AT&T’s Q1 2025 Subscriber Surge: A Strategic Pivot to Fiber Dominance?

The telecommunications landscape is shifting, and AT&T’s Q1 2025 results reveal a company in the midst of a deliberate transformation. With subscriber net additions across wireless and fiber broadband exceeding expectations, AT&T is positioning itself as a dual-force player in a market increasingly dominated by high-speed connectivity and converged services. Let’s dissect the numbers to uncover whether this momentum can translate into sustained investor returns.

Wireless Resilience Amid Industry Turbulence

AT&T’s wireless division delivered 324,000 postpaid phone net additions in Q1 2025, outperforming analyst forecasts of 252,800. This marks the seventh consecutive quarter of year-over-year growth for postpaid adds, a stark contrast to Verizon’s staggering 356,000 postpaid losses during the same period. The churn rate, however, edged up to 0.83%, signaling potential pricing or service quality headwinds. Yet, wireless service revenue rose 4.1% year-over-year to $16.7 billion, driven by a 1.8% increase in postpaid phone ARPU to $56.56.

The resilience in wireless is notable, particularly as AT&T faces pricing pressures from rivals like T-Mobile. Equipment sales also surged 6.9%, suggesting strong demand for newer devices—a trend that could face headwinds if global supply chains or trade tariffs (noted in the earnings call) destabilize.

Fiber: The Engine of Future Growth

The real story lies in AT&T’s fiber broadband expansion. The company added 261,000 net fiber subscribers in Q1, maintaining its 200,000+ quarterly streak for 21 consecutive quarters. While narrowly missing analyst estimates of 264,300, this figure remains impressive against a backdrop of 19% year-over-year growth in fiber revenue to $2.1 billion.

Crucially, AT&T’s fiber network now passes 29.5 million locations, with a target to reach 30 million by mid-2025—a full year ahead of its original plan. The company also aims to expand to 50 million+ locations by 2029 through partnerships like its open-access fiber deals with Gigapower.

The 40% convergence rate—where fiber households also use AT&T wireless—highlights the power of bundled services. This cross-selling not only boosts revenue per household but also deepens customer loyalty, a critical defense against competitors like Dish Network or regional fiber upstarts.

The Financial Imperative: Cash, Capital, and Strategy

AT&T’s capital expenditures in fiber and 5G hit $4.5 billion in Q1, reflecting its commitment to infrastructure. Yet, the company remains financially disciplined: it reaffirmed its $16 billion+ free cash flow target for 2025 and plans to offload its 70% stake in DIRECTV to TPG by mid-year. This move will free up capital for growth initiatives while reducing legacy asset drag.

However, risks linger. The postpaid churn uptick and tariff-related equipment cost pressures underscore vulnerabilities. Additionally, fiber expansion requires sustained investment, and AT&T’s reliance on third-party partnerships (e.g., Gigapower) introduces execution risk.

Conclusion: A Telecom Titan Rebooting for the Fiber Era

AT&T’s Q1 results are a compelling snapshot of a company leveraging its scale to dominate two critical markets: high-end wireless service and fiber broadband. The 21-quarter streak of fiber adds, mid-teens fiber revenue growth, and strategic cross-selling of services suggest a path to long-term profitability.

Crucially, AT&T’s ability to outperform Verizon in wireless while expanding fiber in a market hungry for reliable broadband positions it well. With 40% of fiber customers now also wireless subscribers, the company is building a sticky revenue stream that rivals may struggle to replicate.

Investors should, however, remain cautious. The postpaid churn rise and lingering tariff uncertainties demand close monitoring. Yet, if AT&T can sustain its fiber momentum and curb wireless service attrition, its valuation—currently trading at a forward P/E of 9.2x—could prove undervalued.

In a sector where fiber is the new battleground, AT&T’s Q1 performance signals that it is not just keeping pace but setting the pace. The question now is whether this pace can be maintained as competitors close in.

The data suggests AT&T’s pivot is working—but the finish line is still years away.