DALLAS (dpa-AFX) - Telecommunications giant AT&T Inc. (T), Wednesday reported a five percent increase in third-quarter profit on modest revenue growth amid subscriber additions and lower income tax expense. While quarterly earnings topped Wall Street estimates by a penny, revenue fell shy of expectations.
AT&T saw robust growth in smartphone usage during the quarter, while its landline business continued to wane.
The company said its wireless revenue for the quarter rose 5 percent to $17.48 billion from a year ago. AT&T added 363 thousand wireless postpaid subscribers, up from 151 thousand a year ago. Operating margin at the segment dropped to 26.4 percent from 26.9 percent.
Subscriber additions were modest compared with Verizon Wireless, which last week indicated adding 927 thousand postpaid customers in its recent quarter.
Verizon Communications also had reported a surge in quarterly profit, amid high customer demand for Verizon Wireless, FiOS and strategic enterprise services.
That apart, both AT&T and Verizon are seeing increasing rivalry from T-Mobile US Inc. (TMUS) and Sprint Corp. (S) as the companies strive to ramp up their infrastructure.
AT&T added 1.2 million postpaid smartphone subscribers and sold a record 6.7 million smartphones for the quarter.
The company said its total postpaid wireless average revenue per subscriber, or ARPU, was up 1.5 percent from a year ago, while total churn rate fell to 1.31 percent from 1.34 percent.
Revenue at its wireline division meanwhile fell 1 percent year-over-year to $14.67 billion and operating margin slid to 10.6 percent from 12.1 percent.
Dallas, Texas-based AT&T reported third-quarter total revenue of $32.16 billion, up 2.2 percent from $31.46 billion last year. Twenty-six analysts had a consensus revenue estimate of $32.19 billion for the quarter.
Net income for the quarter rose to $3.81 billion or $0.72 per share from $3.6 billion or $0.63 per share last year.
Results for the quarter included gains of $0.03 per share from a transfer of spectrum and $0.03 per share from income tax items.
Excluding items, adjusted earnings for the third quarter were $0.66 per share, compared with $0.63 per share a year ago. On average, 28 analysts polled by Thomson Reuters estimated earnings of $0.65 per share for the quarter. Analysts' estimates typically exclude special items.
Operating expenses for the quarter grew 2.2 percent year-over-year to $26 billion.
During the quarter, AT&T repurchased 55 million shares for $1.9 billion and at quarter end, had 216 million shares under authorization.
Recently, AT&T agreed to lease the rights to about 9,100 of its company-owned wireless towers as well sell about 600 towers to Crown Castle International Corp. (CCI). AT&T will receive about $4.85 billion in cash up-front proceeds for the deal.
The telecom sector has been undergoing vibrant changes. In July, AT&T agreed to acquire prepaid-wireless provider Leap Wireless International Inc. (LEAP) for about $1.19 billion.
In September, Verizon Communications agreed to buy British mobile phone company Vodafone Group Plc.'s (VOD, VOD.L) 45 percent stake in their Verizon Wireless joint venture in a $130 billion cash and stock deal.
Earlier, Japanese telecom company SoftBank Corp. (SFTBF.PK, SFTBY.PK) agreed to buy a 78 percent stake in Sprint for $21.6 billion, and T-Mobile USA, a unit of Deutsche Telekom AG (DTEGY.PK), merged with MetroPCS Communications Inc. (PCS).
AT&T closed Tuesday at $35.28, up $0.05 or 0.14%, on a volume of 27 million shares on the NYSE.
Copyright RTT News/dpa-AFX