AT&T Q3 Earnings Result 2026- Market Insight Briefing

1. Executive Summary

2. Q3 2026 Performance Snapshot

* Non-GAAP measure as defined by AT&T. Sources: Release p.1–2; Slides p.3.

Business priorities stated by AT&T

• Grow converged customer relationships
• Operate with greater efficiency
• Invest for durable growth and attractive returns

3. Consolidated Financial Results

Revenue rose to $32.3B from $30.7B, driven by Advanced Connectivity wireless service and equipment revenue and by fiber revenue, including the first-quarter acquisition of Lumen's Mass Markets fiber business. Latin America revenue rose on favorable FX and postpaid growth. Lower Legacy revenue was the offset as copper is decommissioned. Equipment revenue grew 12% YoY, which dilutes margins, yet adjusted EBITDA margin still reached 38.7%. Reported

Income statement and cash flow detail

• ReportedOperating expenses were $28.2B (vs $24.6B), driven by the $2.6B non-cash Mexico impairment, employee separation charges, higher wireless equipment costs, higher advertising and higher bad debt from subscriber growth, plus incremental customer costs from the acquired fiber business. Partly offset by transformation savings and apportioned legal settlements in the prior-year period. Depreciation was lower from fully depreciated legacy assets.
• ReportedOperating income $4.1B (vs $6.1B); adjusted operating income* $7.6B (vs $6.6B), i.e. $4.1B plus $3.5B of adjustments including the Mexico impairment. 3Q25 adjustments were $435M.
• ReportedIncome from continuing operations $1.3B (vs $9.7B); attributable to common stock $0.9B (vs $9.3B). The year-ago quarter included the gain on the DIRECTV sale ($5.5B in other income).
• ReportedAdjusted EBITDA reconciliation: $1.3B income from continuing operations + $1.4B tax + $2.0B interest + $(10)M equity in affiliates − $0.6B other income + $5.0B D&A + $3.4B adjustments = $12.5B. 3Q25: $9.7B + $1.0B + $1.7B + $(20)M − $6.3B + $5.3B + $425M = $11.9B.
• ReportedCash from operating activities (continuing operations) $10.5B vs $10.2B; the year-ago period included voluntary pension contributions, and the increase also reflects timing of working-capital payments.
• ReportedCapital expenditures $5.1B (vs $4.9B); vendor financing payments $0.5B (vs $0.4B); capital investment* $5.6B (vs $5.3B), up about $300M YoY.
• ReportedInterest expense rose to $1,979M from $1,700M a year earlier; interest during construction was $150M (vs $56M). D&A was $4,978M (vs $5,317M).
• ReportedTotal employees: 127.2K at 30 Sep 2026 (vs 135.7K a year earlier).
• ReportedDiscontinued operations (Forged Fiber 37): loss of $37M in 3Q26 (net of tax).

4. Advanced Connectivity Segment

The Advanced Connectivity segment (5G and fiber-based wireless, internet and advanced connectivity services) drove the quarter: revenue $29.5B (+7.2%), service revenue $23.9B (+6.1%), operating income $7.6B (+18.9%, margin 25.9% vs 23.3%) and EBITDA* $12.3B (+7.3%, up $837M; margin flat at 41.8%). Reported

Drivers. Wireless service grew on retail subscriber growth in underpenetrated categories and converged accounts, and on pricing actions, partly offset by promotional discounts on additions. Advanced home internet growth includes the acquired mass markets fiber business plus higher fiber and AT&T Internet Air revenue. Business fiber grew on fiber and fixed wireless; transitional revenue fell on lower VPN and wholesale demand. Opex rose 3.6% on equipment costs, advertising, acquired-fiber customer costs and bad debt, partly offset by transformation savings and lower depreciation. Reported

Consumer and Business relationships

Supplemental Mobility results (disclosed for a transitional period through 3Q26): revenue $23.2B (service $17.8B, equipment $5.4B), operating income $7.9B (33.9% margin), EBITDA $10.4B, EBITDA margin 44.8% and EBITDA service margin 58.6% (vs 57.3%). Business Advanced Connectivity operating income was $288M versus a $215M loss a year ago. Reported

5. Customers, Convergence and Network Metrics

• ReportedWireless base: 110.2M retail wireless subscribers, including 75.3M postpaid phone, 16.5M prepaid phone and 18.5M other. Wireless net adds 537K; phone net adds 358K; prepaid phone net adds −21K; other net adds 179K.
• ReportedChurn: phone 1.19%, postpaid phone 0.92% (stable YoY), prepaid phone 2.41% (vs 2.63%).
• ReportedARPU: postpaid phone $58.90 (vs $56.64); phone $54.93; prepaid phone $36.88. Consumer postpaid wireless ARPA $163.07 (vs $155.51) on 25.9M accounts. The CFO attributed ~4% postpaid phone ARPU growth to new and refreshed rate plans and back-book pricing management. Call
• ReportedOther wireless metrics: postpaid phone gross adds and upgrades 5.8M; postpaid upgrade rate 3.7% (vs 4.1%); FirstNet connections 8.7M (vs 7.8M).
• ReportedAdvanced home internet: 14.8M connections; 696K net adds (416K AT&T Fiber, 280K Internet Air), a record for the combined services. AHI ARPU $68.55; AT&T Fiber ARPU $70.35; Internet Air ARPU $57.97.
• CallFiber ARPU declined 4% YoY due to introductory pricing traction, converged-account discounts and lower-ARPU Quantum-brand customers in the acquired Lumen territories. A similar YoY decline is expected in 4Q26 (slight sequential moderation), with relatively stable ARPU over the three-year outlook as growth is driven by customer additions rather than price. AT&T also noted a meaningful fiber price increase last December.
• CallGo-to-market: tiered introductory fiber pricing to anchor the home early, simpler converged plans, digital experiences and "America's Best Guarantee"; AT&T says it is "shunning uneconomical device offers". Advanced home internet net adds are expected to moderate in 4Q on seasonal demand.

6. Legacy Segment and the Copper Exit

Legacy (copper-based voice and data) revenue fell 24.5% to $1.5B on lower demand as the network is decommissioned. Direct operating expenses fell 23.5% to $1.0B on lower personnel and other costs and lower fulfillment cost amortization, partly offset by favorable vendor settlements in the prior-year period. Operating income and EBITDA* were $498M, down $181M (margin 32.8% vs 33.7%). Reported

• CallCustomers are being moved to Phone Advanced, Fiber and Internet Air. AT&T sees a meaningful medium-term opportunity to monetize copper embedded in the legacy network.
• GuidanceLegacy service revenue to decline 20%+ in 2026 and be immaterial by the end of 2029. Legacy EBITDA is expected to turn negative after 2027 until direct copper costs are substantially eliminated. Gaining approvals could delay decommissioning beyond 2029.
• CallAbout $100M of unfavorable vendor dispute settlements in 4Q26 will mainly hit the Legacy segment. Copper retirement is integral to the $4B annual consolidated cost-savings target by end-2028, which AT&T says it remains on pace to achieve.

7. Latin America and the Mexico Sale

On 13 October 2026, AT&T agreed to sell its Mexico wireless business, the entire Latin America segment, to Grupo Televisa and Fintech Holdings. Closing is expected in 1Q27. Held-for-sale accounting was applied as of 30 September 2026, producing a $2.6B non-cash impairment recorded in Corporate and Other (no impact on segment results); the business remains in continuing operations and in the Latin America segment until sale. Announced

Segment revenue rose 13.2% to $1,240M (service $798M, +14.7%; equipment $442M, +10.8%) on favorable FX and postpaid growth. Operating expenses rose 11.4% on unfavorable FX, bad debt and equipment costs. Operating income was $45M (up $23M); EBITDA* $236M (up $37M, +18.6%). Reported

Mexico ARPU rose to $9.24 (vs $7.78) and churn improved to 4.45% (vs 5.69%); net adds were −102K. On the call, the CFO said Mexico wireless accounts for $300–400M of the ~$1B capex reduction and that its absence will reduce free cash flow by about $400–500M annually. Proceeds will help pay down debt in 2027. ReportedCall

8. Capital Allocation, Debt and Shareholder Returns

• ReportedTotal debt $159.6B and net debt* $149.8B, both up sequentially on the closing of the EchoStar spectrum transaction. Net debt rose about $23B QoQ (the ~$23B spectrum purchase closed at the end of July). FX lowered the debt balance by $0.3B in the quarter ($1.2B YTD).
• ReportedInvesting cash flow included $22.95B of acquisitions, net of cash acquired; financing included $21.8B of long-term debt issued, $4.8B repaid, and $3.0B of short-term borrowings issued and repaid in the quarter. Debt ratio 56.1% (vs 52.0%).
• Reported$4.8B returned in 3Q26 including $2.8B of buybacks; $7B+ repurchased YTD. Shares outstanding fell to 6,761M (vs 7,109M). Quarterly dividend declared: $0.2775 per share.
• GuidanceAbout $10B of buybacks targeted in 2026; $24B+ of repurchases and the $1.11 annualized dividend maintained within $45B+ of returns over 2026–2028.
• GuidanceNet debt/adjusted EBITDA expected back to the ~2.5x target range during 2029, through EBITDA growth and debt repayment funded by excess cash flow and 2027 proceeds from the Fiber JV close and the Mexico sale.

9. Corporate Announcements and Strategic Transactions

Management says these agreements, together with industry-leading capital investment and the EchoStar and Lumen acquisitions, sharpen AT&T's US investment focus and position it to hold the leading share of advanced connectivity service revenue by the end of the decade. Call

10. Financial Outlook and Guidance

AT&T raised its 2026 adjusted EPS outlook and lowered its long-term capital investment outlook. The long-term outlook is on a continuing-operations basis, excludes Forged Fiber 37 discontinued operations, and for 2027–2028 excludes AT&T Mexico. Guidance

Near-term commentary from the call

• Call4Q26 adjusted EBITDA growth will be affected by higher marketing and customer-acquisition costs (an extended device launch cycle and a larger fiber go-to-market opportunity) and ~$100M of unfavorable vendor dispute settlements, mainly in Legacy.
• CallThe ~$1B lower annual capital investment comes from $300–400M of Mexico capex with the rest from build efficiencies (scale, long-term partner contracts). Savings will be reallocated mainly to working capital for customer acquisition (devices paid upfront, collected over time) and higher interest payments.
• CallThe ~$800M employee separation charge will affect cash mainly in 2027. Higher cash interest reflects higher gross debt and rates. More detail on the $19B+ 2027 FCF drivers will come with 4Q results early next year.
• Reported2026 reported EPS adjustments are expected to include ~$0.3B of acquisition-related amortization (preliminary), a non-cash mark-to-market benefit-plan gain/loss (a significant item that is not reasonably estimable) and other items. Estimated pre-tax prior service credit amortization is $1.6B for 2026, $0.7B for 2027 and under $0.1B for 2028 (vs $1.9B in 2025).

11. Earnings Call: Management Remarks and Analyst Q&A

Call on 21 October 2026 with John Stankey (Chairman and CEO), Pascal Desroches (CFO) and Brett Feldman (Treasurer and Head of IR); Deputy CFO Jennifer Biry also attended. Call

Strategy points from prepared remarks

• Best quarter for Advanced Connectivity subscriber additions in more than four years; second straight quarter of adjusted EBITDA growth above 5% and adjusted EPS growth above 20%.
• In dense urban and suburban areas where AT&T deploys both fiber and 5G at scale, management believes competitors "cannot and will not match" its operating proficiency, network performance or converged value proposition.
• By the end of the decade AT&T expects to run "the most advanced and technologically open communications network in the US", built on dense metro fiber and a nationwide wireless network that already works at scale indoors and out.
• AI-grade connectivity: high-margin services and network intelligence layered on fiber across business endpoints, metro aggregation and managed multi-vendor cloud ingress and egress.
• Second consecutive quarter of YoY growth in business Advanced Connectivity service revenue, helped by better sales execution across direct, indirect and digital channels.

12. What to Watch Next (Company-Stated Milestones)

13. Notes, Definitions and Sources

• Non-GAAP measures (*): adjusted EPS, adjusted operating income, EBITDA, EBITDA margin, adjusted EBITDA, free cash flow, capital investment, net debt and net debt-to-adjusted EBITDA as defined by AT&T. Reconciliations are in the earnings release, slides pp.10–13 and Form 8-K dated 21 October 2026.
• Converged customers: AT&T Fiber or Internet Air connections that are also primary wireless account holders with consumer postpaid phone service. The convergence rate is converged customers divided by advanced home internet connections. Latest-quarter convergence metrics are subject to revision.
• Total fiber locations reached: AT&T Owned and Operated locations plus AT&T Fiber Ventures locations (served by the acquired mass markets fiber business/Forged Fiber, Gigapower and other open-access providers). Consumer fiber penetration = AT&T Fiber connections / consumer fiber locations served.
• Churn is the average of monthly churn rates. ARPU is subscriber revenue divided by average subscribers. Upgrade rate is postpaid upgrades divided by beginning-of-period postpaid subscribers.
• Corporate and Other EBITDA was $(559)M in 3Q26; it includes parent support costs, securitization fees, the value portfolio, and items for which segments are not evaluated.
• Derived figures (YoY percentages not printed by AT&T, ARPU changes, the Internet Air convergence split) are NextGComm arithmetic on reported data.

Sources (all AT&T, 21 October 2026):

1. AT&T Inc., "AT&T Delivers Strong Third-Quarter 2026 Results with Its Best Consolidated Service Revenue Growth in More Than Four Years" (earnings release).
2. AT&T Inc., 2026 3rd Quarter Earnings presentation (13 slides).
3. AT&T Inc., Financial and Operational Trending Schedule, 3Q26 (PDF, 17 pages, and Excel workbook).
4. AT&T Inc., Q3 2026 Earnings Call edited transcript (LSEG StreetEvents), 21 October 2026, 8:30 a.m. ET.

This briefing summarizes company-published materials and contains forward-looking statements made by AT&T management that are subject to risks and uncertainties; actual results may differ materially. AT&T disclaims any obligation to update these statements. AT&T and the Globe logo are registered trademarks of AT&T Intellectual Property. This is not investment advice. NextGComm Market Insight Division, 24 October 2026.