AT&T's Q3 2025 Earnings Call: Key Contradictions in Pricing Strategy, Fiber Expansion, ARPU Management, and AI's Role Emerge Between Stankey and Desroches

Date of Call: October 22, 2025

Financials Results

• Revenue: Total revenues grew 1.6% year-over-year
• EPS: Adjusted EPS $0.54, consistent with prior year
• Operating Margin: Adjusted EBITDA margin expanded 30 basis points year-over-year

Guidance:

• Full-year service revenue growth expected in the low single-digit range.
• Adjusted EBITDA growth of 3% or better for the full year.
• Full-year adjusted EPS guidance $1.97–$2.07, management expects to be nearer the high end.
• Full-year free cash flow expected in the low- to mid-$16B range; Q4 FCF ~ $4B; Q4 legal settlement will reduce Q4 FCF by ~ $0.5B (accrued, excluded from adjusted EPS).
• Full-year capital investment $22.0–$22.5B; Q4 capex ~ $7.0–$7.5B.
• Expect to close Lumen and EchoStar transactions early 2026 and update long-term outlook early next year.
• Pension contributions of $1.5B by end of 2026 (includes $400M in Q4, $700M next year).

Business Commentary:

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

• This growth is attributed to the scale achieved as a nationwide provider of home Internet services and the successful penetration of fiber and fixed wireless services in new areas.

• Fiber and Wireline Growth:

• AT&T added 288,000 AT&T fiber customers during the third quarter, reflecting seasonal tailwinds and the expansion of its fiber footprint.

• This growth is driven by the strong demand for advanced connectivity solutions and the ongoing expansion of its fiber network.

• Mobility and Postpaid Phone Net Adds:

• AT&T delivered over 400,000 postpaid phone net adds in the quarter, slightly ahead of the performance in the previous year.

• The growth in postpaid phone net adds is due to the company's success in attracting high-value customers and its differentiated connectivity franchise.

• Strategic Acquisitions and Spectrum Deployment:

• AT&T is making significant strategic moves, including planned acquisitions of spectrum licenses from EchoStar and fiber assets from Lumen, to enhance its connectivity portfolio.
• These acquisitions are aimed at improving 5G wireless performance and expanding Internet Air, aligning with the vision to build the most efficient high-performance network.

Sentiment Analysis:

Overall Tone: Positive

• Management called it "another solid quarter" and said they "remain on track to achieve this year's consolidated financial guidance." Highlights: "Total revenues grew 1.6% year-over-year," "Adjusted EPS was $0.54," "highest total broadband net adds in more than 8 years," and reiterated full-year guidance and confidence in pending transactions.

Contradiction Point 1

Churn and Pricing Strategy

It highlights differing perspectives on the impact of churn on pricing strategy, which could affect customer retention and financial performance.

Should AT&T reconsider the pace of price hikes driven by churn, and will the spectrum budget be reviewed? - Peter Supino (Wolfe Research, LLC)

2025Q3: Price is not the issue driving churn; pricing decisions are tied to customer value assessments. - John Stankey(CEO)

Should AT&T reconsider the pace of price hikes to address churn, and is the spectrum budget under review? - Peter Supino (Wolfe Research, LLC)

2025Q2: We've been cautious, obviously, about how we're pricing our business. As you just heard from John, we've announced a number of price increases across the portfolio. - Pascal Desroches(CFO)

Contradiction Point 2

Fiber Expansion and Competition

It involves differing statements regarding AT&T's fiber expansion plans and its response to potential competition, which could impact strategic direction and market positioning.

How does AT&T plan to address competition from other fiber expansion plans, and what impact will DSL base decline have on its broadband strategy? - Peter Supino (Wolfe Research, LLC)

2025Q3: AT&T is confident in its fiber expansion plans. The company aims to make its presence known and penetrate markets aggressively. - John Stankey(CEO)

Does slower growth risk the 45 million fiber passings target by 2029? - Sebastiano Petti (JPMorgan)

2025Q1: Fiber is a long-term asset with strategic importance. AT&T remains committed to its fiber deployment, leveraging US supply chain and service partnerships for cost stability. - John Stankey(CEO)

Contradiction Point 3

Managing ARPU Pressure

It involves differing approaches to managing ARPU pressure in wireless and broadband, which directly impacts financial performance and customer retention strategies.

How does AT&T segment its market between fiber and fixed wireless, and how is it addressing ARPU pressures in wireless and broadband? - Benjamin Swinburne (Morgan Stanley, Research Division)

2025Q3: AT&T is marketing Internet services nationally without specifying technology. Messaging is adjusted according to geographic requirements. - John Stankey(CEO)

How does AT&T plan to improve ARPU for postpaid phones and fiber subscribers? - Michael Rollins (Citi)

2025Q1: AT&T will continue to find opportunities for ARPU improvement based on product utility and market trends. The focus is on fiber's profitability, which aligns with its strategic importance. - John Stankey(CEO)

Contradiction Point 4

Fiber and Fixed Wireless Strategy

It raises questions about the company's strategy regarding the role of fiber and fixed wireless, which impacts service offerings and market positioning.

How does AT&T segment its market between fiber and fixed wireless, and how is it managing ARPU pressures in wireless and broadband? - Benjamin Swinburne (Morgan Stanley, Research Division)

2025Q3: AT&T is marketing Internet services nationally without specifying technology. - John Stankey(CEO)

How do fiber and fixed wireless integrate in scaling? - Kannan Venkateshwar (Barclays Bank PLC)

2025Q2: Fiber is the long-term solution for premium segments, while fixed wireless targets price-sensitive segments. - John Stankey(CEO)

Contradiction Point 5

AI and Operational Improvements

It highlights differing views on the role and impact of AI in internal operations, which could affect cost management and efficiency.

How does AT&T position itself with increased wireless promotional activity, and how to assess ARPU pressures in wireless and broadband? - John Hodulik (UBS Investment Bank, Research Division)

2025Q3: AT&T is well-positioned with its convergence strategy. The focus on high-value, converged customers is expected to reduce churn and drive profitability. The company remains confident in its ability to manage competitive pressures. - John Stankey(CEO)

How can cloud and AI be used to improve customer relationships and reduce costs? - Timothy Horan (Oppenheimer)

2024Q4: We leverage AI for efficient customer support and operational improvements. AI continues to be a critical tool for enhancing our operations and capabilities. - John Stankey(CEO)

Q&A:

• Question from Peter Supino (Wolfe Research, LLC): At what point should investors worry about other builders overbuilding homes AT&T plans to pass (given industry plans ~110M homes) and could that alter AT&T's plans? Also, with DSL/VDSL declining within ~2 years, what should that mean for your broadband strategy and competitive outlook?
  Response: AT&T is confident in its scalable, targeted fiber build strategy and will recalibrate where needed; overbuilds are unlikely to materially harm returns given scale, and AT&T will replace DSL with fixed wireless or converged offers where fiber isn't built.

• Question from Benjamin Swinburne (Morgan Stanley, Research Division): As AT&T expands Internet Air across ~47 states, how do you segment markets between fiber and fixed wireless and ensure efficient marketing; and how are you approaching SMBs?
  Response: Top-line messaging is unified as 'AT&T Internet' with targeted digital offers by geography to avoid selling Air in fiber footprints; ramping third‑party distribution to scale SMB fixed wireless sales.

• Question from Benjamin Swinburne (Morgan Stanley, Research Division): Pascal, with higher equipment and acquisition costs pressuring mobility margins this year, your multi-year plan assumes margin improvement—how do you deliver that if competitiveness remains elevated?
  Response: Margin expansion will come from transformations: copper removal, wireless modernization (substantially complete by end‑2027), and higher convergence to lower churn and improve acquisition efficiency.

• Question from John Hodulik (UBS Investment Bank, Research Division): How is AT&T positioned if promotional activity steps up in Q4 (given competitor changes), and what about cohorts coming off plans versus recent quarters?
  Response: Well positioned; AT&T will focus on convergence and acquiring accretive customers, adjust tactics as competitors shift, and expects seasonal churn/upgrade behavior in Q4 tied to device launches.

• Question from John Hodulik (UBS Investment Bank, Research Division): Given comments on ARPU pressure with growth driven by convergence, should we expect continued ARPU pressure across wireless and broadband in coming quarters?
  Response: ARPU pressure is a feature of targeting underpenetrated segments to grow service revenue; pricing actions (e.g., one effective in December) and deeper convergence should drive overall service‑revenue growth over time.

• Question from David Barden (New Street Research LLP): With Lumen and EchoStar deals, leverage targets, dividend and buybacks, is AT&T effectively out of the M&A acquisition game and focused on organic growth?
  Response: Management is focused on organic execution—building on existing assets and internal investments—while not ruling out opportunistic deals, but current emphasis is on internal value creation.

• Question from David Barden (New Street Research LLP): Given C‑suite changes elsewhere, what is AT&T/Board succession planning (timing, roles)?
  Response: Management declined to discuss succession; the company is focused on daily execution and stated no changes to that operational focus.

• Question from Michael Ng (Goldman Sachs Group, Inc., Research Division): Has confidence increased around accretion from the Lumen fiber assets and EchoStar spectrum; how do EchoStar benefits split across Internet Air, passing acceleration, capex deferral, wholesale/Boost MNO?
  Response: Confidence unchanged/affirmed—due diligence validated Lumen assumptions; EchoStar mid‑band deployment defers some capex, boosts wholesale revenues and Internet Air scale, and should add accretion reflected in updated outlook early next year.

• Question from Sebastiano Petti (JPMorgan Chase & Co, Research Division): Is there seasonality in FWA similar to fiber (4Q slowdown)? Any update on Gigapower progress and risk from wholesale partners meeting penetration targets?
  Response: Some consumer seasonality in Q4 (moves/acquisitions slow); FWA may be less seasonal and benefits business customers; Gigapower partnership is performing as intended with AT&T as expected anchor—wholesale partner risk viewed as manageable.

• Question from Michael Rollins (Citigroup Inc., Research Division): Do LEO constellations pose a competitive threat to mobile and fixed broadband, and how will AT&T offer direct‑to‑device satellite services?
  Response: LEOs are seen as complementary and innovative; AT&T expects to integrate/partner (e.g., AST), but believes terrestrial fiber+cell networks offer superior capacity/indoor performance and remain hard to replace.