AT&T had strong 1Q on wireless installment plans

Apr 22 2014, 5:24pm CDT | by

NEW YORK (AP) — AT&T's wireless business had a strong first quarter as the company added more than 1 million subscribers and benefited from an installment plan that permits frequent phone upgrades.

Although customers in the installment plan, called Next, aren't locked into traditional two-year service contracts, they pay the entire cost of phones in installments. As a result, AT&T doesn't have to pay hundreds of dollars per customer in subsidies. In return, customers can get a new phone as often as every year instead of every other year.

The company's first-quarter net income was $3.7 billion, or 70 cents per share, compared with $3.7 billion, or 67 cents, a year earlier, when AT&T had more shares outstanding. Adjusting for one-time items, including costs related to its March acquisition of Leap Wireless, income was 71 cents per share, compared with 64 cents in the same period last year. Analysts expected 70 cents.

Revenue grew 4 percent to $32.5 billion, better than the $32.4 billion analysts expected, according to FactSet.

Nonetheless, AT&T's stock fell 2.2 percent to $35.50 in after-hours trading after the release of results.

AT&T added 1,062,000 wireless subscribers in the quarter. That includes 625,000 smartphones and tablets in "post-paid" plans. These are the high-value customers on contracts or long-term installment plans. Wireless service revenue grew 2 percent to $15.4 billion. Total wireless revenue, including phones and tablets sales, grew 7 percent to $17.9 billion.

The U.S. wireless industry is undergoing a transformation as wireless carriers try to wean customers off subsidies. Subsidies had helped attract customers as the wireless industry grew, but most Americans now have cellphones.

Among new customers of post-paid smartphones and those upgrading to new devices, more than 40 percent, or about 2.9 million, signed up for the subsidy-free Next plan. That was up from 15 percent in the last three months of 2013.

Besides letting people upgrade more often once they are on Next, AT&T waived the usual wait until existing contracts are up. People were allowed to switch right away. About 1.1 million of the new Next customers came through that promotion.

AT&T also has been pushing customers into more expensive plans that offer larger amounts of data — by reducing prices at the high end.

"Customers really like the new mobility value proposition and are choosing to move off device subsidies to simpler pricing while at the same time, they are continuing to move to smartphones with larger data plans," AT&T CEO Randall Stephenson said in a statement.

In the landline business, revenue fell 0.4 percent to $14.6 billion. But its newer U-verse phone, TV and Internet service saw growth. AT&T had 634,000 additional high-speed Internet subscribers and 201,000 new TV subscribers.

AT&T raised its outlook for the year to reflect the Leap purchase. It expects revenue growth of at least 4 percent, compared with the previous guidance of 2 percent to 3 percent. It kept expectations for adjusted earnings per share the same: a percentage gain in the mid-single digit.

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/31" rel="author">Associated Press</a>
The Associated Press (AP) is one of the largest and most trusted sources of independent newsgathering, supplying a steady stream of news to its members, international subscribers and commercial customers.

 

blog comments powered by Disqus

Latest stories

Insomnia triples risk of motor accident deaths
London, Nov 1 (IANS) Developing a healthy sleeping habit could be a life saviour as researchers have found that insomnia significantly increases risk of death caused by motor vehicle crashes and other unintentional fatal injuries.
 
 
Resveratrol could impede benefits of exercise
Toronto, Nov 1 (IANS) Contrary to popular belief, adding resveratrol (RSV) to your exercise routine may not enhance the effects of physical activity, said a study.
 
 
Tectonic event led to burst of animal life during Cambrian Age
New York, Nov 1 (IANS) A major tectonic event may have triggered the rise in sea level and other environmental changes that led to the Cambrian explosion, the sudden burst of animal life 530 million years ago, showed a research.
 
 
NASA's Mars spacecraft ready for test flight
Washington, Nov 1 (IANS) The US space agency National Aeronautics and Space Administration (NASA) has fully assembled the Orion spacecraft for a test flight Dec 4.
 
 
 

Latest from the Network

Insomnia triples risk of motor accident deaths
London, Nov 1 (IANS) Developing a healthy sleeping habit could be a life saviour as researchers have found that insomnia significantly increases risk of death caused by motor vehicle crashes and other unintentional...
Read more on Business Balla
 
Emma Watson, Judi Dench win Britannia awards
Los Angeles, Nov 1 (IANS) British actresses Emma Watson and Dame Judi Dench were two of the six honourees at the annual Britannia Awards. The annual ceremony was hosted by BAFTA (British Academy of Film and Television...
Read more on Celebrity Balla
 
All's still not good between Avril, Chad
Los Angeles, Nov 1 (IANS) Trouble continues to plague singers Avril Lavigne and Chad Kroeger's paradise even as the news of their split continues to do the rounds. After a little over a year of marriage, the duo is...
Read more on Celebrity Balla
 
Kutcher, Kunis researched parenthood
Los Angeles, Nov 1 (IANS) Ashton Kutcher and Mila Kunis equipped themselves well before becoming parents to daughter Wyatt Isabelle Kutcher. He says Google is like their "manual". They find the parenting experience "...
Read more on Celebrity Balla
 
Resveratrol could impede benefits of exercise
Toronto, Nov 1 (IANS) Contrary to popular belief, adding resveratrol (RSV) to your exercise routine may not enhance the effects of physical activity, said a study. Resveratrol occurs naturally in the skin of red...
Read more on Celebrity Balla
 
13 killed in Libya clashes
Tripoli, Nov 1 (IANS/EFE) At least 13 people were killed in violent clashes between Islamist militias and Libyan security forces in the struggle to control Benghazi city. Rtd Libyan general Khalifa Haftar Friday...
Read more on Politics Balla
 
Amanda Bynes released from psychiatric facility
Los Angeles, Nov 1 (IANS) Troubled actress Amanda Bynes has been released from a psychiatric facility here. Three days after a judge ruled that she needed to spend at least another month in the facility, Bynes asked...
Read more on Celebrity Balla
 
20 militants killed in Pakistan clash
Islamabad, Nov 1 (IANS) At least 20 militants and four security personnel were killed Saturday in a clash in Pakistan's federally administered Orakzai Agency, an official said. Three security personnel were also...
Read more on Politics Balla
 
Ben Affleck broke Jennifer Lopez's heart
Los Angeles, Nov 1 (IANS) Singer-actress Jennifer Lopez says Ben Affleck was the first man to break her heart and admits that she didn't give herself enough time to "heal". The 45-year-old, who got divorced twice...
Read more on Celebrity Balla
 
IS poses grave threat to Pakistan, says MQM chief
Islamabad, Nov 1 (IANS) Pakistan's Muttahida Qaumi Movement (MQM) chief, Altaf Hussain, has said that the Islamic State (IS) is the new threat to Pakistan, media reported. Addressing a press conference in Karachi via...
Read more on Politics Balla