AT&T Shows Quarterly Decline Thanks To IPhone 3GS

Posted: Jul 23 2009, 9:40am CDT | by , Updated: Aug 11 2010, 3:27pm CDT, in News | Mobile Phones

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Despite record-breaking iPhone sales and a huge increase in their number of subscribers, AT&T's revenue is down from $3.8 billion to $3.2 billion this quarter. The launch of the iPhone 3GS was the carrier's biggest sales day in history and this quarter saw a gain of 1.4 million subscribers. This has been a great quarter for why is revenue down?

As it turns out, the iPhone is to blame for that as well. AT&T has to subsidize every iPhone sold in order to keep costs down. This means that actual iPhone sales lose them money. Of course, that doesn't mean the iPhone is hurting AT&T. A little bit of a loss now is a fair price to pay for the overall profits they're going to rake in over the next couple of years.

This quarter has seen a 37.2% increase in data revenue, which includes Internet access and text messaging. With all these new iPhones and subscribers, that number is only going to go up. People who subscribe to the iPhone have to buy two-year contracts and data plans. Selling a 3GS may initially lose the company a few bucks, but they'll have made it up after the first month or two of subscription fees.

Altogether, this was a very good quarter for AT&T. In the long run, these losses mean very little. Of course, in the long run ATT's going to have to find a way to keep Apple exclusive to their carrier or deal with losing their most profitable partnership. But they don't have to worry about that for another six months.

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<a href="/latest_stories/all/all/5" rel="author">Robert Evans</a>
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