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How AT&T Managed to Post Record Profit Margins Amid Intense Wireless Competition

The strong second-quarter results from AT&T Inc. (T) present something of a paradox. While unlimited plans have ratcheted up competition, AT&T reported record wireless services margins and low customer defections.

"I don't think it's an industry-wide phenomenon," said Amy Yong of Macquarie Capital (USA) Inc. "It's pretty much a company-specific dynamic."

Shares of AT&T gained 4.75% Wednesday to $37.94 following its strong second-quarter earnings report.

T-Mobile USA Inc. (TMUS) , which has led the charge towards unlimited data, improved Ebitda margins from 37% to 40% in the second quarter, which Yong attributed to T-Mobile's increasing scale. Verizon Communications Inc. (VZ) , which reports Thursday morning, has historically had high margins, although the carrier's new unlimited plan could eat into profits when the carrier reports earnings. Sprint Corp. (S) follows on Aug. 1. The launch of Apple Inc.'s (AAPL) iPhone 8 in about two months could further tempt carriers to launch margin-squeezing promotions.

If the wireless market is so competitive, how is AT&T posting record high margins and record low churn?

— Walt Piecyk (@WaltBTIG)

How did AT&T notch record wireless services Eibtda...