By Harshita Mary Varghese
(Reuters) - AT&T (NYSE:T) exceeded market expectations for wireless subscriber additions in the second quarter as the telecom operator's higher-tier unlimited plans attracted customers, sending its shares up 4.8% on Wednesday.
The company added 419,000 monthly bill-paying wireless phone subscribers, compared with expectations of 284,800 additions, according to five analysts polled by FactSet.
"Our significant investment in 5G and fiber and consistent execution is driving durable growth across the large majority of our business," CEO John Stankey said in a post-earnings call.
AT&T's unlimited plans that are usually priced lower than those of rivals have helped the company add budget-conscious customers amid tough competition from T-Mobile and Verizon (NYSE:VZ).
That has also helped AT&T retain customers better than rivals, with its postpaid phone churn - the number of people disconnecting from a company's service - coming at 0.70%, the second lowest reported for a second quarter.
AT&T's initiative which offers new and existing customers with the same deals on all smartphones has also helped to keep churn levels in check.
Free cash flow, a metric that helps determine dividend payouts, rose more than 9% to $4.6 billion, beating LSEG estimates of $4.22 billion.
However, slower phone upgrades in the U.S. weighed on AT&T's revenue, mirroring comments from Verizon.
Mobility equipment revenue was down 8% in April-June period. Total revenue of $29.8 billion missed estimates of $29.92 billion, according to LSEG data.
The U.S. Federal Communications Commission said in a report on Monday the nationwide outage in February that lasted over 12 hours blocked more than 92 million voice calls and prevented more than 25,000 attempts to reach 911.
"Following data breaches and a network outage, AT&T entered this round of earnings needing a win," said Jamie Lumley, analyst at Third Bridge.
"The company has a number of positive takeaways, notably stable wireless customer growth, fiber business expansion and ongoing momentum in converged service adoption."