AT&T bolstered by iPhone sales in 4Q

It was the fourth quarter that Verizon Wireless launched an aggressive ad campaign highlighting AT&T Mobility's more sparse 3G coverage. As such, folks wondered what impact those ads would have on AT&T's fourth-quarter results. It appeared unfazed.

AT&T said it it added 2.7 million net new wireless subscribers during the fourth quarter, which was the second highest quarterly gain in the company's history. iPhone subscribers continued to make up the bulk of those net adds. The company activated 3.1 million iPhone users in fourth quarter, and more than a third were new to AT&T.

Still, the issues surrounding AT&T Mobility's 3G network continue to be a focal point as executives spent much of the quarterly conference call talking about ways to improve it. AT&T said it will spend $18 billion to $19 billion on its network in 2010, more than the $17.3 billion it spent in 2009. As part of the increased capex, the operator will increase its spend on improving backhaul capacity.

AT&T Operations President and CEO John Stankey said that "wireless is our No. 1 investment priority." In particular, the company talked about two key markets that continue to experience problems: San Francisco and New York City. The company said it has added cell site controller capacity in its troubled markets. Now it is in the process of adding third and fourth radio network carriers to maximize capacity, Stankey said.

AT&T has previously announced that its network has the software necessary to deploy HSPA 7.2Mbps but lacks the backhaul capacity. That will happen over the course of this year and 2011.

"We anticipate that the majority of our mobile data traffic will be carried over the expanded fiber-based, HSPA 7.2-capable backhaul by the end of this year, with deployment continuing to expand in 2011," AT&T recently said in a release.

With Apple's latest device, the iPad, coming out many have been asking whether AT&T Mobility can handle the additional traffic. However, AT&T executives said the new Apple iPad is a different model for the company because it is not subsidizing the device and because customers will activate it online--thus, AT&T won't have the typical activation and billing costs. However, executives also said they believe iPad users will rely predominantly on Wi-Fi, and therefore it won't drain AT&T's 3G network. "We will monitor the usage as the device gets out there," said Rick Lindner, senior executive vice president and CFO at AT&T. "If it turns out substantially different, we will adapt."

Meanwhile, Verizon Wireless benefited from the strong momentum surrounding the Motorola Droid and other smartphones during the fourth quarter holiday buying season. The company added 2.2 million net new wireless subscribers, surpassing market expectations.

For more:
- see this ZDnet article
- read this FierceWireless article
- see this release