AT&T Inc. (NYSE:T) Surge Highlights $10 Billion Buyback and 4.55% Yield

AT&T posted revenue of $31.6 billion, marking a 2.3% increase compared to the prior year. Adjusted earnings climbed 20.4% to $0.65 per share, surpassing the analyst consensus of $0.59. Revenue came in just under the estimated $31.8 billion. Subscriber gains and an 8.0% rise in Advanced Connectivity EBITDA were among the stronger highlights.

AT&T posted 432,000 net additions for postpaid phones, surpassing last year’s 401,000 and well above the 338,500 analyst consensus. Postpaid phone churn dropped by one basis point to 0.86%. Wireless service revenue was up 3.3%, boosted by both subscriber growth and pricing moves. According to management, reduced churn this quarter was also helped by fewer device upgrades, though they cautioned this positive effect may not last. AT&T Investor Relations

A portion was not acquired. AT&T gained 367,000 new fiber connections and 279,000 fixed-wireless subscriptions. Revenue from advanced home internet climbed 27.3% to $2.93 billion. The company did not break out the quarter’s organic revenue figures. Revenue per fiber customer slipped 1.3%, but remained nearly unchanged when excluding Lumen. The acquisition expanded scale, decreasing the average revenue reported per customer.

Free cash flow for the first half reached approximately $7.2 billion. Hitting the full-year goal means generating at least $10.8 billion in the second half. Management anticipates third-quarter cash flow will be essentially unchanged from the previous year. Achieving the prior year’s $4.9 billion in the third quarter would mean $5.9 billion must be reached in the fourth quarter. That would mark an increase of about 40% over fourth-quarter 2025 cash flow. This is presented as a scenario, not official company guidance. The capital investment outlook remains set at $23 billion to $24 billion.

AT&T’s $1.11 annual dividend amounts to around $7.6 billion based on quarter-end shares outstanding, representing about 42% of the company’s $18 billion minimum cash flow. AT&T is also targeting close to $10 billion in share buybacks for 2026. Together, expected shareholder returns are projected to reach $18 billion this year, nearly matching forecasted free cash flow. The next dividend of $0.2775 is set for August 3. Share repurchases provide flexibility for capital allocation. AT&T Investor Relations

AT&T has agreed to purchase 50 MHz of spectrum for around $23 billion. The deal received Federal Communications Commission approval in May. The company expects to complete the transaction by the end of July, though that date remains subject to change. As of the second quarter, AT&T reported total debt of $144.0 billion, which includes $126.4 billion in net debt. Net leverage stood at 2.68 times and is projected to rise to nearly 3.2 times following the acquisition. The company’s target is to reduce that figure to about 2.5 times within three years post-closing, depending on cash generation and disciplined capital spending. AT&T Investor Relations

AT&T is priced at $24.42, with adjusted guidance implying a multiple between 10.4 and 10.9. The midpoint stands close to 10.6 times estimated 2026 profit. Its $1.11 yearly dividend generates an approximate yield of 4.5%. These valuations are modest for a firm with rising adjusted profit and EBITDA. However, net debt of $126.4 billion makes the balance sheet sensitive. Valuation is low, but leverage is high.

At present, this holds true. Advanced Connectivity accounts for more than 90% of service revenue and contributes almost all adjusted EBITDA. Service revenue for this segment increased by 5.1%, and adjusted EBITDA was up 8.0%. Operating income climbed 20.3%. By contrast, Legacy service revenue declined 26%, and its EBITDA was down roughly 46%. Management forecasts that Legacy EBITDA will go negative after 2027. Approvals in California could push the scheduled copper shutdown past 2029. AT&T Investor Relations

There is no announced wholesale deal between AT&T and Starlink. AT&T’s CEO stated the company manages approximately 98% of customer network traffic directly, with external arrangements covering mainly the remaining 2%. SpaceX’s acquisition of EchoStar spectrum increases its prospects in direct-to-device services. The exact timing, network capacity and customer profit outlook for these efforts is unclear. There is no clear evidence yet of negative impact on near-term earnings. AT&T Investor Relations

Not at this time. AT&T expects to ramp up quantum applications for outages, routing and managing network traffic. A pilot optimization workload dropped from about an hour to under 15 seconds. The announcement did not state a contract value or anticipated cost savings. No update was given on AT&T’s financial outlook. This should be viewed as an efficiency measure, not a current earnings contributor. businesswire.com