Tablets, Cars Drive AT&T Wireless Gains

AT&T said it gained 2 million wireless subscribers in the latest quarter, but most were from cheaper non-phone services such as tablets and Internet-connected cars. The nation's second-largest wireless carrier is facing pricing pressure from smaller rivals T-Mobile and Sprint in a competitive environment in which most Americans already have a cellphone.

The company's third-quarter earnings and revenue slightly missed expectations, and it cut its revenue outlook for the full year on Wednesday.

It didn't lose many customers -- its turnover rate, or churn, for postpaid accounts was less than 1 percent, AT&T's best for a third quarter. Postpaid customers are the ones with better credit and stay with carriers longer, sometimes with contracts. But of the net 2 million subscribers added, most were for tablets or other non-phone services such as cars. Those plans aren't as lucrative for AT&T as smartphone customers.

Also, AT&T is trying to wean customers off equipment subsidies and shift them toward installment plans in which they ultimately pay full price for a phone -- $650 for an iPhone 6, for instance, compared with $200 under subsidy pricing. That shift means it books less service revenue in the short term, as the company offers monthly discounts of $15 or $25 per phone.

AT&T Inc. added over 500,000 car data plans, thanks to the Internet connectivity included in many 2015 models that went on sale in recent months. It added 342,000 tablet customers and 466,000 smartphone customers, including existing customers upgrading from basic phones. On tablets, AT&T said it is seeing a shift toward postpaid plans, which will mean revenue stability in the long run. Previously, many customers turned on service for just a month here and there, depending on their immediate needs.

AT&T's larger rival, No. 1 carrier Verizon, is also seeing growth in tablets. On Tuesday, the company said...

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