AT&T Nets Record Number of Wireless Subscribers Q4
A slowing economy didn’t hurt AT&T’s Q4 wireless results. AT&T added 2.7 million subscribers in the quarter, a U.S. wireless industry record contrasting starkly with Sprint Nextel’s 638,000 post-paid customer loss in the period (CD Jan 22 p5). “We had an excellent fourth quarter, which affirms our outlook for 2008,” said Rick Lindner, chief financial officer.
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Wireless results were “outstanding,” Lindner told analysts in the company Q4 conference call. AT&T wireless revenue rose 16.3 percent year-over-year to $11.4 billion. Data revenue was up 57.5 percent. Revenue per user grew 1.9 percent to $50.28. Six million customers signed AT&T cellphone contracts, pushing that figure up 9.6 percent. Total churn fell 0.1 point to 1.7 percent, and post-paid churn shrank 0.3 points to 1.2 percent. For the full year, AT&T added 7.3 million net subscribers, excluding acquired Dobson customers.
3G handsets and the iPhone fueled the increases, said Lindner. About 13 percent of AT&T devices are 3G and they pull 20 percent more revenue per user than 2G phones, he said. AT&T uses the iPhone to lure competitors’ subscribers, and about 40 percent of iPhone customers are new to AT&T, the official said. Per-user revenue from the Apple phone is “nearly double” that from other devices, he said. AT&T has sold almost 2 million iPhones, but that figure includes some phones that haven’t been activated or were sold to customers overseas, he said.
AT&T moved 390,000 wireless subscribers off its legacy TDMA network Q4. Of the 390,000 that remain, two-thirds are wholesale customers, Lindner said. He expects wireless churn to decrease after the switch is completed, he said.
AT&T ended the year with 231,00 U-verse IPTV customers, up from 126,000 at the end of Q3 2007. AT&T didn’t provide a churn figure, but Lindner said it compares to that of access lines and broadband, and will shrink below 2 percent as AT&T builds the customer base. In mid-December, AT&T was doing 12,000 service installations a week, beating the company’s target of 10,000. Including satellite, AT&T added 235,000 video customers in the quarter.
Broadband revenue rose 13.7 percent year-over-year to $1.4 billion. In the quarter, AT&T added 396,000 DSL, U- verse and satellite broadband Internet subscribers. For the year, AT&T added 2 million subscribers, finishing with 14.2 million.
AT&T affirmed the 2008 guidance it gave at a December analyst day (CD Dec 12 p5). January trends support the outlook, Lindner said: Trends in broadband look better than Q4’s, and those for access lines seem about the same. Economic softness affected consumer access lines and broadband net adds, but hasn’t reduced 2008 expectations, Lindner said. “The economy is always a risk but I think when you look across our business, we're defensive in nature about these kind of downturns,” he said. The economy hasn’t hurt sales to wireless and business customers, he said.
AT&T is “ahead of schedule” integrating BellSouth, Lindner said. AT&T achieved $4 billion in BellSouth merger efficiencies in 2007, and seeks $1 billion each in 2008 and 2009. In 2008, AT&T expects $2 billion overall in operating expense savings from cost cutting.