AT&T Activates Fewer iPhones, Reports Record Wireless Margins

Lower handset upgrades helped AT&T achieve record wireless margins in the second quarter.

AT&T reported a wireless operating income margin of 30.3 percent, beating the year-earlier figure of 26.9 percent.

The company cited "improved operating efficiencies, fewer handset upgrades and further revenue gains for the company’s 43 million high-value smartphone subscribers."

Like its bigger competitor, Verizon Wireless, AT&T continues to grow its wireless business, adding 1.3 million customers to end the quarter with 105.3 million in service. Among the additions: 320,000 postpaid subscribers. AT&T has added 6.6 million customers over the last year.

The majority (61.9 percent) of AT&T’s postpaid subscribers now own smartphones, and that’s beneficial for AT&T because churn levels for these customers are significantly lower than for other postpaid customers.

AT&T sold 5.1 million smartphones in the last quarter, and the company reported activating 3.7 million iPhones. In the first quarter, AT&T sold 5.5 million smartphones and activated 4.3 million iPhones.

The lower number of iPhone activations may be related to the widely anticipated release of Apple’s sixth-generation iPhone. Apple has remained mum on the topic, but most analysts expect the company to release a new phone later this year.

For the quarter, AT&T reported 66 cents of diluted earnings per share on consolidated revenues of $31.6 billion. Among the milestones the telecom giant reached, AT&T achieved year-over-year revenue growth in the enterprise business for the first time since the first quarter of 2008. However, total business revenues fell to $9.1 billion, down 1.5 percent over the year-ago period.

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