AT&T beats earnings estimates on fiber growth, guidance exceeds expectations
Telecom giant forecasts FY2026 EPS of $2.25-$2.35, above Wall Street consensus as broadband expansion offsets wireless subscriber miss
AT&T reported stronger-than-expected fourth-quarter earnings, driven by robust growth in its fiber broadband business, while issuing profit guidance for 2026 that exceeded analyst estimates. The telecom giant's shares climbed in pre-market trading as investors focused on the improved outlook rather than a miss in wireless subscriber additions.
The Dallas-based company reported adjusted earnings per share of $0.52 for the quarter, beating the Wall Street consensus of $0.46. Revenue reached $33.5 billion, topping projections of $32.87 billion. The earnings performance marked a 13% surprise relative to analyst expectations.
AT&T provided fiscal year 2026 earnings guidance of $2.25 to $2.35 per share, above the $2.21 consensus estimate from analysts. The company also declared a quarterly dividend of $0.2775 per share, maintaining its annualized payout of $1.11, payable February 2 to shareholders of record as of January 12.
The fiber business emerged as a standout performer, with 283,000 net subscriber additions in the quarter. Consumer wireline fiber revenues surged 13.6% year-over-year to $2.2 billion, highlighting the success of AT&T's strategy to expand high-speed broadband access. The fiber segment has become a critical growth driver as the company pivots away from content assets toward connectivity infrastructure.
However, the wireless division showed signs of strain in an increasingly competitive market. AT&T added 421,000 postpaid phone subscribers, falling short of analyst estimates that ranged from 432,000 to 442,000. The subscriber miss reflects intensifying competition from Verizon and T-Mobile, all vying for market share in a saturated wireless landscape.
The mixed operational results underscore the strategic transition AT&T is undertaking. Following the divestiture of its WarnerMedia assets and the spinoff of DirecTV, the company has focused on strengthening its core telecommunications businesses while reducing debt. The fiber expansion represents a $2 billion annual investment aimed at capturing the growing demand for high-speed internet services, particularly as remote work and streaming content consumption continue to drive bandwidth requirements.
Analysts maintain a cautiously optimistic outlook on AT&T shares, with 22 analysts rating the stock a buy and nine recommending hold. The consensus price target stands at $29.48, implying significant upside from current levels around $23. The stock's valuation remains attractive at a price-to-earnings ratio of 7.64, well below the broader market average.
The company's strong free cash flow generation supports its dividend policy, which yields 4.7% at current prices. AT&T has committed to maintaining the dividend through 2027, providing income investors with visibility on returns even as the company invests heavily in network expansion.
Looking ahead, investors will focus on AT&T's ability to sustain fiber growth while stabilizing wireless subscriber trends. The company expects mobility service revenues to grow at the higher end of its 2% to 3% range for full-year 2025, suggesting confidence in its wireless business despite the quarterly subscriber miss.
The 2026 guidance indicates management expects continued margin expansion and operational efficiency improvements to drive earnings growth. Analysts project 8.25% year-over-year EPS growth for fiscal 2026, reflecting confidence in AT&T's strategic positioning as a pure-play telecommunications provider.
Options markets had priced in a move of approximately 5.3% following the earnings announcement, suggesting the results could spark significant volatility. However, the strong guidance and fiber performance appear to have outweighed concerns about wireless subscriber additions in early trading.