AT&T (T) — Earnings Preview: Q3 2026
Key Points
- Momentum Building: AT&T is coming off a strong Q2 2026, with accelerating growth in service revenue (+2.7% YoY), adjusted EBITDA (+5.2% YoY), and adjusted EPS (+20% YoY). Q2 marked a "tipping point" as investments in fiber, wireless, and convergence are translating into improved financials.
- Guidance Reiterated: Management reaffirmed full-year 2026 guidance for consolidated service revenue growth in the low single digits, adjusted EBITDA growth of 3–4%, adjusted EPS of $2.25–$2.35, and free cash flow of $18B+.
- Consensus Expectations for Q3 2026: Revenue consensus is $31.7B, EBITDA $12.3B, and GAAP EPS $0.62. These figures imply continued sequential and YoY improvement.
- Year-over-Year Comparison: Q3 2025 was a solid quarter, but Q3 2026 faces a tougher comparable due to higher net adds, margin expansion, and strong ARPU performance in the prior year.
- Key Focus Areas for Q3 2026:
- Execution on fiber and fixed wireless net adds, especially in newly acquired Lumen territories.
- Progress on convergence (fiber + wireless) penetration rates.
- ARPU trends in both wireless and fiber, given ongoing pricing actions and mix shift toward value segments.
- Margin sustainability as cost transformation and copper retirement progress.
- Early signals from the EchoStar spectrum acquisition and integration of Lumen assets.
- Capital returns: pace of buybacks and dividend coverage.
- Business segment revenue inflection and durability of growth.
Most Important Factors to Watch in Q3 2026
| Factor | Why It Matters | What to Watch For |
|---|---|---|
| Fiber & FWA Net Adds | Core to revenue and EBITDA growth; largest-ever fiber build year | Sequential and YoY net adds, especially in Lumen footprint; ability to sustain >1M quarterly adds |
| Convergence Penetration | Drives lower churn, higher LTV, and margin expansion | % of advanced home internet customers with postpaid wireless (targeting 45–50%+) |
| Wireless & Fiber ARPU | Mix shift to value segments and convergence discounts can pressure ARPU | ARPU stability or growth, impact of pricing actions, and back-book repricing |
| Margins & Cost Transformation | Margin expansion is a key part of the long-term guide; copper retirement unlocks cost savings | Adjusted EBITDA margin trend, cost-out progress, copper shutdown milestones |
| Business Segment Growth | Recent inflection to positive growth; key for multi-year outlook | Low-single-digit YoY growth in business advanced connectivity revenues |
| Capital Returns | Aggressive buybacks and dividend payout; capital allocation discipline | Pace of buybacks ($10B target for 2026), dividend coverage, leverage trajectory |
| Integration of Acquisitions | Lumen and EchoStar deals are central to footprint and spectrum expansion | Early revenue/EBITDA contribution, operational ramp, and synergy realization |
Quarterly Financial Snapshot — Actuals vs. Consensus
Quarterly Results and Consensus (Q3 2025–Q4 2026)
| Quarter | Revenue ($M) | EBITDA ($M) | Net Income ($M) | GAAP EPS | Cash Flow/Share ($) | Notes |
|---|---|---|---|---|---|---|
| Q2 2026 | 31,810 | 12,108 | 4,171 | 0.59 | 1.41 | Actual |
| Q3 2026E | 31,662 | 12,330 | 4,165 | 0.62 | 1.45 | Consensus |
| Q4 2026E | 34,553 | 11,739 | 3,586 | 0.53 | 2.01 | Consensus |
| Q3 2025 | 30,885 | 11,742 | 3,833 | 0.53 | 1.44 | Actual |
*Consensus figures are not actuals.
Annual Financial Snapshot — Actuals and Consensus
| Fiscal Year | Revenue ($M) | EBITDA ($M) | Net Income ($M) | GAAP EPS | Cash Flow/Share ($) | Notes |
|---|---|---|---|---|---|---|
| 2025 | 125,094 | 46,245 | 14,767 | 2.93 | 5.59 | Actual |
| 2026E | 129,267 | 48,182 | 16,163 | 2.35 | 5.74 | Consensus |
Guidance Summary — FY2026
| Metric | Guidance (FY2026) | Context/Notes |
|---|---|---|
| Consolidated Service Revenue | Low single-digit % growth | Driven by wireless, fiber, and fixed wireless; offset by legacy declines |
| Adjusted EBITDA | +3% to +4% YoY | Margin expansion expected; cost transformation and copper retirement underway |
| Adjusted EPS | $2.25–$2.35 | Double-digit CAGR through 2028 targeted |
| Free Cash Flow | $18B+ | Q2: $4.7B; Q3 expected stable YoY; Q4 expected strong YoY growth |
| Advanced Connectivity Revenue | +5% YoY | Fiber, fixed wireless, and wireless service revenue growth |
| Advanced Connectivity EBITDA | +6% YoY | Margin expansion from scale, cost-out, and mix shift |
| Capex | $23B–$24B | Largest-ever fiber build year; capital intensity to moderate after 2027 |
| Share Repurchases | ~$10B in 2026 | Up from $8B prior target; $18B total capital return (dividends + buybacks) in 2026 |
| Net Leverage | ~3.2x post-EchoStar close | Targeting 2.5x within ~3 years |
Q3 2026: Key Questions and What to Watch
- Fiber/FWA Net Adds: Can AT&T sustain or accelerate net adds in both legacy and Lumen footprints? Is the Lumen integration driving incremental growth?
- Convergence Rate: Is the convergence rate (fiber + wireless) continuing to rise toward the 50% target? Are new account additions still at multi-year highs?
- ARPU Trends: Is wireless ARPU holding up despite increased value-segment focus and convergence discounts? Is fiber ARPU stabilizing ex-Lumen, or is there further dilution?
- Margin Expansion: Are margins expanding as guided, and is cost transformation (including copper shutdown) delivering as expected?
- Business Segment: Is the business segment sustaining its recent positive growth? Are indirect/digital channels contributing meaningfully?
- Capital Returns: Is the company on track for $10B in buybacks and $18B in total capital return for 2026? Is leverage tracking to plan post-EchoStar?
- Integration Progress: Are Lumen and EchoStar assets being integrated on schedule, and are they contributing to revenue/EBITDA as planned?
How Did They Report Last Year? (Q3 2025)
- Q3 2025 Actuals: Revenue $30.9B, EBITDA $11.7B, Net Income $3.8B, GAAP EPS $0.53, Cash Flow/Share $1.44.
- YoY Comparison: Q3 2026 faces a tougher comp as Q3 2025 saw strong net adds, margin expansion, and ARPU performance. However, management expects to deliver sequential and YoY improvement in most key metrics, supported by expanded fiber footprint and convergence momentum.
Summary and Conclusions
- AT&T enters Q3 2026 with strong momentum across all core metrics, driven by execution on fiber expansion, convergence, and disciplined capital allocation.
- Guidance and consensus expectations call for continued growth in revenue, EBITDA, and EPS, with margin expansion and robust capital returns.
- The most important factors for the upcoming print will be execution on fiber/FWA net adds (especially in Lumen markets), convergence penetration, ARPU/margin trends, and the durability of business segment growth.
- Year-over-year comparables are challenging but achievable given the current trajectory and management's confidence.
- Watch for updates on integration of Lumen and EchoStar assets, as well as any commentary on competitive dynamics (wireless, broadband, satellite/LEO) and capital allocation priorities.
Upcoming Catalysts
- Q3 2026 earnings report (expected late October 2026)
- Progress updates on Lumen/EchoStar integration
- Further copper retirement milestones and cost-out realization
- Any changes to capital return plans or leverage targets
- Industry developments in satellite/LEO and AI-driven network demand
Bottom Line: AT&T is executing well against its multi-year strategy, with Q3 2026 expected to show continued operational and financial momentum. The focus remains on scaling fiber and convergence, managing ARPU/margins, and delivering on aggressive capital return targets, all while integrating recent acquisitions and transforming the cost structure.
