AT&T net income spikes on mobile customer gains

The company reports strong gains in wireless revenue and subscribers

AT&T's revenue for the first quarter of 2011 was up 2.3 per cent and its net income rose 38.9 per cent from a year earlier, driven by mobile customer gains.

AT&T on Wednesday reported revenue of $US31.2 billion for the first quarter of 2011, up from $30.5 billion in the first quarter of 2010. Net income attributable to AT&T went from $2.5 billion in the first quarter of 2010 to $3.4 billion this past quarter. Earnings per share were $0.57, meeting the expectations of analysts polled by Thomson Reuters.

AT&T pointed to a 10.2 per cent growth in wireless revenue, to $15.3 billion, and an increase of 2 million mobile customers during the quarter as reasons for the strong quarterly results. AT&T, now with 97.5 million mobile customers, reported its largest first-quarter increase in mobile subscribers.

"We delivered another robust mobile broadband growth quarter for a very solid start to the year," Randall Stephenson, AT&T chairman and CEO, said in a statement. Mobile broadband networks are bringing "unprecedented growth" he added.

AT&T posted 23.9 per cent growth in mobile data revenue. The company reported that it now has 3.6 million subscribers using Apple's iPhone, up about 1 million from a year ago. The company now has 3.4 million data-only mobile devices, including tablets and aircards, up by 421,000 during the quarter.

In AT&T's wireline division, revenue was down 3.2 per cent, to $15 billion. But the company saw a net increase of 218,000 U-verse television subscribers and a 175,000 increase in wireline broadband subscribers. AT&T reported a 26.1 per cent increase in wireline consumer data revenue.

AT&T reported a strong quarter, but there are some warning signs on the horizon, said Jeff Kagan, an independent telecom analyst. Much of the mobile subscriber growth came from its current customers switching devices, he said.

However, AT&T did not see large numbers of customers switching to competitor Verizon, which added the iPhone to its lineup earlier this year, Kagan noted. "The next question is will AT&T's luck hold out after the next version is released later this year," he said. "If so, then they can dodge the bullet everyone is watching."

AT&T's wireline business continues to struggle, Kagan said."They are losing business quarter after quarter," he said. "On one hand, that is expected, but on the other hand it is still disturbing to see. Their U-verse business continues to grow, but not fast enough to calm fears of losses in the traditional phone business."

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags business issuesAppletelecommunicationat&tRandall Stephensonfinancial resultsJeff Kagan

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