AT&T's Q3 2025 Earnings Call: Contradictions Emerge on Broadband Strategy, Churn, ARPU, and M&A Plans

Date of Call: October 22, 2025

Financials Results

• Revenue: Total revenues grew 1.6% year-over-year (consolidated)
• EPS: Adjusted EPS was $0.54 in the quarter, consistent with the prior year

Guidance:

• Full year service revenue growth expected in the low single-digit range.
• Full year adjusted EBITDA growth expected 3% or better.
• Full year adjusted EPS guidance $1.97 to $2.07 (management expects nearer the high end).
• Full year free cash flow expected in the low- to mid-$16 billion range (about $4B in Q4).
• Full year capital investment expected $22.0B–$22.5B (Q4 capex ~ $7.0B–$7.5B).
• Mobility: service revenue +3% or better and mobility EBITDA growth ~3% (full year).
• Consumer fiber broadband revenue growth expected mid- to high-teens; Consumer Wireline EBITDA growth low- to mid-teens.

Business Commentary:

• Broadband Growth and Market Strategy:
• AT&T reported record broadband net adds, with over 550,000 new subscribers to its most advanced broadband services in Q3.
• The growth is attributed to investments in fiber and fixed wireless infrastructure, resulting in the highest total broadband net additions in eight years.

• AT&T plans to reach over 10 million premium AT&T fiber subscribers by the end of 2030, doubling its fiber customer base in less than five years.

• Wireless and Convergence Strategy:

• AT&T achieved over 400,000 postpaid phone net adds in Q3, slightly ahead of the previous year's performance.
• The company is focusing on convergence, with more than 41% of AT&T fiber households also choosing AT&T for wireless, exhibiting lower churn and higher lifetime values.

• The convergence strategy is aimed at enhancing profitability and expanding market share in retail connectivity service revenues.

• Acquisitions and Asset Buildout:

• AT&T's planned acquisitions of spectrum licenses from EchoStar and fiber assets from Lumen are intended to enhance its connectivity portfolio.
• The acquisition of EchoStar's 3.45 GHz spectrum expects to cover nearly 2/3 of the U.S. population by mid-November, enhancing Internet Air availability.

• The integration of these assets is expected to establish a competitive advantage with improved 5G performance and expanded Internet Air deployment.

• Financial Performance and Guidance:

• Total revenues grew 1.6% year-over-year, adjusted EBITDA grew 2.4%, and adjusted EPS was $0.54, consistent with the prior year.
• AT&T maintains a strong financial outlook, reiterating full-year guidance for service revenue growth in the low single digits and adjusted EBITDA growth of 3% or better.
• The company anticipates closing the Lumen transaction early in 2026, which is expected to boost organic growth in revenues and profitability.

Sentiment Analysis:

Overall Tone: Positive

• "We had another solid quarter"; "highest total broadband net adds in more than 8 years"; reiterated full-year guidance (service revenue low-single digit; adjusted EBITDA +3%+); passing >31 million fiber locations and targeting >60 million by end of 2030; "Adjusted EBITDA grew 2.4% and we expanded adjusted EBITDA margins by 30 basis points."

Contradiction Point 1

Broadband Growth Strategy and Competition

It highlights differing approaches to managing competition in the broadband market and the strategic focus on fiber expansion versus fixed wireless, which directly impacts investor expectations and market positioning.

How do you address investor concerns about competitors impacting AT&T’s planned home reach? What impact will a declining DSL base have on AT&T’s broadband strategy and competitive position? - Peter Supino (Wolfe Research, LLC)

2025Q3: AT&T focuses on the scalability of its build engine and leverages its brand effectively to deter competition. AT&T is deliberate about target markets and capital allocation. The DSL base is being replaced with fixed wireless to reduce legacy infrastructure costs. AT&T is confident it can manage broadband growth effectively, and strategic acquisitions will enhance its connectivity portfolio. The company remains focused on its vision to become the best advanced communications provider in America. - John Stankey(CEO)

Can you update us on fixed wireless penetration, financial outlook, and its role in broadband expansion beyond the 50 million target? - Michael Rollins (Citi)

2025Q1: Fixed wireless growth is driven by modernizing the network, opening new geographies, and enhancing yield. The strategy remains focused on using fixed wireless as a replacement for legacy broadband and a supplement to fiber expansion. - John Stankey(Chairman and CEO)

Contradiction Point 2

Impact of Churn and Promotional Activity on Wireless Segment

It involves the company's stance on how churn and promotional activity affect its wireless segment, which is critical for understanding revenue stability and customer retention.

How is AT&T positioned with increased Q4 promotional activity? With ongoing ARPU pressure, will declines continue in wireless and broadband due to convergence? - John Hodulik (UBS Investment Bank, Research Division)

2025Q3: AT&T is confident in its convergence strategy and believes that attracting high-value customers will drive long-term profitability and reduce churn. The focus is on stable market share rather than aggressive promotional tactics. - John Stankey(CEO)

What caused the increase in wireless churn and what are the potential savings from decommissioning 10% of wire centers? - John Hodulik (UBS)

2025Q2: Higher churn this year is due to customers leaving financing contracts and possible demand pull-forward due to tariffs. A competitive market is assumed for planning. - Pascal Desroches(CFO)

Contradiction Point 3

ARPU and Pricing Strategy

It highlights differing perspectives on the impact of ARPU and pricing strategies on market competitiveness, which are critical for understanding AT&T's revenue growth and customer retention strategies.

How is AT&T positioned with increased fourth-quarter promotional activity? With ongoing ARPU pressure, will ARPU declines continue in wireless and broadband as a result of convergence? - John Hodulik(UBS Investment Bank, Research Division)

2025Q3: We view it as a feature rather than a problem. And we're trying to attract high-value customers. The lowest end of the market isn't necessarily the most attractive to us. And as we have said, we're not, we're not in an aggressive promotional mode for our fiber solution. And we think that we have a lot of opportunity to continue to drive penetration, particularly among underserved communities, with messaging around the product that doesn't talk about fiber versus broadband, but talks about the solution that we have that is really -- that people are looking for. And if you have a good solution, that's a combination of fiber and fixed wireless, a bundled offering that we think will be very attractive to our customers. - John Stankey(CEO)

What was the impact of pent-up demand on Q4 fiber growth? How confident are you in fiber ARPU growth for '25? - Benjamin Swinburne(Morgan Stanley, Research Division)

2024Q4: ARPU growth from price increases and product transitions continues. Fiber pricing is competitive and aligned with the market. - John Stankey(CEO)

Contradiction Point 4

M&A Strategy and Strategic Intentions

It involves changes in AT&T's approach to mergers and acquisitions, which are crucial for understanding the company's future growth and expansion plans.

Is AT&T out of the M&A game given recent acquisitions and leverage focus? Can you outline AT&T's succession plan and how it might unfold? - David Barden(New Street Research LLP)

2025Q3: AT&T is focused on exploiting internal assets and executing its strategic plan, rather than pursuing external acquisitions. The management team is focused on operating effectively within the current asset base, and succession plans are not a current priority. - John Stankey(CEO)

Are there direct cost savings from legacy product regulatory filings? What are the next steps if the filing is successful? What is your view on tax reform and the timing for CapEx acceleration? - John Hodulik(UBS)

2024Q4: In terms of areas that we think that we are -- that we are going to be interested in in 2025, we think that there will be opportunities for strategic investments in the assets that help us deliver against some of these growth initiatives we just talked about. It may be in areas where we feel there are some strategic assets that we might be able to get our hands on that we think we can do a better job with than the current owner of that asset. - John Stankey(CEO)

Q&A:

• Question from Peter Supino (Wolfe Research, LLC): The broadband results were really striking... at what point do AT&T investors have to worry about insurgence getting to some of the homes that AT&T plans to pass before you do and if they do, could that alter your plans at all? And within 2 years, your DSL base will be gone or declining much more slowly... what should that mean for your broadband strategy and competitive outlook?
  Response: AT&T is confident in its scale and disciplined capital allocation; will manage overlap by reallocating builds, use fixed wireless where not building fiber, and recalibrate plans when market conditions change.

• Question from Benjamin Swinburne (Morgan Stanley, Research Division): How are you segmenting the market between fiber and fixed wireless and being efficient with marketing, and how are you approaching SMB? Pascal: competitive environment raised equipment and subscriber acquisition costs—your 3-year guidance assumes margins improve; how will you deliver that if competition stays elevated?
  Response: Use nationwide 'AT&T Internet' branding plus targeted digital/geography-specific offers; ramp third-party channels for SMB; margin expansion will come from wireless modernization, declining copper costs, and increased convergence lowering churn and acquisition spend.

• Question from John Hodulik (UBS Investment Bank, Research Division): How are you positioned if promotional activity increases in Q4 given competitor changes, and please touch on cohorts coming off plan? Also, with pressure on ARPU in wireless and broadband, should we expect continued ARPU pressure near-term as growth shifts to converged services?
  Response: Well-positioned to compete; priority is driving convergence even if ARPU dips initially—this expands service revenue and reduces churn over time; a December pricing action will also support service revenue.

• Question from David Barden (New Street Research LLP): Given Lumen and EchoStar deals, leverage targets, dividend and buybacks, is AT&T effectively out of the M&A game and focused on organic growth? Follow-up on succession planning?
  Response: Management is focused on organic investment and executing its existing asset strategy rather than pursuing external M&A as a priority; succession topics are not being discussed as a near-term focus.

• Question from Michael Ng (Goldman Sachs Group, Inc., Research Division): Has confidence increased around accretion from Lumen fiber assets and EchoStar spectrum? Please outline key accretion buckets (Internet Air scaling, passing acceleration, infrastructure deferrals, wholesale, Boost hybrid MNO etc.).
  Response: Confidence unchanged and supported by diligence; Lumen fiber aligns with conservative models and drives converged upside; EchoStar mid-band will defer capacity spend, boost wholesale/Internet Air growth, and increase mobility attachment (already >50%), offering incremental accretion.

• Question from Sebastiano Petti (JPMorgan Chase & Co, Research Division): On FWA seasonality—do you see a similar Q4 step-down as fiber? Any update on Gigapower and risk from wholesale partners meeting penetration/rollout targets?
  Response: Expect some consumer Q4 seasonality for installs; FWA likely less impacted; Gigapower partnership is performing, AT&T will be the anchor provider and management expects wholesale partners to be a modest incremental penetration, not a material risk.

• Question from Michael Rollins (Citigroup Inc., Research Division): Do LEO direct-to-device constellations pose a competitive threat to mobile and broadband, and how will AT&T offer its own direct-to-device satellite services?
  Response: LEO is viewed as complementary, not a replacement; AT&T expects to integrate LEO offerings via partnerships and focus on fiber/terrestrial networks for superior performance, capacity and lower marginal cost.