AT&T Inc. Q4 FY2025 earnings call

• Achieved or exceeded all consolidated full-year financial guidance in 2025 driven by 5G and fiber subscriber growth. - Made progress on capital allocation, achieving net debt to adjusted EBITDA in the 2.5 times range and commencing share repurchase program, returning over $12 billion to shareholders. - Agreed to acquire spectrum licenses from EchoStar and fiber assets from Lumen, expected to close early 2026. - Plan to accelerate fiber expansion, with annual fiber construction ramp from 3 million in 2025 to 4 million by end of 2026, and reach over 40 million customer locations with fiber services by end of 2026. - Fiber convergence rate climbed 200 basis points year over year to 42% in Q4 2025. - Made progress on discontinuing legacy services, stopped sales of all targeted legacy copper base services in 85% of wire centers and FCC approved applications to discontinue copper-based services in over 30% of wire centers by 2026. - Achieved over $1 billion of cost savings in 2025 and plan to accelerate efficiency gains using AI, moving customer transactions to digital, and achieving operating leverage. - Plan to adopt new segment reporting starting Q1 2026, separating advanced connectivity (domestic 5G and fiber services) from legacy operations.

In 2025, AT&T had over 1.5 million postpaid phone net adds for the fifth consecutive year and over 1 million AT&T Inc. Fiber net adds for the eighth consecutive year. Accelerated growth of AT&T Inc. Internet Air with 875,000 net adds. Advanced connectivity drove about 90% of revenues and over 95% of adjusted EBITDA on a recast basis in 2025. Legacy segment represents results from domestic services over copper-based network.

• Over next three years, expect accelerated growth in adjusted EBITDA, double-digit adjusted EPS growth, and strong free cash flow. - Expect to return $45 billion plus to shareholders over next three years through dividend and share repurchases. - 2026 expected adjusted EBITDA growth in 3% - 4% range, improving to 5% or better in 2028. - 2026 adjusted EPS expected in $2.25 - $2.35 range with double-digit three-year CAGR through 2028. - 2026 free cash flows expected $18 billion plus, growing by $1 billion plus in 2027 and approximately $2 billion in 2028. - First quarter 2026 expected adjusted EBITDA growth below full-year run rate, free cash flows in $2 billion - $2.5 billion range. - Expect advanced home Internet service revenues to grow organically by 20% plus annually through 2028. - Total business service revenues within advanced connectivity segment expected to grow at low single-digit CAGR through 2028. - Pending acquisitions not expected to materially contribute to EBITDA growth until 2028 when expected to be accretive to adjusted EPS.

Q: On fiber convergence rate, where do you expect it to get to over time and about Lumen territory?

A: Expect convergence rate to continue to improve, aim to drive to 50%, and optimistic about performance in Lumen territory similar to traditional region with potential upside.

Q: On consumer wireline revenue growth slowdown, drivers and progress?

A: Partly due to ratable pricing management and providing value when adjusting prices, with forward guide for advanced home Internet growth being positive.

Q: On long-term outlook, spectrum investments and foldable iPhone impact?

A: Reserved capacity for strategic options, spectrum view as preemptive and opportunistic, foldable iPhone not expected to be broadly applicable form factor.

Q: On broadband, fiber ARPU and FWA growth?

A: Have degrees of freedom in managing ARPUs, DSL base going away by design, and FWA growth expected to hold up.

Q: On wireless, macro factors and response to competitor promotions?

A: Wireless industry mature, see opportunity in underpenetrated segments with convergence plays, plan to execute competitive playbook.

Q: On EBITDA growth inflection, cost drivers and cost cutting?

A: Key drivers include integrating Lumen assets, penetration of new assets, and legacy declines improving; expect over $4 billion of cost savings over next three years.

Q: On bad debt and cost cutting acceleration?

A: Bad debt increase due to higher equipment sales and service revenues, cost reduction across board including legacy decommissioning, AI, and digital.

Q: On national advertising, converged offering and FWA targeting?

A: Spend time on customer understanding, use national generic internet message with rifle shot targeting in right places, and expect evolution of advertising based on footprint growth.

Q: On handset amortization and wireless competition?

A: Expect same level of headwinds as 2025, basis of competition is different using converged relationships, and confident in managing ARPU dynamic.