AT&T beats estimates for subscriber additions, free cash flow

FILE PHOTO: An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni/File Photo

(Reuters) -AT&T surpassed Wall Street expectations for first-quarter wireless subscriber additions and free cash flow on Wednesday as more people purchased its higher-tier unlimited plans.

The telecom giant has been leaning on its 5G rollouts and plans that are usually cheaper than rivals such as Verizon to appeal to more budget-conscious consumers and drive growth in the competitive U.S. market.

AT&T added 349,000 net monthly bill-paying wireless phone subscribers in the first quarter, flying past expectations of 286,800 additions, according to five analysts polled by FactSet.

AT&T's efforts to expand its fiber network also helped it post a 7.7% increase in broadband revenue for the period.

"As our customer base continues to migrate to fiber from legacy services, our broadband support cost are decreasing, thanks to fiber's more efficient operating model, greater reliability and higher quality service," finance chief Pascal Desroches said on a post-earnings call.

AT&T's free cash flow more than tripled to $ 3.1 billion, topping estimates of $2.53 billion, according to Visible Alpha.

"The business fundamentals are in a better position than they were a year ago with substantial expansion in free cash flow combined with ongoing growth in postpaid wireless and fiber internet," said Jamie Lumley, analyst at Third Bridge.

The company reported its lowest first-quarter churn -- the rate at which customers disconnect service -- at 0.72% for the three months ended March.

But revenue came in at $30 billion, below LSEG expectations of $30.54 billion, as the U.S. telecom space continues to see muted phone upgrades.

Adjusted profit for the quarter was 55 cents per share, in line with expectations.

Verizon kicked off earnings for the U.S. telecom sector on Monday and posted fewer subscriber losses for the quarter.

(Reporting by Harshita Mary Varghese; Editing by Maju Samuel)

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