Oct 23 (Reuters) - AT&T ( T ) gained more wireless

subscribers than expected in the third quarter, driven by the

steady adoption of its higher-tier unlimited plans that come

with perks including increased hotspot data.

The U.S. telecom firm said on Wednesday it had added 403,000

net monthly bill-paying wireless phone subscribers in the

July-September period, above Visible Alpha estimates of 393,430

additions.

Premium plans have helped AT&T ( T ) stay competitive in the

saturating U.S. telecom market where rivals Verizon and T-Mobile

are bundling their offerings with streaming services such as

Netflix and Max to attract customers.

Demand has also been growing for AT&T's ( T ) convergence plans

that allow customers to combine its high-speed fiber data with

its wireless phone service. The company said 40% of customers

that use fiber also opt for its wireless plans.

To sharpen focus on its main business, AT&T ( T ) agreed last

month to sell its entire 70% stake in satellite TV provider

DirecTV to private equity firm TPG for $7.6 billion,

exiting from a costly foray into the media business.

Postpaid phone churn, or the number of customers canceling

AT&T's ( T ) service monthly, was 0.78% in the third quarter, helped

by the company's smartphone plans that offer new and existing

customers the same promotions.

But revenue of $30.2 billion missed estimates of $30.44

billion, according to data compiled by LSEG, as the company's

mobility equipment revenue took a hit from lower phone upgrade

volumes.

Rival Verizon also reported a quarterly revenue miss on

Tuesday due to the lull in phone upgrades.

AT&T's ( T ) fiber business added 226,000 customers, missing

expectations of 257,860 additions, according to Visible Alpha.

This was mainly driven by a work stoppage that began in August

in its southeast region and impacted fiber installations.

Free cash flow, which helps investors determine dividend

sustainability, came in at $5.1 billion, above Visible Alpha

estimates of $4.7 billion.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by

Devika Syamnath)