AT&T Is Third Major Carrier Suffering from Weak iPhone 8 Sales

October 24, 2017, 9:27 PM UTC

AT&T became the latest wireless carrier to report on the less-than-enthusiastic reception to the new iPhone 8.

The carrier said only 3.9% of its regular monthly customers upgraded a phone in the third quarter, when the iPhone 8 went on sale, compared to 5.1% a year ago when Apple introduced the iPhone 7. As a result, AT&T sold about 2 million fewer smartphones in the quarter than it sold in the same period a year ago, CFO John Stephens said on a call with analysts on Tuesday.

The news came amidst disappointing overall results at AT&T, which had pre-released some of the bad news in a securities filing on Oct. 11. Total revenue of $39.7 billion was down 3% from a year ago and missed analyst estimates of $40.1 billion. Adjusted earnings per share of 74 cents were unchanged from 2016 and a penny less than analysts expected. AT&T shares, which were already down 18% so far this year, fell 2% in after hours trading on Tuesday.

AT&T’s slow phone sales despite the introduction of the iPhone 8 follow Apple’s decision to offer three new models instead of the usual two this year. The more advanced $999 iPhone X, which has an OLED screen and better telephoto camera, doesn’t go on sale until Nov. 3 (pre-orders start Oct. 27), and many Apple fans may be holding for the higher-end model. Also, AT&T and other carriers aren’t offering the same deals they offered last year, when consumers could get a free iPhone 7 with a trade in.

Stephens said he didn’t see the offers for the X model getting much better. “With regard to the competitive environment, so far we’ve seen some rational activity through the iPhone 8 launch and most recently the activities that are going on, so we’re optimistic,” he told analysts. “We believe we can compete and win based on our product offerings and that promotional activity of an extensive nature is not necessary.”

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On Monday, T-Mobile (TMUS) reported much the same phenomenon for third quarter phone sales, with just 6% of customers upgrading compared to 7% last year. And last week, Verizon (VZ) said its upgrade rate slipped to 5.5% from 6.3% in the third quarter of 2016. Both carriers said they still anticipated a big pick up in upgrades once the iPhone X finally goes on sale. Sprint (S) will report its results for the quarter on Wednesday.

The iPhone 8 has the same exterior appearance as Apple’s (AAPL) past two years models, though with faster processors and better cameras. The iPhone X is the only model with a completely new design, a higher contrast OLED screen, a facial recognition security feature, and a faster telephoto camera.

(This story was updated Oct. 24 to correct that CFO John Stephens spoke to analysts.)

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