AT&T Saw Record iPhone, Android Smartphone Sales in Q4

AT&T activated 7.6 million Apple iPhones during its 2011 fourth quarter and sold 9.4 million smartphones in total. This made it not only AT&T's best-ever quarter for Apple and Android smartphone sales, but the best-ever quarter for smartphone sales in the history of the industry, AT&T CFO John Stephens said during a Jan. 26 earnings call.

During the call, executives offered a narrative in stark contrast to the one more frequently playing out in the media this yearone in which AT&T's failed bid for T-Mobile set it back several steps, both from the $4 billion and spectrum holdings that it had to pay to T-Mobile in a no-hard-feelings gesture written into the failed deal and the Long-Term Evolution (LTE) rollout momentum it was said to have lost during its nine-month fight for T-Mobile, while competitor Verizon sped ahead of projections.  

"We had a tremendous year in terms of execution, and we have excellent momentum across our growth platforms," Randall Stephenson, AT&T chairman and CEO, said in a statement. "This was a blowout quarter for sales. Our network performance is at a high level on voice quality and best-in-class mobile download speeds. Sales continue to be strong and business revenue trends are on a good track."

While competitor Verizon activated 4.2 million iPhones during the quarter and posted a $2.02 billion loss that it attributed to pension and iPhone costs, AT&T announced net income of $6.7 billion on revenue of $32.5 billionup $1.1 billion, or 3.6 percent from a year ago. All of its key areas grew by double digits, including 10 percent growth in wireless and 43.7 percent growth in consumer U-verse. As with Verizon, all those smartphone additions took a toll on wireless margins, though data revenue over the long term is expected to be well worth the current hit.
Smartphone sales represented more than 80 percent of AT&T's postpaid device sales during the quarter, making now 57 percent of AT&T's 69.3 million postpaid subscribers smartphone owners.

"The smartphone is a platform," Stephens said the during the call, repeating that the carrier that sells a smartphone to a customer will also be the carrier that customer turns to when they buy a tablet, home-monitoring capabilities or a range of other products. "It's why we're going so aggressively with LTE."

Analysts with research firm Technology Business Research said in a statement that they believe there's "significant opportunity" for carriers, particularly AT&T, to grow the number of tablets connected to their network. 

"Any previous doubt about AT&Ts ability to adapt to life without iPhone exclusivity was dismissed in 4Q11, as AT&T activated a record 7.6 million iPhones [which was] 77 percent more units than competitor Verizon Wireless activated [during the fourth quarter]," the analysts said.

Opening and closing the earnings call, Stephenson was critical of the Federal Communications Commission (FCC), expressing his frustration with its policies, the foot-dragging he said it showed in reaching decisions, and the opaqueness of its decision making.

Describing the general need for spectrum, he explained that it wasn't a matter of figuring out where more is"When you scan the horizon, there are no secrets, everyone knows where it isbut how to receive FCC approval to acquire it.

"Our problem is we don't know what to dowho we're allowed to do business with and how much spectrum we're allowed to hold."

When AT&T reviewed the FCC report on the proposed T-Mobile acquisition, Stephenson said they found that, "to our surprise," the FCC had "changed the spectrum screens," though in a recently approved deal with Qualcomm the FCC used the old spectrum caps.

"It's the who and what that are our big questions," he repeated.