The success of its Next tariff, which enables subscribers to trade up to new smartphones before the end of their contracts,  was shown in AT&T’s first-quarter results.

The US giant said Next accounted for more than 40 per cent – or 2.9 million – of all smartphone gross additions or upgrades during the quarter.

The tariff, which was introduced in July last year, acts as a boost to earnings because the operator records the entire sale of the smartphone upfront rather than swallowing a subsidised price.

Tariffs such as Next enable subscribers to pay off the full cost of a device in monthly instalments as an alternative to buying a subsidised smartphone, and then trade in their model for a new one.

The 40 per cent take-up figure for Next will decline to 35 per cent over coming quarters once the initial rush passes, said CFO John Stephens.

The operator also raised its outlook for full-year revenue growth, now expected to be at least four per cent from its previous forecast of three per cent.

As well as its new tariffing model, the increased forecast reflected the recent acquisition of Leap Wireless.

First-quarter revenues were $32.5 billion, up 3.6 percent or more than $1 billion, against the year-earlier period. AT&T said it was the company’s strongest growth in more than two years.

The operator’s first-quarter earnings were $3.65 billion, down from $3.70 billion in the equivalent quarter in 2013. Share repurchases helped increase per-share profit even as total net income fell.