AT&T says it signed up a net of just 400,000 customers on contract-based wireless plans in the fourth quarter, the lowest number in at least five years.
The result demonstrated that even though sales of the iPhone were strong, it's lost much of its power to attract customers from other carriers. In two weeks, AT&T Inc. will face more competition as Verizon Wireless starts selling the iPhone.
Subscribers who sign two-year contracts are the most lucrative for wireless carriers and are an important measure of their performance. AT&T balanced the weakness somewhat by adding large numbers of other subscribers. It added a record 1.5 million "Connected devices," a category that collects non-phone devices like Kindle e-book readers and Internet-enabled GPS units. AT&T is taking a lead in this area, but the revenue per subscriber is much lower than it is for phones.
AT&T also added 442,000 subscribers with tablets like the iPad. They generally don't sign contracts, and can drop their $30 monthly fees at any time.
All told, AT&T added a record 2.8 million wireless subscribers, to reach 95.5 million, or 86.2 million excluding "connected devices."
Verizon Wireless, AT&T's chief competitor, on Tuesday reported adding more than twice as many subscribers under contract. However, difference is exaggerated by the fact that Verizon sells tablets with contracts, while AT&T doesn't. Excluding "connected devices," Verizon has 94.1 million subscribers.
Dallas-based AT&T posted net income of $1.09 billion, or 18 cents per share, for the October to December period. That was down 60 percent from $2.8 billion, or 46 cents per share, in the same period of 2009.
Excluding items, chiefly due to the performance of its pension and health care plans for retirees, earnings were 55 cents per share, a penny above the average estimate of analysts polled by FactSet.
Revenue was $31.4 billion, up 2.1 percent from a year ago. It was slightly short of analyst expectations at $31.5 billion.
AT&T shares fell 76 cents, or 2.7 percent, to $27.97 in pre-market trading.
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