AT&T profits beat expectation with data-hungry devices

AT&T Inc., the largest U.S. phone company, posted first-quarter earnings that beat analysts’ estimates after wireless subscribers spent more on browsing the Web, downloading video and sending e-mail.

Earnings climbed to 60 cents a share from 57 cents a year earlier, Dallas-based AT&T said today in a statement. Analysts projected 57 cents, the average of estimates compiled by Bloomberg. Sales rose 1.8 percent to $31.8 billion, in line with the average analyst estimate.

AT&T is promoting feature-rich devices such as the Apple Inc. iPhone to boost monthly bills and offset slower subscriber growth in a market where most people already have mobile phones. Average revenue per user, or ARPU, rose 1.7 percent and contract-subscriber gains were 187,000, compared with the 189,285 average of eight analyst estimates compiled by Bloomberg.

“Rising ARPU means the carriers are able to increase data pricing, which is good for the industry,” Walter Piecyk, an analyst at BTIG LLC in New York with a neutral rating on the stock, said in an interview before the earnings release.

The U.S. market is nearing saturation after a growth spurt fueled by sales of the iPhone last year. Wireless penetration in the U.S. is 105 percent when including mobile devices like tablet computers, said Bob Roche, a statistician with CTIA, a wireless-industry trade group.

AT&T fell 0.8 percent to $30.61 yesterday. The stock has advanced 1.2 percent this year.


First-quarter net income rose 5.2 percent to $3.58 billion from $3.41 billion a year earlier.

While AT&T’s contract-subscriber gains were higher than the 62,000 added in the year-ago period, they declined from the 717,000 customers added in the fourth quarter. They also trailed the gains at main rival Verizon Wireless.

The slowing market is forcing AT&T into more intense competition with Verizon Wireless and Sprint Nextel Corp., with the carriers fighting over a shrinking pool of people who don’t yet have mobile phones. They’re also trying to get customers to upgrade to smartphones such as the iPhone that let users browse the Web and stream video.

Average monthly revenue per AT&T contract subscriber increased to $64.46. Analysts projected $64.29, the average of eight estimates compiled by Bloomberg. ARPU growth slowed from 2.4 percent a year earlier.

Last week, Verizon Wireless reported first quarter contract subscriber ARPU of $55.43, more than a $1 higher than analysts’ estimated.