AT&T on Thursday reported the coronavirus pandemic had taken a heavy toll on its media business, but quarterly results were offset by stronger than expected gains in new phone subscribers lifted by offers for its HBO Max streaming service for free on certain phone plans.
That helped AT&T beat revenue expectations for the third quarter ended Sept. 30, sending the stock up more than 5% in mid-day trading.
Total revenue was $42.3 billion during the quarter, exceeding the average analyst expectation of $41.59 billion, according to IBES data from Refinitiv.
During the quarter, the company added 645,000 net new phone subscribers who pay a recurring monthly bill. Analysts had expected AT&T to lose a net 9,000 customers, according to FactSet.
Adjusted earnings per share were 76 cents, down from 94 cents in the same quarter last year.
AT&T said the pandemic eroded earnings per share by 21 cents.
AT&T, which has spent the past few years investing to become a media business, said it had 38 million subscribers in the United States for both its premium TV channel HBO and HBO Max during the third quarter, reaching its 2021 goal a year early. It currently has 57 million subscribers worldwide.
The services had 36.3 million subscribers in the United States in the previous quarter.
Even as the WarnerMedia segment attracts new subscribers, it must also contend with existing HBO subscribers through their pay-TV providers who are dumping their service.
AT&T is playing catchup to larger streaming video rivals. Netflix currently serves about 68 million U.S. customers and nearly 200 million worldwide. Walt Disney's Disney+ has more than 60 million subscribers, reaching its goal four years early.
--Additional editing by CNBC.