By Anjali Athavaley and Anna Driver
(Reuters) - AT&T Inc (T.N), the No. 2 U.S. wireless carrier, reported quarterly results that matched analysts' estimates, as it added more smartphone customers in a saturated wireless market, and said it was confident its deal to buy Time Warner Inc (TWX.N) would be approved.
AT&T is banking on the deal to boost its media offerings such as over-the-top services and to gain control of cable channels like HBO and CNN as well as film studio Warner Bros. The company bought DirecTV in 2015 as part of its plans to diversify from its wireless phone business, which has faced stiff competition from smaller rivals T-Mobile U.S. Inc (TMUS.O) and Sprint Corp (S.N).
"AT&T has made some big bets to reposition its portfolio away from the wireless business, but the businesses that they have accumulated isn't growing either," MoffettNathanson analyst Craig Moffett said.
The company said it added 1.1 million smartphones to its subscriber base in the fourth quarter.
U.S. President Donald Trump said he opposed the company's proposed acquisition of Time Warner during his election campaign.
Thirteen Democratic senators on Wednesday asked AT&T to explain how its planned $85.4 billion takeover is in the public interest.
"We look forward to bringing Time Warner into the fold and doing some very unique things with media and entertainment and content," Chief Executive Randall Stephenson said on a conference call with analysts. The company expects the deal to close later this year.
He also said a lower corporate tax rate was likely under the new administration and that he was optimistic about the appointment of net neutrality opponent Ajit Pai to head the Federal Communications Commission.
Shares of AT&T were flat after the close of regular trading.
Although margins improved, net income attributable to the company fell to $2.44 billion, or 39 cents per share, in the fourth quarter ended Dec. 31, from $4.01 billion, or 65 cents per share, a year earlier.
Excluding a pretax loss of about $1 billion and other items, the company earned 66 cents per share in the latest quarter, in line with the average analyst estimate.
Revenue fell to $41.84 billion, missing the average estimate of $42.04 billion, according to Thomson Reuters I/B/E/S.
Looking ahead to this year, AT&T said it expects consolidated revenue growth in the low-single digits on a percentage basis and adjusted EPS growth in the mid-single digit range. Capital spending is estimated around $22 billion, similar to levels spent in 2016.
(Additional reporting by Aishwarya Venugopal in Bengaluru; Editing by Saumyadeb Chakrabarty, Bernard Orr)