Updated from July 26 with additional information.

The strong second-quarter results from AT&T Inc. (T)   present something of a paradox. While unlimited plans have ratcheted up competition, AT&T reported record wireless services margins and low customer defections. 

"I don't think it's an industry-wide phenomenon," said Amy Yong of Macquarie Capital (USA) Inc. "It's pretty much a company-specific dynamic."

Shares of AT&T gained about 5% Wednesday after the telecom's second quarter report to close at $38.08. The stock gained another 3% Thursday to $39.28.

T-Mobile USA Inc. (TMUS) , which has led the charge towards unlimited data, improved Ebitda margins from 37% to 40% in the second quarter, which Yong attributed to T-Mobile's increasing scale. 

Proving that not all carriers are seeing increased profitability, Verizon Communications Inc. (VZ)  reported Thursday that its wireless services margins contracted from 47.8% a year ago to 45.8% in the second quarter. The slip is not surprising, since the quarter was Verizon's first full earnings period with its new unlimited data plan, which reduced overage charges. Despite the drop in margins, Verizon posted a strong gain of 614,000 net post-paid accounts added, bouncing back from a dismal first quarter. Verizon stock gained 6.8% to $47.45 on Thursday.

Sprint Corp. (S) follows on Aug. 1. The launch of Apple Inc.'s (AAPL) iPhone 8 in about two months could further tempt carriers to launch margin-squeezing promotions.

If the wireless market is so competitive, how is AT&T posting record high margins and record low churn?

— Walt Piecyk (@WaltBTIG) July 25, 2017

How did AT&T notch record wireless services Eibtda margins of 50.4% in the second quarter?

"Their acquisition of DirecTV has really helped their churn," Yong suggested. "There are some synergies they are benefiting from."

AT&T noted during its Tuesday earnings call that bundling DirecTV Now and HBO with its unlimited wireless plan has helped it hold onto customers, driving churn -- or the percentage of customers who cancelled service in the quarter -- to a record low of 0.79% among post-paid phone subscribers. "It's a very competitive environment, and why are people staying with us?" CFO John Stephens told investors. "I think in part it's because they like the ability to bundle."

The second quarter was the first full earnings period in which all four carriers had unlimited plans. Sprint is even offering free service for a year to post-paid subscribers who drop their carriers. Against this backdrop, AT&T's low churn is even more impressive. "Given the low churn amid the current environment and amid a time where competitors like Sprint have essentially given away free services, we think AT&T should continue to be successful with sustaining its low churn levels," CFRA analyst Angelo Zino said.

It's not just the video bundle that is holding down subscriber defections. Customers are holding onto their devices longer, Moody's Investors Service analyst Mark Stodde noted. New installment plans that stretch out payments for phones and a slower pace of new device launches have also helped dampen customer defections across the industry, the analyst added.

While bundling DirecTV Now and HBO benefits wireless, it may ultimately have a robbing-Peter-to-pay-Paul effect. And the impact on AT&T's overall finances would be even greater if it closes the $85 billion purchase of HBO parent Time Warner Inc. (TWX) .

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Craig Moffett of MoffettNathanson LLC noted that the programming included in DirecTV Now's $35 per-month package costs about $30 per month. When customers bundle the service with its wireless package, they can get DirecTV Now for $10 per month and can add Time Warner's HBO for $5 per month.

"Time Warner spent decades building HBO into a powerhouse that could command $20 per month," Moffett wrote. "Offering it for $5 risks angering competing distributors and, just as importantly, risks undermining HBO's premium position."

AT&T also touted its advances in software-defined networking during the call. CFRA's Zinney said that the increased automation of networks  is reducing costs, and could continue to boost margins even if AT&T's sales see low single-digit declines. 

The carrier's limited subscriber gains of 178,000 post-paid phone customers actually helped margins. "Since it costs a lot of money to add a new customer, when a carrier adds fewer customers costs go down and margins and Ebitda go up in the short term," Drexel Hamilton LLC analyst Barry Sine said. "But with a loss of subscribers over long periods of time, revenue and Ebitda will decline."

The launch of the iPhone 8 later this year is a wild card. Carriers will be tempted to launch promotions to gain subscribers. With a reported price tag of  as much as $1,200 a pop, however, subsidizing the coveted device will be costly. "We'll see what the carriers do in terms of trade-in offers or installment plans," Macquarie's Yong said.

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