UPDATE 1-AT&T sees wireless growth improving in second quarter

Fri Jun 7, 2013 1:33am BST

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NEW YORK, June 6 (Reuters) - AT&T Inc said on Thursday it expects to report net wireless subscriber additions of about 500,000 for the second quarter, an improvement on its disappointing first quarter.

For the first quarter AT&T added 296,000 net subscribers, including 365,000 new subscribers using tablet computers and a net loss of 69,000 higher-value phone subscribers.

The No. 2 U.S. mobile service provider did not break out its second-quarter phone and tablet subscriber numbers in its statement issued ahead of an analyst meeting that evening.

It said that strong consolidated customer additions and investments in new growth opportunities would result in a year-over-year decline in second-quarter consolidated margins, which include both landline and wireless communications services.

While strong subscriber growth helps revenue it can hurt margins because it adds upfront costs as wireless service providers such as AT&T have to spend money for each new customer they add.

The company said that higher gross customer additions and an unchanged smartphone upgrade rate would result in wireless margins based on earnings before interest, tax, depreciation and amortization or EBITDA that are comparable to the first-quarter.

It also said it is seeing stronger U-verse broadband and TV subscriber growth than in the second quarter a year ago but it did not give specific numbers.

AT&T received a distribution of about $500 million from YP Holdings LLC, where it holds a minority stake, and about $550 million from its recent sale of shares in America Movil .

AT&T shares fell almost 1 percent to $35.50 in late trade after closing at $35.81 on the New York Stock Exchange.

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