AT&T Inc. on Thursday said promotions are pulling in a large number of new phone customers, but the cost of subsidizing devices for them will hold back profits this year.
The nation's second-largest cellphone company said it expects to report adding a net 500,000 new devices on contract-based plans during the April-June period. That would be the best second-quarter figure since 2010.
Since most Americans already have phones, the number of new customers added every quarter has been slipping across the industry. AT&T's tallies have been propped up by the addition of tablets, but these carry lower monthly fees than phones.
AT&T also said it's adding more U-verse broadband and TV customers than it did in the same period last year.
Dallas-based AT&T doesn't expect the influx of new customers to move the needle on overall sales this year. It said it still expects revenue to rise 2 percent in 2013.
AT&T shares fell 12 cents, or 0.3 percent, to $35.69 in afterhours trading, after the company released its outlook.
The company is set to report full second-quarter results on July 23.