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AT&T Inc. posted better-than-expected wireless subscriber numbers for its latest quarter, which marked a transition for the company as it was the last full period to contain financial results from the WarnerMedia business that the telecommunications company has since spun off.

The company on Thursday posted revenue of $38.1 billion, down from $43.9 billion in the year-earlier quarter, though the prior year’s total included results from the company’s U.S. video and Vrio businesses that have now been divested. Analysts tracked by FactSet were modeling $38.2 billion for the quarter.

AT&T also recorded net income of $4.8 billion, or 65 cents a share, compared with $7.5 billion, or $1.02 a share, a year prior. After adjusting for merger-amortization costs and other items, AT&T T, +4.01% earned 77 cents a share, down from 85 cents a share a year prior but ahead of the FactSet consensus, which was for 62 cents a share.

“Year-over-year earnings declines were primarily driven by WarnerMedia and, to a lesser extent, certain onetime costs in the communications segment,” Chief Financial Officer Pascal Desroches said on AT&T’s earnings call.

The stock was up 3.9% in Thursday afternoon trading.

AT&T officially spun out its WarnerMedia business April 8 in a combination with Discovery, and the company now plans to refocus its energy on the telecommunications side of the business.

“AT&T has entered a new era, meeting this opportunistic moment from a
position of flexibility and strength thanks to our evolving networks, enhanced
customer experience, growing 5G and fiber customer base and a much
stronger balance sheet,” Chief Executive John Stankey said in a release.

The company added a net of 691,000 postpaid phone subscribers in the quarter, which it said was its strongest first-quarter performance on the metric in more than a decade. The FactSet consensus was for 413,000 postpaid phone net additions. AT&T saw postpaid phone churn of 0.79% during the period.

Stankey noted on the earnings call that while AT&T was the first of the major carriers to release its subscriber numbers, he sensed that the overall wireless market “still remains pretty strong.” He added that the company “chose not to chase” rival promotions in the fourth quarter and “stayed very consistent in the first quarter of this year with our strategies and approach.”

Within its consumer wireline business, AT&T notched 289,000 fiber net additions. Stankey said the company has had success selling consumers on simple, stable pricing plans.

“In many cases, we’re in the market at a minimum of $10 higher to the promotional price that cable or the other broadband competitors have in the market,” he said, but customers on rival plans that offer first-year promotions will see step-ups in pricing once the first year winds down, unlike at AT&T, which said it is keeping pricing constant.

Amid a heavy investment quarter, AT&T generated free-cash flow of about $700 million. The company said that free-cash flow for standalone AT&T was $2.9 billion.

“Given that Q1 is a seasonally low quarter for free-cash flow and many of the factors impacting free cash are not expected to repeat, we remain confident in the guidance we provided to you during our analyst day to achieve free-cash flow in the $16 billion range for the year and on a standalone basis,” Desroches said on the call.

See more on AT&T’s analyst-day targets

Shares of AT&T have edged up 1.1% over the past three months as the S&P 500 SPX, -1.34% has risen 0.5%.

Source: This post first appeared on http://marketwatch.com/

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