The iPhone once again boosted AT&T's bottom line, keeping the company as a whole from recording a loss worse than the 9 percent dip in profits it recorded in the first quarter. As the operator gains a significant scale of iPhone users, some interesting trends are emerging.
The company, suffering from the worsening economy, added 1.2 million net new wireless customers in the quarter and posted $3.1 billion in profits, down from the $3.5 billion it recorded during the same quarter in 2007.
But AT&T activated more than 1.6 million iPhone 3G devices during the quarter, and its overall wireless data revenue increased 38.6 percent to $3.2 billion. More than 40 percent of those new iPhone subscribers were new to the company, and AT&T said these customers tend to spend about 1.6 times more on wireless data services than other AT&T customers.
Perhaps more impressive was the fact that AT&T's gamble to deeply subsidize the iPhone is paying off. Margins that had once fallen to 33.5 percent after AT&T launched the subsidized iPhone 3G last summer, are now at nearly 41 percent. AT&T now has enough scale--4.5 million iPhone subscribers paying at least $70 per month--to push margins back up.
Other metrics reported by AT&T may be pointing to a maturing mobile data business for the operator. AT&T reported that, despite a large number of iPhone activations, its data ARPU (average revenue per user) only increased 18 cents to $16.48. Late last year, it was experiencing an 11-percent increase in data ARPU. Meanwhile, AT&T, for the first time in many quarters, didn't see a 50-percent or more growth in data revenue. It posted a 38.6-percent increase to $3.2 billion--a number AT&T partly attributed to its rather large mobile data base.
It will be interesting to see going forward if these metrics continue to slow and what they are attributed to. Part of the slowing this quarter, according to AT&T, had to do with subscribers moving away from pay-per-use data offerings (such as SMS) to unlimited offerings in order to save money. But the larger base of iPhone users means metrics can't move as dramatically.--Lynnette