AT&T Inc. sold a record number of iPhones in the latest quarter, continuing to siphon subscribers from other wireless carriers in a tightening industry.
The country's largest telecommunications company on Thursday said it activated 5.2 million units of Apple Inc.'s phone, roughly 400,000 more than analysts had expected. It's the exclusive U.S. carrier for the phone.
Across all types of phones, the Dallas-based company added a net 745,000 subscribers on contract-based plans, matching analyst expectations. That's much less than it has in previous years, but still strong considering growth in the industry has stalled now that nearly everyone has a phone.
The success in subscriber recruitment didn't immediately translate into a corresponding jump in profits for AT&T, since it subsidizes every new smart phone by hundreds of dollars. It makes that money back through service fees over a two-year contract, but the launch of a new iPhone model in the summer reliably holds back AT&T's earnings.
Excluding a gain on a tax settlement and the effects of the sale of a subsidiary, AT&T's income was 55 cents a share, up 3.8 percent from a year ago, despite having 14 percent more wireless subscribers and getting more out of them in fees each month. The earnings matched Wall Street expectations.
Including the settlement and unit sale, net income rose to $12.3 billion, or $2.08 per share, for the three months ended Sept. 30. That compared with $3.2 billion, or 54 cents per share, a year earlier.
Revenue climbed 3 percent to $31.58 billion. Analysts were expecting revenue of $31.25 billion, according to a poll by Thomson Reuters.
In pre-market trading, AT&T shares fell 29 cents to $28.32.
