AT&T exceeds wireless subscriber estimates in demand for premium plans

By Harshita Mary Varghese

(Reuters) – AT&T added more wireless customers than expected in the third quarter, driven by steady rollouts of its higher-tier unlimited plans that include perks such as increased hotspot data.

The US telecom company added 403,000 net monthly paying wireless customers in the July-September period, above Visible Alpha's estimates of 393,430 new additions.

Premium plans have helped AT&T stay competitive in the saturated U.S. telecom market, where rivals Verizon and T-Mobile are bundling their offerings with streaming services like Netflix and Max to lure customers.

Demand has also increased for AT&T's plans, which allow customers to combine the company's high-speed fiber data with its wireless service at a discounted rate. The company said 40% of customers who use fiber also choose its wireless plans.

“Your convergence strategy will be costly. The most attractive development markets have already been reached, so AT&T will inevitably target areas with increasingly lower density. That means higher costs and lower returns,” said Craig Moffett, analyst at MoffettNathanson.

AT&T shares rose 1.8% as adjusted profit of 60 cents per share also beat estimates of 57 cents, according to LSEG.

Like rival Verizon, AT&T's total third-quarter revenue of $30.2 billion was hurt by lower phone upgrade volumes, missing estimates of $30.44 billion.

A faster-than-expected decline in customers in the legacy fixed-line division, which is aimed at businesses, also had a negative impact on sales.

However, in the fourth quarter, AT&T expects seasonally higher phone purchasing activity, upgrades and promotion cycles.

According to Visible Alpha, its fiber optic business added 226,000 customers in the third quarter, missing expectations of 257,860 new customers, due to a work stoppage that began in the southeast region in August and impacted fiber installations.

Operating expenses rose 14% to $28.1 billion, compared with LSEG estimates of $22.31 billion, as AT&T recorded a $4.4 billion impairment charge related to its wireline business .

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Devika Syamnath)