(Adds company and industry background, CEO comment, updates share price)
NEW YORK, Jan 31 (Reuters) - AT&T Inc reported quarterly profit that beat analysts' estimates on Wednesday, helped by tax cuts and new wireless subscribers, and its chief executive voiced confidence the company will complete its $85.4 billion acquisition of Time Warner Inc.
The U.S. Department of Justice sued to block the deal last year on grounds that it was anticompetitive. A trial is slated to begin on March 19.
"While we remain open to finding some reasonable solutions to address the government's concern, we do expect this case will ultimately be litigated in court," Chief Executive Randall Stephenson told analysts on a conference call. He added, "We remain very confident that we'll complete this merger."
Shares were up 3.8 percent to $38.87 in after-hours trading.
AT&T reported a net addition of 329,000 phone subscribers who pay a monthly bill in the quarter, helped by lower customer attrition and a "buy one, get one free" promotion for the iPhone 8. The No. 2 U.S. wireless carrier lost 67,000 subscribers a year earlier.
AT&T, which owns satellite television service DirecTV, said it lost 207,000 traditional U.S. video subscribers in the quarter as more consumers drop their pay-TV packages. It added 368,000 to its cheaper DirecTV Now streaming service.
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 saturated wireless market.
AT&T's planned acquisition of Time Warner, originally announced in October 2016, reflects an effort to turn itself into a media powerhouse that can bundle mobile service with video.
Net income attributable to AT&T in the fourth quarter was $19.0 billion, or $3.08 per share, in the fourth quarter ended Dec. 31, up from $2.4 billion, or 39 cents a share, in the year-earlier period.
Excluding items, the company reported earnings of 78 cents per share, which included a 13-cent impact from tax cuts signed into law by U.S. President Donald Trump late last year. Analysts on average were expecting earnings of 65 cents per share, according to Thomson Reuters I/B/E/S. Revenue was $41.7 billion, compared with $41.8 billion in the year-earlier period. Analysts had expected $41.2 billion.
For 2018, AT&T said including impacts from tax cuts and a new accounting standard, it expects earnings per share in the $3.50 range, free cash flow of about $21 billion and capital expenditures of $25 billion. (Reporting by Anjali Athavaley; Editing by Matthew Lewis)