(New throughout, adds churn rate, details on profit margins, background, updates stock price)
By Malathi Nayak
SAN FRANCISCO, Jan 27 (Reuters) - AT&T Inc on Tuesday posted a quarterly net loss that was slightly slimmer than Wall Street expected, as its mobile device deals attracted more customers, but its users switched to other networks at a higher rate.
AT&T shares rose 1.6 percent in after-hours trading after closing at $32.81 on the New York Stock Exchange.
The second-largest U.S. wireless carrier posted a net loss of $4 billion, or 77 cents per share, in the fourth quarter, compared with net income $6.9 billion, or $1.31 per share, a year ago. Excluding items, AT&T earned 55 cents per share, a penny more than analysts’ forecasts.
The company said postpaid churn, or the rate of customer defections, rose to 1.22 percent and average revenue per phone user declined 10.7 percent from a year earlier.
Faced with intense competition and promotional activity, wireless carriers have moved from two-year contract plans to equipment financing plans, which reduce service fees and eliminate subsidies for devices.
Such no-subsidy plans along with aggressive price cuts to tackle competition from rivals T-Mobile and Sprint have squeezed profit margins. AT&T’s wireless profit margins, excluding certain items, narrowed to 36.7 percent from 42 percent a year earlier.
As the U.S. wireless market reaches saturation, the company has been expanding its footprint in Mexico to grow its business. It said on Monday it would buy bankrupt NII Holdings Inc’s wireless business in Mexico for $1.875 billion.
In 2015, the company said it expects margin expansion along with adjusted earnings growth in “the low single-digit range.”
AT&T said it had added more than 2 million new wireless customers and 854,000 contract subscribers in the quarter.
Revenue rose to $34.4 billion from $33.16 billion in the year-ago quarter. Wall Street analysts, on average, had expected $34.27 billion, according to Thomson Reuters I/B/E/S. (Reporting by Malathi Nayak; Editing by David Gregorio)