AT&T reported robust 18.8 percent wireless data revenue growth for the second quarter, including the carrier's lowest churn rate ever at less than 1 percent, and added 1.3 million new customers in the period.
"Record low churn and strong sales tell the story of our wireless business," AT&T CFO John Stephens told investors Tuesday. "New customers are choosing AT&T and existing ones continue to stay with us in record numbers. We have 88 percent of our subscribers on FamilyTalk or business plans."
AT&T's smartphone data revenue rose by $1 billion year-over-year to $6.4 billion. "Data revenues are now at a $25 billion annualized revenue stream, growing at almost 19 percent," Stephens said during Tuesday's conference call.
The wireless carrier sold 5.1 million smartphones during the second quarter -- including 3.7 million iPhones, of which about 22 percent represented customers new to AT&T. Moreover, smartphone subscribers overall currently account for 61.9 percent of AT&T's total postpaid base. "These are valuable customers generating revenue twice that of other [wireless] customers," said AT&T Senior Vice President Susan Johnson.
4G LTE Build Remains on Track
Piper Jaffray views AT&T's June quarter iPhone unit sales of 3.7 million as better than the investment firm's prior thinking on the U.S. markets.
"Between Verizon and AT&T, iPhone sales were down 15 percent sequentially, compared to our thinking of down 24 percent sequentially," noted Piper Jaffray analysts Gene Munster and Douglas Clinton.
Some industry observers expected AT&T's iPhone sales to take a major hit in the quarter -- with subscribers postponing their purchasing decisions in anticipation of the arrival of the iPhone 5. However, Piper Jaffray believes that the release of Apple's next-generation handset will come in time to ensure that the third-quarter results at AT&T and other carriers won't be affected.
"The iPhone 5 will likely have been released before Apple [and its carrier partners report] September results," Munster and Clinton wrote in a Tuesday investor note. "Our July survey found 94 percent of iPhone owners plan on buying another iPhone, suggesting the uptake of iPhone 5 will meet or exceed the high expectations."
Widely expected to include super-fast 4G LTE capabilities, the iPhone 5 should help drive the growth of AT&T's LTE networks rollouts. "Our 4G LTE build continues on track, and we now have LTE in 47 markets," Stephens said. (continued...)