For the 2009 3rd quarter SEC filing -- AT&T reported a decrease in operating income of 4.1%, in comparison to their 2008 filing. This decrease has been blamed on the decline in voice revenue and other post-employment benefits. AT&T continues to explain that additional losses were offset by the continued growth in the wireless service space. This growth was in part due to the continued success of the Apple iPhone -- which is partially responsible for a wireless income increase of 41.2%.
It would appear that the iPhone is the lynch pin to AT&T's continued growth in the wireless service space; which as of September 30, 2009 stands at 81.6 million customers. AT&T is optimistic that its customer base will continue to grow and purchase more advanced handsets, such as the iPhone. According to the International Telecommunication Union (ITU) handset penetration will hit 5 billion worldwide in 2010 so there is little doubt that AT&T will continue to see a steady growth in its wireless income.
Although it's not an advanced handset -- the iPad stands to increase AT&T's market share and its wireless income. On Friday, 03.12.2010 at 5:30 AM PST Apple began accepting pre-orders for the iPad. According to Mashable -- Apple sold 90, 000 iPads in the first day. Katy Huberty, a Morgan Stanley analyst, explained that Apple will sell some six million iPads during calendar 2010.
If this is true, then AT&T is looking at another solid revenue stream. Unlike the iPhone there will be no 2-year contract but the iPad will have a pre-paid discounted data plan. If you don't want to use AT&T, you can go to a competitor like Verizon. Unfortunately, the Verizon plan is expensive -- $60 a month with a 2 year contract. It seems rather clear that AT&T will also have your iPad business.
In preparation for the iPad, AT&T has been upgrading its 3G network -- especially in NYC and San Francisco. The company has said that they are spending about $2 billion dollars -- in new 3G hardware. Unfortunately, we really just don't know if the upgrades and all the buzz will be enough to make the iPad an overnight success. It is clear that Apple's success is AT&T's success; at least in the wireless space. I just wonder if the iPad is an overnight failure -- is AT&T prepared for the financial backlash?