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T Q3 Earnings Beat Estimates on Fiber and Wireless Growth
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Key Takeaways
AT&T's Q3 adjusted EPS rose 20.4% to 65 cents, beating estimates, while revenues grew 5.3% to $32.32B.
Record Internet additions of 769,000 included 442,000 fiber and 327,000 fixed wireless connections.
AT&T raises its 2026 adjusted EPS outlook to $2.40 and targets at least $18B in free cash flow.
AT&T Inc. (T - Free Report) reported third-quarter 2026 adjusted earnings of 65 cents per share, up 20.4% year over year, surpassing the Zacks Consensus Estimate of 61 cents by 6.56%. Revenues rose 5.3% to $32.32 billion, beating the $31.68 billion consensus by 2.02%.
Growth in fiber and wireless services supported results, with Advanced Connectivity adding a record 769,000 internet connections. The company also added 379,000 postpaid phone subscribers and raised its full-year adjusted earnings outlook.
Advanced Connectivity revenues increased 7.2% year over year to $29.48 billion. Service revenues rose 6.1% to $23.9 billion, while equipment revenues climbed 12.2% to $5.58 billion, benefiting from stronger wireless equipment activity.
Wireless service revenues rose 5% to $17.76 billion, supported by retail subscriber growth, converged accounts and pricing actions. Promotional discounts partially offset these gains. Advanced home internet revenues jumped 23.4% to $2.98 billion, reflecting fiber and AT&T Internet Air growth, including contributions from the acquired Lumen mass-market fiber business.
AT&T's Internet Additions Reach a Record
The company added 442,000 fiber and 327,000 fixed wireless internet connections during the quarter. Total consumer and business locations reached with fiber exceeded 39 million, keeping AT&T on track to surpass 40 million by year-end.
The advanced home Internet convergence rate reached 42.8%, representing the proportion of advanced home internet customers also subscribing to AT&T's postpaid wireless service. Its converged customer base expanded by approximately 350,000. Postpaid phone churn was 0.92%, indicating the share of subscribers leaving the service.
T's Business Connectivity Growth Offsets Declines
Business fiber and advanced connectivity revenues grew 8.7% year over year to $1.99 billion, primarily on higher fiber and fixed wireless revenues. This contributed to a 2.5% increase in overall business service revenues.
Business transitional and other revenues fell 14.6% to $1.02 billion as demand for virtual private network and wholesale services declined. Other service revenues were down 8.6% to $148 million, illustrating the continuing shift away from older offerings.
AT&T's Legacy Business Continues to Contract
Legacy segment revenues declined 24.5% year over year to $1.52 billion amid lower demand for copper-based network services. Operating expenses decreased 23.5% to $1.02 billion, reflecting lower personnel costs, network decommissioning and reduced fulfillment cost amortization.
Legacy operating income dropped 26.7% to $498 million, with operating margin falling 90 basis points to 32.8%. More than 90% of wire centers have been approved to stop selling legacy services as the company works toward substantially retiring its copper-based network.
T's Adjusted Profit Grows Despite Charges
Consolidated operating expenses increased to $28.2 billion from $24.6 billion, largely reflecting a $2.6 billion noncash impairment tied to the planned sale of AT&T Mexico, employee separation costs and higher wireless equipment expenses. Advertising and bad debt costs also increased.
Reported operating income declined to $4.1 billion from $6.1 billion, while adjusted operating income improved to $7.6 billion from $6.6 billion. Adjusted EBITDA increased 5.4% to $12.51 billion, with the adjusted EBITDA margin edging up to 38.7% from 38.6% a year ago.
AT&T's Latin America Revenues Rise
Latin America revenues increased 13.2% year over year to $1.24 billion, primarily driven by favorable foreign exchange movements and postpaid wireless subscriber growth. Service revenues rose 14.7%, while equipment revenues advanced 10.8%.
Operating expenses increased 11.4% to $1.2 billion due to currency effects, higher bad debt expenses and equipment costs. Operating income improved to $45 million from $22 million, while EBITDA rose 18.6% to $236 million.
T's Cash Flow and Outlook Take Focus
Free cash flow increased to $4.95 billion from $4.87 billion a year earlier. Cash provided by operating activities from continuing operations totaled $10.52 billion, while capital investment reached $5.57 billion. The company returned approximately $4.8 billion to shareholders, including $2.8 billion in share repurchases.
AT&T ended the quarter with $10.77 billion in cash and equivalents and $149.82 billion in net debt. Net debt increased sequentially following the EchoStar spectrum purchase, taking the net debt-to-adjusted EBITDA ratio to 3.13.
Management now expects adjusted earnings around $2.40 per share in 2026. It projects capital investment of $23 billion to $24 billion this year and $22 billion to $23 billion annually in 2027 and 2028. Free cash flow targets are at least $18 billion in 2026, $19 billion in 2027 and $21 billion in 2028.
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting a growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.8%. Arista delivered an average earnings surprise of 8.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2026 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a 10.2% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 5.9%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
GLOBALFOUNDRIES Inc. (GFS - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 51 cents per share, implying a rise of 24.4% from the year-ago reported figure.
GLOBALFOUNDRIES has a long-term earnings growth expectation of 21.2%. GFS delivered an average earnings surprise of 10.9% in the last four reported quarters.
View the Zacks #1 Rank List
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T Q3 Earnings Beat Estimates on Fiber and Wireless Growth
Key Takeaways
AT&T Inc. (T - Free Report) reported third-quarter 2026 adjusted earnings of 65 cents per share, up 20.4% year over year, surpassing the Zacks Consensus Estimate of 61 cents by 6.56%. Revenues rose 5.3% to $32.32 billion, beating the $31.68 billion consensus by 2.02%.
Growth in fiber and wireless services supported results, with Advanced Connectivity adding a record 769,000 internet connections. The company also added 379,000 postpaid phone subscribers and raised its full-year adjusted earnings outlook.
AT&T Inc. Price, Consensus and EPS Surprise
AT&T Inc. price-consensus-eps-surprise-chart | AT&T Inc. Quote
T's Advanced Connectivity Revenues Gain Ground
Advanced Connectivity revenues increased 7.2% year over year to $29.48 billion. Service revenues rose 6.1% to $23.9 billion, while equipment revenues climbed 12.2% to $5.58 billion, benefiting from stronger wireless equipment activity.
Wireless service revenues rose 5% to $17.76 billion, supported by retail subscriber growth, converged accounts and pricing actions. Promotional discounts partially offset these gains. Advanced home internet revenues jumped 23.4% to $2.98 billion, reflecting fiber and AT&T Internet Air growth, including contributions from the acquired Lumen mass-market fiber business.
AT&T's Internet Additions Reach a Record
The company added 442,000 fiber and 327,000 fixed wireless internet connections during the quarter. Total consumer and business locations reached with fiber exceeded 39 million, keeping AT&T on track to surpass 40 million by year-end.
The advanced home Internet convergence rate reached 42.8%, representing the proportion of advanced home internet customers also subscribing to AT&T's postpaid wireless service. Its converged customer base expanded by approximately 350,000. Postpaid phone churn was 0.92%, indicating the share of subscribers leaving the service.
T's Business Connectivity Growth Offsets Declines
Business fiber and advanced connectivity revenues grew 8.7% year over year to $1.99 billion, primarily on higher fiber and fixed wireless revenues. This contributed to a 2.5% increase in overall business service revenues.
Business transitional and other revenues fell 14.6% to $1.02 billion as demand for virtual private network and wholesale services declined. Other service revenues were down 8.6% to $148 million, illustrating the continuing shift away from older offerings.
AT&T's Legacy Business Continues to Contract
Legacy segment revenues declined 24.5% year over year to $1.52 billion amid lower demand for copper-based network services. Operating expenses decreased 23.5% to $1.02 billion, reflecting lower personnel costs, network decommissioning and reduced fulfillment cost amortization.
Legacy operating income dropped 26.7% to $498 million, with operating margin falling 90 basis points to 32.8%. More than 90% of wire centers have been approved to stop selling legacy services as the company works toward substantially retiring its copper-based network.
T's Adjusted Profit Grows Despite Charges
Consolidated operating expenses increased to $28.2 billion from $24.6 billion, largely reflecting a $2.6 billion noncash impairment tied to the planned sale of AT&T Mexico, employee separation costs and higher wireless equipment expenses. Advertising and bad debt costs also increased.
Reported operating income declined to $4.1 billion from $6.1 billion, while adjusted operating income improved to $7.6 billion from $6.6 billion. Adjusted EBITDA increased 5.4% to $12.51 billion, with the adjusted EBITDA margin edging up to 38.7% from 38.6% a year ago.
AT&T's Latin America Revenues Rise
Latin America revenues increased 13.2% year over year to $1.24 billion, primarily driven by favorable foreign exchange movements and postpaid wireless subscriber growth. Service revenues rose 14.7%, while equipment revenues advanced 10.8%.
Operating expenses increased 11.4% to $1.2 billion due to currency effects, higher bad debt expenses and equipment costs. Operating income improved to $45 million from $22 million, while EBITDA rose 18.6% to $236 million.
T's Cash Flow and Outlook Take Focus
Free cash flow increased to $4.95 billion from $4.87 billion a year earlier. Cash provided by operating activities from continuing operations totaled $10.52 billion, while capital investment reached $5.57 billion. The company returned approximately $4.8 billion to shareholders, including $2.8 billion in share repurchases.
AT&T ended the quarter with $10.77 billion in cash and equivalents and $149.82 billion in net debt. Net debt increased sequentially following the EchoStar spectrum purchase, taking the net debt-to-adjusted EBITDA ratio to 3.13.
Management now expects adjusted earnings around $2.40 per share in 2026. It projects capital investment of $23 billion to $24 billion this year and $22 billion to $23 billion annually in 2027 and 2028. Free cash flow targets are at least $18 billion in 2026, $19 billion in 2027 and $21 billion in 2028.
Zacks Rank
AT&T currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases
Arista Networks Inc. (ANET - Free Report) is scheduled to release third-quarter 2026 earnings on Nov. 3. The Zacks Consensus Estimate for earnings is pegged at $1.08 per share, suggesting a growth of 44% from the year-ago reported figure.
Arista has a long-term earnings growth expectation of 22.8%. Arista delivered an average earnings surprise of 8.9% in the last four reported quarters.
Akamai Technologies, Inc. (AKAM - Free Report) is slated to release third-quarter 2026 earnings on Nov. 5. The Zacks Consensus Estimate for earnings is pegged at $1.67 per share, indicating a 10.2% decline from the year-ago reported figure.
Akamai has a long-term earnings growth expectation of 5.9%. Akamai delivered an average earnings surprise of 4.8% in the last four reported quarters.
GLOBALFOUNDRIES Inc. (GFS - Free Report) is set to release third-quarter 2026 earnings on Nov. 4. The Zacks Consensus Estimate for earnings is pegged at 51 cents per share, implying a rise of 24.4% from the year-ago reported figure.
GLOBALFOUNDRIES has a long-term earnings growth expectation of 21.2%. GFS delivered an average earnings surprise of 10.9% in the last four reported quarters.