AT&T activates 1.6M more iPhone 3Gs as data revenues jump

Posted:
in iPhone edited January 2014
AT&T said Wednesday that although first quarter profits slipped 9 percent, its wireless data revenues grew nearly 40 percent as it was able to achieve its third consecutive quarter of double-digit postpaid net subscriber additions on the back of 1.6 million new iPhone 3G activations.



For the quarter ended March 31, 2009, AT&T reported a profit of $3.1 billion or $0.53 per diluted share on consolidated revenues of $30.6*billion, down from $3.5 billion or $0.57 per share on sales of $30.74 billion during the same quarter of 2008.



The Dallas, Texas-based telecommunications firm said the quarter was highlighted by improved postpaid wireless growth with a substantial step up in penetration of integrated devices such as smartphones, double-digit increases in revenues from IP-based and strategic business services, and further AT&T U-verse TV subscriber gains.



In particular, AT&T grew its wireless subscribers by 1.2*million in the first quarter to end with 78.2*million subscribers, up 6.9*million over the past year. The gains were driven in large part by a significant rise in retail-based net subscriber additions, which were 24.1*percent higher at 875,000 than in the year-earlier quarter.



Postpaid subscriber growth also reflected robust demand for Apple's iPhone 3G. Quarterly iPhone 3G activations totaled over 1.6*million, down from 1.9 million during the December quarter, though more than 40*percent of those activations continue to come from customers who were new to AT&T.



"I am particularly pleased with the success of our iPhone 3G initiative, which has driven strong high-end customer growth and delivered financial benefits ahead of our original outlook," said AT&T chief executive Randall Stephenson. "Business and consumer expectations for mobility are on the rise, wireless innovation is flourishing and the opportunities ahead are substantial.”



AT&T's exclusive deal as Apple's U.S. iPhone service provider also continues to attract subscribers with ARPUs (average monthly revenues per subscriber) that are approximately 1.6 times higher and churn rates that are significantly lower than the company’s overall postpaid subscriber base.



The arrangement helped boost the providers wireless data revenues by $884*million, or 38.6*percent, versus the year-earlier first quarter to $3.2*billion. All told, data service revenues represented 27.2*percent of AT&T’s first-quarter wireless revenues, up from 21.5*percent in the year-earlier quarter and 16.0*percent in the first quarter of 2007.



During the quarter, AT&T said it facilitated the transmission of more than 94*billion text messages, or more than double the total for the year-earlier quarter. Internet access and media bundle revenues also continued to rise.



The number of 3G devices on AT&T’s wireless network also more than doubled over the past year, and at the end of the first quarter, 40.8*percent of postpaid wireless subscribers had a 3G device, up from 19.5*percent one year earlier. Similarly, the number of integrated devices on AT&T’s network has more than doubled over the past year. At the end of the first quarter, 31.7*percent of its 61.0*million postpaid subscribers had integrated devices.



The carrier's activation of 1.6 million iPhones during the quarter suggests Apple may report a sequential drop in iPhone 3G shipments for its second-fiscal quarter, which also ended in March. During the previous quarter, the iPhone maker shipped 4.36 million of the touch-screen handsets on 1.9 million domestic activations by AT&T.



Apple will report its results following the close of the stock market this afternoon. AppleInsider will provide in-depth coverage.
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Comments

  • Reply 1 of 91
    richlrichl Posts: 2,213member
    Sounds about on target. The sensible analysts are predicting roughly 3 million iPhones sold in this quarter. Since 50% are sold in the US, you'd expect AT&T to be selling roughly 1.5 million.
  • Reply 2 of 91
    teckstudteckstud Posts: 6,476member
    I's like to know- To what extent has the 3G network slowed down as a result of AT&T's relentless promotion of other 3G devices compromising the very iPhone it's profitting on?
  • Reply 3 of 91
    ivan.rnn01ivan.rnn01 Posts: 1,822member
    AT&T has pretty good momentum, too... I have absolutely no worries about them... That's neither t-Mobile nor Sprint.
  • Reply 4 of 91
    dhkostadhkosta Posts: 150member
    Quote:
    Originally Posted by teckstud View Post


    I's like to know- To what extent has the 3G network slowed down as a result of AT&T's relentless promotion of other 3G devices compromising the very iPhone it's profitting on?



    For AT&T, the iPhone is a momentum product. They make much more money (per phone) selling other 3G devices.
  • Reply 5 of 91
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by DHKOsta View Post


    For AT&T, the iPhone is a momentum product. They make much more money (per phone) selling other 3G devices.



    You think they're not making money on iPhone's data plans? Not the device- the plan.?
  • Reply 6 of 91
    dhkostadhkosta Posts: 150member
    Quote:
    Originally Posted by teckstud View Post


    You think they're not making money on iPhone's data plans? Not the device- the plan.?



    iPhone data usage has forced massive capital improvements to their network, and the iPhone carries a $300-$400 subsidy from AT&T. Besides, they kick back a significant portion of the data back to Apple. Sure, they're making some money, but the business driver behind the iPhone is money for capital improvements to their network, and converting customers from other carriers. Selling an iPhone isn't nearly as profitable in the short term as selling those other 3G phones, though it's great business for other reasons.
  • Reply 7 of 91
    jerseymacjerseymac Posts: 408member
    They're just getting a free ride off of Apple. I still can't complete a phone call without it dropping.
  • Reply 8 of 91
    psych_guypsych_guy Posts: 458member
    It must because I live in the Silicon Valley area, but I've never had a problem with AT&T, neither with their customer service nor the network. I'll drop calls in the obvious areas, like over 17, but it works pretty darn good. I've been a customer since they were first Cingular back in 1998, and never felt the need to switch. The iPhone only added more to the service. 3G works beautifully here (for me anyway). Oh, one exception: at ATT Park. Absolutely "zero" coverage in the park, perhaps they don't want 40,000 fans jawing on the phone when they should be watching the game?
  • Reply 9 of 91
    parkyparky Posts: 383member
    Quote:
    Originally Posted by Jerseymac View Post


    They're just getting a free ride off of Apple. I still can't complete a phone call without it dropping.



    I on the other hand have never had that problem.
  • Reply 10 of 91
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by DHKOsta View Post


    iPhone data usage has forced massive capital improvements to their network, and the iPhone carries a $300-$400 subsidy from AT&T. Besides, they kick back a significant portion of the data back to Apple. Sure, they're making some money, but the business driver behind the iPhone is money for capital improvements to their network, and converting customers from other carriers. Selling an iPhone isn't nearly as profitable in the short term as selling those other 3G phones, though it's great business for other reasons.



    Bottom line- regardless of where the money goes- captial improvements, short term/ long term whatever- they're making money from Apple's iPhones. Don't kid yourself.
  • Reply 11 of 91
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by parky View Post


    I on the other hand have never had that problem.



    Then you're one of the lucky ones. Count your blessings.
  • Reply 12 of 91
    Quote:
    Originally Posted by teckstud View Post


    Then you're one of the lucky ones. Count your blessings.



    I must be one of the lucky ones also. I live in NJ and I have far better service with AT&T than I ever did with Verizon. I think I may have dropped 1 call since getting my iPhone a year ago. I would never consider going back to Verizon.
  • Reply 13 of 91
    These are some good numbers. Every time I read this kind of news it brings to mind Steve Balmer and his obnoxious and flippant IPhone comments when it first arrived.



    What he SHOULD have said was:

    http://www.youtube.com/watch?v=az3XB...E6013&index=32



    God, he's GROSS.
  • Reply 14 of 91
    walshbjwalshbj Posts: 864member
    Did AT&T report what percentage of their new subscribers came over for the iPhone? They better have a good trick planned for when the iPhone goes to other US carriers.



    Real question: What was the last device that drove people to switch carriers in such large numbers? Apple should have some powerful leverage with AT&T.
  • Reply 15 of 91
    solipsismsolipsism Posts: 25,726member
    The article states that 3G phone activations doubled over the last year. I read this to mean phones with 3G capabilities, but not necessarily phones that are paying for a 3G data plan. Aren't many basic cell phones now being marketed to have 3G?



    Quote:
    Originally Posted by DHKOsta View Post


    Sure, they're making some money, but the business driver behind the iPhone is money for capital improvements to their network, and converting customers from other carriers.



    Which is why I think AT&T really liked the revenue sharing plan. It took a lot of work off their retail staff to activate the devices and they only had to pay Apple a small fee per unit that was active and current on their network, not this huge lump sum at the start of the contract. I really this model would have worked out because it would have been much better for the consumer in the long run.





    Quote:
    Originally Posted by Psych_guy View Post


    It must because I live in the Silicon Valley area, but I've never had a problem with AT&T, neither with their customer service nor the network.



    Welcome to AI! My coverage with AT&T has been great. There is the occasional time with only EDGE (like upstate NY last weekend) or with 3G that is slower than EDGE (like in Las Vegas during CES). But today I'm in Cincinnati and just measured 1.71Mbps down and 0.67Mbps up on AT&T's 3G network.



    One aspect of the iPhone I like is that when I call 611 from the iPhone I get to choose to speak with an AT&T rep about my account or speak with an Apple rep about the device itself. This is unique and a good thing to have. I recall reading that Verizon wasn't going to let Apple have their own support center or service their own HW. Thank goodness AT&T knew when to bend over or the iPhone may have ended up on Sprint or T-Mobile, then talk about bad service and spotty coverage.
  • Reply 16 of 91
    dhkostadhkosta Posts: 150member
    Quote:
    Originally Posted by teckstud View Post


    Bottom line- regardless of where the money goes- captial improvements, short term/ long term whatever- they're making money from Apple's iPhones. Don't kid yourself.



    I'm having trouble understanding where you're getting lost here. I didn't say they weren't making money. I was just asserting that iPhone revenue doesn't net AT&T much cash. Those are two completely different things. I wouldn't have called it "great business" if it wasn't making money.
  • Reply 17 of 91
    melgrossmelgross Posts: 31,475member
    Quote:
    Originally Posted by DHKOsta View Post


    For AT&T, the iPhone is a momentum product. They make much more money (per phone) selling other 3G devices.



    What does that mean?



    During the life of the contract, they make more money from the iPhone than from other smartphones. They've stated this numerous times.



    The only place where they take a hit is when the phone is first sold, as that's when they have to give Apple their share.
  • Reply 18 of 91
    melgrossmelgross Posts: 31,475member
    Quote:
    Originally Posted by DHKOsta View Post


    iPhone data usage has forced massive capital improvements to their network, and the iPhone carries a $300-$400 subsidy from AT&T. Besides, they kick back a significant portion of the data back to Apple. Sure, they're making some money, but the business driver behind the iPhone is money for capital improvements to their network, and converting customers from other carriers. Selling an iPhone isn't nearly as profitable in the short term as selling those other 3G phones, though it's great business for other reasons.



    You don't know the numbers. You also don't know what, if anything, they may get kicked back from data services. You're just reading the rumors and repeating them.
  • Reply 19 of 91
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by DHKOsta View Post


    I'm having trouble understanding where you're getting lost here. I didn't say they weren't making money. I was just asserting that iPhone revenue doesn't net AT&T much cash. Those are two completely different things. I wouldn't have called it "great business" if it wasn't making money.



    OK fine- I was talking iPhone's AT&T contracts and you were talking the phone device (iPhone revenue) itself. No problem.

    But your post was misleading- when you say "selling an iPhone" it involves more than just selling the phone itself. The unending contract is AT&T's pot of gold.
  • Reply 20 of 91
    melgrossmelgross Posts: 31,475member
    Quote:
    Originally Posted by teckstud View Post


    Then you're one of the lucky ones. Count your blessings.



    I've only had one dropped call since August.
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