AT&T (NYSE:T) executives used the company’s fourth quarter 2025 earnings call to emphasize continued subscriber momentum in wireless and broadband, a stepped-up capital return program, and a longer-term financial framework that management said is supported by heavy investment in 5G, fiber, and fixed wireless access.
Chairman and CEO John Stankey said the company “met or exceeded all of our consolidated full-year financial guidance” in 2025, driven by what he described as another solid year of 5G and fiber subscriber growth. CFO Pascal Desroches added that fourth quarter results showed AT&T’s ability to deliver “profitable growth, even in a competitive operating environment,” citing consolidated adjusted EBITDA growth of more than 4% in the quarter and 20 basis points of adjusted EBITDA margin expansion.
Subscriber growth and convergence emphasis
Stankey framed the results as evidence that AT&T’s “convergence strategy is a winning play,” with bundled relationships improving customer retention and supporting market share. He said AT&T’s fiber convergence rate climbed 200 basis points year over year to 42% in the fourth quarter, which he called the fastest annual increase since the company began tracking that metric. Stankey also said AT&T estimates its share of postpaid phone subscribers is 10 percentage points higher in areas where it offers fiber than in areas where it does not.
In response to an analyst question, Stankey said he expects the convergence rate to continue rising and reiterated a previously stated objective to reach 50%, adding that he does not expect improvement to stop there over the long term. He also said AT&T expects Lumen’s fiber footprint to be “derated a bit” in terminal penetration assumptions versus AT&T’s core footprint, but noted that stronger-than-expected performance would be upside to AT&T’s business case.
Network expansion plans and legacy copper transition
Stankey said AT&T plans to ramp the pace of fiber construction within its traditional operating region from 3 million new locations in 2025 to a run rate of 4 million by the end of 2026. Including Gigapower and the fiber assets AT&T plans to acquire from Lumen, the company expects to reach more than 40 million customer locations with fiber services by the end of 2026, up from 32 million at the end of 2025.
Beyond 2026, management said it plans to expand fiber reach by roughly 5 million locations annually through the end of the decade. Stankey said AT&T is able to offer advanced internet services over fiber or 5G to more than 90 million customer locations today.
AT&T also discussed progress on retiring legacy copper-based services. Stankey said the company stopped sales of targeted legacy copper-based services in 85% of its wire centers, and that the FCC has approved AT&T applications to discontinue copper-based services in more than 30% of wire centers by the end of 2026. The company reiterated its goal of discontinuing legacy services in the large majority of its footprint by the end of 2029.
Financial results: EPS, free cash flow, and taxes
Desroches said adjusted EPS rose more than 20% in the fourth quarter to $0.52 and increased nearly 9% for the year to $2.12. He said the full-year figure exceeded AT&T’s 2025 adjusted EPS guidance range of $1.97 to $2.07, with upside primarily driven by a lower-than-expected effective tax rate and solid growth in adjusted EBITDA.
Full-year free cash flow was $16.6 billion, up more than $1 billion year over year and toward the high end of AT&T’s “low- to mid-$16 billion” guidance range. Desroches said cash taxes of $1.1 billion (excluding DirecTV) were roughly $400 million below the low end of expectations, but that the benefit was offset by a decision to accelerate planned pension funding by a similar amount, making the combination “effectively neutral” to free cash flow in the quarter.
AT&T made a $1.15 billion cash contribution to its employee pension plan in 2025 and expects to contribute an additional $350 million in 2026. Desroches said the company remains on track to contribute $1.5 billion of cash tax savings from provisions in the “One Big Beautiful Bill Act” to the employee pension plan by the end of 2026. Looking ahead, AT&T expects annual cash taxes of approximately $1.0 billion to $1.5 billion through 2028.
New segment reporting and long-term guidance through 2028
Beginning with first quarter 2026 results, AT&T plans to adopt new segment reporting that separates “Advanced Connectivity” (domestic 5G and fiber services) from “Legacy” (domestic services provided over copper-based networks). Desroches said that on a recast basis in 2025, Advanced Connectivity represented about 90% of revenue and more than 95% of adjusted EBITDA.
Management provided long-term guidance through 2028, with key elements including:
- Wireless service revenue: expected to grow 2% to 3% annually over the next three years, supported by consumer and business relationship growth through convergence.
- Advanced home internet service revenue: expected to grow organically 20%+ annually through 2028. Desroches said the closing of the Lumen fiber acquisition (expected in the first quarter) would add approximately $900 million of annualized fiber revenues, leading AT&T to expect reported advanced home internet revenue growth to exceed 30% in 2026.
- Business services within Advanced Connectivity: expected to grow at a low single-digit CAGR through 2028, as growth in wireless, fiber, and fixed wireless is expected to more than offset continued declines in “transitional and other” services.
- Cost savings: AT&T said it delivered more than $1 billion of cost savings in 2025 and expects to achieve an additional $4 billion of annual cost savings by the end of 2028, driven by operating efficiencies, digital and AI initiatives, and reductions tied to legacy operations.
- Consolidated adjusted EBITDA: expected to grow 3% to 4% in 2026, improving to 5% or better in 2028.
- Adjusted EPS: expected to be $2.25 to $2.35 in 2026, with a double-digit three-year CAGR through 2028. Desroches said 2026 includes about $0.05 of dilution from standup costs and higher interest expense tied to the Lumen and EchoStar transactions.
- Free cash flow: expected to be $18 billion+ in 2026, with growth of $1 billion+ in 2027 and about $2 billion in 2028.
Desroches said AT&T’s outlook does not assume a “material contribution” to EBITDA from pending acquisitions until 2028, which is also when management expects those investments to become accretive to adjusted EPS.
Capital allocation, leverage, and shareholder returns
AT&T ended 2025 with net debt-to-adjusted EBITDA of 2.53x and $18.2 billion in cash and cash equivalents. Desroches said the company closed a $17.5 billion delayed draw term facility in the fourth quarter to support planned transaction closings.
Following the closing of the Lumen and EchoStar transactions, AT&T expects net leverage to rise to about 3.2x and then decline to about 3.0x by year-end as EBITDA and free cash flow grow. Desroches also said AT&T expects to receive cash from an equity partner that will co-invest in the acquired Lumen fiber assets, and reiterated expectations that net leverage returns to the 2.5x range within roughly three years after the acquisitions close.
On shareholder returns, AT&T said it returned more than $12 billion to shareholders in 2025—over $8 billion in dividends and more than $4 billion in share repurchases—and expects to return $45 billion+ to shareholders during 2026 to 2028. The company’s plan assumes maintaining the current common stock dividend and a consistent pace of share repurchases, including roughly $8 billion of buybacks in 2026. Desroches also said AT&T’s board authorized an additional $10 billion of share repurchases after completion of the current authorization.
About AT&T (NYSE:T)
AT&T Inc is a global telecommunications company that provides a broad range of communications and digital entertainment services. Its core activities include consumer and business wireless services, broadband and fiber internet, and network infrastructure. The company operates branded wireless services through AT&T Mobility and deploys fixed-line and fiber networks to deliver high-speed internet and related home services.
AT&T’s product and service portfolio spans mobile voice and data plans, smartphones and device sales, home internet (including fiber-to-the-home where available), and managed connectivity solutions for enterprise customers.
