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Is AT&T Worth Buying as Fiber Growth Offsets Rising Leverage Risks?
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Key Takeaways
AT&T's fiber and wireless growth strengthens its investment appeal, but rising leverage warrants caution.
AT&T added 442,000 fiber customers as wireless service revenues rose 5% in the third quarter of 2026.
AT&T's net debt climbed to $149.8 billion after its $23 billion EchoStar deal, pushing leverage to 3.13X.
AT&T Inc. (T - Free Report) is pairing faster fiber and wireless growth with a balance sheet that became more leveraged after its EchoStar spectrum purchase. Third-quarter 2026 results showed that the core connectivity strategy is gaining traction, but the investment case is not one-sided.
The question for investors is whether improving service revenues, a modest valuation and shareholder returns provide enough compensation for legacy declines, higher interest costs and a longer deleveraging path.
AT&T's Fiber Expansion Strengthens the Growth Case
AT&T added more than 1 million Advanced Connectivity customers in the third quarter, including 769,000 Internet net additions across consumer and business accounts. Fiber additions totaled 442,000, while fixed wireless added 327,000 customers.
Advanced home Internet service revenue increased 23.4% year over year. The convergence rate reached 42.8%, and AT&T added about 350,000 converged relationships during the quarter. The company reached 39.7 million fiber locations and remains on track to exceed 40 million by year-end 2026.
T's Wireless Gains Support Recurring Service Revenue
Wireless service revenues rose 5% year over year, driven by subscriber growth and pricing. AT&T added 379,000 postpaid phone subscribers, while postpaid phone average revenue per user increased about 4%. Management continues to expect Advanced Connectivity service revenue growth of at least 5% in 2026.
T-Mobile US, Inc. (TMUS - Free Report) is also expanding its broadband footprint through fiber partnerships alongside its 5G broadband business. Verizon Communications Inc. (VZ - Free Report) , with a large wireless base and fiber broadband operations, remains another relevant benchmark for investors comparing converged connectivity strategies.
AT&T's Valuation Looks Modest Against Key Benchmarks
AT&T trades at 2.1X trailing 12-month enterprise value to sales, below its five-year median of 2.26X. The multiple also sits well below the Zacks sub-industry's 8.15X and the broader sector's 8.31X.
The shares trade at 9.4X forward earnings, while the PEG ratio is 0.97. Those measures support the value case, but a low multiple alone does not eliminate execution risk when leverage is elevated and legacy operations are shrinking.
T's Debt and Legacy Declines Keep Risks Elevated
Legacy revenues fell 24.5% year over year in the third quarter, while Legacy EBITDA declined 26.7%. Copper retirement should reduce costs over time, but the transition continues to weigh on reported revenues and earnings before the remaining expense base is fully removed.
Net debt rose to $149.8 billion, and net debt to adjusted EBITDA increased to 3.13X from 2.68X in the second quarter after the $23 billion EchoStar spectrum purchase. AT&T still targets leverage near 2.5X during 2029. Capital investment, dividends and buybacks will continue competing for cash while higher interest payments pressure financial flexibility.
Image Source: Zacks Investment Research
AT&T's Scores Favor Value and Momentum
AT&T's operating trends and valuation create a more constructive setup than the balance-sheet risks alone suggest. Still, the combination of rising leverage, legacy erosion and promotional fiber pricing argues against treating the stock as a clear-cut buy based only on recent growth.
The stock currently carries a Zacks Rank #3 (Hold). AT&T also has a Value Score of A, Growth Score of C, Momentum Score of A and VGM Score of A. The A grades support the stock's value and momentum characteristics, while the Growth Score of C is less favorable.
Style Scores are designed to complement the Zacks Rank rather than replace it. With a Zacks Rank #3, AT&T fits a hold or wait-and-see posture better than an aggressive new-buy stance, even as the A-rated Value, Momentum and VGM profiles keep the shares worth monitoring if execution and leverage improve. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Is AT&T Worth Buying as Fiber Growth Offsets Rising Leverage Risks?
Key Takeaways
AT&T Inc. (T - Free Report) is pairing faster fiber and wireless growth with a balance sheet that became more leveraged after its EchoStar spectrum purchase. Third-quarter 2026 results showed that the core connectivity strategy is gaining traction, but the investment case is not one-sided.
The question for investors is whether improving service revenues, a modest valuation and shareholder returns provide enough compensation for legacy declines, higher interest costs and a longer deleveraging path.
AT&T's Fiber Expansion Strengthens the Growth Case
AT&T added more than 1 million Advanced Connectivity customers in the third quarter, including 769,000 Internet net additions across consumer and business accounts. Fiber additions totaled 442,000, while fixed wireless added 327,000 customers.
Advanced home Internet service revenue increased 23.4% year over year. The convergence rate reached 42.8%, and AT&T added about 350,000 converged relationships during the quarter. The company reached 39.7 million fiber locations and remains on track to exceed 40 million by year-end 2026.
T's Wireless Gains Support Recurring Service Revenue
Wireless service revenues rose 5% year over year, driven by subscriber growth and pricing. AT&T added 379,000 postpaid phone subscribers, while postpaid phone average revenue per user increased about 4%. Management continues to expect Advanced Connectivity service revenue growth of at least 5% in 2026.
T-Mobile US, Inc. (TMUS - Free Report) is also expanding its broadband footprint through fiber partnerships alongside its 5G broadband business. Verizon Communications Inc. (VZ - Free Report) , with a large wireless base and fiber broadband operations, remains another relevant benchmark for investors comparing converged connectivity strategies.
AT&T's Valuation Looks Modest Against Key Benchmarks
AT&T trades at 2.1X trailing 12-month enterprise value to sales, below its five-year median of 2.26X. The multiple also sits well below the Zacks sub-industry's 8.15X and the broader sector's 8.31X.
The shares trade at 9.4X forward earnings, while the PEG ratio is 0.97. Those measures support the value case, but a low multiple alone does not eliminate execution risk when leverage is elevated and legacy operations are shrinking.
T's Debt and Legacy Declines Keep Risks Elevated
Legacy revenues fell 24.5% year over year in the third quarter, while Legacy EBITDA declined 26.7%. Copper retirement should reduce costs over time, but the transition continues to weigh on reported revenues and earnings before the remaining expense base is fully removed.
Net debt rose to $149.8 billion, and net debt to adjusted EBITDA increased to 3.13X from 2.68X in the second quarter after the $23 billion EchoStar spectrum purchase. AT&T still targets leverage near 2.5X during 2029. Capital investment, dividends and buybacks will continue competing for cash while higher interest payments pressure financial flexibility.
Image Source: Zacks Investment Research
AT&T's Scores Favor Value and Momentum
AT&T's operating trends and valuation create a more constructive setup than the balance-sheet risks alone suggest. Still, the combination of rising leverage, legacy erosion and promotional fiber pricing argues against treating the stock as a clear-cut buy based only on recent growth.
The stock currently carries a Zacks Rank #3 (Hold). AT&T also has a Value Score of A, Growth Score of C, Momentum Score of A and VGM Score of A. The A grades support the stock's value and momentum characteristics, while the Growth Score of C is less favorable.
Style Scores are designed to complement the Zacks Rank rather than replace it. With a Zacks Rank #3, AT&T fits a hold or wait-and-see posture better than an aggressive new-buy stance, even as the A-rated Value, Momentum and VGM profiles keep the shares worth monitoring if execution and leverage improve. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.