US operator AT&T reported a drop in fourth-quarter profits due to extra costs for selling Apple's iPhone. The company activated 1.9 million iPhones in the quarter, but the extra costs for promoting and supporting the phone took several cents off earnings per share. Overall, EPS fell to USD 0.41 from USD 0.51 a year earlier, with a decline of 7 cents attributed to the iPhone, storm costs and forex effects. AT&T said the iPhone was still paying off, with 40 percent of iPhone buyers new to the operator and ARPU from iPhone users 1.6 times higher than other postpaid users. AT&T Wireless added in total a net 2.1 million new customers in the quarter for a 77.0 million at year-end. AT&T's group revenues for the quarter were up 2.4 percent from a year earlier to USD 13.1 billion, while operating profit fell to USD 4.9 billion from USD 5.5 billion. The company expects revenue growth in 2009 in the low single digits, versus 4.3 percent in 2007. Underlying profits and margins are forecast stable this year, but AT&T will book 19 cents a share in non-cash charges this year for the fall in value of its pension funds. The company expects stable cash flow this year but is cutting capex by 10-15 percent from 2008's USD 20.3 billion. The slower spending means its target for covering 30 million homes with its U-verse fibre service has been pushed back a year to 2011. U-verse currently covers 17 million homes. Just over 1 million customers take U-verse TV, after 264,000 net adds in Q4. The company's total broadband base, which includes DSL, U-verse and mobile broadband, grew by 357,000 customers in the quarter to a total 16.32 million.
