IPhone boosts AT&T as traditional-voice revenues decline

CEO expects more revenue growth in 2009

AT&T Inc. offset some declines in traditional-voice revenues for the fourth quarter with the help of more Apple iPhone customers.

In all, there was a net gain of 2.1 million wireless customers in the fourth quarter, with nearly all of them -- 1.9 million -- new Apple iPhone customers, AT&T reported today.

About 40% of all iPhone customers are new to AT&T. Overall, AT&T had 77 million mobile phone customers by the end of 2008.

AT&T's net income of $2.4 billion for the fourth quarter of 2008 was down from $3.1 billion in the same period last year. Fourth-quarter revenue was $31.1 billion, compared to $30.3 billion in the fourth quarter of 2007.

CEO Randall Stephenson noted that revenues overall for 2008 grew despite a poor economy and predicted more revenue growth for 2009. Revenue for 2008 was $124 billion, up 4.3% from 2007.

For the quarter, the wireless division had $11.5 billion in revenue, up from $10.2 billion in the fourth quarter of 2007. Wireless data revenue grew a whopping 51% for the quarter to $3.1 billion, and wireless customers sent about 80 billion text messages, double the amount from the previous year.

AT&T's addition of 2.1 million new subscribers for the quarter beat out the competition, including Verizon Communications, which posted a strong fourth quarter yesterday. The addition of 1.9 million new iPhone subscribers was down from 2.4 million in the third quarter.

Kate Price, an analyst at Technology Business Research Inc., said that the iPhone has had a more dramatic impact on AT&T than the BlackBerry Storm has had on Verizon. Verizon added 1.2 million new subscribers in the fourth quarter, although it didn't begin selling the Storm smart phone until Nov. 21, midway through the quarter.

Price also said that iPhone subscribers use 1.6 times the data service of the average AT&T customer, or about $100 a month, further adding to AT&T's success.

She added that the switch to smart phones is correlated with the decline in voice minutes at AT&T, which dropped to 711 minutes on average per customer in the fourth quarter, down from 736 in the year-earlier quarter.

AT&T's traditional voice revenue was $8.8 billion in the fourth quarter, down from $9.8 billion in the fourth quarter of 2007.

Copyright © 2009 IDG Communications, Inc.

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