AT&T today released its fourth-quarter earnings, reporting a net income of $6.9 billion – a significant increase over the company’s net $3.9 billion loss during the fourth quarter of 2012. These earnings came on revenue of $33.2 billion, up 1.8% over revenue during the holiday quarter 2012.

For the full-year 2013 AT&T reported revenues of $128.8 billion, up slightly from the $127.4 billion the company took in during 2012. 2013 net income was up nearly 150% year-over-year to $18.2 billion.

AT&T’s report shows that the company added 566,000 net subscribers during the fourth quarter 2013. Even more significant, however, is the fact that it added 1.2 million new smartphone subscribers, including new customers and existing subscriber upgrades. A larger number of smartphone subscribers could help the carrier increase earnings per customer while battling for the few subscribers left in the U.S. market.

“2013 was the year of the network,” said Randall Stephenson, chairman and CEO of AT&T. “With Project VIP, we’re delivering faster speeds and new services to millions more customers. And growth on these platforms is going strong. We exceeded build targets across the board. Our 4G LTE network is nearly complete and is the nation’s most reliable with lightning-fast speeds. U-verse is rapidly expanding, and our fiber-to-the-business build is off to a fast start.

Looking ahead to 2014, AT&T is expecting revenue growth of 2% to 3%. The coming quarters will be very telling for AT&T as it combats a full-on assault from T-Mobile, which is offering to pay consumers’ early termination fees to switch networks. Though AT&T has issued its own deal to pay a portion of T-Mobile subscriber fees to switch, this fourth quarter report shows that AT&T added fewer post-paid subscribers that T-Mobile even before the fee pay-off deals were announced early this year.