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T-Mobile's subscriber boost challenges AT&T for spot as second-largest U.S. carrier

A T-Mobile store is pictured in the Brooklyn borough of in New York

By Sheila Dang and Munsif Vengattil

(Reuters) - T-Mobile US Inc added more monthly phone subscribers than expected in the second quarter and said on Thursday it has overtaken rival AT&T Inc as the second-largest wireless provider in the United States.

T-Mobile got a boost as more people used its services to stay connected and work remotely during coronavirus lockdowns, sending shares up 5.4% to $114.02 in extended trading.

The company said it has overtaken AT&T across postpaid, in which customers pay a recurring monthly bill, and prepaid phones - customers paying for service in advance.

T-Mobile reported 98.3 million customers in those categories, while AT&T had nearly 93 million postpaid and prepaid subscribers in its second quarter.

Subscriber figures between U.S. carriers can be difficult to compare given the variety of plans offered. AT&T declined to comment.

T-Mobile added 253,000 net new phone subscribers who pay a monthly bill, compared with 710,000 additions a year earlier.

Analysts had expected 169,200 new subscribers, according to research firm FactSet.

The carrier, which completed its merger with Sprint in April, reported the quarterly results as a combined company for the first time.

T-Mobile said during the earnings call with analysts that more than 10% of network traffic from Sprint's postpaid customers have been migrated to T-Mobile.

The carrier has sought to attract budget-constrained customers with its cheaper phone plans after the pandemic left millions of people in the United States unemployed.

T-Mobile's second-quarter net income fell to $110 million, or 9 cents per share, from $939 million, or $1.09 per share, a year earlier, due to Sprint merger costs.

Revenue jumped 61% to $17.67 billion, above analysts' estimates of $17.61 billion, according to IBES data from Refinitiv.

(Reporting by Munsif Vengattil in Bengaluru and Sheila Dang in New York; Editing by Dan Grebler and Lisa Shumaker)