By Harshita Mary Varghese
(Reuters) -AT&T gained more wireless subscribers than expected in the third quarter, driven by the steady adoption of its higher-tier unlimited plans that come with perks including increased hotspot data.
The U.S. telecom firm added 403,000 net monthly bill-paying wireless phone subscribers in the July-September period, above Visible Alpha estimates of 393,430 additions.
Premium plans have helped AT&T stay competitive in the saturating U.S. telecom market where rivals Verizon and T-Mobile are bundling their offerings with streaming services such as Netflix and Max to attract customers.
Demand has also been growing for AT&T’s plans that allow customers to combine its high-speed fiber data with its wireless phone service for a discount. The company said 40% of customers that use fiber also opt for its wireless plans.
“Their convergence strategy is going to be costly. The most attractive overbuild markets have already been reached, so AT&T will necessarily be targeting increasingly low-density areas. That means higher costs and lower returns,” MoffettNathanson analyst Craig Moffett said.
AT&T shares rose 1.8% as its adjusted profit of 60 cents per share also beat estimates of 57 cents, according to data compiled by LSEG.
Like rival Verizon, AT&T’s total third-quarter revenue of $30.2 billion took a hit from lower phone upgrade volumes, missing estimates of $30.44 billion.
A faster-than-expected decline in customers at its legacy fixed-line unit that caters to businesses also impacted revenue.
For the fourth quarter, however, AT&T expects seasonally higher phone purchasing activity, upgrades and promotional cycles.
Its fiber business added 226,000 customers in the third quarter and missed expectations of 257,860 additions, according to Visible Alpha, due to a work stoppage that began in August in its southeast region and impacted fiber installations.
Operating expenses rose 14% to $28.1 billion, compared with LSEG-compiled estimates of $22.31 billion, as AT&T took a $4.4 billion impairment charge tied to the business wireline unit.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Devika Syamnath)
