AT&T says iPhone an instant hit

Almost 150,000 Apple iPhones were activated in their first day-and-a-half on sale, AT&T, the largest US telecommunications group, said on Tuesday. The iPhone sales figures are the first official numbers since the iPhone was launched amid a marketing blitz on June 29.

AT&T, which negotiated an exclusive deal with Apple to launch the iPhone, said over 40 per cent of the purchasers of the first 146,000 devices were new customers.

Randall Stephenson, AT&T’s recently appointed chief executive, speaking as the San Antonio-based group announced its second quarter earnings, said initial customer response to the iPhone was “unprecedented” and added that sales in July continued to be strong.

”Expectations were certainly high, but I’m pleased to say that iPhone has truly met them,” said Rick Lindner, chief financial officer during a conference call with analysts.

Nevertheless the first iPhone sales numbers disappointed some industry analysts who have suggested that after the initial rush, demand for the device had slowed dramatically. “We have noticed decent inventories at stores, and thin demand at best,’’ said Ittai Kidron, an analyst with CIBC World Markets in a note to investors.

Overall, AT&T reported a 61 per cent increase in second-quarter earnings boosted by the acquisition of BellSouth at the start of the year coupled with accelerating growth in wireless and IP (Internet Protocol)-based services and signs that business revenues are rebounding.

Net income increased to $2.9bn, or 47 cents per share, from $1.81bn, or 46 cents per share a year ago on revenues that grew to $29.5bn, up from $15.8bn. “The key message is the progress we are delivering in top line revenue growth,” said Mr Lindner.

Excluding costs for major acquisitions, earnings increased to 70 cents a share compared with 58 cents per share for the same period last year. The AT&T executives said they expected AT&T to continue to report double-digit growth in adjusted earnings per share during this year and in 2008.

Cost savings from the integration of BellSouth totalled $1.9bn in the first six months of the year and are on track to reach $3bn by the end of this year and $5bn in 2008.

Underscoring the strong growth of AT&T’s rebranded wireless unit, mobile subscribers rose by 1.5m to 63.7m and wireless revenues grew 14.9 per cent to $9.5bn paced by wireless data services growth.

Wireless data revenues increased 66.9 per cent to $1.7 billion driven by strong increases in both consumer and business data usage. AT&T now has nearly 37m active data users, up 39 per cent. from a year earlier. ”We’re at the beginning of dramatic growth in data use,” said Mr Lindner.

The company also reported strong growth in the subscriber base for its U-verse IPTV service designed to enable AT&T to compete more effectively with the cable TV companies. At the end of June, AT&T said it had 51,000 U-verse subscribers in the 23 cities in which it is available, up from the 13,000 users at the end of the first quarter.