AT&T Profit Rises on Wireless Growth

Top U.S. phone company AT&T posted Wednesday a higher quarterly profit as stronger-than-expected growth in wireless subscribers compensated for shrinking traditional landlines.

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The results pushed AT&T shares up 2.5 percent, though analysts said they remained worried about the fall in home phone lines and also pointed to weaker-than-expected growth in high-speed Internet subscribers in the second quarter.

"The access line loss was worse than expected," said Todd Rethemeier, analyst at Soleil-Sur Terre Research.

"It's an accelerating loss from the second quarter of last year."

AT&T's primary consumer access lines fell 8.7 percent from a year ago, while its high-speed Internet users increased by 46,000 during the quarter to 14.7 million.

"The broadband customer additions fell off a cliff," Rethemeier said.

"They added almost 500,000 in the first quarter of this year. The second quarter is always seasonally weak, but we were still expecting 300,000," he said.

Second-quarter profit rose to $3.8 billion, or 63 cents a share, from $2.9 billion, or 47 cents a share, a year earlier.

Excluding special items such as merger-related costs, profit was 76 cents a share, in line with the average Wall Street forecast, according to Reuters Estimates.

Quarterly revenue rose 4.7 percent to $30.9 billion.

AT&T, the exclusive U.S. carrier for Apple's iPhone, said it added more than 1.3 million net wireless subscribers in the quarter.

That was above the average forecast for 1.25 million additions by seven analysts surveyed by Reuters.

Both AT&T and rival Verizon Communications have banked on growth in mobile phone users and invested in high-speed Internet services to retain customers.

AT&T shares rose to $32.60 in pre-market trade from their New York Stock Exchange close on Tuesday of $31.82.