NEW YORK (AP) — AT&T Inc. said yesterday that its earnings rose 26 percent in the latest quarter and raised its forecast for the year, helped by its iPhone-fuelled wireless arm.

The country's largest telecommunications provider said it now expects a "strong" increase in earnings over last year, compared to its previous forecast of "stable-to-improved" results.

The company, based in Dallas, also posted its first-ever decline in wired broadband subscribers, capping a decade of growth.

Its shares rose 63 cents, or 2.5 percent, to $25.55 in morning trading.

AT&T said its net income rose to $4.02 billion, or 68 cents per share, in the April-June period, from $3.2 billion, or 54 cents a share, a year ago.

Excluding a gain from the sale of stock in an overseas firm, earnings would have been 61 cents per share, still beating the average forecast of 57 cents per share by analysts surveyed by Thomson Reuters.

Revenue was $30.8 billion, compared with $30.7 billion a year ago and slightly below analyst expectations at $30.9 billion. However, AT&T is no longer including e-business subsidiary Sterling Commerce in its results, which analysts have not taken into account. The unit is being sold.

The company signed up a net 496,000 new wireless contract customers, down slightly from the 512,000 it signed in the first quarter. That's about half of what it has signed up in recent years, but it will still likely prove a strong result compared to the rest of the industry, where contract signups have collapsed this year.

AT&T is helped by the iPhone, for which it is the exclusive US carrier. AT&T said it once again activated a record number of iPhones: 3.2 million. That was boosted by the launch of the iPhone 4 in the last few days of the quarter.

Contract-signing customers are the most lucrative, but AT&T also added a net 300,000 no-contract, prepaying customers, more than it has in any quarter since 2007. That's thanks to another Apple Inc. product, the iPad. AT&T is the exclusive US provider for the tablet computer, which launched on April 3.

With sign-ups of new phone subscribers slowing to a crawl in the industry, AT&T and other carriers are banking on keeping growth going by providing wireless services to non-phone devices, like the Kindle e-reader. AT&T said it add 896,000 such devices, less than the 1.05 million it added in the first quarter.