On Tuesday, the telecom giant said it

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Conversely, the firm closed out its holdings in AT&T (T), Annaly Capital Management (NLY), Affirm Holdings (AFRM) and Aehr test Systems (AEHR.

Increased stakes include Nvidia (NVDA), to 3.87M shares in Q4 from 2.51M shares in the prior quarter, Amazon (AMZN), to 1.95M from 1.12M, and Mastercard (MA), to 409.2K from 366.3K, the 13F filing showed.

Trimmed stakes: Salesforce (CRM), to 1.93M shares in Q4 from 2.01M in Q3, Microsoft (MSFT), to 984K from 1.10M, and Wells Fargo (WFC), to 1.14M from 2.54M.

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The news has sent shares of rival satellite internet providers Globalstar (GSAT) and AST SpaceMobile (ASTS) crashing down nearly 8% and 12%, respectively.

Formerly known as “Project Kuiper,” Amazon Leo was set up in 2019 to deploy a large satellite internet constellation in lower Earth orbit and offer low-latency broadband connectivity.

“Amazon Leo will provide internet connectivity services to AT&T, enabling AT&T to broaden its connectivity capabilities and deliver fixed broadband services to business customers in areas where such services are needed,” according to a joint statement.

AT&T said it will migrate workloads from several of its current on-premises technologies to AWS’s on-premises as part of its efforts to bolster its network and achieve operational efficiency.

“By pairing our expanding fiber infrastructure with AWS’s cloud capabilities and through our collaboration to deliver the infrastructure of the future by connecting data centers, we’re creating a more resilient, scalable, and intelligent connectivity ecosystem,” said Shawn Hakl, senior vice president, product, AT&T Business.

AWS and AT&T are expected to share more details about their partnership and demonstrate their joint capabilities at Mobile World Congress 2026.

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Management View

• CEO John Stankey opened by stating, “We met or exceeded all of our consolidated full year financial guidance, driven by another solid year of 5G and fiber subscriber growth.” He highlighted over 1.5 million postpaid phone net adds for the fifth consecutive year and over 1 million AT&T Fiber net adds for the eighth consecutive year. Stankey also noted, “We returned over $12 billion to our shareholders through dividends and buybacks, which was more than a 50% increase from 2024.”
• Stankey announced the closing of agreements to acquire spectrum licenses from EchoStar and fiber assets from Lumen, which are expected to close early in 2026. He said, “Including Gigapower and the fiber assets that we’re acquiring from Lumen, we expect to reach over 40 million customer locations with our fiber services by the end of this year, up from 32 million at the end of 2025.”
• He emphasized a multi-year acceleration in fiber deployment, planning to expand fiber reach by approximately 5 million locations annually through the end of the decade. Stankey stated, “Our fiber convergence rate climbed 200 basis points year-over-year to 42%, which is our fastest annual increase since we began tracking this metric.”
• The CEO outlined a new segment reporting structure beginning in Q1 2026, separating “advanced connectivity” (domestic 5G and fiber) from legacy operations.
• CFO Pascal Desroches said, “We achieved over 4% growth in consolidated adjusted EBITDA during the fourth quarter, while expanding adjusted EBITDA margins by 20 basis points.” Desroches also stated, “Adjusted EPS grew by over 20% in the fourth quarter to $0.52 and nearly 9% for the year to $2.12.”

Outlook

• AT&T expects total wireless service revenue growth in the 2% to 3% range annually over the next three years and organic advanced home Internet service revenue growth of 20% plus annually through 2028. Following the Lumen acquisition, reported advanced home Internet revenue growth in 2026 is expected to exceed 30%.
• Desroches said, “We expect adjusted EPS to be in the $2.25 to $2.35 range in 2026 with a double-digit 3-year CAGR through 2028.” Free cash flow is projected at $18 billion plus in 2026, growing by $1 billion plus in 2027 and approximately $2 billion in 2028.
• The company plans to return $45 billion plus to shareholders from 2026 to 2028, including about $8 billion in buybacks in 2026.

Financial Results

• AT&T reported over $1 billion in cost savings for 2025, with a plan to achieve an additional $4 billion in annual cost savings by the end of 2028. Full-year free cash flow was $16.6 billion.
• Net debt-to-adjusted EBITDA ended at 2.53x, with cash and cash equivalents of $18.2 billion. The company closed on a $17.5 billion delayed draw term facility during the quarter. Desroches noted, “Immediately following the closing of these transactions, we expect our net debt-to-adjusted EBITDA to increase to approximately 3.2x and then to decline to approximately 3x by year-end as we grow adjusted EBITDA and free cash flow.”

Q&A

• John Hodulik, UBS: Asked about future convergence rate targets and Lumen territory performance. Stankey responded, “We have an objective…to drive that to 50% and feel very comfortable with that. I don’t expect it to stop there.” He also discussed a cautious approach to Lumen, stating if penetration matches in-region performance, “that’s going to be upside in terms of our business case.”
• Benjamin Swinburne, Morgan Stanley: Inquired about spectrum investment capacity and the impact of a foldable iPhone. Stankey said, “We have reserved capacity for other strategic options,” and suggested that device form factor shifts are unlikely to drive material changes in customer demand.
• Peter Supino, Wolfe Research: Questioned fiber ARPU and FWA growth as DSL declines. Stankey emphasized, “We currently sit under their (cable) pricing umbrella…we have a lot more degrees of freedom in how we manage our ARPUs.” He projected continued DSL decline by design, with no supply-demand concern for broadband.
• Michael Rollins, Citi: Asked about macro drivers of postpaid phone growth and responses to competitor promotions. Jeffery McElfresh, COO, referenced opportunities in underpenetrated segments and convergence strategy.
• Sebastiano Petti, JPMorgan: Sought clarity on leverage targets and seasonality in fiber build pace. Desroches confirmed expectations for equity partner proceeds, while Stankey projected ongoing seasonality, with ramping from the Lumen integration affecting early quarters.
• Michael Ng, Goldman Sachs: Requested details on EBITDA growth inflection and cost initiatives. Desroches explained that fewer legacy contributions and greater penetration of new assets would drive acceleration by 2028.
• Samuel McHugh, BNP: Queried bad debt trends and cost cutting. Desroches attributed higher bad debt to increased equipment sales, not consumer payment issues, and highlighted $4 billion in expected cost savings over three years.
• Michael Funk, BofA: Asked about marketing strategy for FWA and ARPU headwinds. Stankey explained a broad national message, supplemented by targeted offers, and Desroches reiterated a disciplined investment focus on converged relationships.

Sentiment Analysis

• Analysts raised nuanced questions focused on convergence, ARPU, and integration execution, with a tone that was neutral to slightly positive but pressed for specifics on guidance and cost management.
• Management maintained a confident tone in both prepared remarks and Q&A. Stankey stated, “I’m confident the teams demonstrated that they can be pretty fluid and creative in how they approach these things.” During Q&A, the tone remained optimistic but acknowledged operational challenges and seasonality with statements like “we’re going to be on a learning curve on some of that stuff.”
• Compared to last quarter, analysts’ tone was more focused on integration and guidance clarity, while management’s confidence remained steady, with added emphasis on execution.

Quarter-over-Quarter Comparison

• Guidance language shifted from reiterating targets to providing multi-year projections through 2028, including new segment reporting for advanced connectivity.
• Strategic focus expanded from organic and acquisition-driven growth to a detailed plan for fiber expansion and cost transformation, with explicit targets for convergence rates and cash returns.
• Key metrics saw notable increases, such as a 20%+ adjusted EPS growth in Q4 and a jump in fiber passings target from 32 million to 40 million by year-end 2026.
• Management tone remained confident, but now included more details on operational ramp and integration, while analysts shifted from broad strategy to specifics on execution and cost discipline.

Risks and Concerns

• Management acknowledged integration challenges with the Lumen assets and the need for a “solid 2-quarter ramp” to optimize operations and distribution.
• Seasonality in broadband net additions and the impact of promotional dynamics on ARPU were highlighted.
• Analysts questioned the company’s ability to manage bad debt and maintain cost savings momentum; management attributed bad debt increases to higher equipment sales and not consumer distress.
• Upfront investments required for integration and fiber deployment are expected to impact Q1 results.

Final Takeaway

AT&T’s leadership emphasized strong execution in 2025, achieving or exceeding all guidance targets and accelerating its long-term growth strategy. The company projects reaching over 40 million fiber locations by the end of 2026 and returning $45 billion plus to shareholders over the next three years, supported by growth in its advanced connectivity segment and cost transformation initiatives. Management remains confident in its ability to drive profitable growth, manage integration of new assets, and deliver enhanced shareholder returns through disciplined execution and expanding customer relationships.

Read the full Earnings Call Transcript

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Shares of the company jumped more than 6% in immediate reaction to the report but pared some gains and are currently up 3.5% in early premarket trading on the NYSE.

For the full year, AT&T guided adjusted earnings per share between $2.25 and $2.35, ahead of the $2.23 per share estimate, and adjusted EBITDA growth in the 3% to 4% range, with growth reaching 5% by 2028.

In Q4, the company added 283,000 fiber subscribers, ahead of the Bloomberg consensus estimate of 277,028.

However, wireless postpaid phone net adds of 421,000 were below the 439,946 estimate, and wireless postpaid net additions were 641,000, below the estimates of 663,582.

Postpaid phone-only churn in Q4 was 0.98%, up 13 basis points year-over-year, and ahead of the consensus estimate of 0.94%. Free cash flow was $4.2B vs. $4B for the same period last year.

Net income attributable to common stock for the quarter was $3.8B, or $0.53 per share, compared to $4B, or $0.56 per share, for the same period last year.

Excluding items, on a per-share basis, the Dallas, Texas-based company earned 52 cents, topping the average analyst expectation by at least 5 cents.

Revenue rose 3.6% to $33.5B and was above the consensus estimate by over $600M.

From 2026 through 2028, the company expects service revenue growth in the low-single-digit range annually and capital investment in the $23B to $24B range annually. FCF is expected to be more than $18B in 2026, $19B+ in 2027, and $21B+ in 2028.

The company expects to buy back about $8B of common stock this year and return at least more than $45B to shareholders from 2026 to 2028. It is maintaining its current annualized common stock dividend of $1.11 per share.

Beginning with the first-quarter results, AT&T plans to revise its operating segments, namely “Advanced Connectivity,” “Legacy,” and “Latin America.”

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Wall Street expects the Texas-based company to post EPS of $0.47, on revenue of $32.88 billion, implying a rise of nearly 2% during the quarter.

AT&T, in October, added more wireless subscribers than expected, as it managed to attract more customers due to its heavy promotional activities around the new iPhone launch. However, the company experienced in-line profit and revenue misses, leading to the stock falling over 8% since its third-quarter results.

“With AT&T’s revenue expected to grow at a rate within 1-2%, a drop in gross margin could have significant implications for earnings per share in 2025, and that is why the ARPU gross margin dynamic will be of crucial importance within the upcoming report,” noted Seeking Alpha analyst Vladimir Dimitrov.

Over the last three months, AT&T’s EPS estimates have seen four upward revisions, compared to three downward revisions. Revenue estimates have been revised upwards four times versus five downward moves.

Verizon’s third quarter saw a wide topline miss, a small bottomline beat, and subscriber losses in its consumer business. Still, new CEO Dan Schulman’s strategy to move towards a “customer-centric growth” with a goal to “have the lowest churn rate in the industry” boosted investor confidence.

Wall Street expects Verizon to post EPS of $1.06 on revenue of $36.2 billion.

A recent Seeking Alpha analysis by Juxtaposed Ideas argued that the “aggressive headcount reduction and pivot to franchised retail operations are expected to drive improved productivity and profitability starting in FY2026.”

“I am of the opinion that the market may be in a wait-and-see mode, with investors likely to closely monitor their upcoming FY2026 guidance in the FQ4’25 earnings call sometime in January 2026,” it added.

Seeking Alpha analysts and Wall Street are bullish and rated both the stocks a Buy. In contrast, Seeking Alpha’s Quant ratings are cautious and consider them a Hold.

Over the last three months, Verizon’s EPS estimates have seen no upward revisions, compared to 12 downward revisions, while revenue estimates have seen one upward revision versus 10 downward moves.

Over the last two years, Verizon has beaten EPS estimates 88% of the time and has beaten revenue estimates 50% of the time. Meanwhile, AT&T has beaten both revenue and EPS estimates 63% of the time.

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