AT&T

(T) - Get Report

posted solid fourth-quarter numbers on blowout wireless growth quieting some consumer spending fears.

The No.1 mobile phone service posted adjusted earnings of $4.3 billion, or 71 cents a share, up 16% from the 61 cent pro forma profit a year ago. Analysts expected a 71-cent profit.

Sales also hit Wall Street targets, coming in at $30.3 billion, up from the $21.5 billion level in the year-ago quarter.

As

TheStreet.com

first reported, AT&T had a net gain of 2.7 million wireless subscribers, taking its total customer count to 70.1 million with the addition of the Dobson business. AT&T picked up 1.2 million retail postpaid customers in the fourth quarter, a 37% improvement over last year's levels.

Ma Bell has benefitted from the collapse of No.3 wireless shop,

Sprint

(S) - Get Report

, which announced a top management shakeup Thursday.

Earlier this month, AT&T executives said they saw

softness in its core phone business, sparking fears that the slowing economy and the mortgage crunch were starting to impact the phone giant. But observers say that while the backdrop of lower new-home construction may take some wind out of AT&T's sails, it is really the competitive heat from rivals like

Comcast

(CMCSA) - Get Report

as well as satellite broadcasters like

DirecTV

(DTV)

and

EchoStar

(DISH) - Get Report

that were dragging down sales.

One of the weak spots in AT&T's operations has been its fiber and DSL-based expansion to offer video as a part of its so-called triple play service package. The costly, delay- and glitch-plagued effort is starting to gain some traction, though.

The company added 105,000 IP video customers in the fourth quarter, giving AT&T 231,000 U-verse subscribers at year end.

AT&T says it expects to have more than 1 million U-verse customers by the end of 2008. But the gains will come at an additional cost. AT&T expects U-verse expansion will take about 13 cents off the company's bottom line this year.

Shares fell 24 cents to $36.45, and telco peer

Verizon

(VZ) - Get Report

fell 32 cents to $37.75 in sympathy during premarket trading Thursday.