New AT&T phone contracts dive in 1Q - East Valley Tribune: Home

New AT&T phone contracts dive in 1Q

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Posted: Tuesday, April 19, 2011 11:23 pm

(AP) — AT&T Inc.'s subscribers are still buying iPhones, but with Verizon Wireless now selling the iconic phones too, they seem to have lost their power to draw new subscribers to AT&T.

AT&T, the country's largest telecommunications company, on Wednesday said the first quarter saw the addition of 62,000 net new subscribers on contract-based plans, a record low. In the same quarter a year ago, the figure was 512,000. In several previous quarters, the figure was above a million.

Subscribers on contract plans pay the most every month, so they're crucial to wireless companies. AT&T had an average quarter in terms of total new subscribers: 2 million. That number was bolstered by another Apple Inc. product, the iPad, as AT&T said it added 322,000 subscribers with tablet computers. But the bulk of the net additions, 1.3 million, came from non-phone, non-tablet devices like Amazon.com Inc.'s Kindle, security systems and GPS units. These generate little monthly revenue for AT&T.

AT&T said it activated 3.6 million iPhones, up from 2.7 million a year ago. But given the low number of net new contract subscribers, the new phones were clearly going to people who already had AT&T service. AT&T also said the percentage of iPhone subscribers cancelling service was the same as last year, meaning Verizon Wireless doesn't seem to be pulling a lot of iPhone subscribers from AT&T.

Verizon Wireless started selling its version of the iPhone on Feb. 10, ending three and half years of exclusivity for AT&T. In most other countries where the iPhone is sold, there were already multiple carriers. Verizon Communications Inc., which controls Verizon Wireless through a 55 percent ownership stake, reports its first-quarter results Thursday morning.

AT&T's net income rose 39 percent to $3.41 billion, or 57 cents per share, for the January-March period, up from $2.45 billion, or 42 cents per share, a year ago.

The increase was mainly due to a reduction in taxes — AT&T's operating income fell 2.7 percent as expenses grew faster than revenues on the wireless side, and wireline revenue continued its long slide.

The earnings matched the average estimate of analysts polled by FactSet.

Revenue was $31.2 billion, up 2.3 percent from $30.5 billion a year ago. That also matched analysts' expectations.

Its shares slipped 7 cents to $30.24 in pre-market trading.

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