AT&T’s Fiber Push Gains Speed, But Valuation Lags Future Potential

Forward-Looking Analysis

Analysts project AT&T’s 2025Q4 earnings will reflect progress in its convergence strategy, where 41% of fiber customers also use wireless services, driving lower churn and higher lifetime value. The company added 550,000 fiber and Internet Air subscribers in Q3 2025, surpassing prior-year growth. Strategic acquisitions of EchoStar (spectrum) and Lumen (fiber assets) are expected to accelerate fixed wireless expansion and fiber penetration, targeting 60 million locations by 2030. TIKR’s valuation model forecasts 1.9% annual revenue growth and 21.5% operating margins, projecting a stock price of $25 within 1.9 years. However, near-term P/E compression to 9.3x is anticipated due to transition costs, though margin expansion and free cash flow growth could justify a higher multiple long-term. Analysts’ consensus price target of $29.48 implies a 25% upside from current levels, with scenarios ranging from 1.4% to 9.7% annual returns depending on execution.

Historical Performance Review

AT&T reported Q3 2025 results: revenue of $30.71 billion, net income of $9.68 billion, EPS of $1.29, and gross profit of $18.89 billion. Consumer Wireline EBITDA margins expanded 350 basis points, driving 15% EBITDA growth. Fiber subscriber growth accelerated, with 10 million premium fiber customers, and fixed wireless added 270,000 Internet Air subscribers, doubling year-over-year. Legacy service declines remain moderate, offset by growth in advanced connectivity services.

Additional News

Recent developments highlight AT&T’s fiber expansion and convergence momentum. The company passed 31 million fiber locations in Q3 2025, with 60 million expected by 2030. Converged customers now represent 41% of fiber households, up 180 basis points from prior-year. The EchoStar spectrum acquisition will cover two-thirds of the U.S. population by mid-2026, boosting Internet Air scalability. Analysts’ price targets range from $20 to $34, with a consensus of $29.48. Institutional investors like Vanguard and State Street increased holdings, while some hedge funds reduced stakes. AT&T’s P/E of 7.5x is below its fair value of 12.1x, suggesting undervaluation relative to future cash flow potential.

Summary & Outlook

AT&T’s financial health is bolstered by fiber expansion, margin expansion, and strategic acquisitions. Growth catalysts include convergence-driven customer retention, fixed wireless scalability, and Lumen/EchoStar integration. Risks include competitive pressure in wireless and legacy service declines. The company’s transition to a high-margin connectivity model supports a bullish outlook, with a clear path to $16 billion in annual free cash flow. While near-term P/E compression is likely, long-term margin and revenue trends justify a higher multiple. Analysts’ consensus and valuation models indicate upside potential, making AT&T a compelling play for investors focused on telecom infrastructure growth.