T · Q4 2025 Earnings

Bullish

AT&T

Reported January 28, 2026

30-second summary

30-second take: AT&T closed FY2025 with $16.6B of free cash flow — at the higher end of the "low to mid $16B" guide reaffirmed last quarter — and adjusted EPS of $2.12, above the $1.97–$2.07 guide. More importantly, management used the print to roll out a multi-year (2026–2028) framework: FY26 adjusted EPS of $2.25–$2.35, FY26 FCF of "$18B plus," 3–4% adjusted EBITDA growth in 2026 accelerating to 5%+ by 2028, $45B+ of capital return over three years, and a double-digit adjusted EPS CAGR through 2028. Q4 revenue grew 3.6% YoY to $33.5B with 421K postpaid phone net adds, 210K broadband net adds, and postpaid churn that ticked higher again to 1.12%. The hidden moderation: wireless service revenue is now guided to 2–3% annually for three years vs. "3% or better" in 2025, and the FY26 EPS midpoint of $2.30 implies only ~8.5% YoY growth off the $2.12 base — the double-digit framing is a three-year CAGR, not a 2026 print.

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

Company raised full-year FY2025 free cash flow by $3.4-3.9B above guidance and introduced aggressive FY2026-2028 multi-year outlook with double-digit EPS growth, 3-4% EBITDA growth, and $18B+ FCF, while modestly narrowing wireless service revenue growth to 2-3% annually.

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	+$3.4-3.6B above guide	Beat

New guidance

Metric	Period	Guide	YoY
Adjusted EPS	FY 2026	$2.25 to $2.35	—
Adjusted EBITDA Growth	FY 2026	3% to 4% in 2026, improving to 5% or better in 2028	—
Free Cash Flow	FY 2026	$18 billion plus	—
Advanced Home Internet Service Revenue Growth	FY 2026	20% plus annually through 2028	—
Wireless Service Revenue Growth	FY 2026	2% to 3% range annually over next three years	—
Capital Intensity	FY 2026	decline from high teens percent of revenue to mid-teens through 2028	—
Shareholder Returns	FY 2026	$45 billion plus over next three years	—
Fiber Locations Passed	FY 2026	over 40 million customer locations by end of 2026; 5 million locations annually through end of decade	—

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
Postpaid Phone Net Additions	421 thousand
Total Mobility Net Additions	1,157 thousand
Postpaid Churn	1.12%
Broadband Net Additions	210 thousand
Total Mobility Subscribers	120.1 million
Broadband Connections	14.7 million
Mexico Wireless Subscribers	24.7 million

Profitability

Q4 FY2025

Segment	Q4 FY2025
Mobility Operating Margin	26.3%

Management tone

Narrative arc: Q2 "fiber acceleration unlock" → Q3 "convergence flywheel and M&A retired" → Q4 "multi-year growth-company reframe"

The segment-reporting change is the single most revealing tone shift this quarter. Three quarters ago, AT&T reported as a balanced telco with mobility, business wireline, and consumer wireline as equal pillars; this quarter management announced that starting Q1 2026, the company will split out "advanced connectivity" (5G + fiber) from declining legacy. Stankey: "By separating the performance of our advanced connectivity business from our declining legacy segment, we believe investors will have greater transparency into the returns we're generating on our growth investments in 5G and fiber." This is management telling investors exactly how it wants the equity re-rated — as a growth business with a runoff sleeve, not a defensive telco.

The Lumen acquisition framing has hardened from "capacity" (Q2) to "convergence multiplier" (Q3) to "margin-structure arbitrage" (Q4). Stankey this quarter: "We're acquiring a fiber network with only 25% customer penetration, well below AT&T fiber penetration of 40%...we believe we're able to offer that customer access to the internet on a lower marginal cost structure than any competitor." Three quarters ago Lumen was a footprint addition; today management is arguing the deal is a structural cost-advantage play that lets AT&T price aggressively without margin damage. That's a materially more aggressive thesis than was on the table in mid-2025.

Convergence has progressed from a customer-retention argument (Q2) to a quantified market-share multiplier (Q4). Stankey: "We estimate that our share of postpaid phone subscribers is 10 percentage points higher in areas where we offer fiber than in areas where we don't...fiber convergence rate climbed 200 basis points year over year to 42%, which is our fastest annual increase since we began tracking this metric." The 10-point share differential is the single hardest data point management has put on the table for the convergence thesis — and it changes the conversation from "does this work" to "how big does this get."

Capital return has accelerated meaningfully. Two quarters ago management committed to $4B of buybacks in 2025; this quarter the three-year capital-return commitment is $45B+ — a roughly 50% step-up vs. the recent run-rate. Stankey: "Over the next three years, we expect to drive accelerated growth in adjusted EBITDA, double-digit adjusted EPS growth, and strong free cash flow...we expect to return $45 billion plus to our shareholders." This is the most confident capital-return posture the company has taken since pre-COVID, and is the cleanest signal that management believes the transformation is past tipping point.

Recurring themes management leaned on this quarter:

Convergence as structural competitive advantage and share multiplierFiber acceleration and scale with disciplined capital efficiencyAdvanced connectivity segment separation to highlight growth and returns transparencyCost transformation and legacy copper discontinuation by 2029Capital return acceleration ($45B+ over three years) supported by improved cash generationStrategic acquisitions (Lumen fiber, EchoStar spectrum) enabling TAM expansion and penetration upside

Risks management surfaced:

Elevated device offers creating ARPU headwind (~90 bps in 2025, expected to continue 2026)Competitive operating environment with new and existing customers eligible for promotional offersIntegration and scaling execution risks for Lumen retail and fiber operationsFirst quarter 2026 upfront investments and $100M one-time benefit lap pressure on EBITDA growthTemporary leverage increase to ~3.2x post-acquisition before deleveraging within three years

Q&A highlights

John Hudlick · UBS

On fiber convergence rate trajectory and potential to reach Lumen levels; and on consumer wireline revenue growth slowdown drivers

Management expects convergence rate to continue improving toward 50% with potential for 70-80% long-term as industry converges. Noted that unbundled churn is being offset by bundled customer acquisition. On wireline slowdown: attributed to strategic pricing discipline, promotional discounting to drive bundling, and deliberate ARPU management. Noted pricing adjustments in November will have full year effect in 2026. Advanced home internet (fiber + FWA) expected to grow 20%+ organically, over 30% with Lumen territories.

Fiber convergence rate currently 42%, targeting 50%Long-term convergence potential of 70-80% based on historical bundling periodsFiber passings: 32M end of 2025, 40M end of 2026, 5M per year thereafterAdvanced home internet organic growth 20%+ (30%+ with Lumen)

Benjamin Swinburne · Morgan Stanley

Spectrum investment capacity and strategy post-EchoStar deal; and impact of potential foldable iPhone on consumer upgrade cycles and competitive environment

Management indicated reserved capacity for strategic spectrum options but views EchoStar deal as preemptive/opportunistic, allowing more disciplined future spectrum decisions. Believes industry specializing by band reduces need for aggressive bidding across all spectrum. On foldables: provided market perspective that existing foldable penetration rates suggest form factor adoption is predictable and not broadly applicable; doesn't expect significant elevation in upgrade behavior or competitive pressure from iPhone foldable entry.

Reserved capacity for strategic spectrum options confirmedEchoStar viewed as preemptive move enabling more judicious future spectrum approach300 MHz capacity density per cell tower reduces need for continuous spectrum additionsFoldable device acceptance rates in market are predictable and not broadly transformative

Peter Cipino · Wolf Research

Fiber ARPU pricing strategy vs. Comcast/Charter approaches; and concern about supply-demand imbalance as DSL declines while FWA scales

Management stated AT&T pricing currently below Comcast/Charter levels, providing more flexibility. Emphasized fiber product superiority and lower pricing as competitive advantage. Noted DSL sunset intentional and 'probably can't happen fast enough.' EchoStar spectrum access helps bridge customers with FWA. Expressed confidence in fiber conversion rates dropping and net new account growth being primary driver. Does not anticipate supply-demand constraint as market growth is modest and home switching dynamics will favor superior product.

AT&T fiber pricing below competitor levels with greater flexibilityDSL base intentionally being sunset as part of planFiber conversion rates declining, new account growth is primary driverEchoStar spectrum enables bridging product before fiber deployment

Michael Rollins · Citi

Macro factors influencing postpaid phone growth in 2026 including population/immigration/demographics; and competitive response strategy to maintain wireless service revenue growth guidance of 2-3%

Management acknowledged wireless industry maturity and switching activity, but highlighted success in under-penetrated segments (55+, 1-2 line accounts, SMB) through convergence strategy. Noted pulling existing wireless customers to add fiber, not just adding wireless to fiber accounts. Lumen footprint shows 20-25% pen rates and 20% AT&T mobility attach rates offering incremental opportunity. Expects competitive intensity to continue but confident playbook will sustain 2-3% wireless service revenue growth.

Lumen footprint: 20-25% fiber penetration rates, ~20% AT&T mobility attach ratesUnder-penetrated segments: 55+, 1-2 line, SMB showing accelerating growthGrowth driven by convergence strategy and new account establishment2-3% wireless service revenue growth guidance maintained

Sebastiano Pettys · J.P. Morgan

Leverage target assumptions regarding Lumen JV cash inflows; seasonality and distribution changes in fiber/FWA build as footprint expands 32M to 40M

Management confirmed equity partner close expected later in year with associated proceeds, plus EBITDA growth supporting leverage targets. On seasonality: expects continuation with second half stronger than first half, Q3 better than Q4, acknowledging prior FWA Q4 seasonality was underestimated. Noted Lumen transaction compressed pre-close planning timeline requiring 2-quarter ramp to normalize products, IT infrastructure, supply chains. Distribution strategy not changing materially from proven playbook. Integration challenges and learning curve expected in first quarters.

Equity partner close expected later in 2026 with proceeds contributionEBITDA growth during year to support leverage targetsSeasonality pattern: H2 > H1, Q3 > Q4 expected to continueLumen integration ramp: ~2-quarter learning curve

Answers to last quarter's watch list

Postpaid churn trajectory into Q4: Postpaid churn drifted higher again to 1.12% in Q4 from 1.07% in Q3 — still moving in the wrong direction. Management did not retreat from the "feature not bug" framing but also did not provide a credible reason to expect churn reversion in 2026. The convergence-multiplier evidence (10-point share differential, 42% convergence rate) is genuinely supportive of the thesis, but churn is the cleanest test and it is not passing yet. Status: Resolved negatively

Q4 FCF print needed to hit "low to mid $16B" FY: FY FCF landed at $16.6B, at the higher end of the low-to-mid $16B guide. FCF grew over $1B YoY, with lower-than-expected cash taxes offset by accelerated pension contributions. Status: Resolved positively

Sustained FWA cadence post mid-band deployment: Broadband net adds of 210K in Q4 came in below Q3's 232K, but the company is now framing advanced home internet (fiber + FWA) as a combined 20%+ organic growth segment through 2028, and 30%+ including Lumen territories. Management said FWA volumes will exceed prior year in 2026 despite DSL sunset. Status: Resolved positively

Lumen close timing: Management confirmed expected close during Q1 2026 with the equity partner close expected later in 2026. No further slip from the "early 2026" timeline given in Q3. Status: Resolved positively

Long-term financial outlook update "early next year": Delivered. AT&T issued a full 2026–2028 framework with FY26 EPS of $2.25–$2.35, FY26 FCF of $18B+, 3–4% EBITDA growth in 2026 accelerating to 5%+ by 2028, $45B+ of three-year capital return, capital intensity declining from high-teens to mid-teens, and fiber expanding to 40M+ locations by end-2026 with 5M annual additions through the end of the decade. The "60M+ by 2030" target was effectively superseded by the more granular cadence. Notably, no unit-economics disclosure backing Stankey's pushback on third-party build-cost models was provided. Status: Resolved positively (framework delivered, though unit economics still undisclosed)

Fiber net-add cadence vs. cable response: Q4 broadband net adds of 210K came in below Q3's 232K, consistent with management's flagged seasonality (Q3 > Q4). Convergence rate climbed 200bp YoY to 42% — the fastest annual increase since AT&T began tracking. The convergence-attach dynamic appears to be offsetting some of the seasonal step-down, though not enough to maintain Q3's record print. Status: Continue monitoring

What to watch into next quarter

Q1 2026 EBITDA growth vs. the ~$100M one-time benefit lap: management flagged upfront investments and the Q1 2025 one-time benefit roll-off will pressure Q1 EBITDA growth — watch whether the print falls short of the 3–4% FY26 framework and what management says about the FY trajectory. Q1 FCF guided to $2.0–$2.5B.

Wireless service revenue growth tracking against the new 2–3% three-year guide: this is a step-down from the 2025 "3% or better" framing, and the company posted +5.3% Mobility revenue in 2025. Watch whether the 2–3% guide proves conservative or whether competitive intensity drives prints toward the low end.

Postpaid churn — needs to inflect downward in 2026: four consecutive quarters of YoY churn deterioration would seriously undermine the convergence-stickiness thesis. The Q1 print is the next test.

Lumen integration ramp: management flagged a ~2-quarter learning curve on retail, IT, and supply chain. Watch Q1 and Q2 prints for any margin or net-add disruption, plus the equity partner close timing (expected later in 2026 per Petti exchange).

New segment reporting in Q1 2026: the advanced connectivity vs. legacy split will reset the disclosure framework. The first print under the new segments is the cleanest test of whether the growth-vs-runoff math management is selling is as clean as the narrative implies.

Capital intensity trajectory from high-teens toward mid-teens: if capex efficiency starts showing up in 2026 vs. 2028, the FCF compounding case gets stronger sooner. Watch the FY26 capex disclosure relative to the implied mid-teens % of revenue.

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 prepared remarks and Q&A, 2026-01-28 (company-hosted webcast; CEO John Stankey and CFO Pascal Desroches).

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