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AT&T's 'thanks' keeps existing phone customers happy, but doesn't win new ones

Competition is fierce in wireless as AT&T focuses on new businesses like video and its DirecTV acquisition for future growth.

AT&T says fewer customers left its service during the quarter.
Sara Tew/CNET

Perhaps AT&T didn't thank its customers hard enough.

Fierce rivals AT&T and T-Mobile have battled on many fronts. In June, the latest was over how much appreciation each carrier could show its customers.

AT&T fired the first volley in early June, unveiling "AT&T Thanks," a program that offered perks like a buy-one-get-one-free offer on movie tickets (on Tuesdays) and a few other hastily put together features.

Four days later, T-Mobile followed up with its T-Mobile Tuesday program, which offered free pizza, Frosty's desserts from Wendy's, digital movie rentals, as well as the promise of shares for some customers. T-Mobile's program kicked in the next day, while AT&T offered its first perk at the end of the month.

Gratitude may go a long way in keeping existing customers, but it didn't do much to help the carrier add new ones. AT&T on Thursday reported it added only 185,000 prepaid and so-called post-paid customers, or folks with higher credit who make a long-term commitment to the service. As with past quarters, much of its growth came from connected devices such as cars. In total, it added 2.1 million wireless connections. Meanwhile, the company reported fewer customers left its service during the quarter. It said it had the second lowest churn rate ever at 0.97 percent for post-paid customers. Churn is the rate at which customers decide to cancel service.

The numbers reflect the reality of competition in the wireless business, with carriers aggressively vying for your business and where even a free pizza can make a difference. T-Mobile will almost certainly report higher growth in the same period when it releases its second-quarter results next week.

AT&T, meanwhile, has shifted away from solely focusing on wireless phone customers. It also wants to provide a myriad of services, including broadband access and entertainment.

The Dallas telecommunications giant reported earnings of $3.4 billion, or 72 cents a share adjusted for merger costs and other expenses, on revenue of $40.5 billion in the second quarter. This was in line with Wall Street expectations with earnings of 72 cents a share and revenue of $40.63 billion, according to Yahoo Finance.

One of AT&T's biggest pet projects is the debut of its Web video service, a result of its $49 billion bet on DirecTV. The company in March announced the DirecTV-branded service, but omitted key details like pricing and availability.

It plans to have three tiers, including a free option and a service called DirecTV Now, which works on mobile devices and is designed for folks who don't pay for a subscription TV service.

The company's traditional DirecTV satellite business added 342,000 customers in the period.

AT&T shares fell 1.34 percent to $41.95 in after-hours trading.