AT&T Sees 70 Percent Drop in Q3 Profit, Expects ‘Unbelievable’ Q4
AT&T’s Q3 net income fell 70 percent year-over-year to $3.62 billion, as the company faced a slowdown in subscriber growth. But the company expects a “blockbuster” Q4 in smartphone sales, helped by the launch of new iPhone 4S and new LTE smartphones, said Ralph de la Vega, CEO of AT&T Mobility and Consumer Markets, on a conference call Thursday.
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AT&T gained a net 384,000 postpaid subscribers in the quarter, excluding the impacts of the Alltel and Centennial integration migrations. An improvement from the Q1’s figure of 62,000, the latest net additions were still only half the number AT&T gained a year ago. Net prepaid additions were 293,000 while net connected device additions were 1,038,000. Reseller net additions were 473,000. Q3’s net additions reflect smartphone adoptions, increases in prepaid and reseller subscribers and sales of tablets and connected devices like automobile monitoring systems, security systems and other emerging products, AT&T said. The carrier added 2.1 million wireless customers, growing its total customer base to 100.7 million. Total churn declined to 1.28 percent, from 1.32 percent in Q4 of 2010. Postpaid churn was 1.15 percent.
On the T-Mobile acquisition, executives reiterated that the FCC review is continuing and the company remains hopeful on reaching a solution with the Justice Department, either through the court or in a settlement.
The company added 176,000 new U-verse TV subscribers during the quarter, growing its pay TV subscriber base to 3.6 million. That was well off its pace in recent quarters. While the company added 504,000 U-verse high-speed Internet subscribers, to reach a total of 4.6 million, it lost 501,000 traditional DSL customers. Most of the customers have an Internet plan of 3 Mbps and higher, AT&T said. The operator continued to shed traditional voice access lines, dropping 1.2 million sequentially to stand at 40.1 million at the end of September. The company reported 256,210 employees at the end of the quarter, down from 267,729 a year ago, Public Knowledge President Gigi Sohn noted: “And this is the company that says it will create 96,000 jobs by buying out its competitor T-Mobile? That’s not likely.”