T · Q4 2025 Earnings
BullishAT&T
Reported January 28, 2026
30-second summary
30-second take: AT&T closed FY2025 by beating its own FCF guide ($16.6B actual vs. "low to mid $16B" guided, towards the higher end) and delivered Q4 revenue of $33.47B (+3.6% YoY), Q4 adjusted EPS of $0.52 (+20%+ YoY), and FY adjusted EPS of $2.12 (above the high end of the $1.97–$2.07 guide) with 421K postpaid phone net adds and 210K broadband net adds, then used the Analyst Day-style framing to initiate FY26 adjusted EPS guidance at $2.25–$2.35 (+6% to +11% vs. FY25 $2.12 actual) and FY26 FCF at "$18B plus" — a ~$1.4B+ step-up from the $16.6B just delivered. Total postpaid churn rose 5bps QoQ to 1.12% (+12bps YoY) and postpaid phone churn was 0.98% (+13bps YoY), continuing the upward drift. Management debuted a three-year framework: $4B in additional cost saves by 2028, fiber to 40M locations by end-2026 and 5M/year through 2030, $45B+ capital return through 2028, and segment reporting splitting "advanced connectivity" from legacy starting Q1. The headline is EPS confidence backed by a higher cash floor.
Headline numbers
EPS
Q4 FY2025
$0.53
Revenue
Q4 FY2025
$33.47B
+3.6% YoY
Operating margin
Q4 FY2025
17.3%
Key financials
Q4 FY2025| Metric | Q4 FY2025 | YoY | Q3 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $33.47B | +3.6% | $30.71B | +9.0% |
| EPS | $0.53 | — | $1.29 | -58.9% |
| Operating margin | 17.3% | — | 19.9% | -260bps |
Guidance
FY2026 adjusted EPS guidance raised 9–13% to $2.25–$2.35, but free cash flow outlook declines ~7% to '$18B plus', signaling stronger profitability offset by reduced cash generation.
Guidance is issued for both next quarter and the full year. Both may appear below.
Actuals vs prior guidance
| Metric | Period | Prior guide | Actual | Δ | Result |
|---|---|---|---|---|---|
| Adjusted EPS | FY 2025 | $1.97 to $2.07 | — | — | Beat |
| Free Cash Flow | FY 2025 | low to mid $16 billion range | $19.442 billion | +$3.4–3.9 billion above guide | Beat |
| Adjusted EBITDA Growth | FY 2025 | 3% or better | — | — | Met |
New guidance
| Metric | Period | Guide | YoY |
|---|---|---|---|
| Adjusted EPS | FY 2026 | $2.25 to $2.35 | +8.7% to +13.2% |
| Free Cash Flow | FY 2026 | $18 billion plus | -7.2% vs FY2025 actual |
| Adjusted EBITDA Growth | FY 2026 | 3% to 4% | — |
| Advanced Home Internet Service Revenue Growth | FY 2026 | over 30% reported growth | — |
| Free Cash Flow | Q1 FY 2026 | $2.0 billion to $2.5 billion | — |
| Adjusted EBITDA Growth | Q1 FY 2026 | below full-year run rate | — |
Segment performance
Q4 FY2025| Segment | Q4 FY2025 | YoY |
|---|---|---|
| Mobility | $24.354B | +5.3% |
| Business Wireline | $4.202B | -7.5% |
| Consumer Wireline | $3.565B | +2.9% |
| Latin America | $1.259B | +20.6% |
Platform metrics
Q4 FY2025| Segment | Q4 FY2025 |
|---|---|
| Mobility Postpaid Phone Net Additions (Q4) | 421k |
| Total Mobility Net Additions (Q4) | 1.157m |
| Postpaid Churn | 1.12% |
| Broadband Net Additions (Q4) | 210k |
| Fiber Broadband Connections | 10.406m |
Profitability
Q4 FY2025| Segment | Q4 FY2025 |
|---|---|
| Mobility Operating Income Margin | 26.3% |
| Communications Operating Income Margin | 21.1% |
| Operating Cash Flow (FY) | $40.284b |
Management tone
Q2: Capex-forward growth pivot → Q3: Convergence flywheel hardened → Q4: Strategic narrative repositioning around "advanced connectivity"
The "advanced connectivity" segment split is the most consequential narrative change in this management team's tenure. Three quarters ago AT&T was a consolidated telco managing legacy decline alongside fiber/wireless growth; two quarters ago the convergence flywheel became the operating thesis; this quarter Stankey announced segment reporting will, starting Q1, separate "advanced connectivity" (domestic wireless + fiber, growing 6%+) from legacy operations (declining 3%). The verbatim framing: "Beginning with our first quarter results, we plan to adopt new segment reporting that aligns with this reality... we'll begin reporting the growth in our domestic wireless and fiber-based businesses, which we refer to as advanced connectivity, separate from the results of our legacy operations." This is not cosmetic — it forces analyst models to value AT&T as a growth-plus-runoff sum-of-parts and explicitly resets the multiple-compression argument that has dogged the stock.
The Lumen acquisition framing inverted from "expansion" to "structural cost advantage on undermonetized assets." Q3 framed Lumen as a routine fiber footprint extension with regulatory close risk; this quarter Stankey reframed it as acquisition of a network with 25% customer penetration that AT&T can rationalize: "When we complete our work at the fiber location, we believe we're able to offer that customer access to the internet on a lower marginal cost structure than any competitor with industry-leading product performance." The shift signals management views Lumen not as a footprint deal but as a cost-leadership lever — a meaningfully more aggressive framing than the "fill in the map" pitch of prior quarters.
Capital intensity now has a date and a number. Q2 referenced fiber returns generically; Q3 deferred long-term outlook to "early next year"; this quarter delivered: "This outlook anticipates that our major capital projects will be substantially completed by the end of 2030 or sooner... our capital intensity to decline from a high teens percent of revenue to the mid-teens, driving higher durable long-term cash flow. But our shareholders will see the benefit much sooner." This is the FCF inflection story the bulls have wanted, and the FY26 "$18B plus" guide gives it an early down payment.
Pricing posture shifted from defensive to structural. A year ago AT&T described device-subsidy headwinds as an industry condition to manage; Q3 introduced the "feature not a bug" framing on ARPU; this quarter Stankey moved to "Our ability to put the right offer in front of an expanding customer opportunity positions AT&T to compete on performance and value and not by leading with uneconomical device offers." The implicit claim: convergence economics give AT&T the freedom to opt out of the promotional spiral. Whether postpaid churn (now drifting up two consecutive quarters) tests that claim is the open question.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
John Hudlick · UBS
Where do you expect fiber convergence rate to reach over the decade, can you catch up to Lumen territory numbers, and what's driving consumer wireline revenue growth slowdown?
Management expects convergence to continue improving toward 50% with potential for 70-80% long-term as industry consolidates. On Lumen territory, management is optimistic about performance being similar to in-region despite traditionally conservative modeling. Consumer wireline growth slowed due to pricing strategy, promotional discounting to drive bundling, and pricing adjustments made in November with delayed full-quarter effect.
Benjamin Swinburne · Morgan Stanley
Is capacity being reserved for spectrum investments given potential upcoming auctions, and does 2026 guidance incorporate any view on foldable iPhone demand impact?
Management views EchoStar transaction as preemptive and opportunistic, allowing more strategic future spectrum choices. Management notes industry is bifurcating with particular spectrum bands useful to specific players, reducing need for aggressive national buffet-style bidding. On foldables, management views them as niche form factor with predictable adoption patterns; Apple foldable unlikely to meaningfully shift demand as broader consumer acceptance is limited.
Peter Cipino · Wolf Research
How are you thinking about fiber ARPU pricing for existing customers relative to Comcast/Charter, and should we worry about supply-demand issues in broadband as DSL base declines?
Management notes AT&T is priced below Comcast/Charter with more pricing freedom given superior product and pricing. DSL decline is intentional; management is using Echo Star spectrum as bridge product before fiber deployment. Not concerned about supply-demand imbalance due to superior fiber product, conversion rates dropping as mix shifts to new accounts, and expectant future home switching tailwinds.
Michael Rollins · Citi
What macro factors influence postpaid phone growth for 2026, and how is AT&T responding to competitor promotional changes while maintaining wireless service revenue growth guidance?
Management cites mature, highly penetrated wireless market with switching activity. AT&T is leveraging convergence strategy to win in under-penetrated segments (55+, 1-2 line, SMB). Convergence strategy driving growth not just by adding wireless to fiber, but pulling existing wireless customers to add fiber. New accounts in growth segments factored into 2-3% wireless service revenue guidance. Not expecting competitive intensity to abate.
Sebastiano Petty · J.P. Morgan
Does year-end leverage target assume Lumen JV cash inflows, and what should we expect regarding fiber build seasonality, ramp dynamics, and distribution changes with Lumen integration?
Management expects to close equity partner later in 2026 with cash proceeds, plus EBITDA growth aiding leverage targets. Expects continued broadband seasonality (H2 > H1, Q3 > Q4). Lumen integration will include 2-quarter learning curve with ramp dynamics from compressed pre-close planning, normalization of products/IT, supply chain rationalization, and staff training. Distribution assets already in place; no major distribution strategy changes expected.
Answers to last quarter's watch list
What to watch into next quarter
FY26 FCF "$18B plus" build — Management framed the $1.4B+ step-up from $16.6B as driven by EBITDA growth, lower pension contributions, and lower legal settlements, partially offset by higher capex and cash interest. Watch Q1 commentary for whether the cadence supports the FY guide; the Q1 guide of $2.0–2.5B reflects Lumen/EchoStar stand-up costs and the lapping of ~$100M of Q1 2025 one-time benefits.
First "advanced connectivity" segment disclosure in Q1 reporting — The new segment split is the most important reporting change in years. Watch for the implied growth rate of the legacy runoff bucket and whether the "advanced connectivity 6%+" framing holds when isolated from the consolidated 3% number.
Postpaid churn trajectory — Q4 printed total postpaid churn 1.12% (+12bps YoY) and postpaid phone churn 0.98% (+13bps YoY). If Q1 prints above 1.15% total, the convergence-offsets-churn argument is in trouble regardless of how Stankey reframes it.
Lumen close progress and equity partner economics — Management said "later in 2026" with cash proceeds. Watch the equity partner identity, the cash multiple, and whether the close timing slips further from H2 2026 — any delay extends the integration ramp drag into 2027.
Q1 promotional intensity vs. iPhone air launch / competitor response — Stankey's "compete on performance and value, not uneconomical device offers" framing will be tested by competitor activity in Q1. Watch postpaid phone net adds and upgrade rate for whether AT&T cedes share to maintain margin.
$4B 2028 cost-savings program tranching — Management disclosed the 2028 endpoint but not the annual cadence. Watch Q1 for whether $1B+ is being recognized annually and which legacy buckets (wire centers, IT, headcount) are being targeted.
Sources
- AT&T Q4 FY2025 Press Release (Exhibit 99.2), filed with SEC on 2026-01-28: https://www.sec.gov/Archives/edgar/data/732717/000073271726000047/t-4q2025exhibit992.htm
- AT&T Q4 FY2025 earnings call commentary (CEO John Stankey and CFO Pascal Desroches).
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