AT&T Inc. reported a net loss of cellphone subscribers in the first quarter as it lost market share to bigger rival Verizon Wireless, sending its shares down about 2%.
As a result AT&T’s revenue missed Wall Street
expectations as its subscriber growth was driven by tablet computer
users who pay lower monthly fees than phone users.
Since most US consumers already have smartphones, the No.
2 US mobile service provider and its rivals are rushing to put wireless
connections in everything from tablet computers and consumer
electronics to medical devices and home security systems.
But while customers with devices like tablets are less
costly to attract than smartphone users, which require hefty subsidies,
tablet customers bring in less revenue, raising analyst concerns about
AT&T’s prospects for top-line growth.
“It’s going to take so many connected devices to make up for losing a phone subscriber,” said Nomura analyst Michael McCormack, adding that slowing phone customer growth is also a concern for smaller rivals such as Sprint Nextel and T-Mobile USA, a unit of Deutsche Telekom.
AT&T maintained its target for 2013 overall revenue
growth of 2% and said it still expects net additions of phone customers
for the full year due to a boost in sales in launch quarters for popular
phones like Apple Inc.’s iPhone.
But Susan Johnson, senior vice president for investor relations, said other devices would be increasingly important.
“It’s not just about smartphones any more,” Johnson told Reuters
in an interview on Tuesday after the company’s quarterly conference
call during which analysts peppered executives with questions about the
net loss of phone customers.
AMIT KUMAR SINGH
PGDM 2ND SEM
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