AT&T: 3.7 Million iPhones Activated Last Quarter

Continued strength in sales of the iPhone and other smartphones and growth in mobile data revenue were key factors in AT&T’s better-than-expected earnings on Tuesday.

More than three-quarters of new customers are choosing a smartphone, with 3.7 million iPhones added to its network during the quarter, AT&T CFO John Stephens said on a conference call with investors Tuesday. AT&T is also seeing higher profit margins and lower customer defections, Stephens said.

“You can clearly see the benefits of our mobile Internet strategy,” Stephens said. The carrier said it now has 43 million smartphones on its network, representing 62 percent of its customers under contract. The company says that two-thirds of those customers are on a tiered plan (rather than unlimited).

Recently introduced plans that let customers share a pool of data among multiple devices should boost the number of computing devices running on its network, Stephens said. Even before those plans, the company added half a million such devices in the quarter, including more than 200,000 tablets.

The company saw a benefit on the profits side from a stricter policy on when customers can upgrade. As for whether some buyers are waiting for the next iPhone or other upcoming devices, Stephens said it is hard to say.

“There may be some impact,” Stephens said. He added that the company would have more insight “after a device” comes out, carefully avoiding using the iWord.

On the TV side, the company added 155,000 subscribers to its U-verse video service, with a total of more than 4.1 million customers using AT&T for their TV service instead of cable or satellite.

“We believe there is a lot of room for further growth,” Stephens said.