AT&T Q3 Earnings Beat Expectations: Record Net Adds in Internet Subscribers, Full-Year EPS Guidance Raised to $2.40
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AT&T posted Q3 revenue of $32.3 billion and adjusted EPS of $0.65, both above consensus, while internet subscriber net-adds hit a record 769,000; the company raised full-year EPS guidance to roughly $2.40, but SpaceX's push into wireless is forcing the market to re-examine how durable the growth story really is.
Where exactly did AT&T beat?
Revenue came in at $32.3 billion, up 5.3% year-over-year; adjusted EPS of $0.65 topped the Street estimate of $0.60.
Full-year adjusted EPS guidance was lifted from $2.25–$2.35 to roughly $2.40, above the consensus $2.35. Free-cash-flow guidance held at $18 billion-plus.
This means → AT&T didn't just clear the bar — it outperformed on both subscriber growth and profit, giving management the confidence to raise full-year targets.
Why did internet subscribers hit a record?
Internet net-adds reached 769,000 in a single quarter — an all-time high. Fiber broadband contributed 442,000 and fixed wireless access — a technology that delivers broadband via mobile signals instead of cables — added 327,000.
This marks the second consecutive quarter of advanced-connectivity net-adds exceeding one million, the best run in more than four years.
In plain terms = AT&T is running on two legs at once — laying fiber and beaming wireless — and both legs are accelerating. That's what produced the record.
How did wireless perform — and is there a catch?
Postpaid phone net-adds came in at 379,000, roughly in line with the analyst estimate of about 379,300. Postpaid phone churn held at 0.9%.
Subscriber growth and price increases were the two main earnings drivers, but promotional discounts for new users partially offset the pricing gains.
This reflects a classic carrier dilemma: raising prices lifts margins, but you have to spend more on promos to win subscribers — the two forces eat into each other.
What is the "convergence" bet really about?
Convergence — bundling wireless and broadband in the same household so that switching away becomes costly — is accelerating: roughly 43% of customers signing up for home internet also chose an AT&T wireless plan this quarter.
The converged-subscriber share rose to 42.8%, up from 42.5% last quarter. The company's target is 50%.
In plain terms = AT&T is betting on the "whole-family bundle." If your phone and broadband both run on AT&T, the hassle of leaving is high — and that keeps you locked in.
SpaceX enters the ring — how big is the threat?
SpaceX last month signed an $8 billion deal to acquire cellular spectrum licenses, its largest move yet into wireless. The goal: expand Starlink beyond broadband into broader communications.
Bloomberg Intelligence analyst John Butler warned that SpaceX-driven uncertainty could compress AT&T's margins and push up customer-acquisition and retention costs.
TD Cowen analysts took the opposite view: AT&T's convergence strategy forms an "ideal defensive position" against Starlink, with a diversified business mix that can absorb a single-vector competitive shock.
SpaceX enters wireless — is AT&T's convergence play a shield or a paper wall?
BULL
Convergence as moat
Bundled wireless + broadband raises switching costs; Starlink can't replace both at once.
Fiber edge holds near-term
Fiber latency and reliability still far outperform satellite; household migration incentive is low.
BEAR
Acquisition costs may spike
SpaceX enters with spectrum in hand; AT&T must spend more to retain users, pressuring margins.
Rural and suburban exposure
Areas with thin fiber coverage are exactly where Starlink competes best — convergence can't reach there.
In plain terms = convergence works where fiber already runs, but where fiber doesn't reach, AT&T's defense has a natural gap — and that's exactly the door SpaceX is walking through.
Where does the money go — and what comes back to shareholders?
Capital investment holds at $23–24 billion for 2026, but drops to $22–23 billion per year in 2027–2028. This means → the peak fiber-buildout phase is passing; AT&T is shifting toward harvesting.
Shareholder-return plan: $45 billion-plus returned over 2026–2028, including roughly $10 billion in buybacks in 2026. The annual dividend stays at $1.11 per share.
Free-cash-flow targets ramp up: 2026 $18 billion-plus → 2027 $19 billion-plus → 2028 $21 billion-plus. Net-debt-to-adjusted-EBITDA is targeted at roughly 2.5× by 2029. Whether converged-subscriber share can march toward 50% on schedule will be the market's key test of whether this entire target stack is deliverable.
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