AT&T's Q3 saw record sales of integrated devices, record gross adds and record upgrades. Despite likely losing its iPhone contract, it's "just scratching the surface."
AT&T's pending loss of exclusive U.S. rights to the Apple iPhone
will likely be a low day for the carrier. But no matter. For now the
provider of the iPhone 4, which has gradually put together a diverse
mobile portfolio that now includes every major mobile operating system,
is riding high.
The carrier on Oct. 21 announced third-quarter revenues of $31.6
billion for the quarter and an increase of 2.6 million wireless
subscribers, bringing its total to 92.8 million.
"We had a tremendous wireless growth quarter. Everything we could
hope for and more," Ralph de la Vega, AT&T president and CEO, said
during a conference call with media and analysts. "The word you'll keep
hearing again and again is 'record.' Record sales of integrated
devices, record gross adds, record customer upgrades, record
third-quarter net adds of $2.6 million, record wireless data sales. We
also had the best-ever third-quarter total churn. Our seventh
consecutive quarter of growth in post-paid ARPU (average revenue per
user), and we added 1.2 million connected devices during the third
quarter, setting the pace for the industry."
De la Vega said the company is "just scratching the surface," adding
that AT&T sees new growth opportunities with integrated devices and
believes emerging wireless devices are just beginning to take off.
Devices, however, are only as good as the network supporting
them-just ask any iPhone owner-and so a good portion of the call was
focused on AT&T's plans for upgrading its network from HSPA 7.2 to HSPA+
over the next six to 12 months and then, in 2011, to LTE (long-term evolution), its 4G technology of choice.
At one point, de la Vega and AT&T CFO Rick Lindner more or less
sidestepped an analyst question about whether, once AT&T is no
longer the exclusive provider of the Apple iPhone, its Droid users may
begin to outnumber its iPhone users. The analyst followed, "Is churn on
the iPhone going to be dictated by network speed?" The implication was
that consumers are more likely to choose an iPhone on the highly reputed Verizon network over the often-maligned AT&T.
"The real story here is, this quarter, with as large of a post-paid
base as we have, well over 80 percent of the devices we sold ... were
integrated devices," said Lindner. "That's astounding. And it's huge
compared to even where we were just a year ago. [It] speaks to a
combination of the features in these devices, along with the network
He then used the question as an opportunity to talk up not just AT&T's forthcoming 4G network but its boosted 3G network.
As the smartphones being developed today will require mobile
broadband speeds, soon all the carriers will roll out 4G networks,
Lindner explained. However AT&T, as it completes its three-steps,
will have an opportunity to offer "a superior experience on these
devices" that won't only be about the speed of its 4G network, Lindner
"Eventually, these 4G networks are going to cover a relatively small
piece of geography," he went on. "On our network, [customers are] going
to have a great experience on LTE, but as they move off of that
geography, they're going to have a very, very good experience on HSPA+
... versus other carriers, where you will see a significant decrease in
speeds when you're out of their 4G footprint area."
Verizon Wireless, as it seemingly prepares to offer the iPhone, is
expected to begin offering tiered pricing Oct. 28, according to the
Wall Street Journal. While AT&T recently did away with its
unlimited data plan, Verizon will reportedly offer one
-for $29.99-which has led some to wonder whether AT&T will feel pressured to reverse its decision.
Lindner, while saying it was "difficult to comment on competitor
prices," said he was glad to see spectrum being treated as a valuable
resource and AT&T's competitors offering their customers a choice.
"That's consistent with our view," said Lindner.
Verizon Wireless will announce the results of its fiscal third quarter Oct. 22.