Ina Fried

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AT&T Says T-Mobile Deal Remains on Track to Close Early Next Year

AT&T said on Thursday that it believes its $39 billion deal to acquire T-Mobile USA remains on track to close in the first quarter of next year, with the company remaining confident it will win approval for the deal.

The company said that regulators are asking the types of questions it expected, and that AT&T is making the case for the kinds of public benefits and efficiencies it believes justify allowing the deal to proceed.

“We remain comfortable with the process so far,” AT&T general counsel Wayne Watts said on a conference call with analysts. “They are asking all the right questions.”

The company still faces opposition from Sprint and some politicians, and needs regulatory approval from both the Federal Communications Commission and the Department of Justice.

Earlier on Thursday, the company posted better-than-expected sales, boosted by a gain of 1.1 million wireless subscribers, among other factors. The company sold more than 3.6 million iPhones and saw total smartphone sales make up 70 percent of traditional postpaid phone sales. AT&T CFO John Stephens said on the conference call that the company expects strong smartphone sales for the remainder of the year.

“We had a solid quarter, which adds to our confidence as we head into the second half,” Stephens said.

Among other details, the company also slightly upped its estimate of how much it expects to spend on new capital equipment, forecasting $20 billion in such expenses, up from a previous forecast of somewhere in the low- to mid-$19 billion range.

The company also noted it had its strongest quarter of sales for computing-related devices such as tablets, wireless aircards and hotspots, as well as tethering plans. AT&T added 545,000 such devices in the quarter, with a total of four million devices in service — almost twice as many as it had a year ago. Tablet sales, it said, were particularly strong, with 377,000 added during the quarter. Interestingly, it said that 30 percent of tablet sales were postpaid (think Galaxy Tab and the like). The iPad is considered prepaid because it is sold without a contract, with users paying AT&T only when they want service.

AT&T’s “churn rate,” a number that refers to the percentage of customers lost during the quarter, was 1.43 percent, up slightly from both the prior and year-ago quarters. The company saw its average revenue per traditional subscriber increase two percent year over year to $63.87, with average data revenues up 16.6 percent from a year ago.

On the non-wireless side of things, the company said its U-verse TV service added 202,000 subscribers, with 3.4 million in service. The company added 439,000 subscribers for its U-verse-branded high-speed Internet service, partly offsetting a decline in DSL subscribers.

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