FILE PHOTO: An AT&T logo is pictured in Pasadena, California, U.S., January 24, 2018. REUTERS/Mario Anzuoni/File Photo
(Reuters) -AT&T's fourth-quarter wireless subscriber growth surpassed expectations on Monday, fueled by strong demand for its discounted premium plans combining 5G mobile with high-speed fiber data, sending its shares up more than 6% in early trading.
The U.S. telecom giant added 482,000 net monthly bill-paying wireless phone subscribers in the holiday quarter, outpacing analysts' estimated gains of 424,550, according to Visible Alpha.
As the pool of potential new wireless customers shrinks in the United States, AT&T's strategy of bundling high-speed fiber internet with wireless phone services has helped drive growth for the company.
AT&T's investments in fiber would "undoubtedly" drive faster growth in fiber subscribers and revenue, and help valuation over time, New Street Research analyst Jonathan Chaplin said.
"Broadband is a better business than mobile and it will trade at a higher multiple in time."
Its fiber business added 307,000 new customers in the fourth quarter, higher than 226,000 additions in the prior quarter, marking its best fourth-quarter fiber net additions.
"We continue to focus on building the largest, highest capacity, lowest marginal cost, converged broadband network in the country," AT&T CEO John Stankey said in a post-earnings call.
The last three months of the year are typically strong for telecom operators, driven by factors such as Black Friday promotions, trade-in deals for new iPhone launches and the gift-giving season around Christmas, all of which contribute to higher subscriber additions.
AT&T said last month that it expected free cash flow to be more than $18 billion in 2027 and would reach more than 50 million locations with fiber by 2029.
Excluding items, it reported a profit of 54 cents per share, higher than analysts' estimate of 50 cents per share, according to data compiled by LSEG.
Total revenue rose about 1% to $32.3 billion, compared with an estimate of $32.04 billion.
AT&T began offering bill credits for network outages from Jan. 9, part of a new initiative to attract customers in a highly competitive market.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Pooja Desai)
