Growth in wireless subscribers, which met Wall Street expectations, also helped AT&T offset declines in its traditional telephone business.
The biggest U.S. phone company's first quarter profit fell to $3.13 billion, or 53 cents per share, from $3.46 billion, or 57 cents a share, a year earlier. The results beat the average analyst forecast of 48 cents per share, according to Reuters Estimates.
While revenue edged down 0.6 percent to $30.57 billion, which was below average analyst expectations for $31.06 billion, investors were pleased with AT&T's performance in its growth markets, including its U-verse video service.
You had broadband net adds very strong, U-verse net adds very strong and wireless was very strong, said Commresearch analyst Gregory Lundberg. For this economy, it was an outstanding performance.
AT&T added 284,000 subscriptions to U-verse in the first quarter, ahead of three analyst estimates that ranged from 240,000 to 281,500 subscriptions. It added 264,000 subscribers in the fourth quarter, giving U-verse a total subscriber base of 1.3 million.
The company added 359,000 broadband Internet subscribers in the quarter, well ahead of Lundberg's forecast for 225,000 additions.
AT&T, which trails Verizon Wireless, owned by Verizon Communications
The company said 1.6 million customers activated services on the AT&T network using Apple Inc's
AT&T shares rose 2 percent in premarket trade on Wednesday to $25.80.
(Reporting by Sinead Carew; editing by John Wallace and Derek Caney)