AT&T's Q3 2025: Contradictions Emerge on Churn, Fiber vs. Fixed Wireless, and Wireless Market Strategy

Date of Call: October 22, 2025

Financials Results

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

Guidance:

• Full-year service revenue growth expected in the low single-digits.
• Full-year adjusted EBITDA growth of 3% or better.
• Full-year adjusted EPS $1.97–$2.07 (management expects toward the high end).
• Full-year free cash flow expected in the low- to mid-$16B range (about $4B in Q4); Q4 free cash flow impacted by ~$0.5B legal settlement cash outflow.
• Full-year capital investment $22.0B–$22.5B (Q4 capex roughly $7.0B–$7.5B).
• Mobility service revenue growth of 3%+ and mobility EBITDA growth ~3% for the year.
• Consumer fiber broadband revenue growth mid- to high-teens; Consumer Wireline EBITDA growth low- to mid-teens; Business Wireline EBITDA down low double-digits.

Business Commentary:

• Broadband Expansion and Growth:
• AT&T reported 550,000 new subscribers to its most advanced broadband services, AT&T Fiber and Internet air, which resulted in its highest total broadband net adds in more than 8 years.

• The growth was driven by their strategy of expanding fiber and fixed wireless connectivity services nationwide and offering competitive pricing.

• Mobility Segment Performance:

• The mobility segment delivered 405,000 postpaid phone net adds in Q3, slightly ahead of the previous year's performance.

• This was supported by a focus on attracting high-value customers and executing well across different operating environments.

• Customer Convergence and Retention:

• AT&T saw a convergence rate of 41.5% among fiber customers who also subscribe to mobility services, up 180 basis points from a year ago.

• The increase in convergence rates was due to attractive bundled offers that lead to lower churn and higher lifetime values for these customers.

• Financial Outlook and Strategic Acquisitions:

• AT&T expects to close strategic acquisitions with Lumen and EchoStar, aiming to enhance its connectivity portfolio and drive future growth.
• These acquisitions are expected to improve 5G wireless performance and expand fixed wireless services, aligning with the company's vision to build a high-performance network at the lowest marginal cost.

Sentiment Analysis:

Overall Tone: Positive

• Management called Q3 "another solid quarter," highlighted highest broadband net adds in 8 years and >10M premium fiber subs, reiterated full-year guidance, and emphasized confidence in Lumen and EchoStar transactions and network modernization as drivers of future growth.

Q&A:

• Question from Peter Supino (Wolfe Research, LLC): At what point should investors worry about competitors overbuilding homes AT&T plans to pass and would that alter AT&T's plans; and as DSL/VDSL declines in ~2 years, what should that mean for broadband strategy and competitive outlook?
  Response: AT&T believes its scale, disciplined capital allocation and aggressive market execution limit overbuild risk; where fiber won't be built the company will replace DSL with fixed wireless (Internet Air) and manage customers via converged offers.

• Question from Benjamin Swinburne (Morgan Stanley, Research Division): How is AT&T segmenting markets between fiber and fixed wireless and being efficient with marketing and SMB distribution; and Pascal, how will margins expand over the next few years if competitive intensity and higher equipment/subscriber acquisition costs persist?
  Response: AT&T is shifting to a nationwide 'AT&T Internet' top‑of‑funnel message with precise geographic/digital targeting and is ramping third‑party SMB distribution; margins should improve as copper is retired, wireless modernization completes (target ~end‑2027) and greater convergence reduces churn and acquisition costs.

• Question from John Hodulik (UBS Investment Bank, Research Division): How is AT&T positioned if promotional activity increases in Q4 given competitors' changes; commentary on cohorts coming off plans and should we expect continued ARPU pressure on wireless and broadband over the next several quarters?
  Response: AT&T is focused on driving convergence rather than short‑term ARPU preservation; near‑term ARPU pressure is 'a feature not a bug' as front‑end value/investment in underpenetrated segments should grow service revenue and long‑term customer value.

• Question from David Barden (New Street Research LLP): Given Lumen and EchoStar deals, leverage targets, dividends and buybacks, is AT&T effectively out of the inorganic M&A game and focused on organic growth; and follow‑up on C‑suite succession/board plans?
  Response: Management says priority is organic investment and executing with existing assets to drive the business over the next five years; they declined to discuss succession plans and remain focused on operations.

• Question from Michael Ng (Goldman Sachs Group, Inc., Research Division): Has confidence increased on accretion from Lumen fiber and EchoStar spectrum; what are key accretion buckets (Internet Air scale, passing acceleration, capex savings, Boost wholesale MNO)?
  Response: No material change in view—diligence validated conservative assumptions for Lumen; EchoStar mid‑band will defer capex/augment capacity, grow wholesale revenues (Boost/wholesale), and accelerate Internet Air scale; management will provide updated long‑term outlook early next year.

• Question from Sebastiano Petti (JPMorgan Chase & Co, Research Division): Is there seasonality in fixed wireless similar to fiber in Q4; how to think about pacing of FWA subscriber results and EchoStar expansion; update on Gigapower and wholesale partner risk to AT&T's objectives?
  Response: There is consumer seasonality (fewer moves) that can affect installs, but FWA is less impacted than fiber; AT&T expects to be the anchor provider on Gigapower, confident in penetration, and does not see wholesale partners materially threatening its retail positioning.

• Question from Michael Rollins (Citigroup Inc., Research Division): Do LEO constellations pose a competitive threat to mobile and broadband and what's AT&T's plan for offering direct‑to‑device satellite services?
  Response: LEO is viewed as complementary rather than a terrestrial replacement; AT&T intends to integrate/resell LEO services (already working with AST), while arguing fiber and dense terrestrial networks remain essential for capacity, low latency and AI‑era demands.