AT&T (T) Q1 FY26 earnings call: guidance and Q&A

How widely will OneConnect roll out, what is its target market, and what impact will it have on subscriptions? Can the improved phone churn trend continue despite pricing increases?

OneConnect is an iterative rollout targeting BYOD customers and those seeking simplicity, aiming to drive churn down by pairing fiber broadband with wireless. It will evolve with more variants over time. The improved churn trend is expected to continue as the strategy of converging customers aligns them to AT&T's asset bases, leading to sustainable growth and profitability.

“the best way for us to manage churn is to converge customers.”

asked by John Hodulik · answered by John Stankey

How does AT&T define 'open' in its network strategy, and how does it impact go-to-market and partnerships? What drives current account growth, and how is ARPA balanced with convergence?

An 'open' network involves opening wireless network aspects to manage supply chain costs and re-engineering the core for software-driven APIs, allowing partners and customers to control traffic. Account growth is primarily driven by converging new customers, especially 1-2 line accounts that are new to both fiber and wireless, and also by Internet Air. This strategy focuses on building a sustainable franchise with high customer lifetime value.

“When it matters, it must be AT&T, and that's how you drive returns over the long haul on that investment strategy and that aggregation of capabilities.”

asked by Michael Rollins · answered by John Stankey

How does AT&T assess the threat from satellite (LEO) in broadband and direct-to-cell, and would it consider MVNOs with emerging players? How do satellite and fixed wireless learnings compare?

AT&T aims to build the best converged network with owned assets, integrating LEO capabilities to close white spaces. While LEO will drive innovation, AT&T is not concerned about it as a broadband threat where fiber is present due to fiber's superior performance and low marginal cost. MVNOs are considered for market segments AT&T cannot reach, with conditions to align with AT&T's long-term goals. The company is working closely with AST SpaceMobile.

“My goal would be that I have a good strong wholesale relationship, and it may not just be one of them, it may be with more than one of them.”

asked by Sean Diffley · answered by John Stankey

How will the EchoStar spectrum acquisition augment the business and generate returns? What is the update on the copper retirement program, its advancements at the FCC, and its cost savings/return implications?

EchoStar spectrum will improve network performance, provide capital efficiency, and expand Internet Air penetration for both business and consumer segments, especially for converged customers. The copper retirement program is progressing well, with 30% of wire centers on a definitive shutdown schedule, aiming for full shutdown by 2030. This will reduce costs, power consumption, and improve security/resiliency, all factored into current guidance.

“The old copper infrastructure does nobody any favors. It sucks a ton of power. We've got buildings being cooled and switches and are running with a nominal number of customers on it.”

asked by David Barden · answered by John Stankey

Will the shift away from device subsidies be gradual or hard? What are the key drivers for EBITDA acceleration in Q2 and beyond, considering Lumin, cost efficiencies, and new plans?

The shift from device subsidies will be gradual, aiming for a more balanced portfolio that emphasizes network value, with OneConnect serving as a foundational capability. EBITDA acceleration in Q2 and beyond will be driven by improved wireless service revenue growth (from converged relationships and pricing actions), scaling Lumin operations for incremental fiber penetration, and ongoing cost efficiencies. Q1 free cash flow is seasonally low due to annual incentive payments and device payments.

“Our portfolio right now is over-indexed on device. And it's not the devices aren't important to customers into certain segments of [indiscernible], they'll continue and remain to be important, but I think we need a more balanced portfolio, that make sure that the customer understands the inherent value of the network underneath the relationship.”

asked by Michael Ng · answered by John Stankey

How does the fading DSL business affect AT&T's view of the broadband market, including fiber volume growth, pricing, and FWA pricing?

The shrinking DSL base means fiber growth is increasingly driven by new accounts rather than DSL migrations. AT&T needs to cater to both premium and value-driven customers, leveraging fiber's low marginal cost for profitable offerings across price points. While achieving 0-40% fiber penetration is strong, reaching 40-50% requires targeting value segments, which may involve some ARPU dilution but is economically rational for adding new accounts.

“getting from 0% to 40% penetration as we build fiber is really important. That's a really good return when we do that... But getting from 40% to 50% is different.”

asked by Peter Supino · answered by John Stankey