AT&T (NYSE:T) executives said that, although they expect some volatility in the months ahead as competitor Verizon Wireless (NYSE:VZ) rolls out a CDMA iPhone, AT&T still expects to aggressively add new subscribers in the coming year.
During AT&T's fourth-quarter earnings conference call, CEO Randall Stephenson said that based on the company's addition of 4.1 million Apple (NASDAQ:AAPL) iPhone subscribers in the fourth quarter--a period during which it was well known that Verizon Wireless likely would launch a CDMA iPhone and end AT&T's exclusivity with the device--he believes that AT&T will fare well after Verizon begins selling the iPhone. However, he admitted the real impact is difficult to predict. "I feel confident we can grow through this disruption ... but it may be rocky and hard to predict."
Stephenson added that AT&T has been preparing for this situation by increasing its focus on Android-based smartphones as well as Microsoft's (NASDAQ:MSFT) Windows Mobile 7 and Research In Motion's (NASDAQ:RIMM) BlackBerry devices. "We have not been aggressive in Android, but we are bringing it into the mix aggressively this year," he said. "You can expect us to be a heavy participant in the Android market this year."
Stephenson also said the company has made progress with its wireless network upgrades, and over the past 45 days has significantly expanded its network capacity in markets such as Manhattan and San Francisco.
However, when asked about the company's amount of fiber backhaul--which helps enable the delivery of large amounts of data from the cell site to the switch--Stephenson said that the percent of the network that currently has fiber backhaul is in the "low to mid 20s." He said he expects that to increase to 65 percent to 70 percent of the network by year-end.
AT&T executives also touted the growth in tablets on their network. The company activated 442,000 tablets--primarily the iPad--but executives expect that figure to increase as more tablets become available this year.
Here's a breakdown of AT&T's key metrics for the quarter:
iPhone: AT&T activated 4.1 million Apple iPhone users in the quarter, down from 5.2 million in the third quarter. The company said that 90 percent of its iPhone customers are under contract.
Data: AT&T's wireless data revenues topped $4.9 billion, up from $3.9 billion in the year-earlier quarter. Data average revenue per user was $22.64 up from $19.22 in the year-earlier quarter. Click here for more.
Net adds: AT&T recorded more than 2.8 million net adds for a total of 95.5 million subscribers. Full-year net adds were 8.9 million, the company's best ever. AT&T's retail net adds included 400,000 postpaid and 307,000 prepaid. Reseller net adds were 595,000. The company also added 1.5 million connected devices, and of those 442,000 were iPad and Android-based tablets.
Churn: Total churn was 1.32 percent, down from 1.42 percent in the fourth quarter of 2009. Postpaid churn was 1.15 percent.
ARPU: Postpaid average revenue per user was up 2.2 percent to $62.88.
Financials: Wireless service revenues increased 9.6 percent to $13.8 billion in the fourth quarter. Total wireless revenues, including equipment sales, were up 9.9 percent year over year to $15.2 billion. Meanwhile, margins continued to face some pressure. AT&T's fourth quarter operating income margin was 22.9 percent, down from 25.9 percent in the year-earlier quarter.
- see this release
- see this FierceWireless Q4 earnings page
- see these slides from AT&T's fourth quarter presentation
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