AT&T Mobility (NYSE:T) reported a stunning 9.4 million smartphone sales in the fourth quarter, up nearly 60 percent year-over-year and nearly double its smartphone sales in the third quarter. The figure seems to prove once again that the operator's success in the smartphone arena isn't due solely to its exclusive deal with Apple (NASDAQ:AAPL) for the iPhone, which ended in the first quarter of 2011.
Click here for key slides from AT&T's earnings presentation.
However, the company's smartphone success comes with a downside: AT&T's wireless service margin dropped to 28.7 percent in the fourth quarter, down from 43.7 percent in the third quarter. For the year, AT&T reported wireless service margins of 38.1 percent, down from 40.7 percent in 2010. The company said it expects its wireless margins to improve in 2012 thanks to its new tiered data price plans that it unveiled last week (the company now offers 300 MB of data for $20, 3GB of data for $30 and 5 GB of data for $50) as well as other actions such as its new upgrade policy that it put into place last year.
AT&T also reported total wireless revenues, which include equipment sales, of $16.7 billion, up 10 percent year-over year and wireless services revenues of $14.3 billion, up 4 percent in the fourth quarter. The company had 2.5 million wireless net additions in the quarter, bringing its total wireless subscriber base to 103.2 million.
On the company's quarterly earnings call with investors and analysts, AT&T CEO Randall Stephenson championed the need for more spectrum and chastised the FCC for creating more confusion. Specifically, he said that if the FCC needs to take action and show more leadership, adding that companies like AT&T lack options for acquiring more spectrum if the FCC is not going to allow M&A activity such as AT&T's failed $39 billion acquisition of T-Mobile USA. "The FCC is intent upon picking winners and losers instead of making this market work," he said.
Here is a breakdown of other key metrics for the quarter:
Smartphones: The company sold 9.4 million smartphones in the quarter, and 7.6 million iPhones were activated. However, AT&T also sold twice as many Android smartphones as it did in the previous year's quarter. Also, 56.8 percent of AT&T's 69.3 million postpaid subscriber have smartphones, up from 42.7 percent a year earlier.
LTE Deployment: Stephenson said that the company ended the year with 74 million POPs covered with LTE and will have 80 percent of the U.S. covered with LTE by year-end 2013. In addition, he said that the company now has 80 percent of its network equipped with Ethernet backhaul to help speed data delivery. AT&T also added about 80,000 new antennas to its network and 30,000 carriers.
Tiered Data Plans: The company reported that 22 million of its 69.3 million postpaid subscribers are on tiered data price plans.
Data-only Devices: AT&T added 751,000 tablets, aircards and data-only devices to its network for a total of 5.1 million. Approximately 311,000 of those new subscribers were tablet customers.
Data Revenues: Data revenues increased 19.4 percent to $5.9 billion.
Subscribers: AT&T added 717,000 wireless postpaid subscribers, the largest increase in five quarters. The company added 159,000 prepaid subscribers and 592,000 customers came from resellers. The company also added 1.03 million connected devices.
ARPU: Postpaid average revenue per user was up 1.4 percent to $63.76
Churn: Churn was up slightly to 1.21 percent from 1.15 percent in the year-ago quarter.
- see this release
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