AT&T Inc. reported second-quarter fiscal 2026 adjusted earnings of $0.65 per share, beating the analyst consensus estimate of $0.59. The company posted revenue of $31.56 billion, an increase of 2.3% from the prior year but slightly below the analyst consensus estimate of $31.80 billion. The telecommunications giant added 432,000 postpaid phone net additions, exceeding Wall Street expectations of 325,264 and up from 401,000 a year earlier. AT&T reaffirmed its FY26 adjusted EPS guidance of $2.25-$2.35, compared to the analyst estimate of $2.32.

Operational Performance

Revenue in the Advanced Connectivity segment, AT&T's largest business, increased 4.1% year over year, supported by 5.1% growth in service revenue. The Legacy segment revenue fell 25.9% as the company phases out its copper network. Latin America revenue rose 16.1%, aided by favorable foreign exchange rates and growth in postpaid wireless subscribers. AT&T added 646,000 high-speed internet customers during the quarter, comprising 367,000 fiber subscribers and 279,000 fixed wireless customers.

Financial Metrics

Adjusted EBITDA increased to $12.34 billion from $11.73 billion in the prior-year quarter. Net income rose to $5.01 billion, compared with $4.86 billion previously. Operating cash flow increased to $10.80 billion from $9.76 billion, while free cash flow rose to $4.67 billion from $4.39 billion. Capital expenditures totaled $5.70 billion during the quarter.

Strategic Outlook

AT&T reiterated its financial outlook for 2026 through 2028, expecting low-single-digit annual service revenue growth. The company reaffirmed adjusted EBITDA growth of 3% to 4% in 2026, improving to 5% or better by 2028. Annual capital investment is expected to be $23 billion to $24 billion between 2026 and 2028. Free cash flow outlook is at least $18 billion in 2026, $19 billion in 2027, and $21 billion in 2028. The fiber network now reaches 38.6 million locations, expected to surpass 40 million by the end of 2026 and exceed 60 million by 2030.

Shareholder Returns

AT&T reaffirmed plans to return more than $45 billion to shareholders through dividends and share repurchases between 2026 and 2028. The company maintained its annualized dividend of $1.11 per share and reiterated plans to repurchase about $24 billion of stock during the period, including approximately $10 billion in 2026.

Analyst Ratings and Price Targets

Ahead of the earnings release, several Wall Street firms revised their expectations. RBC Capital analyst Jonathan Atkin maintained an Outperform rating but lowered the price target to $27 from $31. Scotiabank analyst Maher Yaghi maintained a Sector Perform rating and cut the price target from $31 to $29.25. Wells Fargo analyst Steven Cahall initiated coverage with an Underweight rating and a price target of $18. Barclays analyst Kannan Ventakeshwar maintained an Equal-Weight rating and reduced the price target from $26 to $24. Morgan Stanley analyst Simon Flannery kept an Overweight rating but slashed the price target from $30 to $25. Additionally, Oppenheimer analyst Timothy Horan downgraded the stock from Outperform to Perform.

AT&T expects its Advanced Connectivity Business Service revenue to grow at a low single-digit compound annual growth rate (CAGR) through 2028. The company shared this financial outlook during a conference call, providing investors with a specific timeline for revenue expectations in this business segment.

The guidance covers the performance of the Advanced Connectivity Business Service unit, highlighting a conservative growth trajectory over the next several years. This projection serves as a key metric for stakeholders to evaluate the company's future revenue streams from its connectivity services.