AT&T’s fiber-wireless convergence and accelerating capital returns offer an attractive income-and-growth turnaround, provided management converts strong cash generation into sustained deleveraging without sacrificing subscriber momentum.
Overview
AT&T has completed a major strategic reset, exiting legacy entertainment assets and refocusing on 5G mobility, fiber broadband, and enterprise connectivity. Its Advanced Connectivity segment now produces approximately 90% of operating revenue and is the key growth and margin engine; Legacy copper services are contracting, while Mexico is a smaller business. In Q2 2026, revenue rose 2.3% year over year to $31.6 billion, adjusted EPS increased 20.4% to $0.65 and beat $0.59 consensus, and Adjusted EBITDA grew 5.2% to $12.3 billion. Free cash flow reached $4.67 billion. The company added 401,000 postpaid phones and 646,000 broadband customers, including 367,000 fiber subscribers, with postpaid churn of 0.87%. Management reaffirmed 2026 adjusted EPS guidance of $2.25–$2.35 and FCF guidance above $18 billion, alongside $23–24 billion of annual capital investment and approximately $10 billion of 2026 buybacks. At roughly $24.50, AT&T trades at about 10.4x 2026E EPS and yields approximately 4.53%; its $126.4 billion net debt and legacy decline temper the valuation. **The investment case is that convergence and cash generation can drive earnings growth, deleveraging, and multiple recovery.** Near-term tests include the October 21, 2026 Q3 report, fiber additions, buyback delivery, and leverage reduction.