("AT&T 1Q Net Falls 9% On Pension Charges, Landline Weakness," published at 7:51 a.m. EDT, didn't make it clear that people familiar with the situation, and not the company itself, said AT&T was bidding for Verizon Wireless assets. The corrected version follows.)

 
   DOW JONES NEWSWIRES

AT&T Inc.'s (T) first-quarter net income fell 9% on pension charges and continued to be weighed down by ongoing weakness in the landline business.

Telecommunications companies have been facing heightened competition from the new wave of mobile-application stores as concerns arise that they may lose out on revenue, but the telecoms say they're working on application outlets of their own.

They also face pressure from discount wireless carriers like MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP), which have projected big subscriber gains and offer plans for as low as $30 that don't require contracts.

AT&T's shares were recently up 4% at $26.30 in premarket trading as the earnings beat expectations. The stock has lost a third of its value in the last year.

Chief Executive Randall Stephenson said last month the current economic downturn isn't any worse than what the industry faced after the technology bubble burst at the start of the decade.

The company posted net income of $3.2 billion, or 53 cents a share, down from $3.52 billion, or 57 cents a share, a year earlier. The latest results included 5 cents in pension and retiree benefit expenses.

Revenue slipped 0.6% to $30.57 billion.

Analysts surveyed by Thomson Reuters expected earnings of 48 cents on revenue of $31.09 billion.

Profit at AT&T's wireless business rose 13% amid an 8.8% gain in revenue. Total subscribership grew 1.2 million during the quarter to 78.2 million. There were 1.6 million activations of Apple Inc.'s (AAPL) iPhone, with about 40% of them from new AT&T wireless customers.

Meanwhile, for the more-attractive postpaid contracts, net new subscribers were 875,000, up 24% from a year earlier, while churn, the rate of customer cancellations, was stable at 1.2%.

AT&T's wireless data-services revenue - what customers pay for Internet browsing on cellphones as well as sending wireless emails - jumped 39%. Revenue from the wireline segment fell 5.4% on a 27% drop in profits.

Investors have been worried that the wireless business, which has been AT&T's growth engine with years of rapid expansion, may be nearing saturation.

AT&T has launched a bid for the roughly $3 billion in wireless assets that chief rival Verizon Wireless has to sell as part of its purchase of Alltel Corp. (AT), people familiar with the situation told The Wall Street Journal in February. Its spending spree and substantial losses in the value of its pension plans have raised debt-level concerns at Standard & Poor's Ratings Services.

-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089; kerry.grace@dowjones.com