Even though consumers know AT&T (NYSE: T) as one of the oldest legacy telecom providers in the U.S., the big company continues to show that it can stay ahead of the curve with its strong brand and attractively priced products. Not that Ma Bell's recent quarterly earnings blew me away, but it was still an impressive showing in an economy that has severely affected most other companies.
AT&T reported that second-quarter revenue grew 4.7% to $30.9 billion, for a yield of $3.8 billion in net income. Driving the growth this quarter once again was the wireless group, where the Apple (Nasdaq: AAPL) iPhone continues to bag more high-paying wireless users. Apparently, the recent release of the iPhone 3G went even better than the rollout of the first generation did last June, with the first 12 days of sales of the device ringing up nearly double the numbers of the 2007 launch.
Savvy mobile users are taking advantage of the advanced data features on the iPhone and similar data-capable devices from Samsung, Nokia (NYSE: NOK) and Research In Motion (Nasdaq: RIMM) to access the Web and location applications. AT&T reported that wireless-data revenue grew 52% over last year, as subscribers use messaging features as well as applications such as Google (Nasdaq: GOOG) Maps.
AT&T continues to lose traditional wireline customers, but it's been particularly successful at replacing them with wireless subscribers -- it has captured a net 1.3 million new subscribers this quarter. Subscribers still consider AT&T the leading mobile service provider in the U.S., at least until Verizon (NYSE: VZ) completes its anticipated acquisition of Alltel. But holding exclusive rights to the iPhone will give AT&T bragging rights even if it loses top-dog status.
The other major consumer-growth area for AT&T is in broadband services, both in DSL services and in its U-verse broadband television offering. This area has taken an impact from the economy, though, with AT&T adding only 46,000 broadband customers this quarter. It did sign up 170,000 new U-verse subscribers, however, an indication that demand for next-generation media is still strong in particular markets.
The coming quarters will be far more telling for AT&T. As the new iPhone hits the bottom line and the company gears up for the big holiday selling season, AT&T's advantages should really start to differentiate it from competitors Verizon and Sprint Nextel (NYSE: S).
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