 billion, up 3.7 percent.
Likewise, the quarter posted the best-ever third-quarter smartphones sales of 6.7 million, up from the year-ago 4.7 million but down sequentially from the second quarter’s 6.8 million, which was a second-quarter record. iPhone sales weren’t broken out.
All told, 75 percent of the carrier’s 50.6 million postpaid phone subscribers were using smartphones at the end of the quarter, up from the year-ago 66 percent of 44.5 million postpaid phone subscribers.
With the smartphone additions, a record 89 percent of postpaid phones in use were smartphones. Forty-two percent of postpaid smartphones are LTE-equipped, up from a year-ago 9 percent.
To further drive data usage, the carrier has expanded its LTE network to cover 250 million people in more than 435 markets, will expand it to cover about 270 million people by year’s end, and will make the LTE buildout “substantially complete” next summer to reach 300 million people, the carrier said.
In another data-related announcement, the company said that since Mobile Share plans were introduced a year ago, more than 16 million connections, or more than 22 percent of postpaid subscribers, have moved to the plans. The number of Mobile Share accounts reached 5.3 million in the third quarter with an average of about three devices per account, and 30 percent of Mobile Share accounts having signed up for higher-tier data plans of 10GB/month or more.
In other comments, the company said:
— It expect to close its acquisition of Leap Wireless in the first quarter of next year.
— Churn was stable, with postpaid churn falling to 1.07 percent from 1.08 percent and total churn falling to 1.31 percent from 1.34 percent, despite the increasingly competitive environment.
–For the first nine months of the fiscal year, segment income was down 0.4 percent to $13.9 billion on a 4.8 percent gain in operating revenues to $51.5 billion and a margin decline to 27.2 percent from 28.6 percent.