AT&T Inc sold more than 10 million smartphones in the fourth quarter, a record, the company said on Tuesday.

The total topped the previous record of 9.4 million sold in the same quarter in 2011.

The latest results suggested AT&T smartphone sales for all of 2012 will be about 26.7 million units, slightly ahead of its previous forecast of 26 million.

On Monday, AT&T rival Verizon Wireless said it had its strongest fourth quarter ever, with an increase in subscribers and a rise in sales of Apple Inc’s iPhone 5 and other devices.

While smartphones help operators keep customers and attract new ones they also raise costs. Wireless service providers including AT&T pay hefty subsidies to handset makers so that they can offer device discounts to customers who commit to two-year contracts.

Wells Fargo analyst Jennifer Fritzsche said AT&T could miss her expectations for a wireless profit margin of 32.7 percent because of higher-than-expected smartphone sales.

Shares of AT&T were down 1.3 percent at $34.47 on Tuesday morning.

The company averaged daily sales of more than 110,000 smartphones that run on Apple, Google Android and Microsoft Window operating systems, AT&T Chief Executive Ralph de la Vega said in a statement.

AT&T will announce fourth-quarter results on Jan. 24. Analysts, on average, expect earnings per share of 49 cents, compared with 42 cents for the same quarter last year, according to Thomson Reuters I/B/E/S.

(Reuters)