(By Balaseshan) Communications service provider AT&T (NYSE:T) delivered higher than predicted quarterly earnings driven by smartphone sales and margin expansion in wireless. The strong results sent the stock 1.05% higher in the premarket.
The company's net income was $3.90 billion or 66 cents a share, up from $3.59 billion or 60 cents a share in the year-ago quarter.
Consolidated revenues marginally rose 0.3% to $31.58 billion from $31.50 billion. On May 8, AT&T closed the sale of its Advertising Solutions unit to an affiliate of Cerberus Capital Management, L.P. When excluding Advertising Solutions results, revenue grew 2.0%.
While earnings were above Street analysts' estimation of 63 cents a share, revenue were lower than analysts' predictions of $31.70 billion.
Total wireless revenues, which include equipment sales, were up 4.8% year over year to $16.4 billion. The company's average revenue per user or ARPU for smartphone is twice that of non-smartphone subscribers, and about 88% of smartphone subscribers are on FamilyTalk or business plans.
AT&T sold 5.1 million smartphones in the second quarter. Smartphones represented 77% of postpaid device sales. At the end of the quarter, 61.9%, or 43.1 million, of AT&T's postpaid subscribers had smartphones, up from 49.9%, or 34.1 million, a year earlier. In the quarter, the company activated 3.7 million iPhones, with 22 percent new to AT&T.
Total wireless net addition grew 15.6% to 1.27 million subscribers. Total churn was 1.18%, down from 1.43% last year and 1.47% in the first quarter of 2012.
Wireline revenue were $14.9 billion, down 0.8% versus the year-earlier quarter and down slightly sequentially. 6.8 million total AT&T U-verse subscribers (TV and high speed Internet) in service; U-verse TV subscribers grew 22% year over year.
The company bought back 75.8 million shares for $2.5 billion during the second quarter. The company expects to continue to buy back shares consistent with its repurchase authorization.
T closed Monday's regular session up 0.26% at $35.38. The stock has been trading between $27.29 and $36.21 for the past 52 weeks.