AT&T Profits Triple, But New iPhone Subs Fall To All-Time Low

AT&T’s Q3 profits rose on a favorable tax settlement and the sale of its Sterling Commerce business-software unit to IBM, but cracks are starting to show in its exclusive hold on Apple’s iPhone. While it activated a record 5.2 million iPhones in Q3, most were upgrades and only 24 percent were new customers, the latter figure being an all-time low. In terms of just new additions, the company added 2.6 million first-time customers. In the face of Verizon sharing rights to sell the iPhone, AT&T (NYSE: T) has been scrambling to get ready, mostly through a massive upgrade campaign, Craig Moffett of Bernstein Research said in an analyst note.

In addition to focusing on upgrades, which locks iPhone users into a two-year contracts, AT&T has been working on releasing a variety of other smartphones, spanning Google (NSDQ: GOOG) Android’s OS and devices for Microsoft’s new Windows Phone 7.

Other highlights from the quarter included:

— Average revenue from its users was up 2 percent
— Wireless data revenues