More AT&T Customers Move to iPhone, Other Smartphones

AT&T on Thursday revealed that about half (49.9 percent) of its 68.4 million postpaid customers now have smartphones, reflecting consumers growing appetite to access data and other services on sophisticated mobile devices like Apples iPhone.

In the quarter ending June 30, 2011, AT&T sold 5.6 million smartphones and activated 3.6 million iPhones. Smartphones represented nearly 70 percent of AT&Ts postpaid device sales.

Customers that use an iPhone and other smartphones line AT&Ts pockets with significantly more revenues, helping the second-largest U.S. wireless operator squeeze more dollars out of its subscribers.

The average ARPU (average revenue per user) for smartphones on AT&Ts network is 1.8 times that of the companys non-smartphone devices,” the company reported in its second-quarter earnings announcement.

AT&T revealed that postpaid subscriber ARPU rose 2 percent year over year to $63.87, marking the tenth consecutive quarter of growth.

Wireless sales have been fueling growth at AT&T and other major U.S. carriers for years as a growing numbers of Americans have cut their traditional home landline connections.

Total quarterly wireless revenues, including equipment sales, rose 9.5 percent year over year to $15.6 billion. By contrast, AT&Ts revenues from wireline residential customers only grew 0.1 percent to $5.4 billion.

Customer Additions and Higher Churn

AT&T added 1.1 million wireless subscribers in the quarter to reach a total of 98.6 million customers. Of those customer additions, AT&T courted another 331,000 postpaid subscribers.

But churn reflecting the percentage of customers who leave the carrier rose in the quarter. AT&T reported total churn of 1.43 percent, compared to 1.29 percent a year earlier. AT&T also reported higher postpaid churn (1.15 percent) than a year earlier (1.01 percent).

U.S. wireless operators are finding it increasingly difficult to grow their customer base given that nearly all Americans now have mobile phones.

As of December 2010, there were 302.9 million U.S. wireless subscriber connections and the penetration rate was 96 percent, according to CTIA-The Wireless Association.

AT&T still has fewer customers than the total connections Verizon Wireless reported in the first quarter (104 million). Verizon Wireless reports its second quarter results tomorrow morning.

Deutsche Bank analysts expect Verizon Wireless to add 950,000 postpaid customers.

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