Monday, July 23, 2012

AT&T: Smartphone Penetration at 62%, Wireless Margins Up

Driven by its highest margin for wireless services yet, AT&T reported consolidated revenues of $31.6 billion, up 0.3 percent versus the year-earlier period. Second-quarter 2012 net income attributable to  AT&T  totaled $3.9 billion, or $0.66 per diluted share, up from $3.6 billion, or $0.60 per diluted share, in the year-earlier quarter.

"We executed well across the business and posted another strong quarter with growing revenues, expanding margins and double-digit earnings growth," said Randall Stephenson,  AT&T  chairman and chief executive officer. "Our mobile Internet leadership continues, with solid gains in smartphones and tablets, plus our wireless margins have never been better.�?


  • Total wireless revenues, which include equipment sales, were up 4.8 percent year over year to $16.4 billion.

  • Wireless service revenues increased 4.3 percent, to $14.8 billion, in the second quarter.

  • Wireless data revenues increased by $1.0 billion, or 18.8 percent, from the year-earlier quarter to $6.4 billion.

  • Wireless operating income margin was 30.3 percent versus 26.9 percent in the year-earlier quarter, and  AT&T 's wireless EBITDA service margin was 45.0 percent, compared with 41.1 percent in the second quarter of 2011. 

  • Postpaid subscriber ARPU increased 1.7 percent versus the year-earlier quarter to $64.93, which is the highest in the industry.

  • There was a net increase in total wireless subscribers of 1.3 million in the second quarter to reach 105.2 million in service. This includes postpaid net adds of 320,000. Prepaid net adds were 92,000, connected device net adds were 382,000 and reseller net adds were 472,000.

  • Postpaid, prepaid and total churn reached their lowest levels ever – 0.97 percent, compared to 1.15 percent in the year-ago second quarter and 1.10 percent in the first quarter of 2012. Total churn was 1.18 percent versus 1.43 percent in the second quarter of 2011 and 1.47 percent in the first quarter of 2012.

  • AT&T  sold 5.1 million smartphones in the second quarter.

  • Smartphones represented 77 percent of postpaid device sales. At the end of the quarter, 61.9 percent, or 43.1 million, of  AT&T 's postpaid subscribers had smartphones, up from 49.9 percent, or 34.1 million, a year earlier.

  • AT&T 's ARPU for smartphones is twice that of non-smartphone subscribers, and about 88 percent of smartphone subscribers are on FamilyTalk or business plans.

  • In the quarter, the company activated 3.7 million iPhones, with 22 percent new to  AT&T .

  • Approximately 27 million, or about two-thirds, of all smartphone subscribers are on tiered data plans, compared to 45 percent a year ago, and about three-quarters of these have chosen the higher-tiered plans.


  • Total second-quarter wireline revenues were $14.9 billion, down 0.8 percent versus the year-earlier quarter and down slightly sequentially. Second-quarter wireline operating expenses were $12.9 billion, down 1.3 percent versus the second quarter of 2011 and down 1.9 percent sequentially.

  • Total business revenues were $9.1 billion, down 1.5 percent versus the year-earlier quarter.

  • Revenues from strategic business services — including Ethernet, VPNs, hosting, IP conferencing and application services — grew 13.5 percent versus the year-earlier quarter, continuing strong trends in this area.

  • Revenues from residential customers totaled $5.5 billion, an increase of 1.7 percent versus the second quarter a year ago — their strongest growth in more than four years.

  • Consumer broadband, video and voice over IP revenues now represent 57 percent of wireline consumer revenues, up from 50 percent in the year-earlier quarter.

  • Total  AT&T  U-verse subscribers (TV and high speed Internet) reached 6.8 million in the second quarter.  AT&T  U-verse TV added 155,000 subscribers to reach 4.1 million in service.

  • AT&T  U-verse High Speed Internet delivered a second-quarter net gain of 553,000 subscribers to reach a total of 6.5 million, helping offset losses from DSL. Overall,  AT&T wireline broadband connections decreased 96,000, partly due to seasonality.

  • More than 50 percent of U-verse broadband subscribers have a plan delivering speeds up to 12 Mbps or higher, up from 39 percent in the year-ago quarter.