(Reuters) -AT&T surpassed Wall Street expectations for first-quarter wireless subscriber additions and free cash flow on Wednesday as more people purchased its higher-tier unlimited plans.

Shares of the company were up 1.5% in premarket trading.

The telecom giant has been leaning on its 5G rollouts and plans that are usually cheaper than rivals such as Verizon to appeal to more budget-conscious consumers and drive growth in the competitive U.S. market.

AT&T added 349,000 net monthly bill-paying wireless phone subscribers in the first quarter, flying past expectations of 286,800 additions, according to five analysts polled by FactSet.

AT&T's efforts to expand its fiber network also helped it post a 7.7% increase in broadband revenue for the period.

"We achieved a record-low first-quarter postpaid phone churn, grew consumer broadband subscribers for the third consecutive quarter, and expanded margins in mobility and consumer wireline," CEO John Stankey said.

AT&T's free cash flow more than tripled to $ 3.1 billion, topping estimates of $2.53 billion, according to Visible Alpha.

The metric is closely watched by investors as it helps determine dividend payouts at AT&T, one of the biggest dividend payers in the United States.

But revenue came in at $30 billion, below LSEG expectations of $30.54 billion, as the U.S. telecom scene continues to see muted phone upgrades, which often includes a device subsidy.

However, AT&T has not seen the same drop in upgrade rates as rivals Verizon and T-Mobile due to its emphasis on customer retention over customer acquisition, analysts at Morningstar said last month. This has led to the company seeing a lower first-quarter churn -- the rate at which customers disconnect service -- at 0.72% in the three months ended March.

Verizon kicked off earnings for the U.S. telecom sector on Monday and posted fewer subscriber losses for the quarter ended March, helped by its flexible plans and discounted streaming bundles.