AT&T's Net Falls Short (Update)

Despite the impact to the company's operations, AT&T CEO Randall Stephenson is pleased with iPhone adoption. Even though the company must pay out a high subsidy to Apple, AT&T is seeing an increase in the average revenue per subscriber among wireless services and data transfer both year over year and sequentially.

AT&T Mobility head Ralph de la Vega said that the iPhone 3G drove store traffic up 15% from a year ago, and that the average revenue per subscriber, or ARPU, is 1.6 times greater for iPhone 3G users than the average subscriber in the postpaid base. Additionally, de la Vega said that iPhone 3G churn is significantly lower than the average for postpaid base.

"iPhone 3G activations have exceeded expectations and have brought a significant halo effect," said de la Vega during the company's conference call. "The iPhone 3G is attracting high-quality, high-ARPU customers, winning share at the high end."

Among AT&T's other quarter figures, revenue came in at $31.34 billion, up 4% from the year-ago quarter and in line with Wall Street's prediction of $31.31 billion.

AT&T said it had a net gain of 2 million wireless subscribers in the quarter, taking its total customer count to 74.9 million. Postpaid churn, which measures how many subscribers canceled services, came in at 1.2%, compared with 1.3% in the year-ago quarter and 1.1% in the second quarter.

As expected, AT&T saw a sharp decline in its wireline business segment. The unit saw income slip 12% sequentially and 7.5% from a year ago.