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

Related Articles:
AT&T adds 780,000 postpaid subs in Q4, sells record 10.2M smartphones
Verizon's profit surges as postpaid additions keep flowing in Q1
AT&T sold a record 10M smartphones in Q4
AT&T's de la Vega: We're on pace for 'record' smartphone sales in Q4
AT&T to expand LTE network to 300M POPs, deploy at least 40,000 small cells
AT&T impresses with 4.7M iPhone activations, but disappoints with low net adds
AT&T follows Verizon with 'Mobile Share' shared data plans

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

Sponsored by ADI

What if we were always connected? With the help of our advanced wireless technology, even people in the most remote places could always be in touch.

What if there were no ocean, desert, mountain or event that could ever keep us from telling our stories, sharing discoveries or asking for help? ADI’s next-gen communications technology could keep all of us connected.

Suggested Articles

AT&T has shifted its Cricket prepaid brand to a 100% authorized retailer model, according to Wave7 Research.

The FCC decided to extend the timeline for responding to Huawei's application for review until December 11.

With well over 100 5G networks launched worldwide, the multi-year 5G infrastructure cycle is well underway beyond the initial early markets.