AT&T’s Slight Growth Fueled by iPhone

AT&T today posted a 26 percent increase in second-quarter earnings, driven by iPhone-fueled growth and fewer customer defections, despite a slowing rate of new postpaid subscribers.

The Dallas, Texas-based company reported a profit of $4.02 billion in the April-June quarter, up from $3.2 billion a year earlier. Revenue rose 0.6 percent to $30.8 billion.

The company also signed up a 496,000 new postpaid subscribers, down slightly from the 512,000 it signed in the last quarter, and a little more than a third of what it has signed up a year earlier. Wireless carriers, as a whole, have increasingly found it difficult to sign up lucrative long-term contract-signing customers, as many opt to go with a prepaid option.

“Our expectation this year is that net adds will be less than it has been in the last couple of years,” said Rick Lindner, AT&T’s chief financial officer. “That doesn’t mean there isn’t significant opportunity for growth.”

Lindner added that he expects postpaid subscriber growth to bounce back next quarter, as more new customers purchase its recently launched iPhone 4.

AT&T said it, once again, activated a record number of iPhones — 3.2 million units in the quarter. Apple released the iPhone 4 with a week left in the quarter, so the new device contributed little to AT&T’s revenue. Regardless, Lindner said the iPhone 4s sell out as soon as they arrive.

The company, along with other carriers, has also looked to providing wireless services to non-traditional device, such as electronic readers and dog collars. In total, it added 896,000 such devices in the quarter.

Prepaid results were also boosted by sales of iPads, which access data services through a prepaid model. Lindner said AT&T had activated 400,000 to 500,000 iPad 3Gs in the first two months.

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