iPhone sales drive AT&T sub growth
Apple's storming success in the smartphone market last quarter had a knock-on effect for exclusive US handset partner AT&T, driving a record quarterly gain in wireless subscribers.
The carrier said it added 1.9 million net wireless subscribers in total, lowering its churn to 1.07% for postpaid and 1.30% for prepaid.
It activated 2.7 million iPhones during the quarter, with around 891,000 purchased by new subscribers.
Bernstein Research analyst Craig Moffett estimates the iPhone drove about 174% of post-paid net additions.
However, the majority of additions were prepaid customers, with AT&T recording just 512,000 post-paid net adds, down from 897,000 the year before.
The results highlight AT&T's reliance on its precarious iPhone exclusivity in the US. Should the company lose this edge its impact on earnings could be significant.
The slowing rate of subscriber growth was reflected in AT&T's bottom line. The company posted a net profit of $2.5 billion (€1.8 billion), down from $3.1 billion the year before – although earnings were impacted by a pre-disclosed $995 million charge.
And revenues rose by just 0.3% to $30.6 billion.
In an interview with the Wall Street Journal, AT&T Finance Chief Rick Lindner acknowledged that subscriber additions are slowing, but said the company is looking to expand its range of devices to improve the situation and loosen its reliance on Apple.
These new devices will include e-readers and netbooks as well as alternative handsets, he said.
Apple yesterdayrevealed that iPhone sales had soared 131%, sparking a 90% leap in 1Q earnings.
Nearly every analyst tracking Apple have upgraded their forecasts on the back of the result, Barron's columnist Eric Savitz said, with the average target hovering at around 300.