AT&T Inc posted third-quarter revenue below Wall Street estimates as it added fewer customers than expected, citing a shortage of the latest Apple Inc iPhone.
The No. 2 U.S. mobile service provider said it had 151,000 net new subscribers in the quarter, compared with the average expectation for 358,000, according to five analysts contacted by Reuters.
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Its bigger rival, Verizon Wireless, added 1.5 million subscribers in the quarter.
AT&T said a shortage of the latest iPhone, which went on sale in the last week of the quarter, meant that the vast majority of third-quarter iPhone sales went to existing customers, stunting its growth of new customers.
Slow customer growth likely helped the company post better-than-expected earnings for the quarter as new customers come with a hefty cost for wireless service providers.
AT&T's profit rose to $3.64 billion, or 63 cents per share, from $3.62 billion, or 61 cents per share, and was 3 cents ahead of Wall Street expectations, according to Thomson Reuters I/B/E/S.
However, revenue fell to $31.46 billion from $31.48 billion and missed the analysts' average estimate of $31.59 billion, according to Thomson Reuters I/B/E/S.
The company also raised its target for 2012 free cash flow by $2 billion to $18 billion.
Verizon Wireless is a venture of Verizon Communications and Vodafone Group Plc .
(Reporting by Sinead Carew; Editing by Lisa Von Ahn and Jeffrey Benkoe)