AT&T - Q1 2026 Earnings Analysis

Performance Highlights

AT&T reported first-quarter 2026 revenue of $31.5 billion, up 2.9% year over year, while adjusted EPS of $0.57 beat the prior-year quarter by 11.8%, and adjusted EBITDA rose to $11.8 billion, a 2.3% year-over-year gain. Free cash flow came in at $2.5 billion, at the high end of the $2.0 billion to $2.5 billion guidance range, despite higher capital investment as fiber deployment accelerates.

The single most important operating driver was the best-ever first-quarter performance in Advanced Connectivity internet net additions, with 584,000 total adds including 292,000 fiber and 292,000 fixed wireless, marking six consecutive quarters above 500,000. Advanced Connectivity EBITDA grew 5.6% to $11.6 billion, with the organic advanced home internet convergence rate approaching 45%, up over 3 percentage points year over year, while Legacy revenues fell 25.3% as copper decommissioning continues on schedule.

Management Outlook and Forward Catalysts

Management reiterated all 2026 targets, including adjusted EBITDA growth of 3% to 4%, adjusted EPS of $2.25 to $2.35, free cash flow of $18 billion or more, and capital investment of $23 billion to $24 billion, with a longer-term trajectory pointing to $21 billion or more in free cash flow by 2028 and a double-digit adjusted EPS CAGR through that year. The Lumen Mass Markets fiber acquisition, closing February 2, 2026, added over 4 million locations, bringing total fiber reach to more than 37 million and keeping the company on track for 40 million by year-end and 60 million by 2030.

The central investor debate heading into Q2 centers on whether accelerating fiber capital deployment with net debt rising to $126.4 billion and leverage edging up to 2.71x adjusted EBITDA can be absorbed without pressuring the targeted return to a 2.5x leverage ratio, while bulls will focus on whether the convergence flywheel and fixed wireless momentum can sustain postpaid phone net adds of 294,000 and drive the guided free cash flow ramp.