AT&T sales up 3%, mobile growth cited

AT&T on Thursday reported revenue of $31.6 billion for the third quarter, up 2.8% from the third quarter of 2009, with mobile data revenue and mobile subscriber gains from the iPhone driving the growth.

Operating income was up slightly, from $5.4 billion to $5.5 billion. Earnings per share, excluding one-time items, were $0.55 and met the expectations of analysts polled by Thomson Financial.

Net income for the quarter, including a tax settlement and the sale of Sterling Commerce, was $12.3 billion, compared to $3.2 billion last year.

AT&T's mobile data revenue -- including texting, mobile Web access and mobile applications -- grew 30.5% from the third quarter of 2009, to $4.8 billion, the company said in a news release. The AT&T network carried 161 billion text messages during the quarter, up 34% from a year earlier, while multimedia messages more than doubled, to 2.8 billion, the company said.

The telecom giant also reported a net gain of 2.6 million mobile customers, its largest increase ever in a third quarter. AT&T now has 92.8 million mobile customers.

"This was a terrific mobile broadband quarter," Randall Stephenson, AT&T's chairman and CEO, said in a statement. "Mobile broadband is the industry's most powerful growth driver, and demand is in its early stages in both the consumer and business segments. AT&T is well positioned for the opportunities ahead."

AT&T's mobile growth came largely from activations of Apple's iPhone. About 5.2 million iPhones were activated on AT&T's network during the quarter, the largest number of iPhone additions AT&T has reported during any quarter. Twenty-four percent of the iPhone customers were new to AT&T.

Apple released its new iPhone 4 in late June, days before the start of AT&T's third quarter on July 1.

AT&T reported that customers with traditional billing accounts activated 8 million smartphone devices during the quarter, also a record. More than 80% of the handsets activated during the quarter were smartphones, AT&T said.

Overall, mobile revenue grew 11.4% from the third quarter of 2009, with AT&T reporting $15.2 billion from mobile service and equipment sales.

Wireline revenue was down 3% from a year earlier, with AT&T reporting revenue of $15.3 billion from that sector. However, AT&T reported a net gain of 148,000 wireline broadband connections. AT&T's U-verse broadband, television and voice service were up 84% from the third quarter of 2009, to $1.1 billion.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

Copyright © 2010 IDG Communications, Inc.

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