AT&T's wireless business thrives amid pandemic

The company added a total of 645,000 monthly wireless subscribers, blowing away competitor Verizon.

Marguerite Reardon Former senior reporter
Marguerite Reardon started as a CNET News reporter in 2004, covering cellphone services, broadband, citywide Wi-Fi, the Net neutrality debate and the consolidation of the phone companies.
Marguerite Reardon
3 min read
Rafael Henrique via Getty Images

Despite the coronavirus pandemic, AT&T's wireless business is thriving. In its third-quarter earnings report Thursday, the company reported strong growth in mobile phone subscribers and streaming video subscribers for the three-month period. 

The company beat analysts' expectations with revenue of $42.3 billion during the third quarter, which ended Sept. 30. Analysts had expected revenue of  $41.6 billion, according to those polled by Yahoo Finance.

In total, AT&T added 645,000 new monthly phone subscribers during the quarter. These so-called postpaid customers are important because they're considered the most valuable customers. Tracking their growth is often a signal of the health of the wireless business. 

AT&T CEO John Stankey said the growth in postpaid wireless "was the strongest that it's been in years."

The company also reported that the churn rate, or the rate at which people leave its service, for phone customers was 0.69% for the quarter, the best churn rate the company has ever reported.  

On the call with investors and analysts, Stankey credited AT&T's success in wireless to the investments the company has made over the past several years to build and maintain the FirstNet wireless network, which not only provides nationwide access to first responders, but also serves as the basis for AT&T's wireless service. 

"That higher quality network has removed a reason for customers to leave, because they're satisfied with the service that they're getting," he said. 

He explained that when the COVID-19 pandemic hit and as people were forced to stay in their homes as they sheltered in place, much of the usage on the network was distributed throughout suburban markets rather than in urban centers. Stankey said that the company's strong position in low-band spectrum, which allows signals to travel over longer distances and provide better in-home coverage, helped ensure that customers could stay connected while working from home and accessing school remotely.

The big growth in new phone subscribers put AT&T ahead of rival Verizon, which reported earnings Wednesday. Verizon added 283,000 new postpaid subscribers during the quarter. 

The quarter ended two weeks before Apple introduced its iPhone 12 lineup. Some models of the phone are going on sale starting Friday. The iPhone 12 is the first iPhone to offer 5G, the next generation of wireless technology, which will increase download speeds and make networks more responsive. AT&T and its rivals have been expanding their 5G services.

See also: iPhone 12 review: One of our highest rated phones of all time

Stankey said customers old and new can expect AT&T to offer promotions with the rollout of the new device. He said iPhone promotions and other promotions the company offers are important because they're part of the equation in retaining valuable customers. 

"We have an incredibly valuable customer base," he said. "It's our most important asset for us to focus on." 

Much of AT&T's wireless subscriber growth came thanks to offers that bundled its streaming HBO Max service with new phones, the company said. AT&T said it ended the quarter with 38 million US subscribers for its HBO and HBO Max services. It had 57 million subscribers for these services worldwide. 

But not all the news for AT&T was rosy. The company said it continues to feel the effects of the COVID-19 pandemic. The greatest effect has been on its Warner Media business, which had to stop production and is still reeling from the closure of movie theaters. The company estimated that it has cost the company $1.6 billion in revenue during the third quarter. 

Things are starting to pick up. Sports broadcasts resumed during the quarter. Even though the company's media unit is attracting new subscribers, it's also losing existing HBO cable TV subscribers as customers cut the cord. AT&T has been trying to build up its streaming services, but it's still playing catch up to rivals Netflix and Disney Plus. 

AT&T reported it added 357,000 net new fiber internet customers during the quarter. This stemmed from higher demand for internet access as more Americans work from home during the pandemic. 

AT&T's stock was trading up 6.38 percent to $28.42 a share in midday trading.

Watch this: 5G report card: Is it time to get it yet?