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AT&T profit, subscriber growth beat expectations

AT&T Inc.'s second-quarter profit and revenue beat Wall Street estimates as it added more subscribers than expected despite losing exclusive U.S. rights to sell Apple Inc iPhone.

The No. 2 U.S. mobile provider, which is seeking approval to buy T-Mobile USA for $39-billion (U.S.), added 331,000 net subscribers in the quarter, compared with the average expectation for 91,000 from seven analysts contacted by Reuters.

"The net (subscriber) additions were surprisingly strong," said Mizuho analyst Michael Nelson. "It seems like AT&T really successfully defended its turf after losing iPhone exclusivity."

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However, Nelson noted that the strong results could be overshadowed by growing opposition to AT&T's controversial plan to buy T-Mobile USA.

AT&T's results came a day before its bigger rival Verizon Wireless - a venture of Verizon Communications and Vodafone Group Plc was slated to release its results.

In the first quarter of this year, Verizon Wireless started selling iPhone, ending more than three years of AT&T's exclusive rights to sell the device in the United States. While Verizon is expected to add about three times more subscribers than AT&T this quarter as a result, AT&T fared better than expected.

AT&T's net profit fell to $3.59-billion, or 60 cents per share, from $4-billion, or 67 cents per share, a year earlier and compared with analyst expectations for earnings of 59 cents per share, according to Thomson Reuters I/B/E/S.

Excluding a Telmex Internacional transaction in the year-ago quarter, AT&T said earnings would have been flat.

Revenue rose 2.2 per cent to $31.5-billion, compared with Wall Street expectations for $31.3-billion, according to Thomson Reuters I/B/E/S.

As well as subscriber numbers Nelson said he was impressed with AT&T's profit margin of 41.1 per cent based on earnings before interest, tax, depreciation and amortization. this compared with the analyst's expectation for 39.6 per cent.

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