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Big number of AT&T iPhone customers has interesting financial impact
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The iPhone once again boosted AT&T's bottom line, keeping the company as a whole from recording a loss worse than the 9 percent dip in profits it recorded in the first quarter. As the operator gains a significant scale of iPhone users, some interesting trends are emerging.
The company, suffering from the worsening economy, added 1.2 million net new wireless customers in the quarter and posted $3.1 billion in profits, down from the $3.5 billion it recorded during the same quarter in 2007.
But AT&T activated more than 1.6 million iPhone 3G devices during the quarter, and its overall wireless data revenue increased 38.6 percent to $3.2 billion. More than 40 percent of those new iPhone subscribers were new to the company, and AT&T said these customers tend to spend about 1.6 times more on wireless data services than other AT&T customers.
Perhaps more impressive was the fact that AT&T's gamble to deeply subsidize the iPhone is paying off. Margins that had once fallen to 33.5 percent after AT&T launched the subsidized iPhone 3G last summer, are now at nearly 41 percent. AT&T now has enough scale--4.5 million iPhone subscribers paying at least $70 per month--to push margins back up.
Other metrics reported by AT&T may be pointing to a maturing mobile data business for the operator. AT&T reported that, despite a large number of iPhone activations, its data ARPU (average revenue per user) only increased 18 cents to $16.48. Late last year, it was experiencing an 11-percent increase in data ARPU. Meanwhile, AT&T, for the first time in many quarters, didn't see a 50-percent or more growth in data revenue. It posted a 38.6-percent increase to $3.2 billion--a number AT&T partly attributed to its rather large mobile data base.
It will be interesting to see going forward if these metrics continue to slow and what they are attributed to. Part of the slowing this quarter, according to AT&T, had to do with subscribers moving away from pay-per-use data offerings (such as SMS) to unlimited offerings in order to save money. But the larger base of iPhone users means metrics can't move as dramatically.--Lynnette
Comments
Posted by Anonymouse | April 23, 2009 - 8:52am
My verizon contract is up in June. Hopefully the 32 GB iProduct will be available soon after. I am wary of moving to AT&T over concerns about their inferior network; my iProduct-using friends often lose signal when I have multiple bars. However, most say the iProduct is worth the degraded network quality. And someone should pay for a professional to take Lynette's photo. She's prettier than that pic.
Posted by OBloodyhell | April 27, 2009 - 7:50am
It would be far smarter to wait for the iPhone to get unbundled from shoddy AT&T service -- that exclusive contract is due to run out before long, and you won't be stuck with crappy AT&T service and attitudes in the meantime.
Posted by Derek Kerton | May 18, 2009 - 3:07pm
Are you sure? Apple is unlikely to ever produce a CDMA iPhone, so the earliest we could see a Verizon iPhone would be 2H 2010, when VZW says it will have 20-30 LTE cities.
But will there be an LTE iPhone that soon? Not likely. Apple is not one to push the technical limits, and be on the bleeding edge (design limits, yes,but tech, no). Add to that the known fact that the earliest LTE devices will be USB dongles, not phones. Also, would Apple sell an iPhone to a network that only covers 20-30 cities? VZW says they will cover the nation with LTE by ~2014.
So, either you are proposing that there will be a CDMA iPhone (a small probability), or you are suggesting that the commenter two above wait between three to five years.
If you like the iPhone, get one. Your 24 month contract with AT&T will likely be complete before VZW offers an iPhone, titillating rumors aside.
Posted by bre | April 23, 2009 - 9:10am
i have been a att customer for over 10 years. i have traveled all over the world with my BB and the only place i can not get coverage is 12 miles up a canyon, outside of Moab,Utah. Verizon does get coverage there.
the problem is att won't let me tether, and if they don't fix that, i will be moving to a network that does.
i think that now, coverage is not a problem as services, i would advise checking into the fine print of the packages to make sure you can accomplish what you need to.
Posted by Anonymous | April 23, 2009 - 9:20am
It seems like they made a lot of profits from our premium data plan. I think I will start using more of the unlimited data just to be even. Although it's very hard to do so on where I live. Please bring 3G to where I live!
Posted by Anonymous | April 23, 2009 - 9:36am
My biggest issue with my iphone is ATT and the lack of data coverage. I work in this little town in the midwest called Chicago. My co-workers and I have awful data reception. Phone calls work great, but I bought an iphone to do more than make phone calls.
Posted by Captain Vendetta | May 4, 2009 - 12:33pm
If you haven't bailed on Verizon yet I wouldn't. I'm still with Verizon although awfully tempted to make the switch although I'm not ready to commit to the 129 a month unlimited data plan that only makes sense to have with an iphone.The device, which is code-named "Pink," will have additional software capabilities and feature Microsoft's Windows Marketplace for Mobile, according to the Journal, which cited unnamed sources familiar with the matter. A third party is expected to actually produce the hardware for the phone.
"There have been rumors in the past about a project dubbed "Pink," a possible Microsoft smartphone based on the software giant's Zune digital music player. The rumors indicated that the phone would use technology from Microsoft's acquisition of Danger, the company that brought the Sidekick to T-Mobile USA."
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