The days of AT&T Inc. being the exclusive iPhone carrier are long gone, and the network is feeling the effects of now having all four major carriers offering the highly coveted Apple Inc. smartphone. But this did not stop AT&T from seeing subscriber growth and profit increases during the fourth quarter.
AT&T added a net of 854,000 long-term wireless contracts in the fourth quarter, in comparison with 785,000 long-term wireless contracts in the third quarter. AT&T also added more than 1 million new long-term smartphone contracts, which Chief Financial Officer John Stevenson noted does not include its net subscriber figures.
AT&T saw significant increases in its Next program, where customers can opt to pay off their phone subsidies faster and qualify for upgrades within one year instead of two. AT&T said 58 percent, or 5.9 million, of all long-term wireless smartphone gross adds (new subscribers) and upgrades came through the program. Up to 70 percent, or 52 million, connections on AT&T are through the network’s Mobile Share Value program, which allows up to 10 devices to share data on one plan. The network also announced its rollover data plan earlier this month, following T-Mobile US Inc. establishing its data stash plan in December.
The quarter that ended in December was the first time all four major U.S. carriers have had a new iPhone at the same time, creating a competitive situation to win new subscribers upgrading to the iPhone 6. About 1.22 percent of AT&T subscribers left the network for a new carrier in the fourth quarter, compared with the network’s all-time low of 1.11 percent in the year-prior quarter.
“Even with all this noise in the market, postpaid churn levels were comparable to two years ago, the last time a full refreshed iPhone hit the market,” Stevenson said. “And this was the first time that all major carriers were able to sell that phone during the busy fourth quarter.”
September 2014 was the first time that T-Mobile officially offered the iPhone at launch. Prior to that, customers wanting to power an iPhone on T-Mobile had to bring their own. And prior to that, AT&T had four years of exclusivity with the iPhone before Verizon and Sprint also offered the device.
AT&T took a $4 billion hit due to already-disclosed pension costs. Excluding that hit, adjusted earnings per share came in at 77 cents, compared with $6.9 billion and earnings per share of $1.31 in the same quarter last year. Analysts polled by Thomson Reuters were expecting 55 cents per share on revenue of $34.26 billion. Revenue rose 3.8 percent, to $34.44 billion from $33.16 billion a year ago.
The network did warn in December that its fourth quarter wouldn’t be as profitable as it had hoped due to heavy competition in the market. While AT&T counts its subscriber gains positively, both Verizon Communications and T-Mobile reported an addition of 2.1 million long-term wireless contracts during the fourth quarter.
AT&T shares rose 1.3 percent to $33.25 in after-hours trading.