Editor’s note: Eric Cost is an analyst at Technology Business Research. He offers his insight into AT&T’s (NYSE: T) earnings announced Wednesday.

HAMPTON, N.H. - AT&T reported over 2 million total net additions in 3Q14 and is positioning itself to maintain its revenue and subscriber growth heading into 2015.

AT&T’s 2Q14 results are promising heading into 4Q14, with solid subscriber and wireless revenue growth. Both the wireless and U-verse subscriber bases continued to gain traction in 3Q14 and will continue to propel the operator forward to challenge Verizon for the top position in the U.S. market.

Despite strong wireless subscriber growth, especially in the postpaid and connected device segments, AT&T reported fewer postpaid tablet net additions than Verizon in 3Q14, yet AT&T had a slight lead in postpaid smartphone net additions with 466,000 compared with Verizon’s 457,000. TBR expects Verizon to continue to lead in tablet additions in 4Q14 due to the success of the company’s More Everything plans, though AT&T is having more success balancing the percentage of tablets compared to the higher lifetime value smartphone users. The result will help boost ARPU and ARPA growth compared to its main rival.

AT&T will continue to invest in network enhancements to gain ground on Verizon in 2015.

Project VIP

AT&T remains on track with Project VIP, both in the wireless and wireline segments, which will improve the operator’s LTE, fiber and U-verse footprints heading into 2015. This will help improve the network quality and attract new customers onto AT&T’s networks. From the wireless side, AT&T continued its trend of improving churn, reporting a record-low postpaid churn of 0.99% due to the continued adoption of the operator’s Mobile Share plans and strong connected device net additions.

Although AT&T remains behind Verizon in total subscribers and revenue growth, and is being challenged in the wireless market by rejuvenated T-Mobile and its Un-carrier strategy, the operator is well positioned to maintain revenue and subscriber growth over the next two years and gain ground on the market leader, Verizon.

Connected-Device Portfolio

AT&T trails Verizon significantly in the current major connected device segment, tablets, with less than half the tablet net additions of Verizon. However, AT&T boasts the current largest connected device portfolio, which stretches across connected car, connected home, tablets and other products that target multiple verticals including healthcare, security and utilities. As the smartphone market continues to saturate over the next year, tablets will no longer be the main source of connected device revenue for the operators. AT&T will be better positioned compared to its peers to capitalize on this emerging new revenue stream.

AT&T is already looking for ways to better monetize its existing connected device portfolio, including the recent September licensing agreement to Telefonica for its Digital Life services. The operator will remain aggressive in this emerging device segment over the next five years, which will help it continue to draw in new connections and grow data revenue.