Wireless and broadband fuel sales growth for AT&T

Net earnings remain flat, however, even as the company makes gains in wireless subscribers

Gains from its broadband and wireless businesses have fueled AT&T's best revenue growth in more than two years.

Total wireless revenue, which includes equipment sales, was up 7.0 percent from the first quarter a year earlier, to US$17.9 billion, AT&T said Tuesday. Total wireless subscribers increased by just over a million.

Wireline revenue for the quarter, which ended March 31, was $14.6 billion, down 0.4 percent. The good news for AT&T, though, was that revenue from its U-verse broadband business increased 29.0 percent year over year.

The gains helped drive AT&T's overall revenue to $32.5 billion, up 3.6 percent from a year earlier. That was the company's biggest year-over-year sales increase in two years, AT&T noted.

Net income was $3.7 billion, roughly equal to its profit a year ago. Excluding one-time items, earnings per share were $0.71, compared to $0.64 in the year-ago quarter.

Tepid economic growth and competition in both its mobile and traditional wireline markets are bound to put pressure on AT&T's growth, analysts said.

"We continue to believe the wireline business remains challenged while wireless competition -- and the company's response to it -- will limit wireless service revenue growth," said Canaccord Genuity analyst Greg Miller in a research note before AT&T issued its earnings.

But AT&T is striving to branch out in other areas, which is why its U-verse unit is being closely watched.

On Monday, AT&T said it might roll out 1Gbps fiber-optic service in up to 21 new metropolitan areas including Atlanta, Chicago, Los Angeles, San Francisco and San Jose, California.

The plans could cause AT&T to butt heads with Google, which is targeting some of the same cities with its fiber broadband service.

The possible deployments by AT&T depend on discussions with local leaders and groups on ways to roll out the ultra-fast broadband service, the company said.

The rollout of its U-verse broadband with GigaPower service, meanwhile, will also include television service. Before Monday's announcement, AT&T had unveiled plans to build ultra-fast broadband in Austin and Dallas in Texas, and in Raleigh-Durham and Winston-Salem, North Carolina.

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Marc Ferranti

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