Shares of AT&T surged 5.3% to $31.70 in morning trading.
The company said on Thursday it added 595,000 net wireless phone subscribers in the first quarter, more than double what analysts had expected.
AT&T's controversial move to make its entire 2021 theatrical movies slate available to its streaming customers at the same time helped the company attract 2.7 million new subscribers for HBO and HBO Max.
The theatrical release of "Godzilla vs. Kong," which was also available to HBO Max subscribers, generated over $80 million at the U.S. box office and over $300 million globally as the No. 1 film over the past three weekends, and represented an early endorsement of WarnerMedia CEO Jason Kilar's strategy.
In an interview, Kilar said the company's 2022 movie slate, especially big blockbuster films, will return to theaters, but a portion will be offered on the same day on HBO Max.
"I don't think that we would be going back to ... 2016 where windows were quite long and lengthy," he said.
Shares of streaming rival Netflix sank 11% on Monday after it reported a sharp slowdown in new customer additions globally. In the U.S. and Canada, Netflix added 450,000 new paid subscribers.
HBO and HBO Max now have 63.9 million global subscribers, compared to over 100 million for Walt Disney Co's Disney+ and 207.6 million for Netflix.
A lower-priced version of HBO Max supported with ads is set to be launched in June.
AT&T has been investing heavily in its new 5G wireless network and bundling its streaming service HBO Max for free with certain phone plans to retain customers and keep them from switching to competitors.
Wireless phone churn, or the rate of customer defections, declined 0.1% in the first quarter to 0.76%. The improvements were, in part, due to the bundling of HBO Max to higher-priced phone plans.
Ahead of HBO Max's launch last year, AT&T Chief Executive John Stankey said that a single basis point, or 0.01%, improvement in churn represents about $100 million in wireless revenue. This quarter's improvement would have represented about $1 billion in wireless revenue.
Revenue for AT&T was up nearly 3% at $43.9 billion, beating analysts' average estimate of $42.69 billion, according to IBES data from Refinitiv.
Excluding items, AT&T earned 86 cents per share, above analyst estimates of 78 cents.
WarnerMedia, which includes HBO, began to recover from the ravages of the pandemic during which sports events and movie productions were paused. Revenue for WarnerMedia rose 9.8% to $8.5 billion.
AT&T added 235,000 new fiber internet customers, as Americans continued to work from home during the pandemic, driving up demand for home Wi-Fi.
The company's net debt rose to $169 billion at the end of the first quarter, due to its purchase of more wireless spectrum, or airwaves that carry data.
Separately, rival Verizon Communications Inc has said it lost more wireless subscribers than expected during the first quarter as it battled intense competition from T-Mobile US Inc and AT&T to attract customers.
(Reporting by Akanksha Rana in Bengaluru and Sheila Dang in Dallas; Editing by Kenneth Li, Shinjini Ganguli and Bernadette Baum)
By Sheila Dang and Akanksha Rana