AT&T just announced their first quarter financial report for their mobile business and things are looking pretty good. They added 726,000 new subscribers during the last three months and broke a record for first quarter smartphone sales with over 5.5 million devices activated. Interestingly, about 4.3 million of those were iPhones, which have been extremely popular at the carrier.

AT&T’s Chief Financial Officer, John Stephens comments on smartphone sales:

“We continue to set the pace in smartphone sales. We actually sold slightly more smartphones this quarter than a year ago, but our service margins were up significantly.”

Revenues for the quarter totaled $31.8 billion which is a 1.8% increase year-over-year. Operating expenses reached $25.7 billion versus $25.4 billion from Q1 2011. Operating income came in at just over $6 billion, up from $5.8 billion last quarter. The margin was also up from last quarter at 18.6% to 19.2%.

Total net income for Q1 2012 ended up at $3.6 billion which is $0.60 per diluted share and up from $0.57 from last quarter or $3.4 billion. Cash from operating activities reached $7.8 billion, but capital expenditures reached $4.3 billion as well-this left $3.5 billion. All and all, a pretty successful quarter.

Take a look at AT&T’s video on the Q1 2012 Financial results:

The company also experienced growth in their U-Verse TV and high speed internet subscriptions and reached a milestone 4 million users. Wireline industry also grew, however at a much slower rate. Unfortunately, prepaid mobile users fell to the lowest rate in seven years, but again, this is somewhat offset by their gains of over 726,000 wireless subscribers.

Though still highly dependent on their iPhone subscribers, it seems like AT&T is fairing pretty well in the mobile carrier battle and overall as a technology provider. They are still number two in the business, but it doesn’t look like they’ll be surpassing Verizon anytime soon.