From Bloomberg News. The company is holding a conference call with analysts. Updated with comments.
AT&T Inc. reported third-quarter profit that beat analysts’ estimates as the iPhone helped attract a record amount of new customers.

But AT&T's exclusive deal with Apple for the iPhone in the U.S. may soon be ending. The deal has been rumored end in 2010, and AT&T Mobility chief Ralph de la Vega implied that may indeed be true. This morning during the company's conference call with analysts, de la Vega said that even if the company loses its exclusivity, he believes AT&T will still have an advantage because the carrier supports an iPhone that uses HSPA 7.2 network technology, which AT&T is in the process of deploying. "The iPhone will work better on our network than on anyone else's network," he said.

Net income amounted to 54 cents a share, beating the 50- cent average of estimates compiled by Bloomberg. Sales fell 1.6 percent to $30.9 billion, AT&T said today in a statement. AT&T added 2 million wireless users, the biggest third-quarter figure in its history, with 1.4 million signing up for contracts.

AT&T has kept adding wireless users by focusing on Web- equipped devices like Apple Inc.’s iPhone, the top-selling U.S. consumer smart phone in the second quarter. Most of the company’s new contract subscribers were iPhone users, said Chris Larsen, a New York-based analyst at Piper Jaffray Cos.

“Wireless sales overall were strong,” said Larsen, who rates AT&T “overweight” and doesn’t own the shares. “What happened? They sold the iPhone.”

Net income fell 1.2 percent to $3.19 billion from $3.23 billion, or 55 cents a share, a year earlier. Leaving out a 3- cent-per-share tax-related benefit and a 2-cent expense for severance costs, earnings would have been 53 cents.

AT&T, rose 39 cents, or 1.5 percent, to $26.33 in New York Stock Exchange composite trading early Thursday. The carrier trails Verizon Wireless in mobile-phone subscribers.

Customer turnover, or churn, fell to a record low of 1.43 percent from 1.69 percent a year earlier. Turnover on long-term contracts fell to 1.17 percent from 1.22 percent. The iPhone probably helped reduce churn, along with AT&T’s own long-term strategy to improve retention, Larsen said.

Customers who use smart phones such as the iPhone typically spend 80 percent more than the average customer per month, AT&T has said. The company’s wireless unit accounted for about half of operating profit last year. AT&T has been the exclusive carrier for the iPhone in the U.S. since its debut in 2007.

AT&T added 240,000 net new U-Verse TV subscribers, bringing its total to 1.8 million. AT&T is relying on its U-Verse service, which provides video over its phone lines, to persuade land-line clients not to switch to cable-TV carriers that offer voice service. U-verse was generating annualized sales of about $2 billion by the end of the second quarter, AT&T said in July.

AT&T’s 2 million wireless customer additions beat Larsen’s 1.7 million prediction. The company also activated 3.2 million iPhones, with almost 40 percent of users new to AT&T.

Revenue from data subscribers grew 34 percent to $3.6 billion. Wireline revenue fell 7.1 percent to $16.3 billion, making up more than half of sales.

AT&T plans to spend up to $18 billion this year on its network, partly on making its third-generation network twice as fast. Verizon Wireless is upgrading by switching to new technology called long-term evolution, designed to let customers access the Internet and data features at high speeds. Verizon plans to make it available in some markets next year.

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