User growth compounded by price increases, AT&T (T.US) Internet user net growth set a record, and EPS increase guidelines

The Zhitong Finance App learned that AT&T (T.US) announced financial results for the third quarter of 2026 before the US stock market on October 21 (Wednesday). Financial reports showed that its revenue was US$32.3 billion, up 5.3% year over year, higher than the market's unanimous expectations; adjusted earnings per share were $0.65, higher than the forecast of $0.60. The company also raised the adjusted EPS guidance for the full year 2026 from $2.25-2.35 to approximately $2.40.

User growth and price increases are the two major drivers of this year's results. AT&T pointed out that the increase in wireless service revenue comes from user growth and price increases in low-penetration market segments and integrated accounts, but promotional discounts for new users partially offset the price increase.

In the third quarter, the company's post-paid mobile phone users increased by 379,000, roughly the same as analysts' expectations of about 379,300, with a post-paid mobile phone off-network rate of 0.9%; the net increase of 769,000 Internet users set a single-quarter record, including 442,000 fiber-optic broadband households and 327,000 fixed wireless households. About 43% of AT&T home internet service users also choose their wireless package, and the company is betting that this bundling strategy will increase user stickiness as competition intensifies.

The net increase in Internet users reached a record 769,000 in a single quarter, including 442,000 fiber-optic broadband households and 327,000 fixed wireless households. For the second consecutive quarter, the company achieved a total increase of more than 1 million advanced connectivity users. The proportion of integrated users using optical fiber and wireless services at the same time rose to 42.8%, up from 42.5% last quarter. The company's target is 50%.

It is worth noting that the release of this financial report comes at a time when the competitive landscape is changing. SpaceX signed an $8 billion agreement last month to acquire Grain Management's cellular spectrum license, the biggest move the Musk company has made to enter the wireless market so far; SpaceX has indicated that it wants to expand Starlink services beyond broadband, and the deal could make it a more immediate threat to AT&T, Verizon (VZ.US), and T-Mobile (TMUS.US).

By business, advanced connectivity business service revenue was US$23.9 billion, up 6.1% year on year. Among them, wireless service revenue increased 5.0% and household internet revenue increased 23.4% (including Lumen fiber assets combined); the EBITDA profit margin for this segment was 41.8%. Revenue from the traditional copper grid business continued to shrink, down 24.5% year over year.

In terms of guidance, the company raised the 2026 adjusted earnings per share guide from $2.25-2.35 to approximately $2.40, higher than market expectations of $2.35; free cash flow guidance remained above $18 billion (market expectations of $18.12 billion). In terms of capital expenditure, capital investment remained at US$23 billion to US$24 billion in 2026, but the company lowered its long-term outlook to US$22-23 billion a year in 2027 and 2028. The company also maintains an adjusted EBITDA growth rate of 3% to 4% in 2026, reaching a target of 5% or more in 2028, with free cash flow targets of over $18 billion in 2026, over $19 billion in 2027, and over $21 billion in 2028; plans to return more than $45 billion to shareholders from 2026 to 2028 (including about $10 billion in 2026 repurchases), and maintain an annual dividend of $1.11 per share. The goal is to reduce the ratio of net debt to adjusted EBITDA by about 2.5 times by 2029.