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AT&T announced second-quarter results July 23 that included earnings of $3.82 billion on $32.1 billion in revenue. While the numbers were below Wall Street expectations, CFO John Stephens attributed what he called a “solid quarter” to “solid growth in wireless” and strong gains in U-verse, which includes TV, high-speed Internet and voice-over IP services.
AT&T added 551,000 wireless postpaid customers (Verizon, July 18, said it added 941,000 during its second quarter) and 1.2 million new smartphone subscribers.
It sold “record numbers” of Android phones and 6.8 million smartphones total during the quarter, though it declined to say how many of those were Apple iPhones.
T-Mobile CEO John Legere has been direct about his goal of stealing customers from AT&T—rather than targeting No. 3 carrier Sprint, as was the more popular assumption.
As AT&T executives turned aside requests from analysts for specifics on iPhone sales, Legere tweeted, “Hmmmm, I wonder why.”
Stephens, however, insisted that subscriber churn was down sequentially, despite T-Mobile getting the iPhone during the quarter. (On an annual basis, churn was up, although Stephens didn’t add that.)
Stephens also said that AT&T saw the same impact as when Verizon and later Sprint got the iPhone—”there’s a spike and then it comes down”—though the T-Mobile spike was “significantly less” than the Verizon and Sprint spikes.
AT&T also reported that its Long Term Evolution (LTE) network build-out is on track to cover 400 markets, or approximately 270 million people, by year’s end, and that it should be “substantially complete” by next summer.
“The more we deploy LTE, the less it costs us to support a megabyte,” said Ralph de la Vega, president and CEO of AT&T Mobility.
Smartphone data use was up by 50 percent and so was wireless service revenue, by 4.1 percent year on year.
On July 16, AT&T introduced Next, a program that allows smartphone and tablet owners to upgrade their devices after one year. The offer, which de la Vega called “hard to beat” and an “incredible value,” is widely thought to be a response to T-Mobile.
Earlier this year, T-Mobile announced it was dropping the two-year contracts that were so common in the industry. Then, on July 10 it announced Jump, a program that allows customers to upgrade their devices twice a year after an initial six-month enrollment period. (The Jump subscription is $10 per month.)
In regard to the Next program, which enables customers to purchase devices on monthly installment plans like they can at T-Mobile, AT&T’s de la Vega enthused “that you can actually walk out the door with a Nokia Lumia 1020 [which has a super-advanced 41-megapixel camera] with zero money down and a very reasonable payment. … That’s what gets me excited—knowing that we can put that kind of technology in the hands of people.”
He added that he “certainly” expects Next to give AT&T a boost at the end of the year.
U-verse, AT&T’s other money-maker, brought in revenue of $5.6 billion during the quarter and now represents 51 percent of revenues from wireline consumers, up from 41 percent a year ago. U-verse subscribers with both TV and Internet services are 9.4 million strong.
“We have delivered a solid quarter with strong subscriber gains,” Stephens said in conclusion, adding that AT&T also significantly improved its network and, with its Project VIP, continues to. “We think this gives us strong momentum headed into the rest of this year, and years to come.”
Follow Michelle Maisto on Twitter.