AT&T slows subscriber churn; profits up eight percent
updated 11:46 am EDT, Tue July 24, 2012
Strong margins boost Q2 performance
AT&T has released its second-quarter financial disclosures, showing a gain in profits despite nearly flat overall revenue. The jump in net income, from $3.6 billion to $3.9 billion, was mostly attributed to the company's wireless division. Subscriber churn was down to just one percent, while average revenue per user (ARPU) benefited from increased spending on wireless data.
Apple's iPhone release schedule is also said to be a contributing factor, as some customers wait for the sixth-generation model to arrive. AT&T noted that smartphone upgrades reached a new low, helping to boost margins by reducing subsidization costs. The company last year modified its upgrade rules to eliminate 12-month eligibility and force customers to wait nearly two years before receiving the lowest price on new hardware.
Although AT&T showed an increase in post-paid subscriber loyalty, its 320,000 new customers still lag behind competitor Verizon's 888,000 additions in the same quarter. Half of AT&T's new customers also signed onto tablet contracts, rather than the pricier smartphone plans.
AT&T's wireline revenue took a slight hit, dropping by 0.8 percent, though the company still managed to see a slight gain in net income from the segment. Verizon showed similar performance, as both companies lose wired telephone customers but add Internet and television accounts.
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