AT&T Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenues: Increased by 2.9% year-over-year.

Service Revenues: Grew by 1.4%, driven primarily by fiber and fixed wireless customer gains.

Adjusted EBITDA: Up 2.3% year-over-year, with a margin of 37.4%, slightly down by 30 basis points.

Free Cash Flow: Reported at $2.5 billion, at the high end of the $2 billion to $2.5 billion outlook.

Adjusted EPS: Increased nearly 12% to $0.57, with a full-year expectation of $2.25 to $2.35.

Net Debt to Adjusted EBITDA: Increased to 2.71x from 2.53x, primarily due to the acquisition of Lumen.

2Strategic Updates and Business Highlights

Customer Growth: AT&T added 584,000 fiber and fixed wireless customers in Q1, marking the best first-quarter result in six years.

Convergence Strategy: 42% of advanced home Internet customers also subscribed to AT&T Wireless, with an organic convergence rate approaching 45%.

Acquisition of Lumen: Closed ahead of schedule, adding 1.1 million fiber customers and expanding fiber reach significantly.

New Initiatives: Launched AT&T OneConnect, a subscription service for combined fiber and wireless, and expanded the AT&T guarantee to cover Internet Air.

Advanced Connectivity Segment: Over 90% of consolidated revenue and nearly all adjusted EBITDA stem from this segment, which saw service revenues grow 3.6%.

3Forward Guidance and Outlook

Service Revenue Growth: Expected to grow in the low single-digit range for the full year, driven by wireless and fiber services.

Adjusted EBITDA Growth: Anticipated to improve to 3% to 4% for the year.

Free Cash Flow: Projected to exceed $18 billion for the full year, with Q2 expected to be between $4 billion and $4.5 billion.

Long-term Goals: Targeting to reach over 60 million fiber locations by the end of the decade and maintain a consistent pace of shareholder returns.

4Bad News, Challenges, or Points of Concern

Legacy Services Decline: Legacy service revenues fell by 25% year-over-year, with a forecasted decline of over 20% for 2026.

Adjusted EBITDA Margin Pressure: The margin decreased due to prior vendor settlements and increased costs associated with integrating acquired assets.

Increased Net Debt: The leverage ratio is expected to rise to approximately 3.2x post-EchoStar transaction before stabilizing around 3x by the end of 2026.

Competitive Pressures: Concerns regarding the impact of satellite and fixed wireless competition on broadband growth and pricing strategies.

5Notable Q&A Insights

OneConnect Rollout: John Stankey emphasized a gradual shift away from device subsidies towards service-based offerings, with OneConnect playing a pivotal role.

Churn Improvement: Stankey noted improved phone churn trends, attributing it to customer convergence and enhanced service offerings.

EchoStar Acquisition: Stankey highlighted the anticipated performance improvements and capital efficiency from the EchoStar spectrum acquisition.

Copper Retirement Program: Stankey discussed the ongoing efforts to retire legacy copper infrastructure, which is expected to yield significant cost savings and operational efficiencies.

Market Positioning: Stankey expressed confidence in AT&T's ability to compete effectively in the evolving broadband market, emphasizing the advantages of their fiber network over DSL and emerging satellite technologies. Overall, AT&T demonstrated solid execution in Q1 2026, with strategic initiatives aimed at enhancing customer convergence and expanding fiber reach, although challenges remain in legacy service declines and competitive pressures.