AT&T reported third-quarter 2026 results on Wednesday, October 21, before the open. Revenue: $32.3 billion, up 5.3%, and according to the company this is its best consolidated service revenue growth in more than four years. It posted a quarterly record of 769,000 net internet additions, raised its full-year adjusted earnings outlook and lowered its capital investment outlook. And the stock closed down 6.45%.
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What was reported
| Q3 2026 | Q3 2025 | |
|---|---|---|
| Revenue (billions of dollars) | 32.3 | 30.7 |
| Operating expenses | 28.2 | 24.6 |
| Operating income | 4.1 | 6.1 |
| Adjusted operating income | 7.6 | 6.6 |
| Income from continuing operations | 1.3 | 9.7 |
| Diluted earnings per share (dollars) | 0.13 | 1.29 |
| Adjusted earnings per share (dollars) | 0.65 | 0.54 |
| Adjusted EBITDA | 12.5 | 11.9 |
| Cash from operating activities | 10.5 | 10.2 |
| Free cash flow | 5.0 | 4.9 |
Source: AT&T's third-quarter 2026 press release, October 21, 2026, filed with the SEC on Form 8-K as Exhibit 99.1. "Adjusted" and EBITDA are non-GAAP measures, as the company defines them in the release.
The two earnings-per-share lines move in opposite directions, and both are correct.
GAAP earnings collapsed from $1.29 to $0.13 - but both ends are distorted: the year-ago quarter included a gain on the sale of the DIRECTV investment, and the current quarter includes a $2.6 billion non-cash impairment charge on the Mexico wireless business, which the company has agreed to sell to Grupo Televisa and Fintech Holdings, plus employee separation charges. The total adjustment: $0.52 per share.
Adjusted earnings, which strip out both sides, rose from $0.54 to $0.65.
The engine: Advanced Connectivity
The segment the company calls "Advanced Connectivity" - fiber, fixed wireless and postpaid wireless - is the operating story:
- Service revenue of $23.9 billion, up 6.1%
- Operating income of $7.6 billion, up 18.9% - meaning profit grew three times as fast as revenue
- EBITDA of $12.3 billion, up 7.3%
And in additions: 769,000 net internet adds, a quarterly record - 442,000 in fiber and 327,000 in fixed wireless. In postpaid phone it added 379,000, at churn of 0.92%. This is the second consecutive quarter in which the company added more than a million Advanced Connectivity customers.
And the number that explains the strategy: 42.8% of households that took the company's advanced home internet also chose its wireless. The number of these converged relationships grew by about 350,000 in the quarter.
On the other side of the coin sits the legacy business: the company continues to decommission its copper network, and revenue from there is falling - guided to decline by more than 20% in 2026.
The infrastructure, the debt and the outlook
The company has passed 39 million consumer and business locations with fiber, and guides to passing 40 million by the end of 2026 and 60 million by the end of 2030. Fiber revenue also includes Lumen's mass markets fiber business, acquired in the first quarter.
The debt: $159.6 billion in total, and $149.8 billion net - both up sequentially, which the company attributes to the closing of the EchoStar spectrum transaction. The target it sets: a net debt to adjusted EBITDA ratio returning to around 2.5 during 2029.
And the guidance update, which runs in two directions:
| 2026 | 2027 | 2028 | |
|---|---|---|---|
| Adjusted earnings per share | ~$2.40 | double-digit 3-year CAGR through 2028 | |
| Capital investment | $23 - $24 billion | $22 - $23 billion | $22 - $23 billion |
| Free cash flow | $18+ billion | $19+ billion | $21+ billion |
The long-term outlook is presented on a continuing operations basis, and for 2027-2028 excludes AT&T Mexico.
So adjusted earnings went up in the guidance, and capital investment went down - a combination that improves free cash flow from both ends. In the capital return plan: an annualised dividend of $1.11 per share, share repurchases of more than $24 billion - including about $10 billion in 2026 - and in total more than $45 billion to shareholders over 2026 to 2028. In the quarter itself about $4.8 billion was returned, including $2.8 billion in repurchases.
The stock
The report was published before the open on Wednesday, so the trading reaction is that same day, October 21. The stock closed at $21.91, down 6.45% from the prior close of $23.42. It opened at $21.89, rose as high as $22.62 and fell as low as $21.79. Volume: 84.5 million shares.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
There is a gap here worth dwelling on: a company that reported a record in additions, revenue growth that is its best in four years, that raised its earnings guidance and lowered its investment guidance - and fell 6.45% on volume of 84.5 million shares.
Three hypotheses that sit inside the report itself, and I have no way to decide between them:
One, the debt. $159.6 billion, up sequentially, and the target for returning to a ratio of around 2.5 is 2029 - three years from here. A company committing to return more than $45 billion to shareholders over the next three years while carrying debt that is growing has set two obligations competing for the same cash flow.
Two, earnings quality. The gap between $0.13 on a GAAP basis and $0.65 adjusted is $0.52 - four times the reported figure. The Mexico charge is non-cash and flagged, but it is also a reminder that the company is parting with an asset.
Three, the legacy segment. Revenue from there is guided to fall by more than 20% in 2026, and its EBITDA is expected to turn negative after 2027 - until the company has substantially eliminated the direct costs of the copper network. That is a hole the growth in Advanced Connectivity has to fill, and right now it is filling it.
And what I am willing to say: 42.8% of households with the advanced internet also take wireless. That is the number that justifies the whole fiber build, and if it keeps rising, the $23 billion to $24 billion a year of investment acquires a logic that does not depend on additions alone.
What I will follow: that conversion ratio, and net debt against the 2029 target.
(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)
Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.
