AT&T Mobility (NYSE:T) once again experienced strong quarterly subscriber growth, largely thanks to Apple (NASDAQ:AAPL) and the launch of the iPhone 4. AT&T reported that in the second quarter of 2010 it gained a net 1.6 million subscribers for a total of 90.1 million subscribers. The company activated 3.2 million iPhones in the quarter, its largest number of quarterly iPhone activations ever. The carrier said around 27 percent of those activations were customers new to AT&T.
The company reported consolidated revenues of $30.8 billion, up from $30.6 billion in second quarter of 2009. Operating expenses were $24.7 billion in the quarter, down slightly from the $25.1 billion in the previous year's quarter, and AT&T's operating income margin was 19.8 percent, up from 18 percent in the year-ago quarter. Here's a breakdown of the other key metrics:
Net adds: AT&T activated 3.2 million iPhones in the second quarter, but the company didn't say how many of those iPhones were the iPhone 4, which AT&T only started offering June 24. AT&T's quarter ended June 30. Nevertheless, the company did say that pre-orders of the device were 10 times higher than the first day of pre-ordering for the iPhone 3GS. In addition, the company said that retail postpaid net adds totaled 496,000, for a total of 67 million. Analyst firm Technology Business Research noted that without the strong iPhone growth, AT&T would have posted a decline in postpaid net adds for the quarter.
ARPU: AT&T's postpaid subscriber average revenue per user increased 3.4 percent from the year-earlier quarter, to $62.63. The carrier said its postpaid data ARPU reached $21.07, up 18.6 percent vs. the year-earlier quarter.
Devices: AT&T continued to show strong growth in connected or emerging devices such as ereaders. The company had 896,000 net adds in the quarter for a total of 6.7 million connected devices. On the integrated device front, AT&T increased its number of 3G integrated device customers by 2.9 million for a total of 29.7 million. This is an increase of 98.2 percent year over year. The company said 53.2 percent of its 67 million postpaid customers have integrated devices. AT&T CFO Rick Lindner said he believes this percentage could climb to the 70 percent to 80 percent range.
Churn: Postpaid churn was 1.01 percent, down from 1.07 percent in the year-earlier quarter. Total churn was 1.29 percent vs. 1.48 percent in the second quarter of 2009.
Data revenue: Wireless data revenues increased to $4.4 billion, up $936 million from the year-earlier quarter. The number of AT&T subscribers with wireless data plans was up 24 percent over the previous year. Lindner said that early results from the company's move to tiered data pricing plans have been encouraging. In particular, he said the company had expected a lot of customers to migrate to the lower price point ($15 per month for 200 MB of data) but a large portion migrated to the $25 per month for 2 GB of data plan. In addition, he said AT&T is seeing benefits from lowering the point of entry so customers can move into the integrated device category and try data services. "We believe over time they will migrate to higher-tiered plans," he said.
Network: The company did provide some insight into its HSPA network improvements. In particular, AT&T said that in areas where it has upgraded the backhaul and has HSPA 7.2 in place, customers are seeing a 32 percent to 47 percent increase in download speeds. In New York City, the company said that 3G dropped calls have declined by 23 percent in Manhattan and 13 percent in the New York metro area since the fourth quarter of 2009.
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