By John Kell
AT&T Inc.'s (T) third-quarter profit climbed 4.9% as the telecommunication giant added more wireless subscribers.
AT&T added 363,000 customers who signed long-term service contracts in the latest period, compared with 151,000 a year ago and 551,000 in the second quarter. Verizon Wireless--the joint venture of Verizon Communications Inc. (VZ) and Vodafone Group PLC (VOD, VOD.LN)--last week said it added 927,000 of the most profitable contract subscribers.
Both AT&T and Verizon are facing increased competition in the wireless industry, as smaller rival T-Mobile US Inc. (TMUS) pushes an aggressive marketing campaign and Sprint Corp. (S) invests heavily in its network.
And while wireless contract plans are a key metric for the telecommunications giants, both Verizon and AT&T have unveiled plans that bill subscribers for the full price of their phone--broken into monthly payments--but allow customers to upgrade to new devices at a faster pace. The new plans move away from hefty subsidies AT&T and Verizon offer for smartphones purchased with traditional contracts.
Overall, AT&T reported a profit of $3.81 billion, or 72 cents a share, up from $3.64 billion, or 63 cents a share a year earlier. Excluding income tax items and other gains, adjusted profit grew to 66 cents from 62 cents a share.
Revenue rose 2.2% to $32.16 billion.
Analysts surveyed by Thomson Reuters had projected a profit of 65 cents on $32.19 billion in revenue.
AT&T said the rate at which wireless contract customers left its network, called churn, inched down to 1.07% from 1.08% a year earlier, but grew from 1.02% in the prior quarter.
Total wireless revenue, including equipment sales, grew 5.1%, while total wireline revenue fell 1% year-over-year.
The company said it added 1.2 million postpaid smartphone subscribers during the quarter and sold 6.7 million smartphones, a record for the third quarter.
AT&T said earlier this week it would sell the long-term rights to manage a portfolio of cell-phone towers to Crown Castle International Corp. (CCI) for $4.85 billion in cash. The deal comes as AT&T has expressed interest in overseas deals and has ramped up spending on its network in the U.S.
The company is also in the process of closing a deal to buy prepaid carrier Leap Wireless for $1.2 billion plus $2.8 billion in net debt. Earlier Wednesday, Leap postponed a shareholder vote on the acquisition by about a week in order to correct errors in prior financial statements.
Shares were down 0.2% to $35.22 in after-hours trading. Through Wednesday's close, the stock is up about 5%, underperforming the broader market's gain.
-Thomas Gryta contributed to this article
Write to John Kell at email@example.com
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(END) Dow Jones Newswires
October 23, 2013 16:30 ET (20:30 GMT)Copyright (c) 2013 Dow Jones & Company, Inc.
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