Cingular

turned in a solid third quarter with pumped up margins and strong subscriber growth.

The wireless joint venture of

AT&T

(T) - Get Report

and

BellSouth

(BLS)

says it added 1.4 million net new users and trimmed its monthly customer defection rate to 1.5%.

For the quarter ended last month, Cingular posted a profit of $847 million, which is up dramatically over the $222 million in earnings last year. Sales grew to $9.5 billion from $8.7 billion in the year-ago quarter.

Gross margin was 61% in the quarter compared with 58% in the third quarter of 2005.

The average revenue per user, or ARPU, increased slightly to $49.76 from $49.65 last year and was well above the $48.84 level in the second quarter.

Some investors said they were encouraged by the solid jump in Cingular's data ARPU, which reached $6.32, nearly a 50% improvement from the same quarter last year.

The gain is seen as evidence that Cingular is selling more Internet- and messaging-related services, a bit of a payback on the company's big network upgrade investment.

Cingular's subscriber growth strength and higher profits raises expectations for Verizon Wireless, co-owned by

Verizon

(VZ) - Get Report

and

Vodafone

(VOD) - Get Report

.

Verizon Wireless is expected to report earnings later this month.

AT&T shares rose 35 cents to $33.29, nearing another 52-week high; BellSouth shares rose 43 cents to $43.78 in early trading Thursday.