AT&T's first-quarter net income fell 9 percent, but the company's wireless growth helped the largest telecoms company in the United States maintain solid footing despite the weakening economy. AT&T said it earned $3.1 billion in the quarter, down from $3.5 billion in the year-ago quarter. Company-wide revenue fell slightly, to $30.6 billion from $30.7 billion in the year-ago quarter, and came in under analysts' estimates of $31.1 billion. However, AT&T's wireless business saw earnings rise 13 percent and revenue jump 8.8 percent from the year-ago quarter.
Net additions: AT&T Mobility--the carrier's wireless division--had 1.2 million net wireless subscriber additions in the first quarter, with 875,000 postpaid net adds, which is up 24.1 percent year-over-year. AT&T now has 78.2 million total wireless subscribers, up 6.9 million from the year-ago period. The company recorded a whopping 1.6 million iPhone 3G activations in the quarter and said 40 percent of those were new customers to AT&T.
Churn: Postpaid churn for the first quarter was 1.2 percent, stable from the year-ago quarter and down from 1.6 percent in the fourth quarter of 2008.
ARPU: Total postpaid ARPU increased 2.1 percent year-over-year to $59.21. This is down slightly from $59.59 in the fourth quarter of 2008, but marks the ninth consecutive quarter that AT&T has posted a year-over-year increase in postpaid ARPU.
Wireless data revenue: AT&T said that wireless data revenues jumped by $884 million, or 38.6 percent, above the year-ago quarter to $3.2 billion. Data made up 27.2 percent of AT&T's first-quarter wireless service revenue.
iPhone tidbits: According to analyst Gene Munster, AT&T's 1.6 million iPhone activations in the quarter will translate into 3.7 million iPhone sales for Apple in the quarter, above Wall Street expectations. Apple is set to announce its earnings after the market closes today. Apple and AT&T have also started a new advertising campaign aimed at small businesses, emphasizing some of the less-frivolous applications entrepreneurs can use.
Interestingly, AT&T CFO Rick Lindner declined to comment during the carrier's quarterly conference call on speculation about new iPhone models. Rumors have been swirling of a new iteration to be released this summer.
Lindner also said the company was seeing consumers move from pay-per-use data offerings to unlimited data packages as a way to reduce their own costs. He said AT&T was looking into pricing options to get more consumers to move to data packages.
Finally, Linder said AT&T was both trying to manage costs and maintain its investments. "We are focused on the cost side of the business and on generating margins and cash flow," he said on the conference call. "But at the same time, we are investing in areas that we think are important for the future," such as wireless spectrum, products like the iPhone and in relationships with device manufacturers.
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