AT&T faces off the T-Mobile threat with 800,000 customer additions

T-Mobile(s tmus) may be a thorn in AT&T’s side lately, but the “Un-carrier” isn’t making that big an impact on its business — at least not in the fourth quarter. AT&T added 809,000 subscribers in the fourth quarter, which is 300,000 fewer than it added in Q4 of 2012, but its other numbers were strong — certainly not indicative of struggling carrier.

Most notably, AT&T’s contract churn rate fell from 1.19 percent to 1.11 percent year-over-year, a record low. Churn represents the percentage of customers that leave an operator every quarter, so the lower the churn the more of its existing subscriber base a carrier retains each quarter.

AT&T’s overall churn rate – which includes both prepaid and postpaid — ticked up slightly from 1.42 to 1.43 percent, showing AT&T has having a little more difficulty keeping prepaid customers. But it’s more valuable postpaid customers weren’t fleeing to other carriers in any greater numbers once their contracts are up, which is what you’d expect if T-Mobile was luring away customers in droves. That might change this year, though, now T-Mobile is offering to pay other carriers’ early termination fees.

lots of tablets

AT&T added 529,000 net new smartphone subscribers in Q4, but it also saw big growth in tablets, adding a net total of 440,000 new slate connections to its networks. Wireless revenues grew 4.8 percent year-over-year to $15.7 billion, and data revenues jumped 16.8 percent to $5.7 billion. Its total revenue per postpaid subscriber increased 2.1 percent.

Still AT&T is definitely showing signs of slowing growth. In addition to net subscriber additions being down from the previous year, its market-leading smartphone growth lost some steam. In all AT&T sold 7.9 million smartphones in the quarter, down from the 10.2 million it sold in Q4 2012.

iPhone 5s M7 processorThat could show that AT&T could be feeling pressure from T-Mobile when it comes to attracting new smartphone subscribers. It could also be reflective of Apple’s(s aapl) contracting iPhone sales in North America. AT&T has always been Apple’s largest iPhone distributor in the region, and its smartphone customer base skews far more to iOS than its competitors. Notably AT&T didn’t reveal the number of iPhone activations it made last quarter.

As always, AT&T’s biggest threat in the mobile industry is Verizon Wireless(s vz)(s vod). Though both carriers are close to the same size, Verizon is growing at a much faster pace. Big Red added 1.7 million subscribers in Q4, more than double that of AT&T.

This post was updated with additional information at 2:25 PM PT