AT&T added more than one million postpaid subscribers during its second quarter, calling it the strongest gain in five years.
The subscriber growth came in due to more than 700,000 postpaid smartphone net adds and 366,000 postpaid tablet net adds. But AT&T’s tablet growth fell well short of the 1.15 million postpaid tablets Verizon added during the same quarter.
But the carrier was able to squeeze down postpaid churn to a “best-ever” 0.86 percent and saw its wireless service revenues rise 3.7 percent annually.
Tweaks to its Mobile Share plan pricing seem to be working as AT&T reported 56 percent of its postpaid subscribers were on the plans now and that 49 percent of those accounts were buying 10GB or more. Half of the smartphone adds for the quarter were on AT&T’s Next device installment program, which the carrier attributed as one of the reasons for lower churn.
But revenue took a hit in the shift away from device subsidies, said CFO John Stephens during an afternoon earnings call. AT&T posted $32.6 billion in consolidated revenue for the quarter, up 1.6 percent annually but short of analyst expectations. $5.6 billion in operating income was down from $6.1 billion during the year-ago quarter.
Stephens referred to the device subsidy model changes, move away from unlimited and success of shared data plans as part of AT&T’s “mobile repositioning.”
But looking ahead, Stephens seemed confident in the new revenue sources that will come out of AT&T’s recently announced acquisition of satellite-TV company DirecTV.
“Service bundles are a proven winner for us,” Stephens said, saying two-thirds of U-Verse customers buy two or three services.
Outside of the potential mobile video impact from the DirecTV deal, AT&T Mobility CEO Ralph de la Vega was enthusiastic about driving mobile growth in other emerging verticals.
“We’re starting to see the next wave of wireless growth,” AT&T Mobility CEO Ralph de la Vega said, touting the successful quarter for AT&T’s Digital Life connected home service and moves the carrier made in the connected car space.
AT&T stocks fell nearly two percent in after-hours trading as of 3:54 p.m. CT.