AT&T reports best-ever first quarter for smartphone sales with 5.5 million, 60 percent of them are iPhones

Dallas, Texas, April 20, 2011

$0.57 diluted EPS, in comparison to $0.41 diluted EPS, and $0.58 per diluted share when excluding significant items, in first quarter of 2010
Consolidated revenues of $31.2 billion within the first quarter, up greater than $700 million, or 2.3 percent, versus the year-earlier period
10.2 percent growth in wireless revenues, with an 8.6 percent increase in wireless service revenues
Best-ever first-quarter increase in total wireless subscribers, up 2.0 million to succeed in 97.5 million subscribers in service, with gains in every category
Best-ever first-quarter smartphone sales of greater than 5.5 million
iPhone activations increased nearly 1 million year over year to three.6 million, with 23 percent of subscribers new to AT&T; iPhone subscriber churn unchanged year over year
Best-ever first-quarter connected device net adds of one.3 million
Branded computing subscribers (includes tablets, aircards and other data-only devices) up 421,000, doubling because the first quarter of 2010 to arrive 3.4 million
23.9 percent growth in wireless data revenues, up almost $1 billion versus the year-earlier quarter
Postpaid subscriber ARPU (average monthly revenues per subscriber) up 2.4 percent to $63.39, the ninth consecutive quarter with a year-over-year increase
Postpaid churn stable excluding the impacts of the Alltel and Centennial integration
Third consecutive quarter of year-over-year growth in wireline consumer revenues, driven by AT&T U-verse® services
218,000 net gain in AT&T U-verse TV subscribers to achieve 3.2 million in service, with continued high broadband and voice attach rates
26.1 percent growth in wireline consumer IP data revenues, driven by AT&T U-verse expansion
175,000 net gain in wireline broadband connections
Strategic business services revenues continue to extend, up 18.8 percent year over year, the handiest performance in additional than two years

Note: AT&T’s first-quarter earnings conference call shall be broadcast live via the web at 10 a.m. ET on Wednesday, April 20, 2011, at www.att.com/investor.relations.

AT&T Inc. (NYSE:T) today reported first-quarter results, highlighted by continued robust mobile broadband growth with record first-quarter smartphone sales and a two-fold year-over-year increase in branded computing subscribers.

“We delivered another robust mobile broadband growth quarter for an extremely solid begin to the year,” said Randall Stephenson , AT&T chairman and chief executive officer. “We posted double-digit wireless revenue growth, and we set new first-quarter records in total net adds, connected device net adds and smartphone sales. Growth in tablets and other branded computing subscribers also is still strong.

“Mobile broadband networks are driving unprecedented growth and innovation, and AT&T is playing a number one role in bringing these benefits to customers,” Stephenson said. “That’s why our agreement to accumulate T-Mobile USA , which we announced in March, is so important. Combined, the 2 companies’ spectrum and network assets will let us simultaneously address spectrum issues created by this increased demand and improve customers’ network experience as volumes keep growing.”

First-Quarter Financial Results
For the quarter ended March 31, 2011, AT&T’s consolidated revenues totaled $31.2 billion, up greater than $700 million, or 2.3 percent, versus the year-earlier quarter, marking the corporate’s fifth consecutive quarter with a year-over-year revenue increase.

Compared with results for the primary quarter of 2010, operating expenses were $25.4 billion versus $24.6 billion; operating income was $5.8 billion, down from $6.0 billion; and AT&T’s operating income margin was 18.6 percent, when compared with 19.6 percent.

First-quarter 2011 net income brought on by AT&T totaled $3.4 billion, or $0.57 per diluted share. These results compare with reported net income caused by AT&T of $2.5 billion, or $0.41 per diluted share, inside the first quarter of 2010. Excluding 2010 significant items, earnings per share for the 1st quarter of 2011 was stable with earnings per share of $0.58 per diluted share within the year-ago first quarter.

First-quarter 2011 cash from operating activities totaled $7.7 billion, and capital expenditures totaled $4.2 billion. Free cash flow – cash from operating activities minus capital expenditures – totaled $3.6 billion.

Wireless Operational Highlights
Led by strong performance in mobile broadband within the first quarter, AT&T delivered continued solid growth in its wireless business, including record first-quarter subscriber growth and stable churn.

Highlights included:

Mobile Broadband Drives Solid Subscriber Gains. AT&T posted a net gain in total wireless subscribers of two.0 million, to succeed in 97.5 million in service. This included gains in every customer category. First-quarter net adds reflect adoption of smartphones, increases in prepaid subscribers, strength within the reseller channel and a record first quarter for connected devices similar to eReaders , security systems, fleet management systems and a bunch of alternative products. Retail net adds for the quarter include postpaid net adds of 62,000. Excluding the impacts of the Alltel and Centennial integration migrations, postpaid net adds were approximately 165,000. Prepaid net adds were 85,000. Connected device net adds were 1.3 million, and reseller net adds were 561,000.

Tablet Sales Drive Branded Computing Subscribers. AT&T had a powerful quarter with branded computing subscribers, a brand new growth area for the corporate that comes with tablets, aircards, MiFi devices, tethering plans and other data-only devices. AT&T added 421,000 of those devices to arrive 3.4 million, twice as many as a year ago. Most of these new subscribers were tablets with 322,000 added within the quarter. Greater than 80 percent of these tablets were booked to the prepaid category.

Sequential Churn Stable. Churn levels were relatively stable sequentially. Total churn was 1.36 percent versus 1.30 percent inside the first quarter of 2010 and 1.32 percent within the fourth quarter of 2010. Postpaid churn was 1.18 percent, in comparison to 1.07 percent within the year-ago first quarter and 1.15 percent inside the fourth quarter of 2010. Excluding the impacts of the Alltel and Centennial migrations, postpaid churn was 1.12 percent for the quarter, compared with 1.05 percent inside the year-ago quarter and 1.10 percent within the fourth quarter of 2010.

Smartphone Sales Remain Strong. AT&T had another strong quarter of smartphone sales. (Smartphones are voice and knowledge devices with a complicated operating system to higher manage data and Internet access.) Greater than 5.5 million smartphones were sold inside the first quarter, the third-highest quarter ever and a rise of greater than 60 percent year over year. In the course of the quarter, 3.6 million iPhones were activated. Approximately 65 percent of postpaid sales were smartphones.

At the top of the quarter, 46.2 percent of AT&T’s 68.1 million postpaid subscribers had smartphones, up from 34.7 percent a year earlier. The typical ARPU for smartphones on 0 AT&T’s network 0 is 1.8 times that of the corporate’s other devices. Greater than 80 percent of smartphone subscribers are on FamilyTalk and/or business discount plans. Churn levels for these subscribers are significantly less than for other postpaid subscribers.

Double-Digit Wireless Revenue Growth. Total wireless revenues, consisting of equipment sales, were up 10.2 percent year over year to $15.3 billion. Wireless service revenues increased 8.6 percent, to $14.0 billion, within the first quarter.

Wireless Data Revenues Lead Growth. Wireless data revenues – driven by messaging, Internet access, access to applications and related services – increased nearly $1 billion, or 23.9 percent, from the year-earlier quarter to $5.1 billion. AT&T postpaid wireless subscribers on monthly data plans increased by 18.7 percent during the last year. Versus the year-earlier quarter, total 1 text messages 1 carried at the AT&T network increased by greater than 25 percent to 179.8 billion, and multimedia messages increased by 54.2 percent to three.7 billion.

Postpaid ARPU Expansion. Driven by strong data growth, postpaid subscriber ARPU increased 2.4 percent versus the year-earlier quarter to $63.39. This marked the ninth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Excluding the impact of the Alltel merger, postpaid ARPU growth would were about 3 percent year over year. Postpaid data ARPU reached $23.35, up 16.0 percent versus the year-earlier quarter.

Wireless Margins Reflect Strong Smartphone Sales. First-quarter wireless margins reflected increased operating costs linked to strong smartphone sales, high customer upgrade levels and the Alltel and Centennial merger costs, offset partly by improved operating efficiencies and extra revenue growth from the corporate’s base of high-quality smartphone subscribers. AT&T’s first-quarter wireless operating income margin was 25.8 percent versus 30.0 percent within the year-earlier quarter, and AT&T’s wireless EBITDA service margin was 39.0 percent, compared with 44.5 percent within the first quarter of 2010. Without customer migration costs from the Alltel and Centennial mergers, service margin would had been 40.5 percent. (EBITDA service margin is earnings before interest, taxes, depreciation and amortization, divided by total service revenues.) First-quarter wireless operating expenses totaled $11.4 billion, up 16.8 percent versus the year-earlier quarter, and wireless operating income was $3.9 billion, down 5.3 percent year over year.

Wireline Operational Highlights
AT&T’s first-quarter wireline results were highlighted by continued growth in consumer revenues, sustained growth in revenues from strategic business services and solid cost management.

Highlights included:

Growth in Wireline Consumer Revenues Continues. Driven by strength in IP data services, revenue from residential customers totaled $5.3 billion within the first quarter, up 0.5 percent year over year, the third consecutive quarter of year-over-year growth.

U-verse Drives Consumer Growth. 2 AT&T U-verse 2 TV added 218,000 subscribers to succeed in 3.2 million in service. Within the first quarter, the AT&T U-verse High Speed Internet attach rate continued to run above 90 percent and nearly 60 percent of subscribers took AT&T U-verse Voice. Greater than three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. ARPU for U-verse triple-play customers was $168, up 14.3 percent year over year.

AT&T’s U-verse deployment now reaches 28 million living units. Companywide penetration of eligible living units is 15.3 percent, and across areas marketed to for 30 months or more, overall penetration is 23.8 percent. AT&T’s total video subscribers, which combine the corporate’s U-verse and bundled satellite customers, reached 5.1 million on the end of the quarter, representing 20.6 percent of households served.

Wireline Broadband Growth Remains Strong. Driven by strength in AT&T U-verse High Speed Internet service and standalone broadband, AT&T posted a 175,000 net gain in 3 wireline broadband connections 3 . About two-thirds of customers have a broadband plan of three Mbps or higher.

IP Data Growth Transforms Consumer. Increased AT&T U-verse penetration and a vital selection of subscribers on triple- or quad-play options drove 26.1 percent year-over-year growth in IP revenues from residential customers (broadband, U-verse TV and U-verse Voice). IP revenues now represent 46.9 percent of total wireline consumer revenue, up from 37.4 percent inside the first quarter of 2010.

Growth in Revenues Per Household.Wireline revenues per household served increased 6.5 percent versus the year-earlier first quarter and were up 1.4 percent sequentially (average revenue per household is total consumer wireline revenue divided by the common monthly households in service), driven by AT&T U-verse services. This marked AT&T’s 13th consecutive quarter with year-over-year growth in wireline consumer revenues per household.

Consumer Connection Trends. Within the first quarter, AT&T posted a decline in total consumer revenue connections due primarily to expected declines in traditional voice access lines, in keeping with broader industry trends and somewhat offset by increases in U-verse TV, broadband and VoIP (Voice over Internet Protocol) connections. AT&T U-verse Voice connections increased by 181,000 within the quarter and 716,000 during the last four quarters. Total consumer revenue connections on the end of the primary quarter were 43.1 million, compared with 45.0 million on the end of the primary quarter of 2010 and 43.4 million on the end of the fourth quarter of 2010.

Strongest Growth in Strategic Business Services in additional than Two Years. Revenues from new-generation capabilities that lead AT&T’s most advanced business solutions – including Ethernet, VPNs, 4 hosting 4 , IP conferencing and 5 application services 5 – grew 18.8 percent versus the year-earlier quarter, their strongest growth in additional than two years, continuing AT&T’s strong trends on this category. Total business revenues were $9.3 billion, a decline of four.5 percent versus the year-earlier quarter and down 2.0 percent sequentially, reflecting economic weakness in voice and legacy data products and the third-quarter 2010 sale of the corporate’s Japan assets. When normalized for the Japan sale, total business revenues declined 3.6 percent, in regards to the same rate as normalized results for the fourth quarter of 2010 and improved from the year-ago quarter. Business service revenues, which exclude CPE, declined 4.4 percent year over year and were down slightly sequentially.

Growth in Business IP Revenues. Total business IP data revenues grew 8.5 percent versus the year-earlier first quarter, led by growth in VPN revenues. Greater than 70 percent of AT&T’s frame customers have made the transition to 6 IP-based solutions 6 , which permit them to simply add managed services corresponding to network security, cloud services and IP conferencing on top in their infrastructures. Total business data revenue growth was 0.3 percent when put next to a year earlier.

Wireline Operating Expenses Down 2.7 Percent Year Over Year. AT&T’s first-quarter wireline operating income margin was 11.5 percent, down slightly in comparison with 12.0 percent within the year-earlier quarter and 13.0 percent inside the fourth quarter of 2010. Improved consumer revenue trends and execution of cost initiatives helped to partly offset declines in voice revenues and storm-related costs within the West. First-quarter total wireline revenues were $15.0 billion, down 3.2 percent versus the year-earlier quarter. First-quarter wireline operating expenses were $13.2 billion, down 2.7 percent versus the 1st quarter of 2010 and up 0.4 percent sequentially. Wireline operating income totaled $1.7 billion, when compared with $1.9 billion within the first quarter of 2010 and $2.0 billion within the fourth quarter of 2010.

*AT&T services and products are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and never by AT&T Inc.

About AT&T
AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates – AT&T operating companies – are the providers of AT&T services within the Usa and worldwide. With an impressive array of network resources featuring the nation’s fastest mobile broadband network, AT&T is a number one provider of wireless, Wi-Fi, high speed Internet and voice services. a frontrunner in mobile broadband, AT&T also offers the highest wireless coverage worldwide, offering the foremost wireless phones that work within the most countries. It also offers advanced TV services under the AT&T U-verse® and AT&T | DIRECTV brands. The corporate’s suite of IP-based business communications services is without doubt one of the most advanced on the earth. In domestic markets, AT&T Advertising Solutions and AT&T Interactive are known for his or her leadership in local search and advertising.

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NOTE: EBITDA is defined as earnings before interests, taxes, depreciation and amortization. EBITDA differs from Segment Operating Income (loss), as calculated in line with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA doesn’t give effect to cash used for debt service requirements and thus doesn’t reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA seriously is not presented as a substitute measure of operating results or cash flows from operations, as determined in response to GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an awesome indicator of the way much cash is generated by normal business operations, including capital expenditures, and makes decisions in response to it. Management also views it as a measure of money available to pay debt and return cash to shareowners.

NOTE: Adjusted Operating Income and altered Operating Income Margin are non-GAAP financial measures calculated by excluding from operating revenues and operating expenses significant items which are non-operational or non-recurring in nature. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Income and altered Operating Income Margin must be considered as well as , but not instead for, other measures of monetary performance reported in keeping with GAAP. Our calculation of Adjusted Operating Income, as presented, may differ from similarly titled measures reported by other companies.