AT&T profit rises on wireless growth

NEW YORK (Reuters) - Top phone company AT&T Inc (T.N: Quote, Profile, Research, Stock Buzz) posted on Wednesday a higher quarterly profit as stronger-than-expected growth in wireless subscribers compensated for shrinking traditional landlines.

The results pushed AT&T shares up 2.5 percent, though analysts said they remained worried about the fall in home phone lines and also pointed to weaker-than-expected growth in high-speed Internet subscribers in the second quarter.

"The access line loss was worse than expected," said Todd Rethemeier, analyst at Soleil-Sur Terre Research. "It's an accelerating loss from the second quarter of last year."

AT&T's primary consumer access lines fell 8.7 percent from a year ago, while its high-speed Internet users increased by 46,000 during the quarter to 14.7 million.

"The broadband customer additions fell off a cliff," Rethemeier said. "They added almost 500,000 in the first quarter of this year. The second quarter is always seasonally weak, but we were still expecting 300,000," he said.

Second-quarter profit rose to $3.8 billion, or 63 cents a share, from $2.9 billion, or 47 cents a share, a year earlier.

Excluding special items such as merger-related costs, profit was 76 cents a share, in line with the average Wall Street forecast, according to Reuters Estimates.

Quarterly revenue rose 4.7 percent to $30.9 billion.

AT&T, the exclusive U.S. carrier for Apple Inc's (AAPL.O: Quote, Profile, Research, Stock Buzz) iPhone, said it added more than 1.3 million net wireless subscribers in the quarter.  Continued...