AT&T Inc. NYSE:T gained 0.7%, trading at $23.38 by midday Friday. U.S. cash markets were open at the time. The stock had dropped 5.9% over Wednesday and Thursday after the deal’s closure on Tuesday.
The market decline moved focus from network performance to financing. AT&T covered $14.5 billion, accounting for 63%, using term loans with maturities of two years or under.
Financing for spectrum acquisition
Funding source
Amount
Share of price
Facility term
Two-year term-loan funding
$11.5 billion
50.0%
Two years
364-day loan facility
$3.0 billion
13.0%
364 days
Estimated cash contribution
$8.5 billion
37.0%
—
Total
$23.0 billion
100%
—
The cash amount is a calculated figure. AT&T revealed the two loan withdrawals and stated that the remainder was settled in cash.
AT&T acquired approximately 50 MHz of spectrum from EchoStar Corp. NASDAQ:ECHO, securing licenses that include nearly all U.S. markets.
The bundle includes 30 MHz of spectrum at 3.45 GHz and 20 MHz at 600 MHz. AT&T stated the deal boosts 5G capacity, uplink, and speed. The company reaffirmed its financial forecast after the transaction closed.
Initial scale assessment relative to 2026 free cash flow
AT&T item
Amount
Share of $18 billion FCF floor
Minimum free cash flow guidance
$18.0 billion
100%
Targeted share buybacks
About $10.0 billion
56%
Total projected dividends and buybacks
About $18.0 billion
100%
Cost of spectrum acquisition
$23.0 billion
128%
Draws on new term loans
$14.5 billion
81%
Rows may overlap and do not represent a cash bridge. Percentages reflect initial calculations based on AT&T’s lowest-end guidance.
The acquisition amounts to 128% of the company’s projected annual free cash flow. New debt represents 81%. The calculation is straightforward.
Timing is a key factor. Chief Financial Officer Pascal Desroches stated that combined dividends and buybacks in 2026 are expected to reach approximately $18 billion. That figure would take up nearly the entire projected free cash flow.
AT&T closed June carrying $126.4 billion in net debt, with leverage at 2.68 times. Executives project leverage will reach 3.2 times once the deal closes, trending toward approximately 3 times by year-end. The goal of 2.5 times leverage is still estimated to be around three years out.
The core business provided some balance, with second-quarter postpaid phone net adds rising to 432,000, surpassing the anticipated 338,500. Phone churn remained steady at 0.86%.
“The cross-selling they have been working towards is now evident in the results,” said David Wagner, who oversees equity at Aptus Capital Advisors, a shareholder in AT&T. reuters.com
*T-Mobile lists core adjusted EBITDA as well as adjusted free cash flow. The company’s account additions figures are not directly aligned with phone addition figures. Definitions for non-GAAP metrics vary by company.
AT&T reported higher postpaid phone net adds compared to Verizon. T-Mobile tracks its numbers using an alternative account-focused metric. Based on disclosed definitions, AT&T’s free cash flow-to-revenue ratio for the quarter was lower than those of both competitors.
Market snapshot at midday
Company
Price
Friday move
Market value
Trailing P/E
AT&T
$23.38
up 0.7%
$162.4 billion
7.8
Verizon
$46.60
up 1.1%
$196.2 billion
11.3
T-Mobile
$172.46
down 0.5%
$186.7 billion
18.0
Market data was captured just before noon EDT.
AT&T shares traded at the lowest earnings multiple among peers. This valuation comes as leverage is expected to reach its highest point, while legacy revenue dropped 25.9%. Meanwhile, service revenue in the newer connectivity segment rose by 5.1%.
Chief Executive John Stankey described the expanded buyback as a show of confidence rather than pressure. “We are accelerating the pace of our planned share repurchases this year to approximately $10 billion,” he said. The decision heightens the pressure on delivery. AT&T About
Risks: Shorter maturities heighten exposure to refinancing and interest-rate shifts. Revenues from legacy business are declining rapidly. Delays in deleveraging could occur if customer growth slows or cash flow weakens.
The upcoming test is straightforward. AT&T has to steer leverage closer to 3 times by December while maintaining its pace in subscriber growth. This will determine if the spectrum acquisition increases value or just adds debt.
What is AT&T's current share price, and is it considered undervalued?
AT&T shares traded at $23.19 as of 12:25 p.m. ET Friday, moving between $22.92 and $23.46. The stock is still trading about 22% short of its 52-week high of $29.79. On Thursday, AT&T dropped 3.05% while the S&P 500 gained 1.66%. Based on management’s projected adjusted EPS of $2.25–$2.35, shares are valued at roughly 9.9–10.3 times earnings. With a $1.11 annual dividend, the yield stands near 4.8% at current prices. Management’s target for free cash flow of more than $18 billion points to a yield above 11%. While valuation remains depressed, ongoing concerns over leverage and execution account for some of the discounted price. MarketWatch
Did AT&T’s Q2 results truly surpass forecasts?
Second-quarter revenue was $31.6 billion, an increase of 2.3%, but fell short of the $31.8 billion forecast from LSEG. Adjusted EPS came in at $0.65, topping the consensus estimate of $0.59 by about 10%. Free cash flow totaled $4.7 billion, above the $4.43 billion Visible Alpha forecast. Shares gained nearly 4% following the results. Investors prioritized the beats in profit, free cash flow and subscriber numbers. reuters.com
Can wireless subscriber growth maintain its current pace?
AT&T posted 432,000 net postpaid phone additions, beating expectations of 338,500. Phone churn came in at 0.86%, and wireless service revenue increased by 3.3%. The company gained 147,000 consumer postpaid wireless accounts, marking the highest figure in more than three years. Executives anticipate further robust phone net gains in the third quarter. Targeted deals played a role in user growth but their staying power remains to be seen. Nonetheless, postpaid phone ARPU was higher while churn improved on an annual basis. reuters.com
Is the approach of combining fiber and wireless networks proving effective?
AT&T reported 367,000 new fiber and 279,000 fixed-wireless subscriber additions in the quarter. Revenue from Advanced Home Internet climbed 27.3%, boosted by the Lumen acquisition. Approximately 42.5% of advanced internet households also subscribe to AT&T wireless, a convergence metric the company says could change. Advanced Connectivity EBITDA increased 8%, while its margin expanded by 150 basis points. One downside: fiber ARPU dropped 1.3%, attributed mainly to lower-ARPU Lumen customers. Convergence is delivering results, but management appears to be sacrificing some ARPU to keep customers. AT&T Investor Relations
Is AT&T on track to achieve a minimum of $18 billion in free cash flow by 2026?
Free cash flow for the first quarter was $2.5 billion, rising to $4.7 billion in the second quarter. Combined free cash flow for the first half stood at $7.2 billion. To meet management’s stated minimum of $18 billion, the company must generate at least $10.8 billion in the remaining half. Management projects third-quarter free cash flow to be roughly the same year over year, and anticipates substantial year-over-year growth in the fourth quarter. Although the math appears feasible, the bulk of delivery is concentrated in the latter part of the year. AT&T About
Is AT&T on track to achieve its 2026 earnings target?
Adjusted earnings per share reached $1.22 in the first half, with $0.57 in Q1 and $0.65 in Q2. The full-year adjusted EPS outlook stays at $2.25 to $2.35, implying $1.03 to $1.13 needed in the second half. Management maintains its forecast for consolidated adjusted EBITDA growth of 3% to 4%. Guidance calls for at least 6% growth in Advanced Connectivity EBITDA. Hitting the EPS goal appears within reach, though higher interest costs and legacy declines continue to be headwinds. AT&T About
What is the outlook for the dividend following the expanded buyback program?
AT&T’s annual dividend of $1.11 offers a yield of approximately 4.8% based on a share price of $23.19. With 6.85 billion shares outstanding as last reported, yearly dividend payments amount to around $7.6 billion. That represents about 42% of AT&T management’s free cash flow goal, set at more than $18 billion. The company increased its 2026 share buyback target to near $10 billion. This year, spending on dividends and repurchases is expected to reach about $18 billion in total. While the dividend appears secure, there is less leeway on the balance sheet. AT&T Investor Relations
What level of debt risk was introduced by EchoStar's spectrum acquisition?
AT&T finalised its $23 billion acquisition of EchoStar spectrum on July 28, gaining around 50 MHz nationwide across the 3.45 GHz and 600 MHz frequency bands. Ahead of the deal, AT&T reported total debt at $144.0 billion as of end-June. Prior to closing, net leverage for the second quarter was 2.68 times. Management anticipated net leverage to rise to roughly 3.2 times immediately following the transaction, with an aim to reduce it to about 2.5 times within three years. Interest expense for the second quarter increased 13.8% to $1.88 billion. The debt load remains substantial. reuters.com
What is a plausible price range over the next 12 months?
A clear valuation model ranges from about $20 to $28 before factoring in dividends. Using a multiple of nine on low-end guidance results in approximately $20.25 per share. Applying eleven times to the midpoint figure of $2.30 gives around $25.30 per share. Multiplying high-end guidance by twelve yields roughly $28.20 per share. At the $25.30 figure, shares show potential upside close to 9% before accounting for dividends. Including the current 4.8% yield, the base-case total return is estimated at roughly 14%. MarketBeat’s $29.19 consensus, covering a range of $20–$36, reflects analyst ratings over the past year. AT&T Investor Relations
What factors might undermine the investment thesis?
Legacy service revenue declined 26% in Q2, with legacy EBITDA down 46%. Management projects legacy EBITDA will turn negative after 2027. Regulatory requirements may postpone copper network shutdowns beyond 2029. The FCC gave approval for SpaceX to acquire roughly 65 MHz nationwide for Starlink direct-to-device service. Its effect on AT&T's competitiveness remains unclear. The overall thesis could weaken if leverage remains elevated, cash flow falls short, or churn increases. AT&T Investor Relations
Iwona Majkowska is a financial markets journalist at TS2.tech, specializing in stocks, artificial intelligence and technology. A graduate of the Warsaw School of Economics, she previously worked in equity research and financial analysis before focusing on market reporting. Her daily coverage helps investors follow major developments across U.S. and global markets. Follow Iwona Majkowska on Google News.
