iPhone Sales Dominate AT&T's Wireless Business - InformationWeek

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09:57 AM

iPhone Sales Dominate AT&T's Wireless Business

AT&T's second-quarter earnings show strong growth in its wireless business, with 5.1 million smartphones activated between April and June.

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There's no need to worry about AT&T's profitability and long-term outlook. During the second quarter of 2012, AT&T notched its best-ever margins, huge growth in ARPU, new customers across every segment, its lowest churn rate ever, and massive smartphone sales.

AT&T generated revenues of $31.6 billion during the second quarter and earned $3.9 in net income. Both of these numbers show gains compared to the year-ago and previous quarters. During the second quarter, AT&T's wireless unit generated 52% of the company's revenue and its wireline voice/data services units combined generated 46% of the company's revenue.

Looking at AT&T's wireless unit, it's clear that Americans are crazy for smartphones. The company sold 5.1 million smartphones during the quarter, pushing its total smartphone customers to an incredible 43.1 million. According to AT&T, 61.9% of all its post-paid customers are using smartphones. That means 13.7% of all Americans are using a smartphone on AT&T's wireless network.

[ AT&T's new Mobile Share plan is geared more toward consumers than enterprises. Read about it at AT&T's Shared Data Not For The Enterprise. ]

In comparison, Verizon's smartphone penetration just surpassed the 50% mark.

AT&T said that smartphones represent 77% of all postpaid device sales during the quarter. Amazingly, 88% of smartphone subscribers are on FamilyTalk or business plans. Tethering and tiered data plans are becoming more and more popular. AT&T added 496,000 tablets, laptop dongles, mobile hotspots, and tethered devices, for a total of 6.3 million of such hardware devices using its data network. Approximately 27 million, or about two-thirds, of all smartphone subscribers are on tiered data plans.

Breaking down those smartphones sales, Apple's iPhone continues to lead the way at AT&T. Of the 5.1 million smartphone sales during the quarter, the iPhone accounted for 3.7 million--or 73%--of all smartphones sold between April and June. Android and Windows Phone smartphones combined sold 1.4 million, with approximately 1.1 million for Android and 0.3 million for Windows Phone.

Putting that into perspective, AT&T sold twelve times as many iPhones as Windows Phones, and more than three times as many iPhones as Android smartphones.

The company added a total of 1.3 million new customers for the period, including 320,000 of the more valuable postpaid type. Postpaid churn (the rate at which customers leave AT&T for competitors) dropped to 0.97% and total churn dropped to 1.18%. Postpaid wireless subscriber ARPU (average monthly revenues per subscriber) jumped 1.7% to $64.93. AT&T reported total connections of just over 105 million.

AT&T spent a lot of money improving its existing HSPA+ network and expanding its LTE 4G network. Despite these massive capital expenses, AT&T's doing just fine.

At this year's InformationWeek 500 Conference, C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.

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