By Marina Lopes and Soham Chatterjee
(Reuters) - AT&T Inc T.N raised its full-year revenue forecast for a second time, citing strong growth in its equipment installment plan even as its service revenue stagnated.
The No. 2 U.S. telecom services provider said on Tuesday it now expects full-year revenue to increase 5 percent, compared with its prior forecast of 4 percent.
AT&T shares inched up 0.3 percent at $35.55.
By the end of 2014, analysts expect two-thirds of AT&T's postpaid wireless customers to be on its NEXT pricing plan, which unbundles device payments from mobile service payments. Due to the growing popularity of the plan, the company said it expects no service revenue growth in the second quarter and lower average revenue per user.
Net subscriber additions to the company's wireless services are expected to exceed 800,000 in the second quarter, it said, well above Wall Street estimates of 525,000.
AT&T reaffirmed its full-year forecast for adjusted profit, margins, capital expenditure and free cash flow.
The company, which is scheduled to report second-quarter results on July 23, said it expects to report sales of about 3.2 million AT&T Next smartphones in the current quarter.
AT&T also expects increased content costs on its wireline business, a concern the company has said drove its $48.5 billion bid on DirecTV last month.
(Reporting by Soham Chatterjee; Editing by Ted Kerr, Tom Brown and Sofina Mirza-Reid)