AT&T Q1 2026 Results and Convergence Push

AT&T Inc. (T) reported first-quarter 2026 revenue of $31.5 billion, up 2.9% from $30.6 billion a year earlier, driven mainly by growth in wireless and fiber within its Advanced Connectivity business and higher Mexico revenue from favorable foreign exchange. Operating income increased to $6.7 billion from $5.8 billion, while adjusted operating income rose to $6.9 billion from $6.4 billion.

Income from continuing operations was $4.2 billion, compared with $4.7 billion a year earlier, which had included equity in net income of DIRECTV. Earnings per diluted share from continuing operations were $0.54 versus $0.61, while adjusted diluted EPS increased to $0.57 from $0.51. Adjusted EBITDA rose to $11.8 billion from $11.5 billion, with an adjusted EBITDA margin of 37.4%.

Cash from operating activities from continuing operations totaled $7.6 billion, down from $9.0 billion in the prior-year quarter, which had included $1.4 billion from the DIRECTV investment. Free cash flow was $2.5 billion compared with $3.1 billion a year earlier, reflecting higher capital investment as AT&T accelerates its fiber deployment.

Beginning in the first quarter, AT&T reorganized its reporting to emphasize Advanced Connectivity, which covers domestic 5G and fiber services. Advanced Connectivity segment revenues were $28.5 billion, up 4.7% year over year, with service revenue up 3.6% and equipment revenue up 9.3% on higher wireless device sales volumes.

Advanced Connectivity operating income increased 14.8% to $6.9 billion, and EBITDA for the segment rose 5.6% to $11.6 billion. AT&T recorded 584,000 total consumer and business Advanced Connectivity internet net additions, split evenly between 292,000 fiber and 292,000 fixed wireless. Consumer advanced home internet net additions were 512,000, including 273,000 AT&T Fiber and 239,000 AT&T Internet Air.

The company added 294,000 postpaid phone subscribers in the quarter, exceeding the 272,000 additions expected by analysts polled by FactSet, according to Reuters. Postpaid phone churn was 0.89%. AT&T cited growth in retail wireless subscribers in underpenetrated categories and converged accounts as contributors to higher wireless service revenue.

AT&T highlighted growing uptake of bundles that combine wireless and high-speed fiber. About 42% of households using AT&T's advanced home internet services also chose AT&T wireless, and the organic convergence rate approaches 45% when excluding fiber customers acquired during the quarter. The convergence rate was reported to be more than 3 percentage points higher year over year, representing the company's fastest-ever reported organic growth in this metric.

Reuters reported that AT&T extended device subsidies into the first quarter for Apple's (AAPL) latest iPhone models, similar to T-Mobile (TMUS), as carriers competed on offers. AT&T also raised prices on its lowest and highest wireless tiers to steer customers toward mid-range plans and support average revenue per user, a move described by analysts as easing concerns about a price war.

Advanced home internet revenue grew 27.3% year over year to $2.8 billion, supported by increases in fiber and AT&T Internet Air revenues and two months of contributions from the acquired Mass Markets fiber business from Lumen. Business fiber and advanced connectivity revenues rose 7.2%.

On February 2, 2026, AT&T closed its acquisition of substantially all of Lumen Technologies' (LUMN) Mass Markets fiber business. The fiber customer relationships were retained by AT&T and are included in first-quarter results. The acquired fiber network assets and certain build capabilities were placed into a wholly owned subsidiary that AT&T plans to partially sell to an equity partner; this subsidiary is classified as held for sale and reflected as discontinued operations.

AT&T reported that its fiber network now reaches over 37 million total consumer and business locations, including more than 4 million locations acquired from Lumen during the quarter. The company said it remains on track to reach over 40 million total fiber locations by the end of 2026 and more than 60 million by the end of 2030.

Legacy segment revenues fell 25.3% year over year to $1.8 billion as AT&T continued decommissioning its copper-based network. Legacy operating income and EBITDA were $612 million, down from $1.0 billion. The company reiterated its goal to power down and stop providing service over the large majority of its domestic copper-based network by the end of 2029.

Latin America segment revenues rose 20.8% to $1.2 billion, helped by favorable foreign exchange impacts, subscriber growth and higher equipment sales. EBITDA for the segment increased to $220 million from $193 million, while operating income declined to $20 million from $43 million, reflecting higher operating expenses tied to foreign exchange, sales volumes, bad debt and depreciation.

AT&T ended the quarter with total debt of $138.4 billion and net debt of $126.4 billion. The company repurchased about $2.3 billion of common shares under its 2024 authorization and maintained its plan to return more than $45 billion to shareholders during 2026-2028 through dividends and share repurchases, including approximately $8 billion of repurchases in 2026. It continues to expect 2026 free cash flow of at least $18 billion, capital investment of $23 billion to $24 billion, and adjusted EPS between $2.25 and $2.35.