AT&T takes bigger bite of the Apple than anticipated

Telecom giant AT&T posted net income of USD3.23 billion for the third quarter of 2008, up 5.5% year-on-year. Revenue increased 4%, to USD31.34 billion, boosted by a 15.4% increase in wireless sales. The wireless division generated USD12.6 billion in revenue, led by sales of the new Apple iPhone 3G and a 50.5% increase in wireless data usage. Although iPhone's launch has induced more consumers to switch to its mobile services, AT&T has had to pay larger than expected subsidies of USD900 million to Apple, as take up exceeded expectations. In total, the operator gained two million net new mobile customers during the quarter to take its total customer base to nearly 75 million subscribers nationwide. AT&T’s U-verse internet TV service also performed well, adding 232,000 new subscribers in the third quarter, compared to 170,000 net additions in the previous quarter.

However, it was not good news across the board. The number of consumer voice lines in service fell 10.5% to 28.33 million, year-on-year, while broadband uptake slowed considerably with 148,000 new additions in the quarter, a decline of over 70% on the year-earlier gain of 499,000. The slowdown in the housing market, which creates new customers, and competition from the cable companies were cited as having a detrimental effect on AT&T’s internet and landline business.