NEW YORK – AT&T Inc., the second-largest U.S. wireless carrier, gained contract subscribers last quarter as promotions and new devices helped offset the loss of its exclusivity for the top-selling Apple Inc. iPhone.
AT&T said on Wednesday it won 62,000 wireless contract customers last quarter. Tim Horan, an Oppenheimer & Co. analyst, forecast contract users would be unchanged and JPMorgan Chase & Co.’s Philip Cusick predicted a loss of 100,000. Dallas-based AT&T also posted a 39 percent increase in first-quarter profit.
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Verizon Wireless, the largest U.S. wireless carrier, began offering the iPhone in February. AT&T prepared for the loss of its exclusivity by cutting the price of the older 3GS model in January by half for contract customers and adding devices such as the Motorola Mobility Holdings Inc. Atrix. Last month, AT&T agreed to buy T-Mobile USA for $39 billion to add subscribers.
“The iPhone is still a very important product for AT&T’s customer growth,” said Todd Rethemeier, a Hudson Square Research analyst in New York. “They’ve added some devices, but the iPhone is still very compelling, a very attractive product for consumers.” He rates AT&T shares “hold.”
AT&T activated 3.6 million iPhones in the quarter, compared with 2.7 million a year earlier. Verizon Wireless gaining the iPhone ended four years of AT&T’s exclusivity for the device in the U.S., heating up the competition between the carriers. The iPhone 4 was the most purchased mobile phone by U.S. consumers in the fourth quarter, according to research firm NPD Group.
T-Mobile Combination
AT&T fell 1 cent to $30.30 before the start of regular U.S. trading. It closed at $30.31 on the New York Stock Exchange on Tuesday and had gained 3.2 percent this year before Wednesday.
First-quarter net income advanced to $3.41 billion, or 57 cents a share, from $2.45 billion, or 41 cents, a year earlier. Analysts projected 57 cents, the average of estimates compiled by Bloomberg. Sales rose 2.3 percent to $31.2 billion, also matching the average analysts’ estimate.
Customer departures, known as churn, increased compared with the previous quarter. Overall churn was 1.36 percent, compared with 1.32 percent in the fourth quarter, according to the statement. The carrier lost some users as it integrated assets it acquired from Verizon Wireless.
The T-Mobile USA acquisition, announced March 20, would combine AT&T with the fourth-largest U.S. wireless provider. The deal needs approval from the U.S. Justice Department and Federal Communications Commission, and is to face hearings in Congress.
