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Verizon’s launch of the iPhone this quarter, ending AT&T’s run of exclusivity here in the U.S., did not upend AT&T’s financial performance, though the ripples of its impact will likely still be felt for some time.

AT&T said it ended the quarter with 3.6 million iPhone activations and 2 million net adds. A good portion -- about 77% according to AT&T – of those iPhone activations were re-ups from existing customers, no doubt due to the heavy marketing AT&T did to keep existing iPhone users in the fold.

A few dynamics were in play. AT&T execs said they were able to keep iPhone customers by marketing the differences between the two operator’s networks. While many iPhone users complained about dropped calls and dead spots on the AT&T network, its GSM-based network allows for simultaneous talking and data use, which Verizon’s CDMA network does not. There are also more networks globally onto which a GSM-based iPhone user can roam.
Whether that is truly enough of a differentiator for iPhone customers seems unlikely. A good part of AT&T’s iPhone staying power could be pure inertia among customers, as well as heavy marketing and discounting on earlier versions of the iPhone.

AT&T execs also credited the acceleration of its LTE deployment plans, which it laid out earlier this year (CP: AT&T LTE pace keeps track with VZW). While Verizon is ahead of AT&T in rolling out LTE across its markets, the iPhone isn’t available in an LTE version, putting both carriers on equal footing there and both heading toward networks that by the end of this year will offer significantly higher bandwidth speeds.

While it held its own with the iPhone, AT&T’s new focus on Android devices is off to a good start as well, doubling sales of Android smartphones each month since launching this quarter.

Overall, AT&T grew its total subscriber base to 97.5 million, adding 1.3 million connected devices, 560,000 retail, 85,000 prepaid and 62,000 postpaid subscribers. AT&T sold a total of 5.5 million smartphones in Q1, making up 65% of its sales for the quarter. That addition of just 62,000 postpaid subs on contract plans represents a record low, however, compared to 512,000 postpaid adds a year earlier – showing a potentially significant kink in AT&T’s armor.

On the revenue side, overall wireless revenue grew 10.2% year over year to $15.3 billion, while wireless data revenue jumped 23.9% versus the previous year to $5.1 billion. Churn increased from 1.36% from 1.30% the prior quarter. Average revenue per user, or ARPU, was $63.39, an increase of 2.4% versus a year ago.

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