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AT&T credits Q4 results to 1.9m iPhones

updated 08:30 am EST, Wed January 28, 2009

ATT Q4 2008 Results

AT&T today reported results for the fall quarter that it attributes directly to continued iPhone 3G sales. The company says that its net income dropped from $3.1 billion in late 2007 to $2.4 billion in 2008 but says that its overall revenue climbed 2.4 percent to $31.1 billion based partly on increases in wireless performance and considers the iPhone 3G a "success." The carrier activated 1.9 million of the devices on its network before the end of December and notes that it activated a total of 4.3 million of the newer Apple handsets since launch.

The heavily subsidized nature of the current iPhone ultimately cost AT&T $450 million in earnings but was countered by surges in wireless plans; while the average revenue per customer climbed only slightly to $59.59, revenue from wireless data use spiked 51.2 percent from year to year as users adopted iPhones and other smartphones in greater numbers. More than twice as many smartphones are on the network as there were last year, the company says. As a result, the company believes the iPhone is serving as a catalyst for a broader shift towards data on its cell network.

"The success of our iPhone 3G launch has driven wireless growth and helped redefine the wireless data space," AT&T chief Randall Stephenson says.

The provider specifically notes that iPhone customers should be profitable in the long run, as the average revenue per subscriber is about 60 percent higher than typical customers while the churn rate, or customers who leave the service, is much lower than for the rest of the network. About 40 percent of the iPhone activations during the fall were from users either converting from a rival carrier or new to cellphones.

The iPhone sales are a drop from the all-time peak of 2.4 million in summer but blow past Verizon's performance with the BlackBerry Storm; AT&T's opponent is estimated to have sold just 500,000 Storms in its one month of 2008 sales and a similar amount in January, suggesting the company wouldn't have matched iPhone sales in a full quarter.

Other growth came from AT&T's partly fiber optic-based U-verse Internet and IPTV services, while some of its reduced potential came from leftover merger costs, hurricanes and the impact of the economy on foreign exchange rates. A net 2.1 million cell customers joined AT&T regardless of platform, with 1.3 million of those being regular subscribers while the remaining amount were prepaid users. It currently leads the US cellphone market with 77 million total users but should be eclipsed once Verizon finishes integrating Alltel.

by MacNN Staff



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