AT&T gained more wireless subscribers than expected in the third quarter, driven by the steady adoption of its higher-tier unlimited plans that come with perks including increased hotspot data.

The U.S. telecom firm said on Wednesday it had added 403,000 net monthly bill-paying wireless phone subscribers in the July-September period, above Visible Alpha estimates of 393,430 additions.

Premium plans have helped AT&T stay competitive in the saturating U.S. telecom market where rivals Verizon and T-Mobile are bundling their offerings with streaming services such as Netflix and Max to attract customers.

Demand has also been growing for AT&T’s convergence plans that allow customers to combine its high-speed fiber data with its wireless phone service. The company said 40 per cent of customers that use fiber also opt for its wireless plans.

To sharpen focus on its main business, AT&T agreed last month to sell its entire 70 per cent stake in satellite TV provider DirecTV to private equity firm TPG for $7.6 billion, exiting from a costly foray into the media business. 

Postpaid phone churn, or the number of customers canceling AT&T’s service monthly, was 0.78 per cent in the third quarter, helped by the company’s smartphone plans that offer new and existing customers the same promotions.

But revenue of $30.2 billion missed estimates of $30.44 billion, according to data compiled by LSEG, as the company’s mobility equipment revenue took a hit from lower phone upgrade volumes.

Rival Verizon also reported a quarterly revenue miss on Tuesday due to the lull in phone upgrades. 

AT&T’s fiber business added 226,000 customers, missing expectations of 257,860 additions, according to Visible Alpha. This was mainly driven by a work stoppage that began in August in its southeast region and impacted fiber installations.

Free cash flow, which helps investors determine dividend sustainability, came in at $5.1 billion, above Visible Alpha estimates of $4.7 billion.