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AT&T reported third-quarter net income that narrowly exceeded estimates. AT&T

AT&T Inc. (NYSE: T), the No. 1 telecommunications carrier, reported third-quarter net income that narrowly exceeded estimates because more mobile customers signed up for long-term contracts than expected.

The Dallas-based carrier said net income rose slightly to $3.64 billion, or 63 cents per share, from $3.63 billion, or 61 cents a year ago. Revenue eased slightly to $31.5 billion. The report beat estimates of analysts polled by Thomson Reuters by a penny.

“We had another impressive quarter with strong earnings growth,” said CEO Randall Stephenson before speaking with analysts Wednesday. He predicted ATT’s free cash flow will be at least $18 billion, or $2 billion above prior estimates.

The company sold 6.1 million smartphones, activated 4.7 million iPhones from Apple (Nasdaq: AAPL), the world's most valuable technology company, and reported its best-ever sales of Android phones using the OS from Google (Nasdaq: GOOG), the No. 1 search engine.

Last week, No. 2 Verizon Communications also reported earnings that beat estimates.

AT&T reported 105.9 million mobile customers, about 5 percent more than a year ago, and Verizon Wireless, a unit of Verizon, reported 95.9 million subscribers. Sprint-Nextel Corp., the No. 3 carrier, is scheduled to report Thursday. It had 56 million mobile customers on June 30.

AT&T shares fell 29 cents to $34.71 in Wednesday trading.