AT&T Still Riding High on iPhone

Android phones may be all the rage right now, but for AT&T the Apple iPhone remains its more alluring gold mine.

In its third-quarter earnings released Thursday, AT&T reported that it activated a record 5.2 million iPhones, a 62% increase from the company's previous record of 3.2 million iPhones activated in the second quarter. AT&T says that nearly a quarter of those activations were for new customers.

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Those 1.25 million new iPhone users represented just under half of the 2.6 million wireless subscribers that AT&T added in the third quarter. AT&T reported healthy gains in wireless revenues over the past quarter, as its $13.7 in revenues represented a 10.5% increase over the $12.4 billion in wireless revenues the company posted in the third quarter of 2009. AT&T's wireless churn rate dropped to 1.32% in the third quarter, down from 1.42% in Q3 2009, meaning that AT&T is turning over fewer customers this year than it was a year ago.

Overall, AT&T this past quarter posted net income of $12.3 billion, nearly four times the $3.2 billion in earnings it posted in the third quarter of 2009. However, a good chunk of the earnings were a result of a one-time tax settlement and from a gain in selling its Sterling Commerce unit. On the year, AT&T has so far posted earnings of $18.8 billion, nearly double the $9.5 billion net income the company had posted through three quarters last year. Revenue crept up to $31.5 billion from $30.7 billion in Q3 2009.

AT&T's strong earnings report comes during a time when rumors have been flaring up that Verizon and Apple might be close to finishing a deal to bring a CDMA-based iPhone to Verizon. AT&T has had exclusive rights to sell the iPhone to customers in the United States since its debut in 2007. The iPhone's popularity has been a major factor in helping AT&T keep pace with Verizon's total number of subscribers, as AT&T now has a total of 92.8 million wireless users nationwide.

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