With 1.9M total net adds, AT&T pushes growth with connected devices

AT&T (NYSE: T) touted the strength of its connected devices unit today during its first quarter 2010 earnings call. The company reported an increase of 1.9 million net wireless subscribers, bringing its total base to 87 million. AT&T noted that during the quarter it activated 2.7 million iPhones but attributed its strong growth to the 1.1 million in connected devices such as ereaders and other products that it added to its network. Here's a rundown of the carrier's other key metrics:

Financials: AT&T's consolidated revenue in the quarter was $30.6 billion, up $78 million from the year-earlier quarter. Operating expenses were $24 billion vs. $24.8 billion. Operating income was $6 billion, up from $5.7 billion in the first quarter of 2009. The operator's operating margin was 19.6 percent, up from 18.8 percent in the year-earlier quarter.

Subscribers: AT&T added 1.9 million net wireless subscribers for a total of 87 million. There were 1.1 million connected devices added in the quarter to reach 5.8 million in total. However, postpaid net adds were just 512,000 to reach 65.1 million. In a research note, Technology Business Research noted that connected devices are propelling the company's net additions, and served to mask the relative weakness in the company's postpaid and reseller segments. TBR believes that as new subscriber growth slows, AT&T will increasingly rely upon connected device sales to drive growth in 2010.

Churn: Postpaid churn was 1.07 percent, down from 1.15 percent in the year-earlier quarter. Total churn was 1.3 percent vs. 1.56 percent in the first quarter of 2009.

Data revenue: Data revenue increased $947 million from the year-earlier quarter for a total of $4.1 billion in first quarter. AT&T wireless subscribers on postpaid data plans increased more than 28 percent over the past year. The company said it added 3.3 million 3G postpaid integrated devices in the first quarter. In addition, there were 143 million text messages on AT&T's network in the quarter. MMS messages doubled to approximately 2.4 billion. TBR noted that data now makes up 32 percent of  AT&T's wireless service revenue, which indicates the carrier is shifting away from its dependence on voice for revenue.

During today's earnings call, AT&T CFO Rick Lindner said the company carries half of the wireless data traffic in the U.S. He added that AT&T's HSPA 7.2 network technology is performing well, with a 32 percent to 47 percent increase in data download speeds where the company has added fiber backhaul. The company plans to continue to aggressively deploy backhaul and expand Ethernet access to cell sites.

When asked about tiered data pricing, Lindner said he believes limited spectrum and limited capacity will influence pricing models in the future. "The industry has to develop models that are understandable to customers and ... that is fair to customers," he said.

For more:
- see this release
- see this FierceWireless 1Q earnings page

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