AT&T adds only 296,000 postpaid subs in Q1, but sells 6M smartphones

AT&T Mobility (NYSE:T) sold 6 million smartphones in the first quarter but its postpaid net adds reached just 296,000. The figure is far below Verizon Wireless' (NYSE:VZ) 677,000 net retail postpaid customer additions in the first quarter.

Click here for key slides from AT&T's first quarter earnings presentation.

Nevertheless, AT&T was able to hold its wireless EBITDA service margin at 43.2 percent, up from 42.3 percent in the same quarter a year ago. In addition, the firm activated 4.8 million iPhones in the quarter.

Interestingly, AT&T also said it is ahead of pace in its LTE network deployment, which is part of its Project VIP (or Velocity IP) network upgrade project. The company currently covers 200 million POPs with LTE and plans to have 90 percent of its 300 million POP coverage plan completed by year-end. In addition, the company adjusted its capital expenditures for Project VIP to $20 billion for 2014 and 2015, down from its initial $22 billion projection. AT&T CFO John Stephens said the carrier lowered the figure due to refined planning and better integration.

AT&T saw reseller net adds decline by 242,000. Stephens attributed this to resellers rationalizing no usage and low-usage accounts. However, he noted that this decline had little impact on the company's revenues because reseller revenue was up 50 percent year-over-year.

AT&T also touted its Mobile Share plans, saying it had 3.3 million Mobile Share shared data accounts at the end of the first quarter, which the operator said covers about 10 million devices. Nevertheless, according to TBR Research, Verizon's Share Everything shared data plans are outperforming AT&T's Mobile Share plans and will likely continue to do so. Instead the research firm believes AT&T will capitalize on its M2M segment to drive additional revenue growth over the next two years.

Here's a rundown of other key metrics:

Subscribers: AT&T had 107.3 million subscribers at the end of first quarter, up from 103.9 million customers at first quarter of 2012. The carrier's postpaid churn was 1.04 percent, down from 1.1 percent in the same quarter a year ago. Total churn also was down 1.38 percent vs. 1.47 percent in the first quarter of 2012.                                        

Financials: AT&T's wireless revenue was $16.7 billion in the quarter, up from $16.1 billion in first quarter of 2012. The carrier's wireless services revenue was $15.1 billion, up from $14.6 billion in the year-ago quarter. Data revenues were $5.1 billion, up 21 percent from $4.2 billion in first quarter of 2012.

Mobile Share: AT&T counted 3.3 million Mobile Share shared data accounts at the end of the first quarter, which the carrier said covers about 10 million devices. More than 2.5 million of those accounts are on the 10 GB or higher plan. In addition, 15 percent of customers are switching from AT&T's unlimited plans to its Mobile Share plans.

Smartphones: The company added 1.2 million new smartphone subscribers, and AT&T said smartphones now account for 88 percent of the carrier's postpaid phone sales. The company's 6 million smartphone sales in the quarter represented a record for the first quarter for AT&T.

ARPU: Postpaid phone-only average revenue per user was up 2 percent, AT&T said. Data ARPU was up 18 percent. Total postpaid ARPU, including tablets and other non-phone devices, was up about 1 percent.

Connected devices: AT&T added about 431,000 subscribers on connected devices, and those devices were primarily security and tracking devices.

For more:
- see this release

Special Report: Wireless in the first quarter of 2013

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Updated: This article was updated to include total churn and postpaid churn figures.