(By Balachander) AT&T Inc. (NYSE: T), the second largest wireless carrier in the U.S., posted better-than-expected quarterly earnings driven by growth in smartphone sales, and shares added 1.14 percent in premarket trading on Wednesday.
Earnings attributable to AT&T were $3.6 billion, flat with the year-ago quarter. Revenue too was flat at $31.5 billion.
Adjusted for the sale of Advertising Solutions business, the company earned 62 cents a share, up from 59 cents in the same period of last year. Revenue grew 2.6 percent.
Wall Street analysts, on average, expected earnings per share of 60 cents on revenue of $31.6 billion.
"In wireless, we had another excellent smartphone quarter, penetration of usage-based mobile data plans continues to climb, and our 4G LTE network build is ahead of schedule," said AT&T CEO Randall Stephenson.
Wireless revenue increased 6.6 percent amid gains from the company's 44.5 million smartphone subscribers. Smartphone sales were 6.1 million, 1.3 million higher than the year-ago quarter.
At the end of the quarter, 63.8 percent, or 44.5 million, of AT&T's postpaid subscribers had smartphones, the company said. This is compared with 52.6 percent, or 36.1 million a year-ago.
Postpaid churn was 1.08 percent, compared to 1.15 percent in the year-ago third quarter and 0.97 percent in the prior quarter. Total churn was 1.34 percent versus 1.28 percent in the same period last year and 1.18 percent in the second quarter.
AT&T posted a net increase in total wireless subscribers of 678,000 in the third quarter.
The company's wireless operating income margin contracted to 26.2 percent from 29.5 percent in the third quarter of last year.
And in wireline, the company's IP network continues to deliver strong gains in U-verse high speed Internet connections, which helped drive an almost 10 percent increase in broadband data ARPU, Stephenson noted.
T shares, which have been trading in the 52-week range of $27.41 to $38.58, closed at $35.00 on Tuesday.