AT&T beats estimates for subscriber additions, free cash flow

(Reuters) -AT&T surpassed Wall Street expectations for first-quarter wireless subscriber additions and free cash flow on Wednesday as more people purchased its higher-tier unlimited plans.

Shares of the company were up 2.4% in early trading.

The telecom giant has been leaning on its 5G rollouts and plans that are usually cheaper than rivals such as Verizon to appeal to more budget-conscious consumers and drive growth in the competitive U.S. market.

AT&T added 349,000 net monthly bill-paying wireless phone subscribers in the first quarter, flying past expectations of 286,800 additions, according to five analysts polled by FactSet.

AT&T's efforts to expand its fiber network also helped it post a 7.7% increase in broadband revenue for the period.

"As our customer base continues to migrate to fiber from legacy services, our broadband support cost are decreasing, thanks to fiber's more efficient operating model, greater reliability and higher quality service," finance chief Pascal Desroches said on a post-earnings call.

AT&T's free cash flow more than tripled to $ 3.1 billion, topping estimates of $2.53 billion, according to Visible Alpha.

But revenue came in at $30 billion, below LSEG expectations of $30.54 billion, as the U.S. telecom space continues to see muted phone upgrades.

However, AT&T has not seen the same drop in upgrade rates as rivals Verizon and T-Mobile due to its emphasis on customer retention over customer acquisition, analysts at Morningstar said last month. This has led to the company seeing its lowest first-quarter churn -- the rate at which customers disconnect service -- at 0.72% in the three months ended March.

Adjusted profit for the quarter came in at 55 cents per share, in line with expectations.

Verizon kicked off earnings for the U.S. telecom sector on Monday and posted fewer subscriber losses for the quarter.

(Reporting by Harshita Mary Varghese; Editing by Maju Samuel)