T · Q1 2026 Earnings

Management defined 'open' as two key thrusts: (1) opening aspects of the wireless network to manage supply chain costs and performance, with new spectrum deployment starting after EchoStar closes; (2) complete re-engineering of the network core through flattened, integrated routing infrastructure that supports APIs for traffic control and flexibility. Account growth is driven primarily by converging customers, with new one-to-two line accounts coming in below average line size, indicating new-to-company customers. Growth is also supported by Internet Air convergence with new customers in areas targeted for future fiber deployment, and business account growth stabilizing advanced connectivity service revenues.

EchoStar spectrum improves network performance and perception in key markets, with already-deployed leased spectrum showing measurable perception shifts. Spectrum acquisition creates capital efficiency versus alternative capacity investment. The spectrum also expands Internet Air penetration and distribution, enabling business customers to complete 100% of bids versus 65-70% previously. On copper retirement, 30% of wire centers are on definitive shutdown schedules, with more scheduled in coming months. The FCC order provides a clear roadmap; copper retirement reduces operating costs, improves cybersecurity and resiliency, and is forecasted into forward guidance through 2030.

Management emphasized that AT&T's strategy is building the best converged network with owned foundational assets (fiber, wireless, core routing architecture). Regarding satellite threats, management noted that LEO deployment is complex and won't follow a straight line; satellite works well outdoors but poorly indoors, and customers expect always-on reliability built over decades of infrastructure investment. Management prefers wholesale relationships with multiple satellite constellations (ideally three serving the US) rather than MVNO arrangements. Management does not view direct satellite as an MVNO opportunity and highlighted confidence in fiber's lowest marginal cost and superior performance as the primary competitive moat. AT&T plans 60+ million fiber homes by 2030.

Management noted that DSL base is now tiny and that DSL-to-fiber migration is increasingly difficult due to lack of remaining DSL customers. Fiber growth has been consistent, with recent growth driven by new-new customers rather than DSL conversions. Management acknowledged that the remaining DSL base includes price-sensitive customers who may self-select for cheaper alternatives, and that AT&T needs to improve addressing all customer segments. The company views getting from 0-40% fiber penetration as highly profitable, and 40-50% penetration requires different strategies including value-oriented offerings. Management indicated willingness to accept ARPU dilution to convert price-sensitive DSL holdouts at 40-50% penetration, viewing this as economically rational for long-term value creation.

Management emphasized a gradual portfolio rebalancing rather than an abrupt switch away from devices. OneConnect is a foundational capability that will be iterated on over coming quarters to balance the portfolio. The goal is to help customers understand the inherent value of the network versus device subsidies. On EBITDA acceleration, Pascal identified three key drivers: (1) wireless growth from converged relationships with pricing actions beginning in April; (2) Lumen asset scaling, with monthly performance improving as the organization stands up, continuing fiber net adds and converged growth; (3) seasonal headwinds in Q1 (annual incentive comp, holiday device payments) dissipating in Q2+. Service revenue and EBITDA expected to improve gradually through the year with full benefits of pricing actions visible from Q2 onward.