Business

Phones subsidy cuts AT&T profit

The surge in tablet usage, a trade-in promotion and a fee tacked onto bills helped boost AT&T’s wireless revenue for the latest quarter, but profits declined as costs surged, the company said yesterday.

AT&T’s coffers were drained by smartphone sales, which it subsidizes in the hope of making money back over the life of two-year contracts. It set a second-quarter smartphone sales record, helped by a promotion that gave customers $100 off a new phone when trading in an old one.

Costs also rose due to investments AT&T is making to boost home broadband speeds.

Dallas-based AT&T said it earned $3.8 billion, or 71 cents per share, in the April-to-June period, compared with $3.9 billion, or 66 cents share, a year ago. The per-share figure rose despite the overall profit drop because AT&T has been buying back shares in addition to paying out its dividend.

AT&T shares fell 31 cents to $35.50 in extended trading, after the release of the results.