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AT&T stays strong against threat of Verizon iPhone

Associated Press//July 21, 2011

AT&T stays strong against threat of Verizon iPhone

By Associated Press

//July 21, 2011

NEW YORK — AT&T Inc. saw a rebound in the number of new contract subscribers in the second quarter, showing resilience in the face of competition from Verizon’s iPhone.

The country’s largest telecommunications company said Thursday that it added a net 331,000 new subscribers on contract-based plans, up from a record low of 62,000 in the first quarter.

Verizon Wireless started selling its version of the iPhone on Feb. 10, ending three and half years of exclusivity for AT&T Inc.

For AT&T, retaining iPhone subscribers is crucial, because they pay far more every month than those on other phones.

There’s little sign that the Verizon iPhone is prompting AT&T subscribers to jump ship: AT&T said the number iPhone subscribers leaving them actually declined from the first quarter.

However, AT&T is clearly losing some new customers to Verizon. The 331,000 new subscribers is an improvement from the first quarter, but low compared to last year’s average of 538,000 subscribers per quarter.

AT&T said it activated 3.6 million iPhones in the quarter, the same as the first quarter. But that, too, is a sign that it’s facing competition: in the past two years, AT&T has activated more iPhones in the second quarter than in the first, which is the slowest of the year.

Verizon Communications Inc., which own 55 percent of Verizon Wireless and controls its operations, reports its quarterly results Friday morning. (Vodafone Group PLC of Britain owns the remainder.)

Dallas-based AT&T ended the quarter with 98.6 million devices on its wireless network, making it the second-largest cellular carrier, after Verizon Wireless.

AT&T is trying to become No. 1 by buying No. 4 carrier T-Mobile USA, but that bid is facing scrutiny in Washington.

On Wednesday, Sen. Herb Kohl, D-Wis., and a key member of the Senate Judiciary Committee, called on regulators to block the $39 billion deal because it would lead to less competition and thus higher prices. AT&T says the deal would benefit consumers and still hopes to close it in the first quarter of next year.

AT&T’s second-quarter net income was $3.59 billion, or 60 cents per share, for the April to June period. That’s down 10.4 percent from last year’s $4.0 billion, or 67 cents per share, which was boosted by the sale of stock in an overseas firm.

The latest earnings matched the average forecast of analysts polled by FactSet.

Revenue was $31.5 billion, up 2.2 percent from a year ago and slightly above analyst expectations at $31.3 billion.

AT&T shares edged up 15 cents to $30.38 in premarket trading.

Wireless makes up a little more than half of AT&T’s revenue. The rest comes from its traditional, wired phone company side. There, results were largely stable, but AT&T reported a loss of broadband subscribers, something it’s only done once before. In most of its local-phone territory, AT&T is unable to offer broadband speeds that match those of cable companies. It has upgraded some areas for faster speeds.


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