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AT & T iPhone 5 Sales Strong Despite Slower Growth
Wed, 10/24/2012 - 6:46am
Maisie Ramsay

AT&T Mobility President and CEO Ralph de la Vega said today the company sold twice as many iPhone 5's during the third quarter as its nearest competitor, Verizon Wireless.

The iPhone sales were a bright spot in an otherwise sluggish quarter when AT&T’s net adds fell well behind Verizon’s.

De la Vega did not give a specific sales number, but his statement pegs AT&T's iPhone 5 sales somewhere around 1.3 million, compared to Verizon's iPhone 5 sales of about 651,000.

The estimate indicates brisk iPhone 5 sales at AT&T, given that the device was only sold for the last nine days of the third quarter.

Overall, AT&T activated 4.7 million iPhones, contributing to overall smartphone sales of 6.1 million. Last year, AT&T sold 4.8 million smartphones.

Even with the healthy iPhone numbers, de la Vega said sales were affected by "significant supply constraints."

On days when AT&T has enough iPhone inventory to meet demand, "we'll see 5,000-10,000 net adds in a day compared to days when we don't."

Despite the strong iPhone sales, there was a significant slowdown in the number of new customers signing up for AT&T service.

The operator posted net adds of just 678,000, a fraction of last year's 2.12 million net adds. The bulk of its growth came from connected devices, and it added just 151,000 new postpaid customers.

By comparison, Verizon added 1.53 million postpaid subscribers during the third quarter.

Total ARPU declined slightly to $47.09 from $47.70 last year on dilution from the new shared data plans, but data ARPU rose more than $2 to $20.97.

Profits took a hit from the costly subsidies associated with the iPhone, with net income slipping nearly 6 percent year-over-year to $4.3 billion despite an increase in sales, which hit $16.6 billion.  Including AT&T's other divisions, company-wide profits remained flat at $3.6 billion on sales of $31.5 billion.

Investors appeared largely unfazed by the numbers, with AT&T’s stock dipping just a single percentage point in morning trading on the New York Stock Exchange.

AT&T has tried to slow the rate of margin-crushing device upgrades with new policies and fees that make it more expensive for subscribers to switch to a newer device. De la Vega said efforts to rein in upgrades were showing progress, with the upgrade rate holding steady at about 7 percent.

AT&T launched its shared data plans last quarter. About 2 million subscribers signed up for the bucket data rates during the five weeks they were available during the third quarter. Of those, more than a third chose plans of 10 GB or more and 15 percent switched over from unlimited data plans.

The company's low voice growth caught the attention of analysts during its earnings call. CFO John Stephens defended the flat voice revenues. "There's a lot of things to like here and there are a lot of different markets," he said.

De la Vega chimed in, stating that AT&T planned to roll out "digital life" services including products for home security, monitoring and in-car connectivity. "We're taking this massive data growth and building services on top of that," he said. "I think the future growth is in data, but also services we're going to layer on top of that platform."

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