AT&T (NYSE: T), the US’s largest telecoms company reported today Q3 net income of $3.2 billion, or 55 cents a share, on revenue of $31.3 billion. This compares to last year’s Q3 profit of $3.06 billion, or 50 cents a share. It reported adjusted earnings of 67 cents a share, falling short of the 71 cents a share estimate from a Thomson Reuters (NASDAQ: TRIN) poll of analysts. But the adjusted eps includes 10 cents for Apple (NSDQ: AAPL) iPhone subsidies—or what AT&T called “pressure generated by strong performance from the Apple iPhone 3G initiative”.

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AT&T chairman and ceo Randall Stephenson had nothing but praise for the iPhone, saying in a statement he was “particularly pleased” with the customer response. The iPhone helped drive customer acquisitions, as well as boost revenues at the wireless unit, which saw a 15.4 percent growth in revenues. AT&T’s total wireless revenues came in at $12.6 billion, and wireless service revenues, which exclude handset and accessory sales, grew 14.3 percent to $11.3 billion. Retail postpaid subscriber ARPU was $58.99, up 2.6 percent versus the year-earlier third quarter. Iphone 3G activations totaled 2.4 million in the quarter, with approximately 40 percent of them new customers for the operators. The iPhone was also delivering a better class of subscribers—“high value” ones with “significantly higher ARPU and lower churn than postpaid subscriber average.” iPhone ARPU was 1.6 times higher, coming it at $95 compared to $58.99 for non iPhone users. AT&T expects its dilution associated with the iPhone 3G to “run above its previous expectation.

Other Highlights:

— Wireless customer additions. AT&T posted the largest postpaid net subscriber gain for any quarter in its history—boosted by the iPhone. Retail postpaid net subscriber additions of 1.7 million were up nearly 40 percent versus results in the year-earlier third quarter and accounted for more than 85 percent of AT&T’s 2.0 million total wireless net adds. Total monthly subscriber churn in the third quarter was 1.7 percent, flat with results for the year-earlier quarter, and postpaid churn was 1.2 percent, down from 1.3 percent in the third quarter of 2007.

— Wireless data revenues surging: Wireless data revenues grew 50.5 percent versus the year-earlier quarter to $2.7 billion. This includes eflecting strong internet access, messaging, e-mail and related services. Wireless internet access revenues more than doubled versus results for the year-earlier quarter, and multimedia message volumes were also more than double third-quarter 2007 levels.

—U-verse TV service subs up: AT&T had a net gain of 232,000 subscribers to its U-verse TV service in the third quarter, up from 170,000 added in the second quarter of this year. At the end of the quarter, subscribers to IP-based TV service totaled 781,000. AT&T believes they exceed their target of more than 1 million U-verse TV subscribers by year-end 2008. Attach rates for broadband service are more than 85 percent.

—Wireline IP data revenues up: Consumer IP data revenues, which include broadband and U-verse services, grew 19.0 percent, and business IP data revenues were up 14.7 percent. IP data now accounts for 44.0 percent of AT&T’s total wireline data revenues.

—Broadband connections up: At the end of the third quarter, AT&T’s wireline broadband subscribers totaled 14.8 million, up 148,000 in the quarter and 1.1 million over the past year.

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