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UPDATE 2-AT&T results miss estimates as video competition rises

(Adds background on video subscribers)

NEW YORK, Oct 24 (Reuters) - AT&T Inc's quarterly results missed Wall Street estimates as the U.S. No. 2 wireless carrier lost video subscribers to traditional and online TV competitors and fewer of its existing customers upgraded their devices ahead of Apple Inc's launch of the iPhone X.

The battle for the growing market in providing video entertainment on phones has taken on greater importance as AT&T slugs it out with industry leader Verizon Communications Inc and smaller rivals Sprint Corp and T-Mobile US Inc for customers in a market where most people already have cell phones.

The company is in the process of buying Time Warner Inc for $85.4 billion in an effort to turn itself into a media powerhouse that can bundle mobile service with video. It has said it expects the deal to close by the end of the year.

AT&T, which owns satellite television service DirecTV, said it lost 89,000 U.S. video subscribers in the quarter, slightly fewer than the 90,000 it said earlier this month in a regulatory filing, due to intense competition in the traditional pay-TV and online market and the impact of recent hurricanes.

In the same filing, AT&T also reported 900,000 fewer handset equipment upgrades than in the year-ago period, which negatively impacted wireless equipment revenue.

Analysts have said many consumers are putting off upgrades until the fourth quarter when Apple's iPhone X is expected to launch. AT&T said it lost 97,000 phone subscribers who pay a monthly bill in the quarter, compared to a loss of 268,000 a year earlier. Analysts at Wells Fargo had expected a net loss of 100,000.

AT&T reported net income of $3.0 billion, or 49 cents a share, for the quarter ended Sept. 30, down from $3.3 billion, or 54 cents a share, in the year-earlier period.

Excluding some items, it reported earnings of 74 cents. On that basis, analysts on average were expecting earnings of 75 cents per share, according to Thomson Reuters I/B/E/S.

Its shares dipped 1.52 percent to $34.33 in after-hours trading.

Revenue was $39.7 billion, down from $40.9 billion in the year-earlier period. Analysts had expected $40.1 billion, on average. (Reporting by Anjali Athavaley; Editing by Bill Rigby)