AT&T Earnings Call: Fiber Push Drives Growth Outlook

At&t Inc ((T)) has held its Q1 earnings call. Read on for the main highlights of the call.

AT&T’s latest earnings call struck a notably upbeat tone, with management emphasizing record customer growth in advanced Internet, robust revenue and EPS gains, and a reaffirmed multiyear growth and capital return plan. While executives acknowledged pressure from accelerated capex, margin headwinds and the drag from shrinking legacy businesses, they framed these as near-term trade-offs to cement a fiber-first, convergence-driven future.

Record Advanced Internet Net Adds Underscore Demand

AT&T reported 584,000 total fiber and fixed wireless advanced Internet net additions in the quarter, marking its best-ever first quarter and the sixth straight period with more than half a million net adds. Advanced home Internet alone delivered 512,000 net additions, split between 273,000 new fiber customers and 239,000 Internet Air adds, reinforcing sustained demand across both technologies.

Closing Lumen Deal Early Boosts Fiber Scale

The company closed its large Lumen fiber acquisition ahead of schedule, immediately adding about 1.1 million fiber customers and more than 4 million fiber locations to its footprint. Early integration metrics are encouraging, with sales activity in the acquired territories running well above pre-transaction levels, suggesting meaningful upside once operations and investments ramp.

Advanced Home Internet Revenues Surge

Advanced home Internet service revenues grew 27.3% year over year, powered by strong organic growth and two months of contribution from the newly acquired geographies. Management noted that those acquired areas contributed roughly 650 basis points to the reported growth rate, highlighting both the underlying momentum and the boost from inorganic expansion.

Top-Line, EBITDA and EPS All Move Higher

Consolidated total revenues increased 2.9% from a year earlier, with service revenues up 1.4% as the core connectivity businesses expanded. Adjusted EBITDA rose 2.3% and adjusted EPS climbed to $0.57, nearly 12% higher year over year, underscoring operating leverage even as the company invests heavily in network buildouts.

Advanced Connectivity Segment Extends Its Lead

AT&T’s Advanced Connectivity segment, which accounts for more than 90% of revenues, continued to show healthy momentum, with service revenues up 3.6% and EBITDA up 5.6%. Within that, business fiber and advanced connectivity service revenues rose 7.2%, and segment EBITDA margin improved by 30 basis points, signaling solid profitability in the growth engine.

Convergence With Wireless Deepens Customer Loyalty

The company highlighted a growing convergence advantage, with 42% of advanced home Internet customers also choosing AT&T Wireless services. Excluding the acquired base, organic convergence approached about 45%, more than three percentage points higher than a year ago and the fastest pace yet, and these converged customers show higher satisfaction scores and longer retention.

Fiber Buildout Targets Reinforce Long-Term Strategy

AT&T now reaches more than 90 million customer locations with advanced Internet via fiber or 5G, and fiber alone covers over 37 million locations. Management reiterated its ambition to surpass 60 million fiber locations by the end of the decade, including an expected roughly 8 million location reach expansion in 2026 that incorporates newly acquired territories.

Strong Liquidity and Aggressive Capital Returns

Free cash flow came in at $2.5 billion, landing at the high end of the company’s outlook range despite heavy capital spending. AT&T ended the quarter with $12 billion in cash and $19 billion of term loan capacity, while returning $4.3 billion to shareholders and reaffirming its intention to exceed $45 billion in capital returns through 2028, including buybacks.

EBITDA Margin Compression and Comparison Noise

Despite EBITDA growth, the adjusted EBITDA margin slipped 30 basis points year over year to 37.4%, as mix and one-off factors weighed on percentage metrics. Management reminded investors that the prior-year quarter benefited from roughly $100 million of vendor settlement gains, making year-over-year comparisons tougher and masking underlying progress.

Higher Capex Weighs on Free Cash Flow

Free cash flow declined by about $600 million compared with last year, largely because capital investment jumped to $5.1 billion as AT&T accelerated fiber deployment. Executives framed the elevated capex as an intentional, temporary drag designed to secure long-term growth and cash flow from a denser, higher-quality fiber network.

Leverage Temporarily Higher After Acquisitions

Net debt to adjusted EBITDA rose to 2.71 times from 2.53 times at year-end, reflecting the balance-sheet impact of closing the Lumen deal. Management expects leverage to climb to around 3.2 times following the EchoStar transaction before gradually falling to roughly 3.0 times by the end of 2026 and back toward the 2.5 times target within about three years thereafter.

Legacy Revenue Declines Remain a Drag

The company’s legacy businesses continue to shrink rapidly, with legacy service revenues down about 25% year over year and legacy EBITDA falling roughly 40%. As AT&T winds down copper-based and other outdated services, shutdown costs and migration lag are producing steeper EBITDA declines than revenue declines, a dynamic that management expects to persist for several more quarters.

Newly Acquired Markets Dilute Near-Term EBITDA

AT&T cautioned that the acquired Lumen geographies did not make a material contribution to EBITDA in the first quarter and are unlikely to do so this year. These areas are absorbing elevated investment to stand up operations and accelerate fiber builds, making them near-term dilutive but strategically important for future growth and margin expansion.

Equipment Mix Adds to Margin Headwinds

High single-digit growth in low-margin equipment revenues added incremental pressure to consolidated margins, even as higher-margin service revenues continued to grow. The combination of this equipment mix shift and the inclusion of lower-EBITDA acquired territories tempered overall margin expansion, highlighting the importance of scaling fiber and converged services.

Guidance Reaffirmed With Modest Growth and Strong Cash

AT&T reaffirmed its 2026 targets, guiding consolidated service revenue growth in the low single digits and adjusted EBITDA growth of 3% to 4%, alongside full-year adjusted EPS of $2.25 to $2.35. The company expects free cash flow of at least $18 billion this year, with second-quarter FCF projected at $4.0 to $4.5 billion, and sees Advanced Connectivity delivering 5%+ service revenue and 6%+ EBITDA growth while wireless service revenue rises 2% to 3%.

AT&T’s earnings call portrayed a company in transition but with its strategic compass firmly set on fiber, convergence and disciplined capital returns. Operational momentum in advanced Internet and connectivity is offsetting legacy declines and investment drag, and management’s willingness to maintain guidance and long-term leverage targets gives investors a clearer roadmap through the near-term volatility.