AT&T third quarter on target: iPhone, Android split improves

AT&T's diversification from its reliance on the iPhone appears to be improving.
Written by Larry Dignan, Contributor

AT&T's third quarter earnings were in line with estimates as the company activated 4.8 million smartphones almost evenly split between the iPhone and non-Apple devices run mostly by Android.

The company reported third quarter earnings of $3.6 billion, or 61 cents a share, on revenue of $31.5 billion, down slightly from a year ago.

AT&T said it activated 2.7 million iPhones in the third quarter with 2.1 million non-Apple devices such as Android, Windows Phone 7 and BlackBerry. Android sales doubled for the company. It's unclear whether that diversification will remain though. AT&T's iPhone activations were off from the prior two quarters due to the launch of the iPhone 4S. In the second quarter, AT&T activated 3.6 million iPhones.

Indeed, the carrier already said it had a record number of iPhone activations since the launch of the iPhone 4S. separately, AT&T noted that it has activated 1 million iPhone 4S devices in five days. Also see: AT&T steps up Android push: Devices start to blend together

Overall, AT&T ended the quarter with 100.7 million subscribers. Postpaid net additions were 319,000. AT&T added 293,000 prepaid subscribers, more than 1 million connected devices and 473,000 accounts via resellers.

On a conference call with analysts, Ralph de la Vega, AT&T's President and CEO for Mobility and Consumer Markets, said:

We're off to a very fast start with the iPhone 4S. In fact, it has been our most successful launch in history, activating more than 1 million iPhone 4S' through Tuesday.

Other key points:

  • AT&T will have 15 cities covered with LTE by the end of the year.
  • "Our lower-priced plan continues to be a good entry point for many subscribers. And now that we offer a free iPhone with a two-year contract for the first time ever, the iPhone 3GS, we expect to broaden the smartphone base even more," said De La Vega.
  • Smartphone users make up 52.6 percent of AT&T's customer base.

Churn was 1.28 percent, down from 1.32 percent a year ago. Postpaid churn was 1.15 percent.

By the numbers:

  • Wireless revenue in the third quarter was $14.3 billion, up 4.3 percent from a year ago. Wireless data revenue was $5.6 billion, up 18 percent from a year ago.
  • AT&T said wireless operating margins were 29.6 percent in the third quarter, up from 23.1 percent a year ago.
  • Wireline consumer revenue was $5.3 billion, roughly flat with a year ago. AT&T added 176,000 U-Verse TV subscribers and now has 3.6 million accounts in service.
  • U-Verse broadband additions were 504,000 in the third quarter for a total of 4.6 million.

  • AT&T's enterprise wireline revenue was $9.3 percent, down 2.7 percent from the third quarter a year ago. AT&T is seeing growth in IP data, but sluggish voice and legacy data sales. Services such as hosting, VPNs and applications services were up 19.3 percent from a year ago.
  • Total wireline revenue was $15 billion, down 2.2 percent from a year ago.

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