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Good news for AT&T. The telecommunication company is reporting record profits of $3.9
billion in second quarter earnings. Here’s Fox Business and CNBC.
“The Telecom company is reporting a profit of 66 cents a share, beating the estimate
for 63 cents. Revenue came in at $31.6 billion.”
“That’s pretty much in line with expectations...The company is saying highest every wireless margins...They
say the best ever postpaid, prepaid in total wireless churn...”
The Atlanta Journal Constitution reports the company added 320,000 customers to its monthly
contract list and sold 5.1 million smartphones, which represented 77 percent of its total
sales.
That number is down almost half a million from last year which CNet says could actually
be the reason for profit growth since the longer people keep their phones—the less
AT&T has to pay the phone makers.
One example— “The iPhone continues to be an expensive catalyst for the carriers.
While it propels customer growth, it carries a cost in the form of the pricey subsidy AT&T
must pay to Apple. Still, with virtually every carrier selling the iPhone, it's become a
must-have product for every wireless player.”
But ZDNet says there’s another reason for the bump in earnings that is overlooked—business
services.
ZDNet explains services like “...hosting, VPNs and application management can keep carriers
from becoming dumb pipes and commodity bandwidth dealers...AT&T is finally to the point where
new business services are trumping legacy products.”
And a writer for Forbes says credit can be handed to a change in focus from decorating
products with discounts for new customers—to firing up fees for existing ones.
“With the cell phone market pretty well saturated, the three big telcos are no longer
bashing each other over the head discounting the latest smartphones. They’ve called a
cease-fire and are now focused on draining the wallets of existing customers via higher
data access fees, lower phone subsidies and higher fees for upgrades.”
Analysts expect AT&T’s profits to fall later this year when the iPhone5 is released because
as customers buy new phones, the service provider will have to pay more subsidies to Apple.