AT&T Reports Mixed Q1 Results: EPS Falls 11% Despite Revenue Growth

AT&T (NYSE: T) delivered mixed first-quarter 2026 results on April 22, with reported earnings per share declining 11% year-over-year to $0.54, down from $0.61 in Q1 2025. However, the telecom giant's adjusted earnings of $0.57 per share exceeded the prior year's $0.51, while revenue climbed 2.9% to $31.5 billion.

Key Numbers

The headline numbers tell a tale of two metrics. While reported EPS fell to $0.54 from $0.61 a year earlier — representing an 11% decline — adjusted EPS actually rose 12% to $0.57 from $0.51. This divergence reflects one-time items including acquisition-related costs from AT&T's February purchase of Lumen's Mass Markets fiber business.

Revenue growth accelerated to 2.9% year-over-year, reaching $31.5 billion compared to $30.6 billion in Q1 2025. The company's crucial Advanced Connectivity segment drove this expansion with service revenue up 3.6% to $22.9 billion. Within this segment, Advanced Home Internet revenue surged 27.3% to $2.8 billion, demonstrating strong momentum in fiber and fixed wireless adoption.

Operating income jumped to $6.7 billion from $5.8 billion, while adjusted EBITDA increased to $11.8 billion from $11.5 billion. Free cash flow, however, declined to $2.5 billion from $3.1 billion in the prior year, primarily due to higher capital investments as AT&T accelerates its fiber buildout.

The company added 584,000 total internet customers during the quarter, split evenly between 292,000 fiber and 292,000 fixed wireless additions. On the wireless side, AT&T gained 294,000 postpaid phone net adds while maintaining an industry-leading churn rate of 0.89%.

What Management Said

CEO John Stankey struck an optimistic tone, highlighting the company's "best first quarter ever for Advanced Connectivity internet customer net additions." He emphasized AT&T's strategic positioning in converged services, noting that the company is "uniquely positioned to deliver more of what customers want — fiber and 5G all from one provider."

Management pointed to a key metric demonstrating their convergence strategy's success: nearly 45% of advanced home internet subscribers also choose AT&T wireless when excluding newly acquired Lumen customers. This represents the fastest-ever year-over-year organic growth in the company's convergence rate, up over 3 percentage points.

Importantly, AT&T reaffirmed all its 2026 guidance targets. The company continues to expect adjusted EBITDA growth of 3-4%, adjusted EPS of $2.25-$2.35, and free cash flow exceeding $18 billion. Management also maintained its aggressive capital return program, planning approximately $8 billion in share repurchases for 2026 alongside the current $1.11 annual dividend.

The company reiterated its ambitious fiber expansion goals, remaining on track to reach over 40 million total fiber locations by year-end 2026 and more than 60 million by 2030. Currently, AT&T covers over 37 million locations, including 4 million acquired from Lumen.

What to Watch

Three critical areas merit close monitoring in upcoming quarters. First, the integration of Lumen's fiber assets will be key — while the customer relationships boosted Q1 results, AT&T plans to sell a controlling interest in the network assets to an equity partner. How this structure performs operationally and financially will impact future growth.

Second, the Legacy segment continues its planned decline, with revenues plummeting 25.3% as AT&T decommissions its copper network. This segment's operating income fell 40% to $612 million. The company aims to shut down the majority of its copper network by 2029, making the pace of this transition and its impact on overall profitability crucial to watch.

Third, capital intensity remains elevated at $5.1 billion in capital investment for the quarter, up from $4.5 billion a year ago. With the company targeting $23-24 billion in annual capital investment for 2026, investors should monitor whether this spending translates into sustained customer growth and improved returns. The convergence metric — customers taking both wireless and internet services — appears to validate the strategy, but maintaining momentum while managing costs will determine whether AT&T can achieve its 2028 targets.

The company's ability to balance growth investments with shareholder returns also deserves attention. AT&T repurchased $2.3 billion in shares during Q1 and plans $45 billion in total capital returns through 2028. With net debt at $126.4 billion, executing this ambitious program while investing heavily in network expansion represents a delicate balancing act.

Source: AT&T Inc. Form 8-K and Earnings Press Release filed with the SEC on April 22, 2026

*StockCliff Research*