Summary of AT&T's Q2 2026 Earnings Call

1Key Financial Results and Metrics

Total Revenues: Up 2.3% year-over-year, driven by a 2.7% increase in service revenues.

Adjusted EBITDA: Increased by 5.2% year-over-year, with an adjusted EBITDA margin of 39.1%, up 110 basis points.

Adjusted EPS: Rose to $0.65, a 20% increase from $0.54 in the previous year.

Free Cash Flow: Increased by approximately $300 million year-over-year to $4.7 billion, exceeding guidance.

Capital Investment: Totaled $6.1 billion, up from $5.1 billion a year ago, with expectations of $23 billion-$24 billion for the full year.

Net Debt to Adjusted EBITDA: Stood at 2.68 times, expected to rise to around 3.2 times post-EchoStar transaction.

2Strategic Updates and Business Highlights

Subscriber Growth: Added over 1 million Advanced Connectivity subscribers, marking a record for fiber and fixed wireless net additions.

Convergence Strategy: 42.5% of advanced home internet customers also have a postpaid wireless account, with a higher convergence rate of 45% when excluding acquired Lumen customers.

Fiber Expansion: Plans to reach 8 million new locations, including 4 million from Lumen, with a focus on urban and suburban areas.

Legacy Network Transition: Progress in discontinuing copper services, with approvals to discontinue legacy services in over 30% of wire centers.

Share Repurchase Program: Increased planned share repurchases by 25% to approximately $10 billion for 2026.

3Forward Guidance and Outlook

Service Revenue Growth: Expected to grow in the low single-digit range for the full year.

Adjusted EBITDA Growth: Anticipated to grow in the 3%-4% range for the full year.

Adjusted EPS Guidance: Expected to be in the range of $2.25-$2.35 for the full year.

Advanced Connectivity Segment: Service revenue growth expected to exceed 5% with EBITDA growth of over 6%.

4Bad News, Challenges, or Points of Concern

Legacy Segment Decline: Service revenues in the legacy segment fell 26% year-over-year, with EBITDA down about 46%.

Fiber ARPU Pressure: Fiber ARPU declined 1.3%, primarily due to the impact of the Lumen acquisition, although it was flat when excluding Lumen customers.

Market Competition: Concerns about potential competition from satellite services like Starlink, although AT&T aims to differentiate through its fiber and converged offerings.

5Notable Q&A Insights

Customer Behavior: Churn is improving, attributed to better convergence strategies and less device upgrading, which helps maintain customer loyalty.

Pricing Strategy: Plans to balance pricing across fiber offerings while focusing on overall revenue growth rather than maximizing ARPU for individual products.

Future M&A Speculation: No immediate plans for M&A were indicated, with focus on enhancing existing services and infrastructure.

AI Traffic Monetization: AT&T aims to leverage increased AI-driven traffic by enhancing network capacity and service differentiation. Overall, AT&T demonstrated strong operational momentum in Q2 2026, with significant growth in its Advanced Connectivity segment and a clear strategy for future expansion, despite challenges in its legacy business and competitive pressures.