AT&T Inc.'s (T) first-quarter earnings rose 5.2% as the telecommunications giant saw fewer people cancel services, though revenue grew slower than expected.
AT&T's subscribership gains had outpaced its rivals on the success of Apple Inc.'s (AAPL) iPhone, but it lost iPhone exclusivity last year, which has pressured its customer turnover and growth rates of late. The company is targeting alternative devices such as tablets and e-readers for new sources of revenue and continues to shift attention away from its legacy businesses as wireless profits boom. AT&T recently agreed to sell a majority stake in its Yellow Pages business to private-equity firm Cerberus Capital Management LP for $950 million.
Meanwhile, rival Verizon Communications Inc. (VZ) on Thursday reported its first-quarter earnings rose 17% as the addition of contract wireless and FiOS Internet and video subscribers helped boost revenue 4.6% and improved margins.
AT&T reported a profit of $3.58 billion, or 60 cents a share, up from $3.41 billion, or 57 cents, a year earlier. Revenue rose 1.8% to $31.82 billion.
Analysts polled by Thomson Reuters had most recently forecast earnings of 57 cents on revenue of $31.86 billion.
Operating margin rose to 19.2% from 18.6%.
In the latest period, AT&T added 187,000 customers who signed long-term service contracts, compared with 717,000 additions in the fourth quarter. The company also added 726,000 total wireless subscribers, raising its base to 103.9 million.
Total postpaid churn, or customers who cancel services, was 1.1%, down from 1.18% a year earlier and 1.21% in the prior quarter.
Total wireless revenue, including equipment sales, rose 5.4%, while wireless service revenue grew 4.3%.
Total data revenue increased 8.7% and voice revenue was down 10%.
The company sold 5.5 million smartphones, including 4.3 million iPhone activations. Of those activating iPhones, 21% were new to AT&T.
Shares edged up 0.5% to $30.77 premarket. The stock has risen 1.2% so far this year.
-By Melodie Warner, Dow Jones Newswires; 212-416-2283; firstname.lastname@example.org