AT&T Inc. (NYSE:T) released its fiscal fourth-quarter 2025 financial results on Wednesday, unveiling a mix of encouraging growth in its wireless and consumer wireline divisions against the backdrop of ongoing challenges in its legacy wireline business. The company posted operating revenues of $33.47 billion, marking a 3.6% increase compared to the same quarter last year and exceeding the analyst consensus estimate of $32.87 billion.
The revenue gain primarily reflected strength in AT&T's Mobility, Consumer Wireline, and Mexico businesses. Mobility sales increased by 5.3%, while Consumer Wireline revenue grew 2.9%, with the addition of 283,000 AT&T Fiber net subscribers and 221,000 net additions from AT&T Internet Air services. Conversely, Business Wireline revenue fell 7.5%, driven by persistent declines in legacy and transitional services.
Adjusted earnings per share (EPS) reached 52 cents, outpacing analyst expectations of 46 cents. Net income, however, declined slightly to $4.2 billion from $4.4 billion in the prior-year quarter. Operating cash flow fell to $11.3 billion from $11.9 billion year-over-year, while free cash flow was reported at $4.2 billion, modestly up from $4.0 billion previously. Capital expenditures remained substantial at $6.8 billion for the quarter as the company continues to invest heavily in infrastructure.
On the customer front, AT&T added 421,000 postpaid phone net additions during the quarter, a decrease from 482,000 a year ago. Postpaid phone churn rose to 0.98% from 0.85%, while prepaid churn increased to 2.89% from 2.73%. The company also reported a slight decline in postpaid phone-only Average Revenue Per User (ARPU), down 0.3% to $56.57 year-over-year. Nevertheless, 42% of households using AT&T fiber have bundled their wireless service, indicating a strategic overlap between fixed and mobile offerings.
Examining profitability by segment, Mobility segment operating income grew 4.5% year-over-year to $6.4 billion, maintaining a stable operating margin slightly down to 26.3% from 26.5%. The Consumer Wireline segment demonstrated notable improvement, expanding its operating margin to 15.1% from 8.0% a year earlier. The Business Wireline segment, while still reporting an operating loss, narrowed its deficit to a margin loss of 3.9% compared to 4.6% previously. Overall, AT&T's operating income rose to $5.8 billion from $5.3 billion in the prior-year quarter.
Looking ahead, AT&T anticipates that ongoing heavy investment in 5G and fiber expansion, supplemented by planned acquisitions of Lumen Technologies’ mass-market fiber business and EchoStar’s spectrum assets, will underpin growth in adjusted EBITDA, adjusted EPS, and free cash flow through 2028. The company forecasts a low-single-digit annual increase in service revenue for the 2026–2028 period.
For 2026, management projects adjusted EBITDA growth of 3% to 4%, improving to 5% or greater by 2028 as gains in Advanced Connectivity more than compensate for declines in Legacy services. Adjusted EPS guidance for 2026 is in the range of $2.25 to $2.35, compared to analyst consensus of $2.21, with a targeted double-digit compound annual growth rate through 2028.
AT&T expects the acquisitions to weigh slightly on adjusted EPS during 2026 and 2027 before contributing positively starting in 2028. The company plans to maintain substantial capital investment, allocating $23 billion to $24 billion annually from 2026 through 2028. Correspondingly, the firm aims for free cash flow of at least $18 billion in 2026, rising to $21 billion or more by 2028.
Advanced Connectivity service revenue is projected to grow at a mid-single-digit annual rate, including growth exceeding 5% in 2026 that incorporates roughly 100 basis points from the anticipated Lumen retail fiber subscriber acquisition. EBITDA growth in this segment is forecast at mid-to-high single digits annually, with over 6% expansion expected in 2026. AT&T notes that the Lumen subscriber acquisition will have minimal EBITDA impact in that year.
In contrast, Legacy service revenue is expected to contract by more than 20% in 2026 due to network shutdowns of copper-based infrastructure targeting completion by the end of 2029, with customers transitioning to 5G and fiber. The company anticipates Legacy revenue to become immaterial by 2029 end and projects negative EBITDA from this segment after 2027 until most direct copper network costs are eliminated.
AT&T plans to complete acquisition of Lumen’s mass-market fiber business and wireless spectrum licenses by early 2026. The firm agreed in August to acquire EchoStar's assets for $23 billion to bolster its spectrum holdings. Post-acquisition, AT&T intends to place the Lumen assets in a subsidiary and divest a stake to an equity partner.
The company highlighted that average deployment costs per fiber passing are rising approximately 2% annually, reflecting ongoing cost pressures in network buildout. Furthermore, Q1 2026 results will incorporate additional expenses related to the integration and scaling of the retail operations from Lumen, indicating short-term spending increases tied to these acquisitions.
On shareholder returns, AT&T projects repaying over $45 billion to investors via dividends and stock buybacks from 2026 to 2028. The annualized dividend will be maintained at $1.11 per share. The firm expects to complete repurchases under its existing $10 billion authorization by the end of 2026 and initiate buybacks against a new $10 billion authorization already approved by its board. Approximately $8 billion in common stock repurchases are planned for 2026, with steady buyback activity continuing through 2028, contingent on board approvals.
Following the earnings release, AT&T shares experienced a positive market response, rising 2.7% to $23.63 during premarket trading on Wednesday, signaling investor approval of the company’s strategic balance of legacy transformation and growth in advanced connectivity services.