AT&T Inc. reported a 25% increase in second-quarter profit Thursday, helped by strong wireless growth and a sharp cost reductions.
The Dallas-based company added 1.6 million wireless connections to top
90 million connections for the first time, and it activated a record 3.2 million iPhone accounts. AT&T, Apple Inc.'s exclusive U.S. distributor, got a boost late in the quarter from the release of the iPhone 4."3.2 million iPhone activations - that's huge," said James Brehm, a mobile analyst at market researcher Frost & Sullivan.
More than half of the new connections, however, involved nontraditional devices such as e-book readers or alarm-monitoring systems, which generate high profit margins but relatively little revenue.
Only 496,000 new customers chose wireless-calling plans with annual contracts. Just a few years ago, AT&T and top rival Verizon Wireless used to sign up as many as 2 million contract customers each quarter when the U.S. market was still in a major growth phase.
As the U.S. wireless market matures, AT&T has moved aggressively to connect all sorts of devices to its network as a means to lift sales. It's also signing up more mobile customers for data and Internet plans.
The effort appears to be working. AT&T upped its forecast for 2010, saying it now expects "strong earnings-per-share growth" and higher free cash flow compared to the prior year.
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