EchoStar Communications on Tuesday reported a 34 percent decline in profit even as the satellite operator booked a surge in subscribers and revenue.

The Englewood, Colo.-based company posted net income of $85 million, or 18 cents a share, compared with a year-earlier profit of $129 million, or 27 cents a share.

The company blamed the profit decline on higher expenses related to having more equipment on hand and marketing costs tied to signing up new customers.

However, those costs paid off on the revenue line, which reported a 26 percent increase to $1.8 billion for the quarter, driven by an increase of 340,000 customers to bring EchoStar’s total subscriber count to 10.125 million as of June 30.

While Chairman and CEO Charlie Ergen declined to provide a breakdown of the number of new subscribers generated from EchoStar’s bundling deal with phone company SBC Communications, he did say the relationship is “off to a very solid start.” SBC said in July it had added 121,000 video subscribers as a result of the EchoStar-SBC relationship.

Shares in EchoStar were up 6 percent in midday trading Tuesday after the company also announced that its board approved a stock repurchase program of up to another $1 billion. The latest buyback comes on the heels of a separate stock repurchase program launched in November 2003.