iPhone 3G Sales Spur AT&T Wireless Growth in Q4 2008

[MacRumors]

AT&T today reported financial results from the fourth quarter of 2008 and announced that they had activated 1.9 million new iPhones during the quarter. That number was down from 2.4 million activations in the third quarter, its first full quarter of availability, but was still sufficient to play a significant role in AT&T subscriber growth, which saw an overall net gain of 2.1 million subscribers.

While iPhone activations result in an up-front hit to AT&T's earnings due to the subsidy provided to Apple, AT&T values new iPhone customers for their extended contracts at a higher average monthly rate than typical wireless subscribers. AT&T also reported that 40% of iPhone activations were to customers who were new to AT&T, a figure consistent with previous results.

Fortune analyzes how the iPhone has helped drive AT&T's wireless growth:

1. AT&T has activated 4.3 million iPhone 3Gs since its launch, 1.9 million in Q4 alone -- more than double its iPhone activations one year earlier.

2. The average revenue from Phone users is 60% higher than the typical AT&T customer -- thanks to that $30 per month data fee. Their heavy use of Web services helped drive AT&T wireless data use up 51.2% year to year, which as reader Jon in Brentwood, Calif., points out is not necessarily a good thing.

3. About 40% of the iPhone activations this quarter were new AT&T customers, either buying their first cellphone or switching from another carrier.

4. The churn rate -- the percentage of customers who drop AT&T's service -- among iPhone owners is significantly lower than the rest of the network, sharply reducing marketing costs.

Overall, AT&T's wireless revenue rose 13.2% year-over-year and made up 41.4% of AT&T's total revenue, up from 37.4% in the year-ago quarter.

Article Link: iPhone 3G Sales Spur AT&T Wireless Growth in Q4 2008

[deannnnn]

It's those increases that are murdering AT&T's network in heavily populated areas.

[gibbz]

Yep. I think they severely underestimated the popularity of the iPhone and its impact on their network.

[NoExpectations]

NEW YORK (Reuters) — AT&T (T), the top U.S. phone company, said fourth-quarter profit fell despite higher wireless sales as it paid high subsidies to support Apple's popular iPhone.

So...that is where a good chunk of our $30 monthly fee goes....right to Apple.

[elppa]

Is this a sign Apple learning to make partners better?

[Sbrocket]

Originally Posted by NoExpectations

NEW YORK (Reuters) — AT&T (T), the top U.S. phone company, said fourth-quarter profit fell despite higher wireless sales as it paid high subsidies to support Apple's popular iPhone.

So...that is where a good chunk of our $30 monthly fee goes....right to Apple.

Even if that were true, what would be wrong with that?

In any case, the subsidies being referred to are the subsidies on the hardware being initially purchased, hence why the article mentions the up-front hit to AT&T's earnings to pay the subsidies. That doesn't mean that Apple gets cuts of the monthly fees - that would be silly.

[marine610610]

Better news would be that ATT is not doing so well with the iPhone, then maybe we would see a new carrier pick it up sooner.

[Eduardo1971]

The churn rate -- the percentage of customers who drop AT&T's service -- among iPhone owners is significantly lower than the rest of the network, sharply reducing marketing costs.

Of course. If one leaves AT&T, you are left with a useless phone. One cannot legally leave AT&T for another mobile phone carrier.

AT&T should include text messaging in their monthly fees. Ugh

{yes, am aware of jail breaking the phone but I'm just bugged at AT&T's iphone fees}

[Sbrocket]

Originally Posted by marine610610

Better news would be that ATT is not doing so well with the iPhone, then maybe we would see a new carrier pick it up sooner.

Yeah, that makes sense - the first exclusive carrier doesn't do well with the iPhone, so other carriers will just be jumping on for a slice of the limited pie, right? Come on, think before you say stuff like this. If anything, you want the iPhone to be a success so that other carriers will have an interest in bringing it to their network once the exclusivity contract is up.

[The Tall One]

The lesser of five evils. I switched from Sprint to AT&T because of the iPhone, not because of AT&T. I really hope that AT&T remembers this.

[motulist]

2011? I forget when att is supposed to lose its exclusivity to the iphone. I seem to remember it being 2011, but I can't remember exactly. Does anyone else remember when att iphone exclusivity contract ends?

[MacVixen]

Originally Posted by Sbrocket

Yeah, that makes sense - the first exclusive carrier doesn't do well with the iPhone, so other carriers will just be jumping on for a slice of the limited pie, right? Come on, think before you say stuff like this. If anything, you want the iPhone to be a success so that other carriers will have an interest in bringing it to their network once the exclusivity contract is up.

How long is the exclusivity contract with AT&T? I'm.... living with AT&T..., but was soooooo much happier with Verizon. I'd love to see the iPhone available on other networks... I'd leave MaBell in a heartbeat

[Eduardo1971]

Originally Posted by The Tall One

The lesser of five evils. I switched from Sprint to AT&T because of the iPhone, not because of AT&T. I really hope that AT&T remembers this.

I wish-at the end of the day were are just another number to them.

Geez, I really dislike AT&T.

[ambhci]

I think it will be great when there are other carriers for the Iphone. Competition has a way of driving prices down. When there is no competition (only one player) they can charge whatever they like... I love my Iphone...

[e-coli]

Great. Can we have tethering now?

Originally Posted by MacVixen

How long is the exclusivity contract with AT&T? I'm.... living with AT&T..., but was soooooo much happier with Verizon. I'd love to see the iPhone available on other networks... I'd leave MaBell in a heartbeat

Apple will never make a CDMA iPhone. We're the only country on earth to still use this outdated tech.

[kas23]

Originally Posted by motulist

2011? I forget when att is supposed to lose its exclusivity to the iphone. I seem to remember it being 2011, but I can't remember exactly. Does anyone else remember when att iphone exclusivity contract ends?

Based on this, I really wonder if AT&T is going to win out in the end. They are losing profit, but say that in the end, they are gaining customers, which will pay off in the future for them. However, the 40% new customers are probably switching to AT&T due to the iPhone, not due to AT&T. Myself, as soon as the iPhone can be had on any other carrier, buh-bye AT&T! I will likely go for the cheapest plan, which will mean back to Sprint for me (assuming a CDMA version is produced, which will happen since Apple is not going to ignore the largest population of cellphone users in the US - Verizon).

[Arcadie]

What wrong with AT&T? i love them compared to verizon in terms of coverage and call quality.. But maybe its just better were i live and verizon may be better were you guys live. But here in tampa, AT&T seems to have much better reception and signal...

[kas23]

Originally Posted by Arcadie

What wrong with AT&T? i love them compared to singular in terms of coverage and call quality.. But maybe its just better were i live and verizon may be better were you guys live. But here in tampa, AT&T seems to have much better reception and signal...

The problem with AT&T, at least for me, is their plans - they're too expensive. I came over from Sprint just for the iPhone. Now, due to this switch, I am paying much more money, for less service. I now have to pay for texting, where I didn't before. My nights now start at 9pm, where they started at 6pm with Sprint. The thing is, in terms of quality of the network, I really see no difference. In terms of customer service, I also see no difference - they're all bastards whose main goal is to cheat you out of money.

[kas23]

Originally Posted by e-coli

Great. Can we have tethering now?



Apple will never make a CDMA iPhone. We're the only country on earth to still use this outdated tech.

Yeah they will. In fact, I bet they already have one developed. Remember, Apple offered the iPhone to Verizon first, so they are in fact very willing to produce a CDMA phone. In addition, most of the iPhones sold in the world are to US customers. Do you really think that Apple plans on turning their back on the largest cellphone carrier in the US? No, Verizon's customers represent too much revenue for Apple for them to be snubbed.

[NoExpectations]

Originally Posted by Sbrocket

Even if that were true, what would be wrong with that?

In any case, the subsidies being referred to are the subsidies on the hardware being initially purchased, hence why the article mentions the up-front hit to AT&T's earnings to pay the subsidies. That doesn't mean that Apple gets cuts of the monthly fees - that would be silly.

My point is that Apple isn't 100% innocent when it comes to AT&T's high rates. The money that goes to Apple has to come from somewhere....and guess where? You and me.

[SummerBoy]

Originally Posted by kas23

The problem with AT&T, at least for me, is their plans - they're too expensive. I came over from Sprint just for the iPhone. Now, due to this switch, I am paying much more money, for less service. I now have to pay for texting, where I didn't before. My nights now start at 9pm, where they started at 6pm with Sprint. The thing is, in terms of quality of the network, I really see no difference. In terms of customer service, I also see no difference - they're all bastards whose main goal is to cheat you out of money.

then don't use it !

[kas23]

Originally Posted by SummerBoy

then don't use it !

Then don't use what? An iPhone on AT&T? As I pointed out earlier, I went to AT&T for the iPhone. Tell me, how can I use my iPhone 3G without AT&T? You really have to use your brain before posting some half-wit comment.

[Dmac77]

I don't understand why people bitch about AT&T so much. We just switched from Verizon in December, and we are having a much better experience with AT&T then we did with Verizon. AT&T is 1000x better then Verizon ever will be.

Don

[dejo]

Originally Posted by Sbrocket

That doesn't mean that Apple gets cuts of the monthly fees - that would be silly.

Not so silly, perhaps?

[iFan]

I work for AT&T and can promise you that not a single penny of your $30 data plan goes to Apple. The subsidy paid to Apple is from the upfront hardware sale. For example, if you buy an iPhone for $199, the real cost to AT&T is actually $575. If you buy an Iphone for $299, the real cost to AT&T is $675. The $375 difference is the 'subsidy' that is paid to Apple for EVERY iphone sold in the U.S. This is part of why AT&T's profits fell. It's a GREAT deal for Apple, though!

Most phones at AT&T are subsidized by between $50 and $150 dollars. The Blackberry Bold's subsidy is on the high end at $150. No other phone comes close to the iPhone's $375 subsidy.