AT&T's U-verse service surges

First-quarter growth beats expectations

NEW YORK -- Telecom giant AT&T continued to see accelerating growth of its U-verse video service, which competes with cable and satellite TV providers, in the first quarter.

It added 284,000 new U-verse TV subscribers in the period, up from 148,000 in the year-ago quarter and 264,000 in the fourth quarter of 2008, AT&T said in its latest earnings report. The growth was also ahead of many analysts' forecasts.

The U-verse service now reaches 1.3 million users overall. Nearly 50% of subscribers take the largest video package, according to the firm.

AT&T's total video subscribers, which combine U-verse and bundled satellite TV customers, reached 3.5 million at the end of the first quarter.

AT&T also lauded wireless growth momentum thanks to its exclusive iPhone provider deal. It said 1.6 million Apple iPhone customers had activated services on the AT&T network during the quarter, more than 40% of whom were new to the telecom giant.

"I am particularly pleased with the success of our iPhone 3G initiative, which has driven strong high-end customer growth and delivered financial benefits ahead of our original outlook," said AT&T chairman and CEO Randall Stephenson.

Overall, AT&T's first-quarter profit fell 9.7% to $3.13 billion. Revenue declined 0.6% to $30.57 billion.