What happened 

Shares of AT&T (T -1.21%) climbed more than 6% on Wednesday, following the release of the telecom titan's fourth-quarter earnings report. 

So what

AT&T added 656,000 postpaid phone subscribers, who pay monthly bills and are generally wireless carriers' most profitable customers. For the full year, AT&T gained a total of nearly 2.9 million of these sought-after subscribers.

Additionally, AT&T Fiber added 280,000 customers during the quarter and a total of 1.2 million for the year. The high-speed internet service has now gained at least 1 million subscribers for five consecutive years.

"Our consistent go-to-market strategy and the simplicity of our offerings drove continued robust, high-quality wireless and fiber customer additions in the fourth quarter," CEO John Stankey said in a press release.

Notably, Stankey disputed claims of a brewing price war in the telecom industry. "I don't submit to the view that there's a race to the bottom going on," Stankey said during an interview on CNBC. "I actually think the industry is doing quite well."

The wireless leader's average revenue per postpaid phone subscriber actually increased by 2.5% year over year to $55.43 in the fourth quarter, providing support for Stankey's view.

All told, AT&T's full-year revenue from continuing operations, which excludes the impact of divested businesses, rose by 2.1% to $120.7 billion in 2022. The company also generated $14.1 billion in free cash flow, which was more than enough to fund its $9.9 billion in dividend payments. "The security of that dividend is very high," chief financial officer Pascal Desroches told Barron's. 

Now what 

Management sees AT&T's free cash flow growing to at least $16 billion in 2023, despite its plans to spend an additional $24 billion to strengthen its 5G and fiber networks. During a conference call with analysts, Stankey said that after paying its dividend, AT&T would use the excess cash flow it produces to pay down its debt. That should help to strengthen AT&T's balance sheet and reduce the risks for investors.

"As we enter 2023, I'm confident in the trajectory of our business and in our team's ability to deliver profitable and durable growth for our shareholders," Stankey said.