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    T
    Earnings call· Dec 2025(Q4 FY25)

    AT&T INC. T

    Jan 28, 2026 Source

    Executive summary

    AT&T Q4 FY25 — Strong Growth in Advanced Connectivity and Shareholder Returns

    AT&T delivered a strong Q4 FY25, meeting or exceeding full-year guidance, driven by robust subscriber growth in 5G and fiber. The company is strategically expanding its advanced connectivity footprint through organic builds and acquisitions, aiming for accelerated EBITDA and EPS growth through 2028. Management emphasized a disciplined, investment-led approach to capitalize on convergence and cost transformation, while also committing to significant shareholder returns.

    Highlights

    6

    • Met or exceeded all consolidated full year financial guidance for 2025.

    • Reported over 1.5 million postpaid phone net adds for the fifth consecutive year.

    • Achieved over 1 million AT&T Fiber net adds for the eighth consecutive year.

    • Accelerated AT&T Internet Air growth with 875,000 net adds, more than doubling its customer base.

    • Returned over $12 billion to shareholders in 2025, a 50%+ increase from 2024.

    • Consolidated adjusted EBITDA grew over 4% in Q4 FY25, with margins expanding by 20 basis points.

    Concerns

    4

    • Postpaid phone ARPU growth was impacted by a 90 basis points headwind in 2025 due to device offer amortization, with a similar headwind expected in 2026.

    • Consumer Wireline revenue growth slowed in the quarter due to pricing adjustments and bundling discounts.

    • Net debt-to-adjusted EBITDA is expected to increase to approximately 3.2x immediately following the closing of Lumen and EchoStar transactions.

    • Q1 FY26 adjusted EBITDA growth is expected to be below the full-year run rate due to upfront investments for Lumen/EchoStar integration and fiber deployment, and lapping $100 million of one-time benefits from Q1 FY25.

    Guidance & targets

    27
    CategoryTargetConfidence
    Annual fiber construction pace
    4 million new locations run rate
    high materiality
    High
    Fiber customer locations reached
    Over 40 million
    high materiality
    High
    Annual fiber expansion
    Approximately 5 million locations annually
    high materiality
    High
    Average deployment cost per fiber passing increase
    Approximately 2% annually
    medium materiality
    Medium
    Total capital returned to shareholders
    $45 billion plus
    high materiality
    High
    Total wireless service revenue growth
    2% to 3% range annually
    high materiality
    High
    Postpaid phone ARPU growth headwind from device amortization
    Approximately 90 basis points
    medium materiality
    High
    Advanced home Internet service revenue organic growth
    20% plus annually
    high materiality
    High
    Advanced home Internet service revenue reported growth
    Exceed 30%
    high materiality
    High
    Advanced Connectivity business service revenue CAGR
    Low single-digit
    medium materiality
    Medium
    Annual cost savings target
    Additional $4 billion
    high materiality
    High
    Consolidated adjusted EBITDA growth
    3% to 4% range
    high materiality
    High
    Consolidated adjusted EBITDA growth
    5% or better
    high materiality
    High
    Adjusted EPS
    $2.25 to $2.35 range
    high materiality
    High
    Adjusted EPS CAGR
    Double-digit
    high materiality
    High
    Adjusted EPS dilution from M&A
    Approximately $0.05
    medium materiality
    High
    Effective tax rate
    22% range
    medium materiality
    High
    Depreciation and amortization expense
    About $20 billion annually
    medium materiality
    High
    Free cash flow
    $18 billion plus
    high materiality
    High
    Free cash flow growth
    $1 billion plus
    high materiality
    High
    Free cash flow growth
    Approximately $2 billion
    high materiality
    High
    Adjusted EBITDA growth
    Below full year run rate
    medium materiality
    High
    Free cash flow
    $2 billion to $2.5 billion range
    medium materiality
    High
    Net debt-to-adjusted EBITDA
    Approximately 3.2x (post-close), declining to approximately 3x
    high materiality
    High
    Net debt-to-adjusted EBITDA target
    2.5x range
    high materiality
    High
    Share repurchases
    Approximately $8 billion
    high materiality
    High
    Annual cash taxes
    Approximately $1 billion to $1.5 billion
    medium materiality
    High

    Operational metrics

    29
    Adjusted EPS
    $0.52Over 20% growth YoY
    Q4 FY25

    Above 2025 guidance, primarily due to lower-than-expected effective tax rate and solid adjusted EBITDA growth.

    Adjusted EPS
    $2.12Nearly 9% growth YoY
    FY25

    Above 2025 guidance at the higher end of $1.97 to $2.07 range.

    Cash taxes (excluding DIRECTV)
    $1.1 billionApproximately $400 million below expected range
    FY25

    Benefit offset by accelerated pension funding.

    Cash contribution to employee pension plan
    $1.15 billion
    2025

    Expect to contribute an additional $350 million in 2026, remaining on track to contribute $1.5 billion of cash tax savings from One Big Beautiful Bill Act by end of 2026.

    Advanced Connectivity revenue
    About 90%
    2025

    On a recast basis for new segment reporting.

    Advanced Connectivity adjusted EBITDA
    Over 95%
    2025

    On a recast basis for new segment reporting.

    Consolidated adjusted EBITDA growth
    Over 3% annually
    Past 2 years

    Compared to Advanced Connectivity EBITDA growth of over 6% annually.

    Advanced Connectivity adjusted EBITDA growth
    Over 6% annually
    Past 2 years

    Considerably faster than consolidated adjusted EBITDA growth.

    Advanced Connectivity EBITDA margin
    Expanded
    Past 2 years

    Expanded each year, highlighting profitable growth across 5G and fiber services.

    Advanced home Internet service revenue organic growth
    20% plus annually
    Past 2 years

    Consistent with expected annual growth through 2028.

    Cost savings
    $1 billion
    2025

    Achieved through operating efficiencies, reductions in legacy operations, and support costs.

    Net debt-to-adjusted EBITDA
    2.53x
    End of 2025

    Achieved target of 2.5x range during H1 2025.

    Cash and cash equivalents
    $18.2 billion
    End of 2025

    Balance at the end of 2025.

    Total capital returned to shareholders
    $12 billionOver 50% increase from 2024
    2025

    Returned through dividends and buybacks.

    Share repurchases authorization
    $10 billion
    Future

    Additional authorization after current buybacks are completed, providing necessary approvals through approximately end of 2027.

    Fiber convergence rate
    42%200 basis points YoY increase
    Q4 FY25

    Fastest annual increase since tracking this metric. Target of 50% in the near term, with potential for 70-80% long-term.

    Postpaid phone subscribers share in fiber areas
    10 percentage points higher
    Current

    Estimated share in areas where fiber is offered compared to areas without fiber.

    Lumen fiber network customer penetration
    25%
    Current

    Well below AT&T Fiber penetration of 40%.

    Lumen fiber network wireless service attach rate
    Fewer than 20%
    Current

    Less than half of AT&T's current fiber footprint convergence rate.

    Copper-based services discontinuation
    85%
    Current

    Stopped sales of targeted legacy copper-based services.

    Copper-based services discontinuation approval
    More than 30%
    By end of 2026

    FCC approved applications to discontinue copper-based services.

    Adjusted EBITDA growth
    Over 4%
    Q4 FY25

    Consolidated adjusted EBITDA growth.

    Adjusted EBITDA margin expansion
    20 basis points
    Q4 FY25

    Consolidated adjusted EBITDA margin expansion.

    Cash tax outlook
    $1 billion to $1.5 billion
    Annually through 2028

    Primarily reflects further assessments of expected savings due to legislation.

    Delayed draw term facility
    $17.5 billion
    Q4 FY25

    Closed during Q4 FY25 to support liquidity for acquisitions.

    Postpaid phone net adds
    Over 1.5 million
    FY25

    Fifth consecutive year.

    AT&T Fiber net adds
    Over 1 million
    FY25

    Eighth consecutive year.

    AT&T Internet Air net adds
    875,000
    FY25

    More than doubled customer base from beginning of year.

    Combined AT&T Fiber and Internet Air net adds
    Over 0.5 millionNearly 30% growth vs H2 2024
    Q3 & Q4 FY25

    Achieved in each of the past two quarters, reflecting improved growth of advanced home Internet connections.

    Industry KPIs

    5
    MetricValueDetails
    Postpaid arpa vs ARPU—
    Postpaid phone net addsOver 1.5 millionnet adds
    Broadband fwa net adds split—
    Share buyback capital returned$12 billionUSD
    Net debt EBITDA deleveraging path2.53xx

    Deals & partnerships

    3
    EchoStarAcquisition of spectrum licenses

    The transaction is viewed as preemptive and opportunistic, allowing for more strategic future spectrum acquisitions.

    LumenAcquisition of fiber assets and build capabilities

    The acquired network has only 25% customer penetration and fewer than 20% wireless service attach rate, presenting significant growth opportunity.

    Equity partnerCo-investment in acquired Lumen fiber assets

    This partnership is expected to help manage the net debt-to-adjusted EBITDA ratio post-acquisitions.

    Risks & headwinds

    4
    Headwind to postpaid phone ARPU growth from device offer amortization2025 and 2026

    Approximately 90 basis points in 2025, similar expected in 2026.

    Mitigation: Balanced by gains in underpenetrated categories and growth in converged customer relationships, which have lower churn and purchase additional services.

    Slowing growth in Consumer Wireline revenueQ4 FY25

    Not explicitly quantified, but noted as a slowdown.

    Mitigation: Strategic pricing adjustments and bundling discounts to manage customer base and drive convergence, leading to lower churn over time.

    Upfront investments for M&A integration and fiber deploymentQ1 FY26

    Expected to cause Q1 FY26 adjusted EBITDA growth to be below full-year run rate, and Q1 FY26 FCF in $2 billion to $2.5 billion range.

    Mitigation: These are necessary upfront investments to drive long-term growth and scale execution of strategy.

    Increased net debt post-acquisitionsImmediately post-close (early 2026)

    Net debt-to-adjusted EBITDA expected to increase to approximately 3.2x immediately following Lumen and EchoStar closings.

    Mitigation: Expected to decline to approximately 3x by year-end 2026 and return to 2.5x range within approximately 3 years through EBITDA growth, free cash flow, and equity partner proceeds.

    What to watch in Q1 FY26

    5

    Lumen/EchoStar transaction closing and initial integration impact

    Q1 FY26
    CurrentExpected to close early 2026
    TargetClosed, with initial financial impacts on Q1 results

    Why it matters

    These acquisitions are key building blocks for expanding AT&T's addressable market and are expected to cause upfront costs impacting Q1 EBITDA and FCF.

    We continue to expect both these transactions to close early this year. [...] In the first quarter of this year, we expect adjusted EBITDA growth to be below the run rate we expect for the full year with free cash flows in the $2 billion to $2.5 billion range.

    Q&A highlights

    6

    Inquired about the long-term potential of the 42% fiber convergence rate and the ability to replicate this success in the acquired Lumen territories.

    John Stankey expects the convergence rate to continue improving, targeting 50% initially and potentially reaching 70-80% long-term, driven by industry realignment. He noted that while Lumen territories are expected to have lower terminal penetration, early Gigapower performance suggests potential upside.

    “I don't expect it to stop there. You've heard me say many times that I think we're in a structural realignment of the industry. And ultimately, this is going to be an industry of converged providers that operate assets that allow for consolidated services to businesses.”

    asked by John Hodulik · answered by John Stankey

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Focus on Advanced Connectivity

    AT&T is executing an investment-led strategy to be the best advanced connectivity provider, focusing on 5G and fiber. This involves significant organic expansion, with fiber passings expected to reach over 40 million by end of 2026 and expand by 5 million annually thereafter, alongside strategic acquisitions like Lumen fiber assets and EchoStar spectrum to expand market reach.

    02

    Convergence as a Winning Play

    The company's convergence strategy, combining fiber and wireless services, is driving improved customer relationships. The fiber convergence rate increased 200 basis points year-over-year to 42%, with converged customers exhibiting lower churn and higher value. This strategy is credited with a 10 percentage point higher share of postpaid phone subscribers in fiber-served areas.

    03

    Cost Transformation and Efficiency

    AT&T achieved over $1 billion in cost savings in 2025 and targets an additional $4 billion in annual savings by the end of 2028. These efficiencies are driven by leveraging AI, digital customer transactions, and operating leverage from customer base growth, alongside the decommissioning of legacy copper-based services.

    04

    New Segment Reporting for Transparency

    Beginning Q1 2026, AT&T will adopt new segment reporting, separating "Advanced Connectivity" (domestic 5G and fiber) from "Legacy" (copper-based services). This aims to provide greater transparency into the returns on growth investments and the performance of the core growth businesses, which drove 90% of revenues and 95% of adjusted EBITDA in 2025 on a recast basis.

    05

    Capital Allocation and Shareholder Returns

    The company is committed to returning $45 billion plus to shareholders through dividends and buybacks from 2026-2028, representing nearly 30% of market cap and over 75% of expected free cash flow. This includes approximately $8 billion in buybacks for 2026, supported by a strong balance sheet and expected deleveraging to the 2.5x net debt-to-adjusted EBITDA range within three years post-acquisition.

    06

    M&A Integration and Market Opportunity

    The acquisitions of Lumen fiber assets and EchoStar spectrum are expected to close early in 2026, significantly expanding the total addressable market. The Lumen acquisition, with its lower customer penetration and wireless attach rates, presents a substantial opportunity for AT&T to apply its convergence strategy and improve market share in home internet and wireless.

    AI-generated summary of the company’s earnings call. Not investment advice.