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iPhone Boosts AT&T Q4 Business, Hurts Profits

The iPhone continues to be a good news-bad news story for AT&T. In its fourth-quarter financial results released today, AT&T said it activated 1.9 million iPhones in the three months ended Dec. 31, down from 2.4 million in the third quarter. The average revenue per iPhone customer was 160% that of other AT&T subscribers and churn is ??ignficiantly lower?than for other handsets, and 40% of iPhone buyers came from other carriers.

The bad news is that the iPhone continues to take a hefty bite out of AT&T earnings, presumeably because of the up-front subsidy AT&T pays Apple fore each phone. In the fourth quarter, the iPhone reduced the carrier’s earnings by 5 cents per share, or $293 million. That means that net earnings of $2.4 billion were more than 12% lower than they would have been without the iPhone.

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