AT&T appears to be all set to break their previous quarterly records on smartphone sales, largely thanks to the popularity of the iPhone 4S.
AT&T announced in an online press release that it sold 6 million smartphones in the just the first two months of the fourth quarter. With some time left, it looks like it’s ready to beat its previous record of 6.1 million smartphones.
AT&T’s strong smartphone sales in part reflect a higher number of handset upgrades from customers who were waiting for the launch of a new iPhone. AT&T previously announced that it activated more than 1 million iPhone 4S’ in the first five days the device was available. AT&T said iPhone 4S sales remain strong. Only on AT&T’s network can iPhone 4S users download three times faster and talk and surf at the same time.
Their announcement also covers a bit of the new 4G LTE roll-out.
Stephens also said today that AT&T will turn up additional 4G LTE markets, including New York City, this month, and expects to cover 70 million people with its LTE network by year-end 2011, consistent with its previously announced plans.
AT&T also posted a regulatory filing highlighting that they’ll be due for a hit financially.
Also consistent with AT&T’s earlier guidance, these record smartphone sales are expected to have a near-term negative impact on margins and therefore earnings. However, AT&T expects that these postpaid customers over time will benefit the Company as, historically, postpaid customers produce stable revenue, reflecting their contract term, and higher average revenue per subscriber, including stronger data usage, than other customer categories.
While this may seem counter-intuitive, it’s pretty standard. AT&T will have to take over the subsidies for all of those record-breaking smartphone sales. In the long-term, however, they’ll be making up the revenue due to a larger customer-base locked into 2-year contracts.
AT&T’s long-term gains may help them improve their poor customer service or perhaps launch their 4G LTE network in more markets.