AT&T Misses Expectations as Costs Increase

AT&T reported a quarterly profit that missed Wall Street expectations because it was hit by rising costs.

AT&T’s revenue benefited from growth in the company’s wireless and enterprise businesses, but strong wireless growth comes at a price because the company has to heavily subsidize new smartphone purchases by customers signing long-term contracts. AT&T’s revenue rose 1.6 percent in the second quarter, to $32.08 billion, from $31.58 billion a year earlier, compared with Wall Street expectations for $31.81 billion. AT&T, the nation’s No. 2 mobile service provider after Verizon Wireless, said it added more than 550,000 contract customers in the second quarter, slightly ahead of its target for about 500,000 and an improvement from its 320,000 net additions in the year-earlier quarter. The company’s subscriber growth was still well behind the 941,000 net additions at Verizon. AT&T also faced additional pressure in the second quarter as its smaller rival, T-Mobile US, started selling the Apple iPhone, a top seller for AT&T.