AT&T sees a brighter Q2, projecting 500,000 new contract subscribers

AT&T(s t) didn’t have the greatest first quarter. It sold a lot of smartphones, but it only brought in 296,000 new contract customers, less than half of archrival Verizon’s 677,000(s vz)(s vod). But things are looking up in the current quarter. AT&T is projecting 500,000 net postpaid additions when it reports its Q2 earnings next month.

Announcing some key metrics ahead of an analyst conference, AT&T credited the contract customer gains to new promotions. The biggest of those was a $100 trade in program for smartphones. But my colleague Kevin Tofel also pointed out that AT&T has been particularly adept at securing some of the industry’s hottest smartphones earlier than its competitors.

AT&T was the first U.S. carrier to start selling Samsung’s new Galaxy S4. It also landed an exclusive on the 64 GB HTC One. We’re heading into a summer quarter where expectations will be high about a new iPhone(s aapl) release in the fall, so while the anticipation builds AT&T is going to milk its Android(s goog) lineup for all its worth.

Ma Bell also said it expects to see report strong growth in U-Verse this quarter. But AT&T warned that its consolidated subscriber growth will have an impact on margines, which it is projecting to be lower than last year.

AT&T isn’t changing its financial guidance from the beginning of the year. It’s still projecting in excess of 2 percent annual revenue growth, but is building up its cash. It got $1 billion in additional proceeds from its YP Holdings (Yellow Pages) sale last year. It also took in $564 million from a partial sale of shares in Latin American mega-carrier America Movil(s amex).