Wednesday, July 21, 2010

AT&T Posts Q2 Revenues of $30.8 billion, 3.2 Million iPhone Activations

Led by strong second-quarter growth in its wireless business, AT&T reported Q2 2010 consolidated revenue of $30.8 billion revenues from continuing operations, up $194 million, or 0.6 percent, versus the year-earlier period and up $278 million, or 0.9 percent, sequentially. Second-quarter 2010 net income attributable to AT&T totaled $4.0 billion, or $0.68 per diluted share, up 25.9 percent, including a $0.07 one-time gain from the exchange of Telmex Internacional stock for shares of América Móvil.

"We continue to see positive signs of growth in almost every customer segment of our business, especially wireless, which speaks to the quality of our execution and our leadership in the industry's most powerful growth driver -- mobile broadband. I am excited by the opportunities ahead," said Randall Stephenson, AT&T chairman and chief executive officer.

Some highlights for the quarter:

Wireless Operations

  • AT&T posted an organic net gain in total wireless subscribers of 1.6 million, to reach 90.1 million in service.

  • Postpaid wireless churn was 1.01 percent, down from 1.07 percent in the year-earlier quarter, and total churn was 1.29 percent versus 1.48 percent in the second quarter of 2009 -- both record lows for the company.

  • Wireless data revenues -- from messaging, Internet access, access to applications and related services -- increased $936 million, or 27.2 percent, from the year-earlier quarter to $4.4 billion.

  • Total text messages carried on the AT&T network increased 41.7 percent year-over-year to 154 billion and multimedia messages more than doubled to 2.6 billion.

  • Postpaid subscriber ARPU increased 3.4 percent versus the year-earlier quarter to $62.63, despite including 1.6 million subscribers from the acquisition of properties from Verizon Wireless.

  • Postpaid data ARPU reached $21.07, up 18.6 percent versus the year-earlier quarter, and total postpaid subscriber revenues continued recent trends, with solid double-digit growth, reflecting increases in both voice and data.

  • The number of 3G postpaid integrated devices on AT&T's wireless network increased by 2.9 million to 29.7 million, an increase of 98.2 percent year over year and 10.8 percent sequentially. At the end of the quarter, 53.2 percent of AT&T's 67.0 million postpaid subscribers had integrated devices, up from 36.3 percent one year earlier. The average ARPU for integrated devices on AT&T's network is 1.7 times that of the company's nonintegrated-device base.

  • Preorder sales of iPhone 4 were 10 times higher than the first day of preordering for iPhone 3GS a year earlier. For the full second quarter, AT&T iPhone activations totaled 3.2 million, the most quarterly iPhone activations ever. Approximately 27 percent of those activations were for customers who were new to AT&T.

  • AT&T's wireless operating income margin was 28.8 percent versus 24.9 percent in the year-earlier quarter, and AT&T's wireless OIBDA service margin was 43.1 percent, up from 40.1 percent in the second quarter of 2009.

  • Wireless service revenues increased 10.3 percent to $13.2 billion in the second quarter, and total wireless revenues, which include equipment sales, were up 7.7 percent to $14.2 billion. Second-quarter wireless operating expenses totaled $10.1 billion, up 2.1 percent versus the year-earlier quarter, and wireless operating income was $4.1 billion, up 24.7 percent year over year.

Wireline Operations

  • Driven by strength in IP data services, in the second quarter, total revenue from residential customers totaled $5.4 billion, flat compared to the second quarter of 2009. Versus the first quarter of 2010, consumer wireline revenues increased 1.1 percent. This is the second consecutive quarter of sequential growth.

  • AT&T U-verse TV subscribers increased by 209,000 in the quarter to reach 2.5 million, up almost 60 percent over the past year. In the second quarter, the AT&T U-verse High Speed Internet attach rate continued to run above 90 percent, and about two-thirds of subscribers took AT&T U-verse Voice. More than three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple play customers was nearly $160, up 13.8 percent year over year and 6.8 percent from the first quarter of 2010.

  • AT&T's U-verse deployment now reaches 25 million living units. Companywide penetration of eligible living units is more than 13 percent, and across areas marketed to for 30 months or more, overall penetration is more than 22 percent. AT&T's total video subscribers, which combine the company's U-verse and bundled satellite customers, reached 4.6 million at the end of the quarter, representing 17.9 percent of households served.

  • AT&T U-verse penetration drove 32.0 percent year-over-year growth in consumer IP revenues (broadband, U-verse TV and U-verse Voice). U-verse continues to drive a transformation in AT&T's consumer business, reflected by the fact that consumer IP revenues now represent 40.4 percent of AT&T's consumer wireline revenues, up from 30.6 percent in the year-earlier quarter.

  • In the second quarter, AT&T U-verse revenues exceeded $1 billion for the first time, more than twice the U-verse revenues in the second quarter of 2009.

  • AT&T posted a decline in total consumer revenue connections due primarily to expected declines in traditional voice access lines consistent with broader industry trends, somewhat offset by increases in U-verse TV and VoIP connections.

  • AT&T U-verse Voice connections increased by 183,000 in the quarter and 758,000 over the past four quarters. Total consumer revenue connections at the end of the first quarter were 44.3 million, compared with 46.3 million at the end of the second quarter of 2009 and 45.0 million at the end of the first quarter of 2010.

  • At the end of the second quarter, AT&T had 16 million total wired broadband connections, up 404,000 over the past year and down 92,000 from first-quarter 2010 levels.

  • AT&T posted its best year-over-year business revenue comparisons in five quarters -- reflecting continued solid sales performance and continued improvement in key economic metrics.

  • Total business revenues were $9.6 billion, a decline of 4.7 percent versus the year-earlier quarter. Business service revenues, which exclude CPE, declined 4.0 percent, the third consecutive quarter of improvement, and decreased slightly sequentially, down 0.7 percent.

  • Business IP data revenues grew 9.1 percent overall, the largest year-over-year increase in four quarters, led by growth in VPN revenues. This generated total business data growth of 0.3 percent, the first growth in this category in five quarters.

  • Global enterprise IP data revenues grew 10.8 percent. Approximately 70 percent of AT&T's frame customers have made the transition to IP-based solutions, which allow them to easily add managed services such as network security, hosting and IP conferencing on top of their infrastructures.

  • Gotal wireline revenues posted their smallest year-over-year decline in five quarters, down 3.7 percent, and were essentially flat sequentially. Second-quarter wireline operating expenses were $13.5 billion, down 4.3 percent versus the second quarter of 2009 and down 1.5 percent sequentially.

See also