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AT&T beats earnings thanks to best wireless first quarter in over 10 years

The carrier's promotions seem to be paying off.

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Sarah Tew/CNET

AT&T continued its momentum from a strong fourth quarter, announcing on Thursday that it beat first-quarter earnings expectations thanks to strong performance from its wireless, fiber and WarnerMedia businesses. 

The company reported revenues of $43.9 billion for the quarter, beating the $42.69 billion expected by analysts polled by Yahoo Finance. Adjusted earnings per share came in at $0.86, ahead of the $0.78 analysts expected. 

Behind the growth was what AT&T touted as the "strongest" quarter it had for wireless postpaid phone net additions in over 10 years. In the quarter the carrier had 823,000 postpaid additions, of which 595,000 were phone net adds. Postpaid users, who pay their phone bills at the end of the month, are valued more highly by the investment community as a key metric of a carrier's success.

Since dropping behind T-Mobile last year, AT&T has gotten more aggressive with promotions as the smallest of the US' three major wireless carriers. Those promotions, which often offer discounts to both new and existing customers to upgrade devices, seem to be paying off. 

Verizon, which reported earnings on Wednesday, said it lost 326,000 wireless customer postpaid accounts during the period, of which 225,000 included customers with phone plans. T-Mobile will report its earnings on May 4. 

AT&T touts that its churn -- the metric for measuring people leaving the carrier -- has dropped to 0.76% for postpaid customers, down 10 points from the 0.86% it was at in the first quarter of 2020.

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For its WarnerMedia division, the company announced it now has more than 44.2 million HBO Max and HBO subscribers in the US, up from the 41.5 million it reported last quarter. AT&T has been betting big on HBO Max and announced last year that it will release all of its 2021 Warner Bros. theatrical films simultaneously on the streaming service because of the pandemic.

The company says it has added around 11.1 million users since launching HBO Max last year. During its earnings call Thursday morning, the carrier reiterated that a cheaper, advertising-supported version of HBO Max is coming in June. Globally, AT&T says HBO Max and HBO now have 63.9 million subscribers. 

During its earnings call the company talked about bundling the advertising version of HBO Max with some of its prepaid services. Jeff McElfresh, CEO of AT&T Communications, tells CNET that the company is looking to possibly add it to some of its Cricket plans. 

"We see that as an opportunity to expand not only the value proposition for our Cricket brand," McElfresh says, but also to boost AT&T in different "segments of the marketplace" than more traditional offerings. Right now the carrier only bundles HBO Max with its top-tier, postpaid Unlimited Elite plan and does not offer it on other AT&T plans or through its prepaid subsidiaries. 

AT&T since clarified that the exact details haven't yet been finalized with regards to bringing the advertising version of HBO Max to Cricket. 

On the broadband front, the carrier added 235,000 fiber users and now has 5.2 million fiber subscribers. AT&T announced in March that it will be expanding to 3 million new fiber locations this year, with potentially another 4 million locations coming in 2022.