AT&T: iPhone Activations Down, Smartphone Sales Set Record

AT&T on Tuesday announced setting a record with first-quarter sales of 5.5 million smartphones.

The company revealed activating 4.3 million iPhones. Apple’s five-year-old gadget has kept Americans tethered to their mobile phones and given millions of wireless subscribers an incentive to upgrade to a smartphone with computing capabilities.

AT&T reported that 59.3 percent, or 41.2 million, of its postpaid subscribers had smartphones at the end of the quarter. That’s up from 46.2 percent, or 31.5 million customers in the same period a year ago.

Still, AT&T wasn’t able to keep pace with the postpaid growth of its bigger rival. AT&T, the second-largest U.S. wireless provider, courted 187,000 postpaid subscribers in the quarter. By comparison, Verizon Wireless added 501,000 retail postpaid customers in the same quarter.

AT&T’s wireless operating income margin grew to 27.2 percent, up from 25.8 percent in the year-ago quarter. The company attributed the growth to “improved operating efficiencies and further revenue gains” from its 41 million smartphone customers.

AT&T’s iPhone activations, though significant, were substantially fewer than the 7.6 million iPhones the company activated in the fourth quarter of 2011. That helped AT&T’s margins, Reuters reported, reducing the amount of cash it had to pay Apple.

“One of the big things is they didn’t have such a big iPhone refresh,” Piper Jaffray analyst Christopher Larsen told the news agency.

AT&T also reported that its postpaid churn fell to its lowest level in seven quarters: 1.10 percent.

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