Loss Of Traditional Phone Customers Still Devils AT&T (T)

AT&T’s (T) wireless, broadband, and U-verse TV subscription businesses all did well in the second quarter. Buried a bit deep in the press release about earnings was the fact that AT&T had 46.3 million total consumer connections at the end of the second quarter, compared with 48.4 million at the end of the second quarter of 2008. Voice revenue dropped over 13% to $8.26 billion.

For the period, AT&T’s consolidated revenues totaled $30.7 billion, compared with $30.9 billion in the year-earlier quarter. Net income attributable to AT&T totaled $3.2 billion versus $3.8 billion in the year-earlier quarter, and earnings per diluted share totaled $0.54, compared with $0.63 in the second quarter of 2008. The firm said increased operating expenses in the second quarter of 2009, in part, reflect volume-based acquisition costs associated with the success of the Apple (AAPL) iPhone 3GS launch.

In the company’s wireless business, retail postpaid net adds totaled 1.2 million, up 29% versus results in the year-earlier second quarter and up 31.8% versus the first quarter of 2009.  AT&T’s relationship with Apple is bearing fruit. AT&T iPhone activations totaled more than 2.4 million, with more than a third of those activations for customers who were new to AT&T. The firm’s wireless revenues from messaging, Internet access, access to applications and related services increased $934 million, or 37.2%. Wireless service revenue was up almost 10% to $11.96 billion.

U-verse TV subscribers in service increased by 248,000 in the second quarter to reach 1.6 million, up more than 1 million over the past year. That figure is still modest compared to the subscriber bases of major cable companies, but at the rate AT&T is adding new business, that could change within a few short years.

Douglas A. McIntyre