AT&T’s mobility segment gained more than half a million net postpaid wireless phone subscribers in the third quarter, while churn continued to remain low.
AT&T’s 645,000 net postpaid phone additions in Q3 included 151,000 accounts that the carrier had counted as losses in Q2 but was still serving under the FCC’s Keep America Connected (KAC) Pledge and who made payments in Q3.
Not including the KAC accounts it retained, AT&T still gained 494,000 net postpaid phone subscribers – significantly higher than the 101,000 reported in the third quarter of 2019.
The carrier also gained prepaid subscribers, with 131,00 net phone adds in that segment.
AT&T ended the third quarter serving 176.7 million wireless subs.
Declines in international roaming revenue because of less travel during COVID impacted AT&T again in the latest quarter, bringing wireless service revenues down 0.3% to $13.9 billion. AT&T estimates COVID-19 had a negative $450 million impact on wireless service revenue in Q3.
Still, overall mobility revenues were up 1.1% year over year to $17.9 billion, thanks to gains in equipment service revenue. The carrier recently debuted an aggressive iPhone 12 offer of up to $800 off with trade-in for both new and existing customers that reminded some of promo wars from years past.
While handset upgrade rates remained low in the third quarter at 3.5%, AT&T said pricier postpaid smartphones and more people buying data devices like wireless modems and hotspots boosted equipment revenue 6.4% year over year to $4 billion.
AT&T reported postpaid phone churn of 0.69% (that ticks up to 0.77% when the Keep America Connected paying accounts are excluded).
“Wireless postpaid growth was the strongest that it’s been in years with one million net additions, including 645,000 phones,” said AT&T CEO John Stankey in a statement. “Our strong cash flow in the quarter positions us to continue investing in our growth areas and pay down debt. We now expect 2020 free cash flow of $26 billion or higher with a full-year dividend payout ratio in the high 50s%.”
Revenues in AT&T’s Communications business were down 3.1% year over year to $34.3 billion, as Entertainment and Business wireline segments saw declines. WarnerMedia, meanwhile, saw revenues drop 10%.