TLDR
- AT&T stock fell more than 5% in premarket trading on Wednesday after its third-quarter report.
- Revenue rose 5% to $32.3 billion and adjusted EPS of $0.65 topped estimates of $0.60.
- The company raised its 2026 adjusted EPS outlook to the $2.40 range and plans about $10 billion in buybacks this year.
- Postpaid phone net adds of 379,000 came in just under the 379,300 analysts expected.
- AT&T agreed to sell its Mexico wireless business and booked a $2.6 billion impairment charge.
AT&T (T) stock dropped more than 5% in premarket trading on Wednesday, even after the company beat third-quarter estimates and raised its profit outlook. The stock had closed Tuesday up about 1%.
Revenue rose 5.3% to $32.3 billion. That topped the $31.69 billion analysts surveyed by FactSet were expecting.
Adjusted earnings per share came in at $0.65, ahead of the $0.60 estimate. A year ago, the figure was $0.54.
AT&T now expects 2026 adjusted EPS in the $2.40 range. In July, it had guided to $2.25 to $2.35.
Investors also got a bigger buyback plan. The company will speed up its repurchases to about $10 billion this year.
Why the stock is falling
The likely cause is postpaid phone growth. AT&T added 379,000 postpaid phone subscribers, just shy of the 379,300 analysts expected.
That is also well below the 432,000 added in the second quarter, which beat estimates. Postpaid phone customers matter because they bring steady, recurring revenue.
Churn for postpaid phones was 0.92%. Investors have been watching these numbers closely for signs of price wars and new competition, including from SpaceX.
AT&T did post a record quarter for internet. It added 769,000 Advanced Connectivity internet customers, made up of 442,000 fiber and 327,000 fixed wireless.
That marked a second straight quarter with more than 1 million Advanced Connectivity additions. Service revenue in that segment rose 6.1% to $23.9 billion.
The bottom line and the Mexico sale
GAAP results looked much weaker. Diluted EPS was $0.13, compared with $1.29 a year ago, when AT&T booked a gain on the sale of its DIRECTV investment.
This year’s figure includes a $2.6 billion non-cash impairment on its Mexico wireless business. Employee separation charges also weighed on the result.
On October 13, AT&T agreed to sell the Mexico business to Grupo Televisa and Fintech Holdings. It is now classed as held for sale.
Free cash flow was $5.0 billion, up from $4.9 billion a year earlier. Adjusted EBITDA rose 5.4% to $12.5 billion.
The company returned about $4.8 billion to shareholders in the quarter, including $2.8 billion in buybacks. It expects free cash flow of $18 billion or more in 2026.
AT&T lowered its long-term capital investment outlook. It now sees $23 billion to $24 billion this year and $22 billion to $23 billion in both 2027 and 2028.
The company reached more than 39 million fiber locations and is on track for over 40 million by the end of 2026. Its earnings call was set for 8:30 a.m. ET on Wednesday.
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