AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

Summary: Worries about Verizon's iPhone hitting AT&T's financial results appear to be overblown. AT&T topped Wall Street estimates for the first quarter and even added postpaid subscribers contrary to analyst projections.

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Updated: Worries about Verizon's iPhone hitting AT&T's financial results appear to be overblown. AT&T met Wall Street estimates for the first quarter and even added postpaid subscribers contrary to analyst projections.

AT&T reported first quarter earnings of $3.4 billion, or 57 cents share, on revenue of $31.2 billion, up 2.3 percent from a year ago (see preview).

As expected, AT&T added subscribers due to tablets and e-readers. The big news here, however, is that AT&T added 62,000 net postpaid customers. That sum is well off previous quarters, but analysts were expecting AT&T to lose about 57,000 postpaid customers. Meanwhile, iPhone churn was stable. In other words, that mass exodus of AT&T iPhone users going to Verizon never happened.

AT&T CFO Rick Lindner said the impact of the iPhone going to Verizon had was "significantly less than feared" by the press, analysts and even the company.

Lindner, who is retiring, also did a little of chest thumping about AT&T's ability to fend off Verizon.

I think one of the most surprising areas, perhaps, is the fact that iPhone churn basically stayed flat. It did not increase. And I think as you think about what drove that and what caused those results, frankly I think it had less to do with customers being under contract. Of course, we always work hard with our upgrade policy to keep customers under contract and we do believe that it helps overall churn levels. But the fact is that it was well known for months and quarters in advance that another carrier would launch the iPhone. And yet, we continued to see customers upgrade their devices, enter into new contracts in the third and fourth quarters last year in record numbers, and that continued into the first quarter of this year when the phone was available on another carrier. And the reality is, even if customers were under contract, they had the ability to break that contract, pay a termination charge, and most likely take that device that they had and sell it and recover most, if not all, of that contract termination. So I don't think having customers under contract had that large of an impact. You have to remember the iPhone is a device that carries a lot of data usage and a lot of traffic. For heavy data users, being on our network, having a faster data experience, having simultaneous voice and data, having the ability to use that device not just in the U.S. but around the world, were important to the iPhone customer base.

AT&T also did a good job of diversifying its smartphone base. Of the smartphones added in the quarter, 40 percent of them were Android, RIM and Windows Phone 7 devices.

On a conference call with analysts, Ralph de la Vega, CEO of AT&T Mobility, said:

We also had a strong quarter with other smartphones, selling more than 2 million other smartphones this quarter. That's twice as many as we added in the first quarter of 2010. This was driven by BlackBerrys, Windows Phone 7 devices, and significant growth in new Android models. In fact, during the last six months, our monthly sales of Android devices have more than doubled. We still see a lot of upside here. About 46% of our postpaid base uses smartphones today, but our smartphone sales rate is approximately 65%. This quarter, we also began breaking out the number of branded computing subscribers added to our network. These are devices such as tablets, air cards, and netbooks.

Among the key data points:

  • AT&T sold more than 5.5 million smartphones in the quarter. Of that figure, 3.6 million iPhones were activated. AT&T didn't break down whether these iPhones were iPhone 4 or inexpensive 3GS versions.
  • The company added 322,000 tablets to its network in the first quarter and 421,000 connected devices overall.
  • Churn in the first quarter was 1.36 percent, up a bit from 1.32 percent in the fourth quarter. Postpaid churn was 1.18 percent, up from 1.15 percent in the fourth quarter.
  • AT&T added total wireless subscribers of 2 million. This figure includes phones, tablets, e-readers, security systems and fleet management systems.

Looking at AT&T's first quarter it's apparent that the company has taken Verizon's best punch with its iPhone.

In a statement, CEO Randall Stephenson, who has spent much of his time lately stumping for the T-Mobile acquisition, said AT&T is off to "a very solid start to the year."

Other key data points:

  • First quarter capital expenses were $4.2 billion.
  • The company had 97.5 million wireless connections in service. Of that sum 68.1 million were retail smartphone customers.
  • Wireless revenue was $15.3 billion in the first quarter, up 10.2 percent from a year ago.
  • AT&T added 218,000 U-verse TV subscribers and now has 3.2 million customers. U-verse broadband additions were 175,000 in the first quarter.
  • AT&T business revenue was $9.3 billion, down 4.5 percent from a year ago. Business IP data revenue, however, was up 8.5 percent.

Topics: AT&T, Hardware, Laptops, Mobility, Smartphones, Tablets, Verizon

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19 comments
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  • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

    I think this proved that most of the talkbackers who constantly laughed at non-iPhone platforms as trolls or ignorant.

    Also an interesting point here is the people who laughed and thought that AT&T's death is near are also as ignorant and doing nothing but trolling then.

    Final thing let us see how many people would move away from AT&T once their contracts are over.
    Ram U
    • Bring on the Haters!

      @Rama.NET Haters gonna keep on hating, just watch. As a happy and loyal iPhone4 and AT&T user, I was slightly worried about AT&T sales after the Verizon iPhone launch. Those worries are put to rest. I am looking forward to hearing from all the AT&T haters on this one.
      Bates_
      • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

        @Bates_ Bates, Bates, Bates. Stop being a hater, will ya?
        Narg
      • why?

        @Bates_
        Why on earth would you be concern about at&t sales after the verizon iphone launch unless you own stock in at&t or is employed by at&t and fear losing your job?
        rengek
      • @Bates_

        I agree with the other reply from rengek, wouldn't you get better service if due to lower network load if less people used the iPhone on At&T.
        anono
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @Rama.NET
      Count me in as a new iPhone 4 AT&T user. I cancelled my Tmobile contract and sold POS Samsung Galaxy S phone... 3g speed on AT&T is fast, on Tmobile 3g felt more like EDGE.

      Have fun with your android devices... have fun with those apps that work on DROID but won't work on HTC but might work on Samsung

      Oh and have fun on the older versions of Android cuz your carrier dictates your OS not GOOGLE.
      Hasam1991
      • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

        @Hasam1991 <br>Ok, you assumed that I use Android. Very funny. I use iOS (iPhone 4, iPad1), Android (Motorola Atrix 4g, Evo 4g, Galaxy Tab -Android 2.2) and Windows Phone 7 (Focus, Quantum, and HD7). I think I'm qualified to talk about all the platforms. show an app that is written using plain Google suggested Framework that works on HTC and not on Samsung, please. Of course I know you can't.
        Ram U
      • Why do you need so many platforms? Why no BadaOS phones among them?

        @Rama.NET: Samsung's BadaOS sells millions every quarter and people say that this is really good OS. Is it true?
        DDERSSS
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @Rama.NET No I think the point is service not iOS haters. Both ATT and VZW have the iphone4 now. Both have Android. The rub is VZW has more consistent USA coverage. ATT works everywhere in the world.
      LarsDennert
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @Rama.NET

      I think we need to wait until next year to really see if there will be an serious exodus of iPhone users. Keep in mind iPhone 4 users are locked in until 2013, unless they are willing to pay the exorbitant ETF.
      Masari.Jones
  • Early Termination fees anyone?

    AT&T's customers are locked in until their contracts end. We'll have to wait for that to happen before we see any mass exodus.
    wolf_z
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @wolf_z

      'Wait until their contracts expire, then everyone will flee at&t and it will die'.....this must be like some kind of secular version of the Rapture....i.e. the 'great world shattering event' that everyone is waiting for but which never actually arrives.

      There is never going to be any 'mass exodus' from at&t, in fact the overwhelming majority of customers are pretty happy with the service they get, and most of those who aren't have already left.
      Doctor Demento
      • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

        @Doctor Demento
        Correct. Count me into the Pro AT&T camp. I am with them even before Cigular latter new AT&T acquired. Even I kept the same number since 1997, thats when I first got my mobile phone from AT&T even though I moved to various cities. I am totally happy with them.
        Ram U
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @wolf_z
      I'm actually going to add more lines and new contracts just to get the newest and latest gadgets!! I doubt many people will leave...
      Hasam1991
  • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

    AT&T satisfaction depends a lot on where you are. My friends from LA and NY are amazed how well their iPhones work here compared to at home.

    We are very happy with U-Verse, works much better than what we had before. Time-Warner set the bar pretty low and when Comcast took over then slid right under it.

    DirectTV was far worse, so bad we canceled early -- AT&T rebates covered most of the cost of the switch and we've never regretted it.

    Even if you don't care about TV, look into the minimal U-Verse TV package for the enhanced (16-25 Mbps) DSL that comes along with it. This is a big step up from the standard DSL and cable internet and has been 100% reliable for over a year now.

    Although the cable internet (Time-Warner/Comcast) was faster than standard DSL when it worked, all those 0 bps periods made it far less useful. AT&T DSL stayed up all through Ike's aftermath -- was back on line as soon as I got the backup generator running. The cable internet wasn't back until two weeks after utility power was restored which was a month after the storm.

    Whey you get down to it, Southwestern Bell was the most successful of the breakup companies and has taken back most of the pieces to restore AT&T, although I never really understood the desire to resurrect the AT&T brand, best summed up as "great technology stuck with a marketing department that couldn't sell eternal life".

    AT&T customer service is at least as bad as Time-Warner/Comcast/DirectTV but we've needed it orders of magnitude less often.
    wkulecz
  • The only people surprised by this are the tech pundits

    and AT&T haters who imagined up this huge pent up demand for Verizon with it's "you can't make a call and do data at the same time" network, and crappy 3G speeds. Because Verizon has better cell coverage in parts of New York city and San Francisco.
    fr_gough
    • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

      @frgough@... I agree with you but Verizon's 4G network is simultaneous so that argument is weakening.
      LarsDennert
  • more stats

    What I like to see is more granular statistics like what was the churn rate in cities like NY and SF where at&t have the worse coverage. If you can show how bad it is then you can publicize it enough to where at&t will make improvements in those areas. Otherwise these numbers will just say to at&t's board "oh everything is ok so we don't need to upgrade jack squat".
    rengek
  • RE: AT&T takes Verizon's best punch well; adds postpaid subs, activates 3.6 million iPhones

    and WM7 says "Do you need me now?"
    alphaxi3