User growth combined with price increases drives AT&T (T.US) to record net internet subscriber additions and raises EPS guidance.

AT&T (T.US) released its third-quarter 2026 earnings report before the U.S. market opened on Wednesday, October 21. The report showed revenue of $32.3 billion, up 5.3% year over year and above the market consensus; adjusted earnings per share came in at $0.65, above the expected $0.60. The company also raised its full-year 2026 adjusted EPS guidance from $2.252.35 to approximately $2.40. User growth and price increases were the two main drivers of this quarter's results. AT&T noted that wireless service revenue growth came from subscriber growth in low-penetration segments and converged accounts as well as from price increases, though promotional discounts for new subscribers partly offset the effect of the price hikes. In the third quarter, the company added a net 379,000 postpaid phone subscribers, roughly in line with analysts' expectations of about 379,300, with a postpaid phone churn rate of 0.9%; net internet subscriber additions reached a record 769,000 for a single quarter, including 442,000 fiber broadband and 327,000 fixed wireless. About 43% of customers who take AT&T home internet service also choose its wireless plan, and the company is betting that this bundled convergence strategy will strengthen subscriber loyalty amid intensifying competition. Net internet subscriber additions hit a record 769,000 in the quarter, including 442,000 fiber broadband and 327,000 fixed wireless, and the company achieved total advanced connectivity subscriber additions of more than 1 million for a second consecutive quarter. The share of converged customers using both fiber and wireless services rose to 42.8% from 42.5% in the prior quarter, with the company targeting 50%. It is worth noting that this earnings release comes as the competitive landscape is shifting. SpaceX last month signed an $8 billion agreement to acquire Grain Management's cellular spectrum licenses, its largest move to date into the wireless market by Elon Musk's company; SpaceX has said it wants to expand Starlink services beyond broadband, and the deal could make it a more direct threat to AT&T, Verizon (VZ.US) and T-Mobile (TMUS.US). By segment, advanced connectivity services revenue was $23.9 billion, up 6.1% year over year, including wireless service revenue growth of 5.0% and home internet revenue growth of 23.4% (including the consolidation impact of Lumen fiber assets); the segment's EBITDA margin was 41.8%. Revenue from the traditional copper network business continued to shrink, down 24.5% year over year. On guidance, the company raised its 2026 adjusted earnings per share guidance from $2.252.35 to approximately $2.40, above the market expectation of $2.35; free cash flow guidance was maintained at more than $18 billion (market expectation $18.12 billion). On capital spending, 2026 capital investment was maintained at $23 billion$24 billion, but the company lowered its long-term outlook, reducing it to $22 billion$23 billion per year in 2027 and 2028. The company also maintained its targets of adjusted EBITDA growth at the upper end of the 3%4% range in 2026 and above 5% in 2028, with free cash flow targets of more than $18 billion in 2026, more than $19 billion in 2027 and more than $21 billion in 2028; it plans to return more than $45 billion to shareholders from 2026 to 2028 (including about $10 billion of buybacks in 2026), keep its annual dividend at $1.11 per share, and targets reducing its ratio of net debt to adjusted EBITDA to about 2.5x by 2029.