Margin expansion. Reduced churn. Raised guidance. If you're an AT&T (NYSE:T) shareholder, Tuesday morning's announced third-quarter results were a warm slice of Ma Bell pie.

Big-picture, the company saw its adjusted diluted EPS rise 12.7% to $0.71, which was in line with analysts' estimates. On its face, nothing too sexy. What did lift Mr. Market's spirits, though, were the strong results out of the wireless segment and the hike in full-year free cash flow guidance to a range of $6 billion to $7 billion.

The wireless division boasted higher margins, continued low churn rates, and record subscriber additions. The 2 million net additions in the quarter pushed the total wireless subscriber count up to 65.7 million. That growth may not sound phenomenal next to supergiant China Mobile's (NYSE:CHL) monthly 5 million-plus net adds, but 2 million in the saturated U.S. market is something to crow about.

Contributing mightily to the wireless head count growth was consumers' enthusiastic reception to Apple's (NASDAQ:AAPL) iPhone. Maybeyou'veheardofit? Of the roughly 1.1 million iPhones that have been activated by AT&T, more than 440,000 were new AT&T customers.

What separates iPhone subscribers from the pack? Their willingness to pony up for pricy data service plans. The influx of iPhone users, along with subscribers who picked up AT&T's feature-packed Tilt phones or Research In Motion's (NASDAQ:RIMM) BlackBerry units, led to the most striking figure of the earnings release: a 63.9% increase in the company's margin-rich wireless data revenues.

All in all, a strong quarter for this telecom giant. But because of its sheer size, you're not going to be bringing home 50% annual returns from AT&T shares anytime soon. Still, I like the ground being made in the wireless segment and the rapid adoption of the fledgling U-verse video offering. If you're looking for a tried-and-true play with improving fundamentals and potentially under-the-radar growth prospects, you could certainly do worse than AT&T.

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