In a striking example of what the iPhone can mean for carriers, AT&T – once the exclusive provider of the iconic Apple handset – announced Thursday lower profits and fewer new subscribers than analysts expected. The No. 2 wireless carrier reported $1.09 billion in quarterly profits, down from $2.7 billion announced during the same period a year ago.
Perhaps more significantly, the carrier reported gaining 400,000 postpaid subscribers, far fewer than the 504,000 some analysts were expecting and less than half of the 872,000 customers rival Verizon gained during the same period. Starting Feb. 10, Verizon will sell the iPhone, ending AT&T’s three years of exclusivity.
AT&T’s shares fell 3 percent, even though the carrier reported operating revenue increased 2.1 percent to $31.36 billion – up from $30.71 billion a year ago, but slightly lower than the $31.47 billion some on Wall Street were expecting.
Despite the loss of iPhone exclusivity, AT&T announced it expects wireless and wireline profit margins to increase. Although the company will lose exclusivity, it will continue selling the iPhone. The question next on the minds of both Wall Street analysts and consumers is will the addition of Verizon actually hurt AT&T sales. One analyst Thursday released a bullish prediction that Verizon could sell up to $23.8 million iPhones in the first year. AT&T could potentially make up for the loss by increasing the number of Android-powered handsets it offers, a tactic Verizon used when it did not have the Apple device.
[Reuters]
