Even as competition picks up with unlimited plans, AT&T Inc. (T - Get Report)  topped earnings forecasts and posted record wireless margins in a second-quarter earnings report after the close on Tuesday. 

Shares of the telecom climbed 2.5% to $37.12 in after-hours trading on Tuesday, as earnings grew 10% to 79 cents per share and beat FactSet analysts' consensus of 73 cents per share.

"Our competitors tried just about every promotion in the marketing book," CFO John Stephens told investors during Tuesday's call.

All four wireless carriers have unlimited plans, after Verizon Communications Inc. (VZ - Get Report) joined the other carriers in offering an all-you-can-eat data plan. Sprint Corp. (S - Get Report) is offering free service for a year to customers who switch providers.

Alongside the increased competition, AT&T's churn, or the percentage of customers who cancelled service during the period, fell to a record-low 0.79% in the second quarter. Stephens said that bundling wireless and video service helped AT&T hold onto subscribers.  

Second quarter revenue came to $39.8 billion, a decline from $40.52 in the same quarter last year and in line with expectations of $39.79 billion. AT&T attributed the declines to its traditional wireline services and consumer mobile services.

Wireless Ebitda margins rose to 50.4%, which Stephens said is a record.

The company added 2.3 million net subscriptions in the U.S. and 2.8 million wireless mobile users, up from 2.7 million net adds in the first quarter.

Subscriptions to AT&T's DirecTV Now video streaming service rose to nearly 500,000, Stephens said, helping to offset cord cutters who dropped the company's traditional pay-TV service. 

The telecom still expects to close the $85.4 billion purchase of Time Warner Inc (TWX) this year. Stephens said the company is in discussions with the Department of Justice regarding the deal. Federal Communications Commission Chairman Ajit Pai said the Commission will not review the deal.

Randall Stephenson will remain Chairman and CEO of AT&T following the purchase, Stephens said, addressing a report that the telecom planned changes at the top.

"I don't expect any changes there before or after the Time Warner merger," the AT&T CFO said of Stephenson's role. Bloomberg reported earlier in July that Stephenson would drop the role of CEO and serve solely as Chairman following the deal. The AT&T boss reportedly would oversee co-CEOs who would run AT&T's telecom and media businesses--although Stephens said the story was premature on the call and that Stephenson and Time Warner CEO Jeff Bewkes are working out post-merger issues.

AT&T stock has traded down over 14% since the start of the year.

The market gets its next read on the wireless market on Thursday before the market open, when Verizon reports second-quarter results.

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