USA's AT&T has reported a 10 percent rise in its second-quarter profits of US$3.9 billion, on revenues that were flat at US$31.6 billion. Excluding the effect of the sale of its Advertising Solutions unit, sales would have been up by 2 percent compared to the previous year.
Operating income was $6.8 billion, up from $6.2 billion; and AT&T's operating income margin expanded to 21.6 percent, compared to 19.6 percent, the best in four years.
Total wireless revenues, which include equipment sales, were up 4.8 percent year over year to $16.4 billion. Wireless data revenues increased by $1 billion, or 18.8 percent, from the year-earlier quarter to $6.4 billion. Second-quarter wireless operating expenses totaled $11.4 billion, flat versus a year ago, and wireless operating income was $5.0 billion, up 17.8 percent year over year.
AT&T posted a net increase in total wireless subscribers of 1.3 million in the second quarter to reach 105.2 million in service. This included gains in every customer category. Subscriber additions for the quarter included postpaid net adds of 320,000. Prepaid net adds were 92,000, connected device net adds were 382,000 and reseller net adds were 472,000. Second-quarter net adds reflect continued adoption of smartphones and sales of tablets.
AT&T sold 5.1 million smartphones in the second quarter, and smartphones represented 77 percent of postpaid device sales.
At the end of the quarter, 61.9 percent, or 43.1 million, of AT&T's postpaid subscribers had smartphones, up from 49.9 percent, or 34.1 million, a year earlier. AT&T's ARPU for smartphones is twice that of non-smartphone subscribers. Churn levels for these subscribers are significantly lower than for other postpaid subscribers. More than one-third of AT&T's postpaid smartphone customers use a 4G-capable device.
"We executed well across the business and posted another strong quarter with growing revenues, expanding margins and double-digit earnings growth," said Randall Stephenson, AT&T chairman and chief executive officer. "Our mobile Internet leadership continues, with solid gains in smartphones and tablets, plus our wireless margins have never been better. And most impressive, with this growth, we also achieved our best-ever postpaid wireless churn, which points to the premier experience customers receive on our network."
"In addition, with disciplined cost management our cash generation continues to be strong," Stephenson added. "This allows us to invest aggressively in our growth platforms while returning substantial value to shareowners through dividends and share repurchases."
