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Merger-related cost savings, margin improvements and the continuing strong growth of its mobile unit helped AT&T, the biggest US telecommunications group, almost double net income in the first quarter, the first since the completion of its $68bn acquisition of BellSouth.

Net income increased to $2.85bn, or 45 cents a share, from $1.4bn, or 37 cents, a year earlier helped by $900m in savings from mergers – ahead of expectations. Total operating revenue rose to $28.97bn from $15.76bn a year earlier.

Adjusted earnings per share, before merger costs and other items, were 65 cents compared with 52 cent a share a year ago, the eighth consecutive quarter of double digit growth.

”We had an outstanding start to the year,” said Edward Whitacre, AT&T chairman and chief executive officer. ”Merger integration is on track, volumes continue to be solid and we expanded margins in both wireless and wireline.”

Boosted by the strong start to the year, the San Antonio, Texas-based group raised its estimate for full-year adjusted operating income margin to a range of 23 percent to 24 percent, up from a 21 percent to 23 percent target announced in January.

The company also accelerated its share buyback plan, saying it will complete $10bn of repurchases by the third quarter instead of the end of this year.

Margins AT&T’s wireless unit – previously called Cingular Wireless - jumped from 15.2 per cent to 25.5 per cent as service revenues grew by 13.5 per cent helped in part by higher revenues per subscriber.

AT&T also highlighted a surge in wireless data revenues which grew by 66.8 per cent to 1.5bn. The company said it now has more than 33m wireless data customers reflecting growing uptake of 3G and other data services.

Overall the wireless unit added a net 1.2m subscribers and ended the quarter with 62.2m subscriber – slightly less than some analysts had been expecting perhaps reflecting the strong competition from Verizon Wireless, the joint venture carrier owned by Verizon of the US and Britain’s Vodafone.

Average monthly subscriber churn, a key measure of customer loyalty, declined to 1.3 per cent.

AT&T continued to shed fixed access lines as consumers switch to wireless or VoIP services. The company said its total number of access lines fell by 6.6 per cent.

Like other carriers, AT&T is counting on growth in broadband DSL and its advanced IPTV service which began to be rolled out late last year to offset these access line losses.

AT&T also offers satellite video through partners DirecTV Group and EchoStar and said about 187,000 users signed up its bundled TV service in the first quarter. It added that is signing up customers for its U-verse IPTV service at a rate of 2,000 per week. The company plans to expand the service into the Los Angeles market shortly.

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