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AT&T earnings sees wireless growth in Q2, but video side continues to struggle

Video continues to be a weak spot for the carrier.

In this photo illustration the DirecTV Now logo is seen

DirecTV Now continues to underperform for AT&T. 

Rafael Henrique/SOPA Images/LightRocket via Getty Images

AT&T met analyst expectations in its latest earnings report, even as struggles continued around the company's U-Verse and DirecTV video unit. 

The technology giant added 335,000 phone users, the bulk of them coming on the company's prepaid side. AT&T says it added 72,000 postpaid users, the more lucrative customers that sign up for its traditional monthly wireless service. By comparison, in the first quarter of the year, the company added 179,000 phone users, of which 80,000 were postpaid. 

Utilizing its deployment of FirstNet, a wireless network for first responders, AT&T says it has been able to upgrade its traditional wireless network and get it ready for 5G, which it plans to make commercially available nationwide during the first half of 2020. 

"The wireless side of the house, we're feeling more and more confident every day," said Randall Stephenson, AT&T's chairman and CEO in a call with investors. Stephenson says the company has built out 60% of its FirstNet network thus far.

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The growth in mobile comes as its more premium DirecTV and AT&T U-Verse continue to shed users for its traditional satellite, cable and streaming DirecTV Now services. AT&T said it lost 778,000 premium video users, with an additional 168,000 users disconnecting from DirecTV Now as the company rolled out fewer promotions. 

AT&T warns that the losses could continue through the rest of the year as it still has 1 million users locked on two-year pricing promotions. The company is touting a new, forthcoming over-the-top streaming service called AT&T TV, set for trial in the third quarter of the year, as well as next spring's HBO Max launch, as options to turn its video ship around. 

Read moreDirecTV Now vs. YouTube TV vs. Sling TV vs. Hulu and more

Stephenson says HBO Max will have live sports, touting the NBA and MLB as two potential examples. While it is unclear exactly what AT&T TV will look like and how it will compare to the company's other streaming services, Stephenson told investors that the company "will put our shoulder and our muscle behind AT&T TV."

WarnerMedia, the division that houses the Time Warner properties AT&T acquired last year, including Turner TV stations and HBO, had revenues of roughly $8.4 billion. 

Earnings per share were 89 cents for the quarter, exactly matching the estimates from analysts polled, according to Yahoo Finance. Revenues came in at $45 billion, slightly higher than the $44.85 billion analysts anticipated.