AT&T's T Stock Falls Amid Fiber Subscriber Miss Despite Wireless Growth

AT&T's latest financial results showcase mixed performance in its various business segments during the second quarter. The telecom giant experienced a significant boost in wireless subscribers, driven by promotional activities, yet faced challenges in its fiber segment. Despite adding 401,000 net monthly bill-paying wireless phone subscribers, surpassing FactSet estimates of 295,700, the company fell short in its fiber segment, adding 243,000 fiber customers against the 250,610 anticipated by analysts at Visible Alpha.

The strategic growth in wireless subscribers highlights the effectiveness of AT&T's bundled plans and promotions in a competitive market. However, the fiber subscriber miss underscores the heightened competition from rivals such as Verizon and T-Mobile, as well as broadband giants like Comcast. To bolster its position and counter the slowing growth in certain areas, AT&T has emphasized a significant push into high-speed internet services.

AT&T has laid out plans to invest approximately $3.5 billion from savings accrued via the new tax law to expedite its fiber network expansion. This investment is aimed at boosting this critical growth area as the wireless market approaches saturation and internet usage continues to increase. The tax reforms allow companies to write off the full cost of certain new equipment immediately, enhancing AT&T's annual fiscal forecasts.

Looking forward, the telecom entity expects savings from cash taxes ranging from $6.5 billion to $8 billion through 2027 under the new tax reforms. These developments have prompted adjustments in future financial projections, with AT&T now anticipating free cash flow to be about $1 billion higher than previous forecasts for 2026 and 2027.

AT&T's second-quarter revenue reached $30.8 billion, exceeding expectations of $30.50 billion. Adjusted earnings per share stood at 54 cents, surpassing the projected 51 cents. This revenue growth was fueled by a 6.7% increase in mobility revenue, driven by the surge in wireless subscribers and higher sales volumes of wireless devices.

In its commitment to expand fiber network capabilities, AT&T aims to close its acquisition of Lumen’s mass markets fiber business by the first half of 2026, with ambitions to reach over 60 million fiber locations by the end of 2030. This strategic acquisition is part of the company's broader efforts to cement its standing in the high-speed internet segment.

Despite these gains, AT&T's stock has experienced a downturn. The fall can be attributed to existing market conditions following a substantial run-up in the stock price. The broader investor sentiment and response to the fiber subscriber miss may reflect concerns about future competition and strategic execution in an intensely competitive industry. Nevertheless, analysts predict continued growth potential due to AT&T’s extensive investment in fiber infrastructure and robust promotional strategies designed to attract more subscribers across various segments.

Overall, while AT&T faces challenges in achieving anticipated fiber subscriber gains, its push into wireless and planned expansions in the fiber network remain a focal point of its strategic growth. Investors and market participants will continue to monitor AT&T's execution of these strategies and its ability to navigate competitive pressures while capitalizing on emerging opportunities within the telecom landscape.