AT&T, the telecommunications giant, has unveiled its impressive financial performance for the fourth quarter of fiscal year 2025, surpassing market predictions. The company's strategic pivot towards advanced connectivity, marked by significant investments in 5G and fiber optic networks, is proving instrumental in offsetting the diminishing returns from its traditional services. This forward-looking approach positions AT&T for sustained growth, promising enhanced profitability and considerable returns for its shareholders in the coming years.
AT&T's Financial Triumph and Future Trajectory
On a brisk Wednesday morning, January 28, 2026, AT&T Inc. released its financial statements for the fourth fiscal quarter of 2025, revealing a robust performance that outshone analyst forecasts. The company recorded operating revenues of $33.47 billion, marking a 3.6% increase from the previous year and exceeding the consensus estimate of $32.87 billion. Furthermore, adjusted earnings per share (EPS) reached 52 cents, comfortably beating the 46-cent analyst prediction. This revenue surge was primarily fueled by the strong performance of its mobility, consumer-wireline, and Mexican operations, even as its business-wireline segment experienced a decline.
While the business-wireline segment saw a 7.5% drop due to a reduction in legacy and transitional services, the mobility sector compensated with a 5.3% growth in sales, and consumer wireline sales rose by 2.9%. Despite a slight decrease in postpaid phone net additions to 421,000 and an uptick in customer attrition rates (postpaid phone churn to 0.98% and prepaid churn to 2.89%), AT&T maintained its average revenue per user (ARPU) at $56.57. A notable achievement was that 42% of households utilizing AT&T fiber also opted for their wireless services, showcasing strong cross-selling capabilities. The company continued its aggressive expansion of fiber optic networks, securing 283,000 new AT&T Fiber subscribers and 221,000 AT&T Internet Air additions.
Financially, adjusted EBITDA climbed to $11.2 billion, up from $10.8 billion in the prior year. However, net income slightly decreased to $4.2 billion, from $4.4 billion. Operating cash flow also dipped to $11.3 billion from $11.9 billion, yet free cash flow improved to $4.2 billion from $4.0 billion. Capital expenditures for the quarter stood at $6.8 billion. The mobility segment's operating income increased by 4.5% year-over-year to $6.4 billion, maintaining a margin of 26.3%. The consumer wireline segment showed remarkable improvement, with its operating margin expanding significantly to 15.1% from 8.0%. Conversely, the business wireline segment reported an operating margin loss of 3.9%, a slight improvement from the previous year's 4.6% loss. Overall, the company's operating income reached $5.8 billion, an increase from $5.3 billion in the same quarter last year.
Looking ahead, AT&T is optimistic about its future, projecting robust growth in adjusted EBITDA, adjusted EPS, and free cash flow through 2028, driven by substantial investments in 5G and fiber, alongside planned acquisitions. The company anticipates a low-single-digit annual service revenue growth for 2026–2028, with adjusted EBITDA growth of 3% to 4% in 2026, improving to 5% or better by 2028. Adjusted EPS is forecasted to be between $2.25 and $2.35 in 2026, targeting a double-digit three-year CAGR through 2028. AT&T plans annual capital investments of $23 billion to $24 billion from 2026 through 2028, aiming for free cash flow of $18 billion or more in 2026, $19 billion or more in 2027, and $21 billion or more in 2028. The company expects Advanced Connectivity service revenue to grow in the mid-single digits annually, while Legacy service revenue is expected to decline significantly as AT&T phases out its copper-based network by the end of 2029. The acquisition of Lumen’s mass-markets fiber business and EchoStar spectrum is slated for early 2026, with plans to sell partial ownership of the Lumen assets to an equity partner.
Regarding capital returns, AT&T aims to return over $45 billion to shareholders from 2026 to 2028 through dividends and buybacks. The current annualized dividend will be maintained at $1.11 per share, with plans to complete an existing $10 billion share repurchase authorization by late 2026 and initiate another $10 billion authorization. AT&T intends to repurchase approximately $8 billion of common stock in 2026, with continuous buybacks through 2028, subject to board approval. Following these announcements, AT&T shares saw a positive movement, trading up 2.70% at $23.63 in premarket trading.
AT&T's journey through this transitional phase underscores a vital lesson for established industries: adaptation is key to survival and growth. By proactively shedding legacy systems and embracing next-generation technologies like 5G and fiber, the company is not just navigating change but actively shaping its future. This strategic foresight ensures its relevance in an ever-evolving digital landscape, setting a precedent for how traditional businesses can innovate to stay competitive and deliver substantial value to stakeholders.