AT&T Inc (T.US) announced its fourth-quarter financial results, revealing revenue of $33.5 billion, a 3.7% year-over-year increase that surpassed analyst estimates of $32.8 billion. Adjusted earnings per share climbed to 52 cents, exceeding the projected 46 cents, while adjusted EBITDA reached $11.2 billion, also topping the anticipated $11.1 billion. The company, however, reported lower-than-expected net additions of postpaid phone subscribers, signaling pressure for the nation's third-largest wireless carrier in an intensifying battle for customers. It added 421,000 wireless subscribers, falling short of Wall Street's forecast of 440,000. CEO John Stankey had previously indicated in October that his company was navigating an "increasingly active market," with no signs of this competitive intensity abating before the end of 2025.
To effectively compete with rivals Verizon (VZ.US) and T-Mobile US (TMUS.US), AT&T has rolled out a series of promotions and discounts aimed at attracting new customers and retaining existing ones, including offers for the latest iPhone 17 Pro with trade-in. The three major U.S. carriers are engaged in a fierce promotional war, which analysts believe could potentially impact their financial performance. AT&T's strategy heavily relies on customers who bundle multiple services—for instance, subscribing to both a mobile plan and home internet. In the fourth quarter, AT&T added 283,000 fiber broadband subscribers, exceeding analyst expectations of 277,000.
AT&T's fixed wireless internet service, Internet Air, which utilizes its 5G mobile network to provide connectivity across much of the U.S., serves as another home internet option. This service added 221,000 subscribers in the quarter, which was below Wall Street's expectation of 272,000. AT&T was the first major U.S. telecom operator to report earnings this season. Verizon is scheduled to report on January 30, followed by T-Mobile on February 11. Both Verizon and T-Mobile appointed new CEOs last year, and Verizon recently experienced a significant, nationwide service outage that lasted an entire day. Year-to-date, the stock prices of all three major carriers have declined.
Looking ahead, the company's annual profit guidance exceeded market expectations, as it bets that its expansion of wireless and fiber networks will position it to meet growing demand for 5G and high-speed internet. AT&T forecasts adjusted earnings per share between $2.25 and $2.35 for 2026, surpassing the $2.21 consensus estimate compiled by LSEG. The cornerstone of this optimistic outlook is AT&T's infrastructure strategy, centered on two major transactions: the nearly $6 billion acquisition of Lumen's consumer fiber business and the $23 billion purchase of spectrum licenses from EchoStar.
These deals, expected to close early this year, are anticipated to help AT&T lure customers from competitors with faster speeds and improved mobile coverage, allowing it to capitalize on the broadband demand fueled by growing data consumption from remote work, streaming, and connected devices. AT&T also projects that free cash flow will exceed $21 billion by 2028, higher than the analyst consensus of $19.61 billion compiled by LSEG. Beginning in the first quarter of 2026, AT&T will reorganize its reporting structure into three segments. The first is the new "Advanced Connectivity" segment, encompassing domestic 5G and fiber services, which is expected to represent approximately 90% of 2025 revenue.
The other two segments will be the Legacy business, which includes copper-based voice and data services, and the Latin America business, representing the company's wireless operations in Mexico.