Apple 2.0

Covering the business that Steve Jobs built

What the iPhone did for AT&T

October 22, 2009: 11:06 AM ET

Sales are up. Churn is down. Wireless data revenue is pouring in.

att_logoIn the flat but better-than-expected third quarter earnings report AT&T (T) issued Thursday, most of the good news came from its wireless division via the iPhone.

True its margins got squeezed -- as they do every quarter -- by heavy iPhone discounts and the bounty the carrier pays Apple (AAPL) for each device it sells. And its reputation continues to suffer under the strain of delivering broadband to millions of data-gobbling iPhones.

But on the plus side:

  • AT&T activated a record 3.2 million iPhones last quarter, 40% to new customers.
  • Wireless data revenue was $3.6 billion, up 33.6% from a year ago.
  • Total subscriber churn for the quarter was 1.43%, down from 1.69% a year ago.

As ZDNet's Larry Dignan put it: "You may gripe about AT&T, but you don't leave."

Even AT&T's famously spotty cellular service is getting better -- or so the company claims. Dropped calls on its 3G network fell 12% over the past year, to something approaching 1%. Your mileage may vary, especially in city driving.

For the company's earnings statement, press release and slide presentation, click here.

[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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