AT&T Inc. Bank of America 2026 Media,Communications & Entertainment Conference
Review the key takeaways and the transcript of this earnings call.
Transcript
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Thank you all for attending the last presentation of the 2026 Bank of America Telecom and Media Conference. Really happy to have AT&T helping us wrap up this year and excited to have Pascal and Gen join us here this afternoon. Thank you both for being here.
Thank you for having us.
Thank you. I think you might have a safe harbor that you wanted to show, Pascal.
Yes, indeed. Can we pull up the safe harbor? Some of the comments today will be forward-looking and are subject to risk and uncertainties. Please refer to our website for more information.
Great. Thank you, Pascal. I want to cover a broad range of topics, but I want to start with priorities and momentum in the business and going back to the second quarter. Big picture in the second quarter, AT&T reported faster growth in service revenue, adjusted EBITDA and adjusted EPS than in the first quarter. You also reiterated your full-year outlook. I would love to hear from you, Pascal, what has improved most meaningfully in the underlying business, and what gives you confidence in that momentum carrying through to the second half and even longer-term guidance period?
Yeah, look, I think we reached a tipping point in the second quarter, and we expected that. I will take you back. The last several years, we have been investing against priorities that we have deep convictions against. It is our belief if you want to be the best connectivity company, you need to have the very best technology. That is, for us, fiber and 5G. We have made enormous investments in both bolstering our spectrum position, modernizing our wireless network, and deploying fiber. Last year, we significantly increased, enhanced our position by mounting the acquisition of the Lumen consumer assets and the EchoStar spectrum. Together, those assets positioned us for accelerated growth. We said it at the time we did those deals. Those deals have both closed now, and we expect to see an acceleration in broadband revenue growth, both fiber and fixed wireless.
When we acquired EchoStar spectrum, it allowed us to open up more areas with fixed wireless. The combination of those two acquisitions, plus our organic build, that fiber that we have been at for several years now, really has increased the opportunity set for us to drive converged relationships. Our consumers have told us very clearly, they want to buy from one provider, and if we can provide them the very best services at a compelling price point where we have onerous economics on both sides, we believe that is a critical advantage. Ironically, in many ways, we are an insurgent in broadband and that for years, our cable peers have enjoyed a virtual monopoly, and we are overbuilding in their areas. We are able to bring a better product at an attractive price point, knowing that we can trade economics between wireless and fiber.
It is a great play and a great position to be at, and we think there is a lot of room to run. As you know, we continue to build out significant fiber locations both in our historical footprint, plus in the footprint that we acquired from Lumen, and that is going to continue to give us nice runway. We sit here today, AT&T, we have guided for the next three years to grow earnings double digits, EPS double digits. We said this year that we are returning $18 billion back to our owners in the form of dividends and buybacks. Over the next three years, we expect to deliver $45 billion back to owners, plus double-digit EPS growth and accelerated EBITDA growth from here. All in all, I am so incredibly proud of the organization and the position we find ourselves in.
You touched on convergence earlier, and I want to come back to that in a minute because it is really central to the story and even the evolving debate around telecom versus LEO and that entire thing. I wanted to focus on maybe wireless and competition for a second because we entered 2026 with expectation for elevated competition. I think in part because in 4Q, you did see some carriers out with relatively aggressive promotions, not AT&T, but others. In the second quarter, combined, what, 432,000 postpaid phone net adds, higher ARPU, lower year-over-year postpaid phone churn. Maybe contrary to some of the expectations that the market had entering the year, I would love to hear what changed during the quarter and how much that performance reflects AT&T's specific execution versus moderation industry switching activity. It is kind of a long question.
If you look beneath the headline numbers, what customer behavior has changed? Are they switching less frequently? What has changed in their behavior, their activity?
Let me start, and then I will have Gen jump in. There were several things we knew was going to accelerate our momentum. Remember, we acquired the Lumen assets in February. That first quarter, we knew we were going to have to invest significantly to ramp up our distribution. That was a headwind we had called out, and we expected that. Two, we only had two months of Lumen operations in the first quarter. Mechanically, in the second quarter, when you having a full quarter would also add to our growth rate. One, we also had pricing actions planned for the second quarter. On top of that, we knew as we scaled the Lumen assets, as we managed those assets and put more marketing muscle behind it, that those assets were going to produce more than they have historically.
All things that we are seeing and we are benefiting from that have really helped the momentum and all those plays. That is a lot of room to run on top of a great performance by our business segment, which has also reached a tipping point that, for years we have been saying we are going to achieve service revenue growth. We grew service revenues 1.8% last quarter, and we are guiding to our growth for the foreseeable future over the next three years, both single digits. A lot of things are working well, and as we scale our fiber footprint, as we scale the Lumen acquisition, we have a lot of room to run.
You touched on execution of AT&T strategy and things that you are actively doing. I am also curious, if you are seeing the consumers are switching less frequently, holding devices longer, maybe placing greater emphasis on network quality service, what you are seeing with customer behavior and how that is affecting the metrics that you posted.
Yeah, I will build from where Pascal just was, which is, we certainly are seeing behavior that is similar to last year with respect to switching.
We are seeing same levels. I would say the industry is very healthy with respect to competition. It is as competitive out there as it has been. Switching levels we have said is they are on par. I would not say they are higher or they are lower. They have held steady as we have gone through the year. What we are very proud of is that our thesis is holding across three fronts. One, the converged strategy is working. Anchoring the home with converged absolutely gives us the opportunity in areas where we are under-penetrated in fiber, such as the new Lumen assets. We can go build off the home, pick up the fiber, and then grow wireless where we have not historically had as strong of wireless share, like in the Lumen footprint.
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