Smartphones Represent 89 Percent of Postpaid Phone Sales. AT&T sold a record 10.2 million smartphones in the fourth quarter. Smartphones represented 86 percent of postpaid device sales and 89 percent of postpaid phone sales in the quarter. At the end of the quarter, 69.6 percent, or
47.1 million, of AT&T’s postpaid phone subscribers had smartphones, up from 58.5 percent, or
39.4 million, a year earlier. AT&T’s ARPU for smartphones is twice that of non-smartphone subscribers, and about 90 percent of smartphone subscribers are on FamilyTalk®, Mobile Share or business plans. Churn levels for these subscribers are significantly lower than for other postpaid subscribers. About
55 percent of AT&T’s postpaid smartphone customers now use a 4G-capable device.
In the quarter, the company activated a record 8.6 million iPhones, with 16 percent new to AT&T. The company also had its best-ever sales quarter for Android smartphones.
More than 6.6 Million Postpaid Subscribers on Mobile Share Plans. The number of subscribers on usage-based data plans (tiered data and Mobile Share plans) continues to increase. More than two- thirds, or 31.7 million, of all smartphone subscribers, are on usage-based data plans. This compares to 56 percent, or 22.1 million, a year ago and 31 percent two years ago. More than three-quarters of customers on tiered data plans have chosen the higher-priced plans.
Mobile Share plans continue to be popular. More than 6.6 million customers, or 9 percent of postpaid subscribers, have already signed up for Mobile Share plans. The number of Mobile Share accounts reached 2.2 million in the fourth quarter for an average of about three devices per account. Take rates on the higher-data plans continue to be much stronger than expected with more than a quarter of Mobile Share accounts 10 gigabytes or higher.
Postpaid Churn Down. For the fourth quarter, postpaid churn was 1.19 percent, down when compared to 1.21 percent in the year-ago fourth quarter. Total churn was 1.42 percent versus 1.39 percent in the fourth quarter of 2011.
Record Smartphone Sales Impact Margins. In the fourth quarter, wireless margins reflected record- setting smartphone sales (800,000 more than fourth-quarter 2011), strong customer upgrade levels and the impact of Superstorm Sandy. This was offset in part by further revenue gains from the company’s high-value smartphone subscribers and improved operating efficiencies. AT&T’s fourth-quarter wireless operating income margin was 14.5 percent versus 15.5 percent in the year-earlier quarter, primarily driven by depreciation and amortization. AT&T’s wireless EBITDA service margin was 29.1 percent, or about the same as 29.2 percent in the fourth quarter of 2011. Without the Superstorm Sandy impact, EBITDA service margin would have been nearly 30 percent. (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.)
WIRELINE OPERATIONAL HIGHLIGHTS
AT&T’s fourth-quarter wireline results were led by strong U-verse TV and high speed Internet gains and accelerating wireline consumer revenue growth. Highlights included:
Wireline Revenues Increase Sequentially. Total fourth-quarter wireline revenues were $14.9 billion, down 0.5 percent versus the year-earlier quarter but up 0.7 percent sequentially. Fourth-quarter wireline operating expenses were $13.1 billion, down 0.9 percent versus the fourth quarter of 2011.