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Wednesday, July 23, 2008, 09:00 am PT (12:00 pm ET)

AT&T says initial iPhone sales double that of last year

AT&T said Wednesday that sales of Apple's iPhone 3G during the first twelve days were nearly double that of last year, this despite shortages that have seen backorders stretch one to three weeks at its retail stores.

AT&T made the announcement while releasing results for its fiscal second quarter, in which it said that profits rose 30 percent to $3.77 billion, or 63 cents per share, on revenue of $30.9 billion for the three months ended June 30. Those results don't include a boost from iPhone 3G, however, as the device did not go on sale until July 11th — 11 days after the quarter's end.

The nation's largest telecoms firm said mobility, broadband connectivity and integrated services that encompass voice, data and video are driving a new wave of communications, and that it plans to enhance its premier networks and products to best deliver those emerging capabilities to both business and consumers.

"The Apple iPhone 3G is a dramatic example of this transformation," said chief executive Randall Stephenson. "In the days following our exclusive U.S. launch of this new device, powered by the nation's fastest 3G wireless network, customer response has been everything we had anticipated and more."

During the quarter, AT&T added 1.3 million wireless subscribers, which was about 200,000 shy of the 1.5 million added by main rival Verizon Wireless. Still, AT&T ended the quarter with 72.8 million customers compared to Verizon Wireless' 68.7 million, maintaining is rank as the largest US wireless provider.

Total wireless revenues increased 15.8 percent to $12.0 billion in the second quarter, and wireless service revenues, which exclude handset and accessory sales, grew 14.8 percent to $11.0 billion. AT&T said wireless revenue growth was driven by its solid subscriber gains and a greater number of customers choosing more advanced smartphones and integrated devices like the iPhone.

Those smartphone users helped more than doubled AT&T's wireless data revenues to $2.5 billion, while revenues from e-mail, messaging and data access also saw greater than 50 percent growth. At the same time, text messaging volumes tripled versus totals for the year earlier, and multimedia message volumes increased more than 170 percent. At the end of the second quarter, approximately 18 percent of AT&T's postpaid wireless subscribers had an integrated device, up from 8 percent last year.

On average, AT&T said iPhone and other smartphone subscribers produce average revenues of roughly double the company average. The carrier expects continued strong growth in wireless data services as more customers choose data plans and advanced wireless devices such as the new iPhone 3G.

AT&T also said that retail postpaid churn — or number of subscribers who left and were subsequently replaced — moved down to 1.1 percent in the second quarter, which represents the lowest level in its corporate history.