Jul 24, 2007 3:40 PM,

AT&T posts second-quarter gains

By Mark Donahue

Buoyed by wireless and IP-based services growth, AT&T reported second-quarter revenues of $29.5 billion—up from the $15.8 billion it posted in the same period last year. But the numbers reflected only a small taste of what could (or could not) come from iPhone sales.

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The service provider saw its ninth consecutive quarter of double-digit growth in adjusted earnings per share, which were $0.70 in the second quarter—up 20.7% from the same period last year.

AT&T said wireless service revenues grew 14.9% and wireless data revenues increased 66.9% from Q2 2006. It gained 1.5 million new wireless subscribers in the second quarter to bring its total to 63.7 million served. AT&T also added 200,000 video customers and finished the quarter with 51,000 U-verse subscribers—up from 13,000 at the end of the first quarter.

An x-factor going forward for AT&T will be continued sales of the iPhone. The device was launched June 29, allowing for less than two days of sales and activations before the end of the quarter. AT&T activated 146,000 iPhone subscribers during that small window—more than 40% percent new subscribers.

However, some analysts were disappointed by these numbers, expecting higher activation totals during the iPhone’s debut weekend.

Although it is still early to gauge the iPhone’s impact on AT&T, Chairman and CEO Randall Stephenson highlighted the company’s overall wireless gains.

“AT&T has a strong foundation for growth in wireless and IP-based services, and in the second quarter, we improved our trajectory in key areas,” Stephenson said in a prepared statement. “Wireless revenue growth accelerated for the fourth consecutive quarter; our U-verse video service has begun to ramp aggressively; and we took a major step toward revenue growth in enterprise services where AT&T has tremendous assets and great potential.”

Stephenson also pointed to AT&T’s recent agreement to acquire Dobson Communications as a way to further expand the company’s wireless coverage in rural and suburban areas.