AT&T INC. $36 (New York symbol T; Conservative Growth and Income Portfolios, Utilities sector; Shares outstanding: 5.4 billion; Market cap: $194.4 billion; Price-to-sales ratio: 1.5; Dividend yield: 5.0%; TSINetwork Rating: Average; www.att.com) is the largest wireless service provider in the U.S., with 107.3 million subscribers. This business supplies 53% of AT&T’s revenue and 74% of its earnings.

The wireline division, which sells phone services, television packages and high-speed Internet access to 37.4 million customers, accounts for most of AT&T’s remaining revenue and earnings.

Due to the recession and weaker demand for regular phone services, AT&T’s revenue fell slightly from $123.4 billion in 2008 to $122.5 billion in 2009. However, revenue turned around and climbed to $127.4 billion in 2012.

AT&T earnings tend to fluctuate more than its revenue. Earnings fell 2.6%, from $12.9 billion in 2008 to $12.5 billion in 2009. The company is an aggressive buyer of its shares, so earnings per share fell 1.9%, from $2.16 to $2.12. Earnings then rose to $2.29 a share (or a total of $13.6 billion) in 2010, but fell again to $2.20 a share (or $13.1 billion) in 2011. In 2012, earnings improved to $2.33 a share (or $13.7 billion).

In the quarter ended March 31, 2013, AT&T added 291,000 new wireless subscribers, net of cancellations, down 59.9% from a gain of 726,000 a year earlier. However, the drop is something of an illusion, as more customers are bundling several devices— a cellphone, a tablet and possibly a wireless Internet connection- — into a single shared-data account. Even with the slowdown in growth, the overall number of wireless customers rose 3.2% from a year ago.

Revenue in the quarter fell 1.5%, to $31.4 billion from $31.8 billion a year earlier. That’s because AT&T sold its telephone directory business in 2012. Earnings rose 8.5%, to $0.64 a share from $0.59.

In 2013, AT&T expects to spend $21 billion on network upgrades, plus a further $20 billion in each of 2014 and 2015. Much of this spending will go toward expanding its 4G long-term evolution (LTE) wireless service to cover 300 million people in the U.S. by the end of 2014. LTE networks are up to five times faster than those in use today.

Switch to smartphones will boost sales Faster wireless service will help AT&T attract and retain more smartphone users. That’s important, as AT&T’s revenue from smartphone customers is about twice that of regular cellphone users.

The company also wants to expand its high-speed fibre optic service to 75% of its home and business customers by the end of 2015.

AT&T’s balance sheet remains strong: its long-term debt of $70.7 billion is a moderate 36% of its market cap. It also holds cash of $3.9 billion.

The stock trades at 14.3 times AT&T’s projected 2013 earnings of $2.51 a share. The $1.80 dividend yields 5.0%.

AT&T is a buy.