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AT&T Declines 19.3% in Three Months: How to Play the Stock?
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Key Takeaways
AT&T is expanding fiber, adding customers and targeting 60M fiber locations by decade-end.
AT&T's bundled wireless and broadband strategy improved postpaid phone churn to 0.89% in Q1 2026.
T faces pressure from legacy revenue declines, intense competition and higher leverage after the Lumen deal.
AT&T, Inc. (T - Free Report) has lost 19.3% in three months compared with the Wireless National industry’s decline of 15.8%. The stock has also underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
The company has underperformed its peers like Verizon Communications Inc. (VZ - Free Report) but outperformed Charter Communications (CHTR - Free Report) . Verizon has declined 9.5%, while Charter has lost 43.5% year to date.
Major Challenges
AT&T continues to experience steep declines in legacy wireline and copper-based services as customers migrate to newer technologies. In first-quarter 2026, Legacy service revenues declined about 25% year over year, and management expects a decline of 20% plus for full-year 2026. The company's long-term growth story relies on massive investments in fiber and wireless infrastructure. It is accelerating fiber deployment, investing $19 billion in California alone through 2030, which places pressure on free cash flow.
It faces stiff competition in the U.S. wireless and broadband market. Major rivals like Verizon and Charter are also aggressively investing in fiber, fixed wireless access, and customer acquisition. T must continue offering attractive pricing, bundled services, and network improvements to maintain subscriber growth. Spending on promotional activities and lucrative discounts will put pressure on the margin.
Verizon has been aggressively bundling wireless and broadband services through its myPlan and myHome offerings. The company has also been expanding its fiber footprint through the Frontier acquisition and growing fixed wireless access to deepen customer relationships and increase cross-selling opportunities. These strategies from Verizon can impact AT&T’s customer acquisition efforts to some extent.
AT&T's leverage increased following the Lumen transaction. Net debt-to-adjusted EBITDA ended first-quarter 2026 at 2.71x, up from 2.53x at the end of fourth-quarter 2025, primarily due to the Lumen transaction close. As of the first quarter of 2026, T’s current ratio stands at 0.92. A current ratio lower than unity suggests that it might face difficulties in fulfilling its short-term debt obligations.
Key Growth Drivers
AT&T is rapidly expanding its fiber infrastructure nationwide through organic deployments and strategic acquisitions. The company added strong fiber and fixed wireless customers during the first quarter. Management expects fiber reach to exceed 60 million locations by the end of the decade.
It has been implementing several initiatives to drive customer retention over the past several quarters. Its convergence strategy has become one of the central pillars of these retention efforts. The company is focused on increasing the number of households that subscribe to both AT&T wireless and broadband services, including AT&T Fiber and AT&T Internet Air.
When customers get dependent on multiple services from a single vendor, it becomes difficult for them to change service providers. From a user’s point of view, opting for fiber and wireless services from a single vendor reduces complexity for them as well. This trend improves customer retention, lowers churn and increases long-term customer value. AT&T's postpaid phone churn improved sequentially to 0.89% in the first quarter of 2026 from 0.98% in the fourth quarter of 2025, reflecting stronger customer retention.
AT&T is strengthening its presence in the connected car market through partnerships with major automakers. Recent agreements with Lexus and Rivian expand AT&T's 5G connectivity solutions into next-generation vehicles. T is supporting over-the-air software updates, enhanced infotainment, navigation, and personalized in-car services. It is broadening its Connected Car platform through collaborations with LiveOne and Cisco. For automakers, the AT&T platform streamlines the deployment of digital entertainment offerings in vehicles. Venturing into this market diversifies T’s revenue stream beyond its legacy telecom business and boosts resilience in its business model.
T is planning to invest $19 billion in California for network modernization. The company plans to expand fiber access to more than four million additional locations and add over 1,200 wireless sites by 2030. Such strategic investment is expected to improve service reliability and also support the company’s convergence strategy.
Estimate Revision Trend of T
Earnings estimates for AT&T for 2026 have increased over the past 60 days, while for 2027, the estimates have remained unchanged.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 9.83 forward earnings, lower than 11.33 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T's growth is being driven by aggressive fiber deployment, expanding 5G coverage. Rising adoption of bundled wireless and broadband services is boosting user retention. Its effort to venture into the automotive market is a positive factor. However, AT&T is progressing on decommissioning its copper-based network, but the transition continues to pressure reported growth and profitability. Fierce competition in the U.S. telecom market is hindering margins. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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AT&T Declines 19.3% in Three Months: How to Play the Stock?
Key Takeaways
AT&T, Inc. (T - Free Report) has lost 19.3% in three months compared with the Wireless National industry’s decline of 15.8%. The stock has also underperformed the Zacks Computer & Technology sector and the S&P 500’s growth during this period.
Image Source: Zacks Investment Research
The company has underperformed its peers like Verizon Communications Inc. (VZ - Free Report) but outperformed Charter Communications (CHTR - Free Report) . Verizon has declined 9.5%, while Charter has lost 43.5% year to date.
Major Challenges
AT&T continues to experience steep declines in legacy wireline and copper-based services as customers migrate to newer technologies. In first-quarter 2026, Legacy service revenues declined about 25% year over year, and management expects a decline of 20% plus for full-year 2026. The company's long-term growth story relies on massive investments in fiber and wireless infrastructure. It is accelerating fiber deployment, investing $19 billion in California alone through 2030, which places pressure on free cash flow.
It faces stiff competition in the U.S. wireless and broadband market. Major rivals like Verizon and Charter are also aggressively investing in fiber, fixed wireless access, and customer acquisition. T must continue offering attractive pricing, bundled services, and network improvements to maintain subscriber growth. Spending on promotional activities and lucrative discounts will put pressure on the margin.
Verizon has been aggressively bundling wireless and broadband services through its myPlan and myHome offerings. The company has also been expanding its fiber footprint through the Frontier acquisition and growing fixed wireless access to deepen customer relationships and increase cross-selling opportunities. These strategies from Verizon can impact AT&T’s customer acquisition efforts to some extent.
AT&T's leverage increased following the Lumen transaction. Net debt-to-adjusted EBITDA ended first-quarter 2026 at 2.71x, up from 2.53x at the end of fourth-quarter 2025, primarily due to the Lumen transaction close. As of the first quarter of 2026, T’s current ratio stands at 0.92. A current ratio lower than unity suggests that it might face difficulties in fulfilling its short-term debt obligations.
Key Growth Drivers
AT&T is rapidly expanding its fiber infrastructure nationwide through organic deployments and strategic acquisitions. The company added strong fiber and fixed wireless customers during the first quarter. Management expects fiber reach to exceed 60 million locations by the end of the decade.
It has been implementing several initiatives to drive customer retention over the past several quarters. Its convergence strategy has become one of the central pillars of these retention efforts. The company is focused on increasing the number of households that subscribe to both AT&T wireless and broadband services, including AT&T Fiber and AT&T Internet Air.
When customers get dependent on multiple services from a single vendor, it becomes difficult for them to change service providers. From a user’s point of view, opting for fiber and wireless services from a single vendor reduces complexity for them as well. This trend improves customer retention, lowers churn and increases long-term customer value. AT&T's postpaid phone churn improved sequentially to 0.89% in the first quarter of 2026 from 0.98% in the fourth quarter of 2025, reflecting stronger customer retention.
AT&T is strengthening its presence in the connected car market through partnerships with major automakers. Recent agreements with Lexus and Rivian expand AT&T's 5G connectivity solutions into next-generation vehicles. T is supporting over-the-air software updates, enhanced infotainment, navigation, and personalized in-car services. It is broadening its Connected Car platform through collaborations with LiveOne and Cisco. For automakers, the AT&T platform streamlines the deployment of digital entertainment offerings in vehicles. Venturing into this market diversifies T’s revenue stream beyond its legacy telecom business and boosts resilience in its business model.
T is planning to invest $19 billion in California for network modernization. The company plans to expand fiber access to more than four million additional locations and add over 1,200 wireless sites by 2030. Such strategic investment is expected to improve service reliability and also support the company’s convergence strategy.
Estimate Revision Trend of T
Earnings estimates for AT&T for 2026 have increased over the past 60 days, while for 2027, the estimates have remained unchanged.
Image Source: Zacks Investment Research
Key Valuation Metric of T
From a valuation standpoint, AT&T appears to be trading relatively cheaper compared to the industry and trading below its mean. Going by the price/earnings ratio, the company shares currently trade at 9.83 forward earnings, lower than 11.33 for the industry.
Image Source: Zacks Investment Research
End Note
AT&T's growth is being driven by aggressive fiber deployment, expanding 5G coverage. Rising adoption of bundled wireless and broadband services is boosting user retention. Its effort to venture into the automotive market is a positive factor. However, AT&T is progressing on decommissioning its copper-based network, but the transition continues to pressure reported growth and profitability. Fierce competition in the U.S. telecom market is hindering margins. With a Zacks Rank #3 (Hold), AT&T appears to be treading in the middle of the road, and new investors could be better off if they trade with caution. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.