AT&T adds wireless users but trails Verizon Wireless


U.S. telco posted $3.86 billion loss in Q4.

AT&T Inc. added subscribers in the fourth-quarter, but it couldn’t keep pace with rival Verizon Wireless, as the telecom companies continue to compete for the shrinking number of customers that are adopting smartphones.

The Dallas-based wireless carrier added 780,000 contract customers–the most valuable and profitable–bringing its total to around 1.4 million for 2012. In comparison, Verizon Wireless added 2.1 million contract customers in the quarter and 5 million for the year.

“Our objective is to not lose share throughout the course of this year and actually get to a point where we are gaining share vis-a-vis our competitors,” Chief Executive Randall Stephenson said. He added that the company aims to “get our margins comparable to our competitors and also equalize share.”

AT&T trails Verizon’s Wireless in total contact subscribers by more than 20 million. The gap is amplified by a U.S. wireless industry that isn’t growing very much overall, as most people already have phones.

AT&T released its subscriber numbers as part of the company’s fourth-quarter report, in which it lost $3.86 billion, weighed down by a previously announced charge of $10 billion for an accounting shift related to pension and post-retirement benefit plans. AT&T also projected revenue and earnings growth in 2013 that was slightly above analyst estimates.

Shares of AT&T dropped a couple pennies after hours to $33.73.

AT&T’s smartphone sales continued to be dominated by iPhone activations, which hit its highest level ever for the carrier, but most of those devices went to existing customers. The growing trend of users replacing older smartphones brings in less new revenue to the carrier, which still has to pay the same subsidy.

“This is a continuation of what we have been concerned about,” said Nomura Securities analyst Michael McCormack.

In the quarter, AT&T activated 8.6 million iPhones and sold about 10.2 million total smartphones. AT&T was long the exclusive U.S. carrier for the iPhone, and it has continued to activate more of the devices than any other carrier. Verizon Wireless activated 6.2 million iPhones and 9.8 million total smartphones in the same period.