AT&T (T.US)'s profit and wireless user growth in the second quarter exceeded expectations, and SpaceX handed over steady answers under the cloud of competition

The Zhitong Finance App learned that AT&T (T.US) handed over a report card that exceeded expectations amid investors' general anxiety about the potential competitive threat of SpaceX (SPCX.US). For the second quarter ending June 30, the Dallas-based telecom operator added 432,000 new wireless phone subscribers, significantly higher than Wall Street's previous forecast of 325,000. After the financial report was released, AT&T's stock price had risen by about 4% before the market, but the cumulative decline from the beginning of the year to date was about 10%.

Core data: wireless users exceeded expectations, profit indicators fully met

In the three months ending June 30, there was a net increase in wireless phone users: 432,000, far exceeding analysts' previous forecast of 325,000.

Revenue: US$31.6 billion, up 2.3% year over year, slightly below market expectations in the range of US$31.8 billion to US$32 billion.

Adjusted EBITDA: $12.3 billion, slightly above expectations, is a key measure of financial health.

Adjusted earnings per share: $0.65, above market expectations of $0.59.

Full-year guidance: Reiterates the target for FY2026 adjusted earnings of $2.25 to $2.35 per share, with free cash flow of over $18 billion.

AT&T Chief Financial Officer Pascal Desroches said earlier at an investor conference that the year-on-year growth rate of wireless service revenue in the second quarter improved further compared to the first quarter.

Business highlights: The bundling model has achieved remarkable results, and fiber broadband continues to expand

In the midst of an increasingly competitive price war in the mobile user market, AT&T has introduced a series of positive offers and incentives over the past year. Among them, the “wireless+fiber” bundled model became the core engine driving growth.

According to the data, 42.5% of households that purchased AT&T home broadband services also purchased the company's mobile phone service. The success of this “integrated model” enabled AT&T to take the lead in establishing differentiated competitive barriers among the three major operators.

AT&T announced a new all-inclusive pricing structure for broadband and wireless services in March. In terms of optical fiber broadband, analysts expect about 287,000 new users to be added this quarter, which is basically the same as the number of new wireless users, reflecting the growth characteristics of “two-wheel drive”.

Shareholder return: $45 billion return plan provides safety pads

In the context of an uncertain competitive landscape, AT&T's shareholder return promises provided important support for the stock price. The company has reaffirmed its long-term financial guidance up to 2028, and plans to return $45 billion to shareholders through dividends and share repurchases during this period. Throughout 2026, the company is expected to repurchase approximately $8 billion of common stock.

AT&T's current annualized cash dividend remains at $1.11 per share, with a dividend yield of about 5%, which is still attractive to yield investors in an environment of fluctuating interest rates.

Competitive Threat: Starlink's “Sword of Damocles”

Despite the impressive financial data, the real challenge AT&T faced came from Elon Musk's SpaceX (SPCX.US). AT&T's stock price has fallen by about 10% since this year, and investors' concerns about Starlink's entry into the wireless communications market are a core suppressing factor.

SpaceX's ambition has been upgraded from a “satellite broadband supporter” to a “direct challenger to terrestrial mobile networks.” In June of this year, there were reports that SpaceX had revealed to investors that it plans to directly provide mobile services to American consumers, and that it had already negotiated a partnership with Franchise Communications to launch consumer-oriented mobile services. SpaceX's IPO prospectus has clearly positioned Starlink Mobile as a direct competitor to Verizon, AT&T, and T-Mobile.

In terms of spectrum layout, SpaceX completed an aggressive layout in the past year: in May 2026, the FCC officially approved SpaceX's acquisition of wireless spectrum licenses from EchoStar for about $17 billion, while AT&T purchased 50 MHz spectrum for about $23 billion in the same transaction. This means that SpaceX has acquired the ability to independently operate a mobile phone directly connected to a satellite service on its own band.

In terms of defensive measures, in May of this year, AT&T, Verizon, and T-Mobile rarely announced the establishment of a joint venture to jointly promote direct terminal connection satellite (D2D) services. The joint venture aims to integrate spectrum resources, help satellite service providers reach more users through a unified platform, and eliminate wireless signal blind spots in the US, including rural areas. This move has been widely interpreted as a “group defense” strategy adopted by the three major operators against SpaceX.

Analysts Bernstein believe AT&T has found “a more isolated battleground” in telecom operators' price wars. Over the past seven quarters, AT&T continued to beat analysts' earnings per share expectations.

TD Cowen analyst Gregory Williams pointed out that it is unlikely that any operator will sign an MVNO wholesale network agreement with SpaceX — “the wireless industry is already suffering due to cable MVNOs.” However, he also acknowledged that AT&T is probably the “least losing” of the three major operators due to its strong position in fiber optic networks.

J.P. Morgan analyst Sebastiano Petti believes that Starlink is more of a “long-term sword in the US wireless market than a short-term fundamental threat,” and predicts that SpaceX will not start building a US terrestrial network until 2028 at the earliest, and will not launch consumer-facing services until 2029.

Optical fiber business: AT&T's “moat” and “Achilles' heel”

According to analysts, AT&T's fiber business is both its biggest competitive advantage and a key variable in dealing with the Starlink shock.

Wells Fargo expects fiber business revenue to rise from 8% of total revenue in 2026 to 14% in 2032, and the number of fiber-optic coverage locations will increase from about 21 million to 54 million. However, Cahall warned that customers outside of AT&T fiber coverage are still extremely vulnerable to Starlink competition.

AT&T's converged model data for the second quarter confirmed the strategic value of optical fiber — 42.5% of broadband users purchased mobile services at the same time. The company also completed the acquisition of Lumen fiber customers, completed the transaction ahead of schedule, adding approximately 1.1 million fiber customers and more than 4 million fiber coverage locations.

Bernstein believes that it is this fusion advantage that may put AT&T in a relatively favorable position in the game with SpaceX. However, Wells Fargo still maintains a pessimistic judgment, believing that even with the support of the fiber-optic business, AT&T still faces the greatest risk in terms of net user growth and loss of share. Citing concerns about the Starlink deal, it gave AT&T a “low price” rating and a target price of $18.

The future: an unavoidable “satellite-terrestrial” competition

The signal conveyed by AT&T's earnings report is twofold: short-term operations are steady, and long-term strategies are under pressure. The unexpected performance of user growth proves that AT&T still has strong execution in the current market competition. But the threat posed by SpaceX is not a short-term fluctuation, but rather a structural challenge to traditional telecom operators' business models — satellite internet is reopening the coverage rights, marginal user acquisition rights, and pricing rights in rural areas that were previously monopolized by terrestrial networks.

The outcome of this war will depend on several key variables: whether SpaceX can successfully obtain terrestrial spectrum and establish its own mobile network in the 2027 spectrum auction; whether the satellite joint venture of the three major operators can form an effective check and balance in competition with SpaceX; and whether AT&T's fiber expansion can cover enough users to hedge against the erosion of Starlink.

As Starlink transforms from a rural broadband provider to a global connectivity platform covering broadband, mobile, and hybrid satellite-terrestrial networks, the “price war” between AT&T and its traditional rivals is evolving into a “satellite-terrestrial” paradigm war across the ages. While Musk's low-orbit satellite constellation is redefining the meaning of “connection” at a very low cost, the moat of ground base stations is being eroded little by little.

SpaceX is already valued at around $2 trillion, has about $110 billion in available capital, and has around 10.3 million Starlink users around the world — these figures mean that AT&T is not just a “satellite supplement network,” but a potential disruptor with strong capital, complete spectrum, and a huge user base.

AT&T chose to use a “fusion model” to reinforce the moat, use “group defense” to meet challenges, and use “shareholder return” to maintain the bottom line. However, in the face of SpaceX's “elephant in the room,” whether these measures work will be the most important investment proposition in the telecommunications sector in the next few quarters.