iPhone Still Driving New Business for AT&T

Yesterday Verizon reported strong wireless results yesterday. And so did AT&T today. Here are selected mobile highlights from the release:

  • 2.1 Million Net Gain in Wireless Subscribers. AT&T posted a fourth-quarter net gain in wireless subscribers of 2.1 million to reach 77.0 million in service, up 7.0 million over the past year. Retail postpaid net adds topped 1.3 million, up 13.9 percent versus results in the year-earlier quarter. Total monthly subscriber churn in the fourth quarter was 1.6 percent, down from 1.7 percent for both the preceding quarter and the year-earlier fourth quarter. Postpaid churn was 1.2 percent, flat versus results for the preceding quarter and the fourth quarter of 2007.
  • 1.9 Million Apple iPhone 3G Activations. Postpaid subscriber growth reflects the dramatic success of iPhone 3G, which was launched in July 2008. AT&T’s fourth-quarter iPhone 3G activations totaled 1.9 million, approximately 40 percent to customers who were new to AT&T, and the company’s total iPhone activations over the last half of 2008 topped 4.3 million.
  • 51.2 Percent Wireless Data Revenue Growth. Powered by AT&T’s premier wireless data network and its attractive device lineup, AT&T's wireless data revenues grew 51.2 percent versus the year-earlier fourth quarter to $3.1 billion. Wireless text messages on the AT&T network were nearly 80 billion in the fourth quarter, more than double the total for the year-earlier fourth quarter. Internet access revenues and multimedia message volumes also continued their robust growth.
  • 13.2 Percent Total Wireless Revenue Growth. Driven by subscriber gains and data growth, AT&T's total wireless revenues increased 13.2 percent to $12.9 billion, and wireless service revenues, which exclude handset and accessory sales, grew 13.3 percent to $11.5 billion. For the full year 2008, total wireless revenues were $49.3 billion, up $6.7 billion or 15.6 percent versus 2007 results.

The iPhone continues to attract new subscribers: of the 1.9 million iPhone activations in Q4, 40% were new. Verizon seems to be holding subscribers so it's likely Sprint and T-Mobile (or smaller prepaid carriers) are giving them up -- Sprint in particular.

That's why it's critical for Sprint to get its Android phone and Palm Pre into the market sooner rather than later. Sprint laid off 8,000 people yesterday, which will further contribute to churn in all likelihood. The carrier has only a limited amount of time -- probably the rest of 2009 -- to try and reverse the negative trends. The new phones will be critical in that effort. 

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Other highlights from the earnings report:

  • Wireline revenues decreased 10% YoY
  • In the fourth quarter, Advertising & Publishing’s Internet revenues increased 31.6 percent versus the year-earlier quarter, and total Advertising & Publishing revenues declined 9.8 percent (print yellow pages)