AT&T’s second-quarter results show a telco reshaping itself around fiber-led growth, using fixed broadband to drive wireless gains and cash generation. The strategy is working – although top-line growth remains constrained by tough telco economics.
In sum – what to know:
Fiber foundation – AT&T added a record combined 646,000 fiber and fixed wireless connections, while 42.5% of advanced broadband households also took mobile services.
Advanced comms – Postpaid fiber, FWA and 5G delivered more than a million net additions collectively, with segment revenue up 5.1% and operating income up 20.3%.
Cash confidence – Despite $126.4 billion in net debt, rising free cash flow is allowing AT&T to accelerate $10 billion in share buybacks as it exits legacy copper.
AT&T delivered a good quarter, to June 30, and is starting to look (and sound) like a fiber-first telco – albeit one that remains constrained by marginal utility-style top-line growth. John Stankey, chairman and chief executive at the firm, went so far as to declare fiber as “the best connectivity technology available” – which might be true enough, but is hardly the standard line from an aristocratic 5G carrier. Still, its second-quarter showing makes clear it is using fiber to sell wireless and wireless to sell fiber, and looking to free-up cash flow, and backing itself by buying back stock.
The quarter suggests its strategy is working, with a record quarter for “combined” fiber and fixed wireless access (FWA) net additions (646,000), and its strongest consumer postpaid wireless growth in three years. These are its big engines, effectively – reported collectively as ‘advanced connectivity’, and contributing more than a million net additions (not necessarily separate customers) in the period. In detail, it added 367,000 fiber lines, 279,000 FWA accounts, and 432,000 4G/5G subs – for a total of about 1.078 million across the three advanced-connectivity types.
These combine both consumer and enterprise sales, and are big numbers, individually and collectively. Churn within its consumer postpaid 4G/5G base was 0.86 percent in the period – which is healthy in a mature mobile market, especially with the additions on top. But the fiber figure is most notable – given the lower churn and higher revenue in ‘fixed’ connectivity, plus cross-selling opportunities. More than two in five (42.5 percent) of ‘advanced broadband households’ also take mobile services from the firm. Besides, there is a pipeline of new AI services to come online.
Or so the story goes, across the whole tech sector. AT&T said its fiber network now reaches 38.6 million locations in the US; it has a target to pass 40 million by year-end, and 60 million by 2030. All in, its total revenue topped-out at $31.6 billion, up 2.3 percent from the year-ago quarter (again, very respectable given the industry’s record), and was higher, at 5.1 percent ($23.5 billion) across its ‘advanced’ categories. Income was up: $7 billion overall (adjusted to $7.5 billion), $5 billion for ‘continuing operations’; and way up (20.3 percent) to $7.3 billion for fiber, FWA, and 5G.
The lower total-income figure, versus the ‘advanced connectivity’ count, absorbs the losses in its legacy copper business – which the business wants shot of. Legacy service revenue will decline by over 20 percent in 2026, and be “immaterial” by the end of 2029. Adjusted EBITDA climbed 5.2 percent overall, so faster than revenue, to $12.3 billion – indicating improving margins. EBITDA growth for advanced connectivity will be higher through 2028, it said – in the “mid-to-high single-digit range” annually, and over six percent in 2026.
Legacy EBITDA will turn negative after 2027, until AT&T has “substantially eliminated direct costs associated with operating its copper-based network”. Operating cash flow was $10.8 billion, up from $9.8 billion a year ago – despite continued investment in its network, including $5.7 billion in capital expenditure. After those investments, free cash flow reached $4.7 billion, up from $4.4 billion a year earlier, giving AT&T more capacity to fund dividends, reduce debt, and accelerate share buybacks.
Equally, AT&T’s debt remains considerable – $144 billion, and $126.4 billion as net debt. Which is manageable given cash flow generation – expected to be over $18 billion in 2026, $19 billion in 2027, and $21 billion in 2028. But it is nevertheless a sizable balance-sheet for a firm that over-extended with deals for Time Warner and DirecTV last decade, before the whole industry reset to focus on core operations. The fact it is accelerating buybacks to approximately $10 billion in 2026, rather than paying-down debt, says it is confident in its fiber and 5G strategy.
