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AT&T activated 7.6 million Apple iPhones during its 2011 fourth quarter and sold 9.4 million smartphones in total. This made it not only AT&T’s best-ever quarter for Apple and Android smartphone sales, but the best-ever quarter for smartphone sales in the history of the industry, AT&T CFO John Stephens said during a Jan. 26 earnings call.
During the call, executives offered a narrative in stark contrast to the one more frequently playing out in the media this year-one in which AT&T’s failed bid for T-Mobile set it back several steps, both from the $4 billion and spectrum holdings that it had to pay to T-Mobile in a no-hard-feelings gesture written into the failed deal and the Long-Term Evolution (LTE) rollout momentum it was said to have lost during its nine-month fight for T-Mobile, while competitor Verizon sped ahead of projections.
“We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms,” Randall Stephenson, AT&T chairman and CEO, said in a statement. “This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track.”
While competitor Verizon activated 4.2 million iPhones during the quarter and posted a $2.02 billion loss that it attributed to pension and iPhone costs, AT&T announced net income of $6.7 billion on revenue of $32.5 billion-up $1.1 billion, or 3.6 percent from a year ago. All of its key areas grew by double digits, including 10 percent growth in wireless and 43.7 percent growth in consumer U-verse. As with Verizon, all those smartphone additions took a toll on wireless margins, though data revenue over the long term is expected to be well worth the current hit.
Smartphone sales represented more than 80 percent of AT&T’s postpaid device sales during the quarter, making now 57 percent of AT&T’s 69.3 million postpaid subscribers smartphone owners.
“The smartphone is a platform,” Stephens said the during the call, repeating that the carrier that sells a smartphone to a customer will also be the carrier that customer turns to when they buy a tablet, home-monitoring capabilities or a range of other products. “It’s why we’re going so aggressively with LTE.”
Analysts with research firm Technology Business Research said in a statement that they believe there’s “significant opportunity” for carriers, particularly AT&T, to grow the number of tablets connected to their network.
“Any previous doubt about AT&T’s ability to adapt to life without iPhone exclusivity was dismissed in 4Q11, as AT&T activated a record 7.6 million iPhones [which was] 77 percent more units than competitor Verizon Wireless activated [during the fourth quarter],” the analysts said.
Opening and closing the earnings call, Stephenson was critical of the Federal Communications Commission (FCC), expressing his frustration with its policies, the foot-dragging he said it showed in reaching decisions and the opaqueness of its decision making.
Describing the general need for spectrum, he explained that it wasn’t a matter of figuring out where more is-“When you scan the horizon, there are no secrets, everyone knows where it is”-but how to receive FCC approval to acquire it.
“Our problem is we don’t know what to do-who we’re allowed to do business with and how much spectrum we’re allowed to hold.”
When AT&T reviewed the FCC report on the proposed T-Mobile acquisition, Stephenson said they found that, “to our surprise,” the FCC had “changed the spectrum screens,” though in a recently approved deal with Qualcomm the FCC used the old spectrum caps.
“It’s the who and what that are our big questions,” he repeated.