AT&T missed its analysts' earnings expectations by a penny, at 63 cents per share, adjusted. It also reported $32.96 billion in revenue for the quarter, missing Street estimates of $33.25 billion.
"[T]he fact that they're still missing even with that tailwind tells us that the underlying fundamentals of the business are very, very troubled right now," said Craig Moffett, senior research analyst at Moffett Nathanson.
"It's not a growth business anymore. What you're looking at is a mature business with four competitors with high fixed and low variable costs, and it's very difficult to sustain pricing in a market like that," Moffett said. He currently has a "hold" rating on the stock.
The telecom giant said total revenue rose 2.5 percent from the year-ago quarter, boosted by a 5 percent year-over-year increase in wireless revenue.
However, the company's wireless operating profit margin decreased to 24.6 percent, versus 26.4 percent in the year-earlier quarter, as more customers migrate to its lower priced "mobile share value plans."
Shares slid more than 2 percent in after-hours trading.
AT&T, the No. 2 U.S. mobile operator, has moved away from the traditional device subsidy model in an attempt to compete against lower priced rivals. Its value plans now represents about 62 percent of its postpaid subscribers.
"It's a very difficult, challenging business and perhaps pricing was an issue in the quarter," said Hilliard Lyons' David Burks, who has a "buy" rating on AT&T and price target of $39.
The cellphone provider said postpaid net adds more than doubled in comparison to the year-ago quarter, bringing the year-to-date total to more than 2.4 million.
The S&P 500 telecom industry has declined some 1.25 percent over the last year, but it's still outperforming AT&T, which has dropped about 2 percent over that period. In comparison, Verizon has declined nearly 6 percent in the last 12 months.
Earlier this week, industry rival Verizon Communications said quarterly sales rose as it added customers to its wireless business.
CNBC's Michelle Fox contributed to this report.