AT&T beats profit estimates as tablet sales rise

No. 2 wireless carrier AT&T posted profits that topped analysts’ estimates as the company added more tablet customers even as price pressure from rivals made subscriber growth challenging.

First-quarter earnings were $3.2 billion — 63 cents a share excluding some items, exceeding the 62-cent average of estimates compiled by Bloomberg. Revenue rose 0.3 percent to $32.6 billion, shy of projections for $32.8 billion.

AT&T encouraged customer loyalty by offering free tablets and data rollover plans. The moves were a response to a series of promotions by T-Mobile US as well as Sprint’s half-price offer.

AT&T added 441,000 new monthly subscribers, compared with the company’s “400,000 range” forecast on March 10. The company added more than 700,000 monthly tablet subscribers while losing about 260,000 mobile phone users, said chief financial officer John Stephens.

“The ones we are losing are price sensitive and more interested in the latest offers,” he said. “We feel very good that we are retaining the high-quality customers.”

No. 1 Verizon reported Tuesday that it added 565,000 customers in the quarter, also thanks to tablet subscribers as its number of handset customers declined.

Sprint will report its earnings May 5. T-Mobile hasn’t announced a date yet.

Investors now will look to see how AT&T’s $48.3 billion proposed purchase of DirecTV is progressing, said Colby Synesael, an analyst with Cowen and Co. in New York.

This story was originally published April 22, 2015 at 6:57 PM with the headline "AT&T beats profit estimates as tablet sales rise."