T Q3 CY2025 Deep Dive: Fiber Expansion, Convergence Strategy, and Margin Focus Define Quarter

Telecommunications conglomerate AT&T (NYSE:T) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 1.6% year on year to $30.71 billion. Its non-GAAP profit of $0.54 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

AT&T’s third quarter results landed in line with Wall Street’s revenue expectations, but the market reacted negatively, reflecting concerns raised by management about rising subscriber acquisition costs and competitive intensity within the wireless segment. CEO John Stankey credited robust broadband net additions—AT&T’s highest in eight years—to ongoing investments in fiber and fixed wireless services. Stankey emphasized that convergence between wireless and broadband is driving higher-value, lower-churn customer relationships, while CFO Pascal Desroches acknowledged that increased equipment and acquisition expenses pressured margins despite operational cost efficiencies.

Looking ahead, AT&T’s guidance is driven by its continued execution on expanding fiber and fixed wireless footprints, as well as the integration of pending Lumen and EchoStar asset acquisitions. Management highlighted that a growing share of incremental revenue will come from converged customer relationships, underpinned by cross-selling wireless and broadband offerings. Stankey noted, “Our goal is to become the best advanced communications provider in America,” while Desroches pointed to ongoing network modernization and convergence as levers for sustainable margin improvement, even as the company navigates seasonal ARPU pressures and ongoing market competition.

Key Insights from Management’s Remarks

Management attributed the quarter’s performance to broadband subscriber growth, convergence adoption, and strategic asset acquisitions, while noting persistent cost pressures in mobility.

• Broadband subscriber momentum: AT&T recorded its highest total broadband net additions in more than eight years, driven by strong demand for fiber and fixed wireless (Internet Air), reflecting the benefit of expanded network investments.
• Convergence strategy progress: The company reported that 41% of fiber households and over half of Internet Air subscribers also have AT&T wireless, highlighting the success of bundling services to increase customer lifetime value and reduce churn.
• Mobility cost headwinds: Management noted elevated costs to acquire and retain subscribers, primarily due to higher equipment expenses and intense market competition, which weighed on mobility margins despite efficiency gains elsewhere.
• Asset acquisitions for growth: Pending purchases of EchoStar’s spectrum licenses and Lumen’s fiber assets are expected to expand AT&T’s advanced connectivity footprint, with management projecting these moves will enhance both wireless and fixed broadband offerings.
• Legacy transition and operational efficiency: AT&T continues to phase out outdated copper and DSL infrastructure in favor of fiber and fixed wireless, a shift that reduces maintenance costs and supports improved margins as the company transitions to an AI-ready network.

Drivers of Future Performance

AT&T expects its growth and margin outlook to be shaped by network expansion, customer convergence, and operational transformation.

• Fiber and fixed wireless expansion: Management plans to aggressively expand both fiber and fixed wireless footprints, targeting more than 60 million locations by 2030. These investments are seen as foundational for attracting new subscribers and supporting higher broadband revenues.
• Converged customer focus: The company’s strategy prioritizes increasing the penetration of customers taking both wireless and broadband services, which management believes will lower churn and boost profitability over time, even as introductory offers initially compress ARPU (average revenue per user).
• Margin improvement initiatives: AT&T is banking on the reduction of legacy network costs and completion of wireless modernization projects to drive sustainable margin expansion. CFO Pascal Desroches highlighted that increased convergence will also enhance acquisition efficiency and support long-term profit growth.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will watch (1) the pace of expansion and adoption for AT&T’s fiber and fixed wireless offerings, (2) integration progress and realized benefits from the Lumen and EchoStar acquisitions, and (3) improvements in operating margins tied to legacy infrastructure replacement and customer convergence. Execution against these milestones will signal AT&T’s ability to sustain growth and profitability amid a competitive landscape.

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