AT&T Inc. (NYSE:T) shares jumped the most in more than 8 years after the telecomm giant recorded a surprise wireless subscriber rise in the second quarter, demonstrating it can fend for itself in an aggressive price war. In the last trading session, the stock price of AT&T gained 5% to close the day at $38.03.
Second-quarter earnings surpassed projections, and wireless clients surged by 127,000, compared with street analysts’ average estimate for a loss of 22,713. A proposal for unlimited wireless data, together with discounted streaming-TV service, assisting AT&T bide its time while looking for regulatory nod to transform into a media center via the purchase of Time Warner Inc (NYSE:TWX).
Competitor Sprint Corp (NYSE:S) is showering deep discounts, comprising a year’s worth of free service, while T-Mobile US Inc. persists to hammer AT&T with advertising. However, the company is managing to weather the strong competitive environment by bundling services at the place of reducing prices, adding wireless subscribers and running its network efficiently in Mexico, its new market. Its operating profit margin came at 21.6% from 21.45% a year earlier, discounting expenses including merger expenses.
Colby Synesael of Cowen and Co. reported that AT&T managed the aggressive competition positively in the quarter, and while it assures to get aggressive with the iPhone release, the carrier’s integrated plan is beginning to prove out. Apple Inc. (NASDAQ:AAPL)’s latest device launch is anticipated to be around September or October.
As per the latest update, AT&T lost as many as 89,000 phone subscribers, however that drop was more than offset by the addition of 156,000 tablet consumers. The loss of phone consumers, the most profitable subscribers, declined from 180,000 a year ago. T-Mobile wireless subscribers’ addition was added 817,000 in the second quarter. The company also raised its full-year consumer-gain expectation last week, boosted by giveaways and price cuts.