T Q2 Deep Dive: Fiber and 5G Expansion Drive Converged Growth, Cost Initiatives Support Margins

Telecommunications conglomerate AT&T (NYSE:T) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 3.5% year on year to $30.85 billion. Its non-GAAP profit of $0.54 per share was 1.9% above analysts’ consensus estimates.

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StockStory’s Take

AT&T’s second quarter results met market expectations for both revenue and profitability, reflecting steady execution in its core Mobility and Consumer Wireline businesses. Management attributed the quarter’s performance to continued subscriber growth in postpaid wireless and fiber broadband services, as well as an acceleration in converged offerings—customers taking both fiber and wireless plans. CEO John Stankey highlighted, “Our convergence trend accelerated in the second quarter, driven by growth in new customer relationships that subscribe to both our fiber and 5G services.” Cost efficiencies and network modernization also contributed to improved operating margins.

Looking ahead, AT&T’s forward guidance centers on accelerating fiber deployment and further leveraging its converged offerings strategy to drive long-term growth. Management aims to use cash tax savings from recent legislation to invest in network expansion and pension funding, expecting to reach 60 million fiber locations by 2030. CFO Pascal Desroches emphasized, “We intend to invest a portion of these savings in our network, primarily by accelerating our fiber deployment.” The company also plans to balance continued investment in growth initiatives with disciplined capital returns and cost controls, while monitoring competitive dynamics and seasonality in wireless.

Key Insights from Management’s Remarks

Management’s commentary focused on growth in converged customer relationships, increased investment in next-generation networks, and ongoing cost savings from legacy infrastructure retirement.

• Converged service adoption rising: AT&T reported a higher rate of customers subscribing to both its fiber and wireless services, which management said leads to lower churn and improved customer lifetime value. The company’s convergence rate reached 40.9% for fiber and 5G, up 140 basis points from last year.
• Fiber expansion pacing up: The company nearly tripled total broadband net additions compared to a year ago, driven by 243,000 new fiber subscribers and 203,000 Internet Air (fixed wireless) net adds. Stankey noted these trends demonstrate AT&T’s brand strength in broadband and its ability to attract customers nationwide.
• Cost efficiencies from copper retirement: Progress in retiring legacy copper infrastructure is driving operating leverage and margin improvement. AT&T filed to discontinue service in about 10% of its wire centers, supporting its goal to retire most copper by 2029 and reduce costs.
• Investments fueled by tax savings: Recent tax legislation, referred to as the One Big Beautiful Bill Act, is enabling accelerated capital investment in fiber and 5G networks. Management plans to reach a pace of 4 million new fiber locations per year by the end of 2026 and double total fiber reach to over 60 million by 2030, including planned acquisitions.
• Mobility subscriber growth and higher costs: The Mobility segment added over 400,000 postpaid phone customers, with increased gross additions partially offset by higher churn due to device financing expirations and a competitive environment. Higher growth-related spending is being balanced by cost reductions elsewhere in the business.

Drivers of Future Performance

AT&T expects future performance to be shaped by network expansion, converged services adoption, and ongoing cost discipline, while navigating a competitive wireless market.

• Accelerated fiber deployment: Management targets a run rate of 4 million new fiber locations added annually by 2026, aiming for total reach above 60 million by 2030. This expansion is expected to drive higher broadband revenue and create cross-selling opportunities in Mobility.
• Converged offerings as growth lever: The company is focused on increasing the share of customers taking both fiber and wireless services, which management believes leads to lower churn, improved margins, and stronger customer retention. The strategy is seen as key to differentiating AT&T in a converged connectivity market.
• Continued cost savings and capital allocation: AT&T plans to reinvest a portion of anticipated cash tax savings into network upgrades and pension funding, while also accelerating share repurchases. Management highlighted ongoing cost takeout from legacy infrastructure retirement and a disciplined approach to capital allocation as important factors supporting future margin expansion.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of fiber deployment and subscriber growth in both fiber and Internet Air, (2) the impact of rising converged customer adoption on churn and margins, and (3) continued execution on cost-saving initiatives, particularly legacy copper retirement. We will also track how management balances capital investments with shareholder returns as tax savings materialize.

AT&T currently trades at $27.62, in line with $27.41 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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