AT&T posts record iPhone sales; first quarterly loss in three years

By Kristi E. Swartz

The Atlanta Journal-Constitution

Frustrated over having to drop its deal to buy T-Mobile USA and lose out on a quick fix to add more capacity, AT&T Chief Executive Randall Stephenson Thursday called on the Federal Communications Commission and Congress to let telecommunications companies add more wireless capacity as soon as possible.

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John Spink, jspink@ajc.com Despite selling a record number of iPhones, AT&T posted a loss for the last quarter.

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AT&T dropped its $39 billion deal to buy T-Mobile after challenges from the Department of Justice and the FCC. Walking away meant AT&T had to pay T-Mobile $3 billion in cash and $1 billion in wireless airwave capacity known as spectrum. The breakup fee, pension costs and a writedown from its phone-directory business led to the Dallas-based telecommunications company to post a $6.68 billion fourth-quarter loss -- the company's first quarterly loss in three years -- compared with a $1.09 billion profit during the last quarter of 2010.

The uncertain regulatory climate is making it difficult for the wireless industry to allocate capital, which Stephenson said is key to adding jobs in a down economy.

"The end result is that we have an industry that is just really stuck in creating any real capacity," he said, which is needed for smartphones, tablets and other mobile devices to work.

AT&T's fourth quarter sales made it clear that the appetite for such devices is increasing. The company sold 7.6 million iPhones and signed 717,000 customers to long-term contracts during the fourth quarter of 2011. Sales for the quarter, ending Dec. 31, rose 3.6 percent to $35 billion.

AT&T sold 9.4 million smartphones, which included doubling the amount of Android phones sold compared with the year before. Sales of tablets, aircards and other computer-related devices were up 70 percent, the company said.

AT&T's robust wireless division, AT&T Mobility, is based in Atlanta. The majority of AT&T's revenue growth, including a $956 million increase in wireless data revenue during the fourth quarter, comes from this unit.

AT&T's 2011 net income was $3.9 billion, or 66 cents a share compared with $19.9 billion, or $3.35 a share for 2010. Revenue for 2011 rose 2 percent to $126.7 billion.