AT&T Beholden to Steve & the iPhone? Seems like!

Updated: AT&T has reported its fourth-quarter 2008 results, and they show how dependent the company is on Apple and the iPhone for its future growth. For instance, AT&T added 2.1 million new wireless subscribers during the quarter. Nearly 1.9 million 3G iPhones were activated during the three-month period, and 40 percent, or about 760,000, were new to AT&T. That works out to a whopping 36 percent of total new customers for the company that has been bleeding landline customers and is facing serious problems because of the economic downturn. AT&T points out in the press release: “iPhone exclusive continues to deliver high-value subscribers with ARPU approximately 1.6 times higher and churn rates significantly lower than the company’s overall postpaid subscriber base.”

Update: However, the iPhone subsidies cost AT&T about $1.3 billion in 2008. AT&T is banking on those subscribers both buying expensive plans and sticking around long enough to make up for the subsidy. A quick look at fourth quarter numbers show that iPhone subsidies cost about $450 million for about 760,000 new subscribers. Those subscribers need to stick around for more than 10 six months (given the Q4 average revenue per user of $59.59 $95.34 for iPhone users) to offset the subsidy. Think of it as indentured servitude.

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