AT&T nears record with 2.7M net adds in Q4

Verizon Wireless' aggressive holiday ad campaign slamming the quality of AT&T Mobility's 3G network didn't stop customers from signing up for AT&T wireless service. The carrier rounded up 2.7 million net new wireless subscribers during the fourth quarter--the second highest quarterly gain in the company's history. 

However, issues surrounding AT&T's wireless network continue to be a sore spot for the carrier, and executives spent much of their quarterly conference call discussing what AT&T is doing to improve it. Specifically, AT&T will spend $18 billion to $19 billion on its network this year, notably above the $17.3 billion it spent in 2009.  This includes an increase of $2 billion for improving backhaul capacity.

On the revenue side, AT&T posted fourth-quarter wireless service revenues of $12.6 billion, up 9.2 percent from the same quarter in 2008. The carrier's operating income clocked in at $3.4 billion, up 24.7 percent over the year prior. Here's a breakdown of the rest of AT&T's key metrics:

Subscribers: AT&T added 2.7 million net new subscribers in fourth quarter, for a total of 7.3 million net new subscribers in 2009. The company's total subscriber base reached 85.1 million (still behind No. 1 carrier Verizon's 91.2 million). AT&T's net new postpaid subscribers totaled 930,000 in the fourth quarter and 4.3 million for the full year.

iPhone and iPad: Apple's iPhone continued to drive consumers to AT&T. The company activated 3.1 million iPhone users in fourth quarter, and more than a third were new to AT&T. During the conference call with analysts, AT&T executives said the new Apple iPad is a different model for AT&T because the company is not subsidizing the device and because customers will activate it online--thus, AT&T won't have the typical activation and billing costs. However, executives also said they believe iPad users will rely predominantly on WiFi, and therefore it won't drain AT&T's 3G network. "We will monitor the usage as the device gets out there," said Rick Lindner, senior executive vice president and CFO at AT&T. "If it turns out substantially different, we will adapt."

Emerging devices: AT&T's new emerging devices division also posted a strong quarter, adding more than 1 million new devices onto the network. AT&T executives said that, despite smaller ARPU than standard phones, such devices typically carry low churn numbers and high margins.

Data: AT&T's wireless data revenues hit $3.9 billion in fourth quarter, an increase of 26.3 percent over the year prior. Text messages increased 70 percent to 135 billion and multimedia messages doubled to more than 2 billion in the period.

ARPU:  Postpaid average revenue per user was $61.13, an increase of 2.6 percent over the year-earlier quarter. Postpaid data ARPU was $19.16.

Churn: Postpaid churn was 1.19 percent, down from 1.2 percent a year ago. Total churn was 1.44 percent, lower than the 1.64 percent AT&T recorded in the fourth quarter of 2008.

AT&T's stock remained relatively unchanged on the news, hovering at $25.74 in mid-afternoon trading.

For more:
- see this release
- see these metrics on AT&T's quarter
- see how AT&T compares with other wireless companies in Q4 earnings

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