AT&T added 1.3 million subscribers in the second-quarter and said net income increased 30 percent as the company benefited from a surge in wireless data use. The operator posted net income of $3.77 billion, or 63 cents a share, up from $2.9 billion, or 47 cents a share in 2007. AT&T's wireless business, which is the exclusive operator of the iPhone in the U.S., saw its earnings jump 91 percent as revenue increased 16 percent. Subtracting merger-related costs, profits increased 39 percent.
Still, the 1.3 million net new customers added was down 8.4 percent from last year and below Verizon Wireless' 1.5 million subscribers it added during the second quarter. Verizon Wireless released some preliminary results yesterday. Churn dropped to 1.1 percent from 1.2 percent. Revenue from wireless data service increased 52 percent during the quarter, while ARPU (average revenue per user) also increased to 3.5 percent.
Meanwhile, Apple's new iPhone 3G, which went on sale earlier this month, might not boost earnings significantly in the third quarter as AT&T is now subsidizing the device significantly to make it available for $199. It's subsidy bill might reach as high as $720 million, and AT&T already warned that subsidy costs would hurt earnings by 10 cents to 12 cents a share this year and in 2009.
- check out the WSJ (sub. req.)
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