AT&T's earnings missed by a penny but revenue rose faster than expected in the fourth quarter as it added more subscribers due to strong sales of smartphones like Apple's iPhone, sending its shares up 1 percent in after-hours trading.
The No. 2 U.S. mobile service provider said on Thursday that it added 780,000 subscribers in the quarter compared with the average expectation for 699,200 from 10 analysts. Most estimates were 700,000 or higher but the lowest was 475,000.
AT&T forecast earnings and revenue growth for the full year 2013 but said it is expecting little improvement in the economy.
While the company's sale of 8.6 million iPhones in the quarter helped AT&T's subscriber numbers it hurt its profit because AT&T pays Apple a big subsidy for every iPhone it sells so it can offer a discount to customers who commit to contracts.
AT&T's wireless service profit margin based on earnings before interest, tax, depreciation and amortization was 29.1 percent, compared with the average expectation for 31.29 percent from ten analysts contacted by Reuters.
The company forecast earnings per share growth in the upper-single digit percentage range or higher and revenue growth exceeding 2 percent for 2013 based on strength in wireless and its wireline consumer business.
"Guidance was good but not dramatically good," said Hudson Square Research analyst Todd Rethemeier.
AT&T's fourth-quarter loss was $3.86 billion or 68 cents per share, compared with a loss of $6.68 billion or $1.12 per share in the year-ago quarter when it took big charges including the break-up fee for its failed purchase of T-Mobile USA, a Deutsche Telekom unit.
Excluding items, earnings rose to 44 cents per share from 42 cents a share in the year-earlier period.
Revenue improved to $32.58 billion from $32.50 billion a year ago.
Wall Street had expected AT&T to report earnings excluding items of 45 cents a share on $32.22 billion in revenue, according to Thomson Reuters consensus estimates.
Revenue rose to $32.58 billion from $32.5 billion and compared with Wall Street expectations for $32.2 billion, according to Thomson Reuters.
While AT&T's wireless subscriber growth was better than expected it was slower than bigger rival Verizon Wireless, which reported subscriber additions of 2.1 million on Tuesday.
Sprint Nextel, the No. 3 U.S. mobile provider, does not report its results until Feb. 7.