AT&T Inc. (NYSE: T)

AT&T’s second quarter 2025 results demonstrated strong execution across its connectivity strategy, with total revenues increasing 3.5% to $30.8 billion. This growth was primarily driven by higher mobility service revenues, which increased 3.5% year-over-year, and robust consumer wireline growth of 5.8%, partially offset by expected declines in business wireline and Mexico operations.

Operating income improved significantly to $6.5 billion from $5.8 billion in the prior year, representing a 12% increase. The improvement reflected operational growth and ongoing transformation efforts, partially offset by higher equipment costs associated with increased wireless equipment sales and continued fiber investment. Adjusted operating income was also $6.5 billion, up from $6.3 billion in the prior year.

Net income reached $4.9 billion, a substantial 26% increase from $3.9 billion in Q2 2024. This translated to diluted earnings per share of $0.62, up from $0.49 in the prior year. On an adjusted basis, which excludes equity income from DIRECTV and other items, earnings per share were $0.54 compared to $0.51 in the prior year.

Adjusted EBITDA grew to $11.7 billion from $11.3 billion in the prior year, reflecting the company’s continued focus on operational efficiency and margin expansion. The company maintained strong cash generation with cash from operating activities of $9.8 billion, up from $9.1 billion in the prior year, driven by operational growth and higher distributions from DIRECTV.

Free cash flow, excluding DIRECTV cash flows, was $4.4 billion compared to $4.0 billion in the prior year, representing a 10% increase. This strong cash flow performance supported the company’s capital allocation priorities including network investment and shareholder returns through share repurchases of approximately $1.0 billion during the quarter.

Mobility segment delivered exceptional performance with revenues increasing 6.7% to $21.8 billion. Service revenues grew 3.5% to $16.9 billion driven by postpaid phone ARPU growth of 1.1% and continued subscriber additions. Equipment revenues surged 18.8% to $5.0 billion reflecting higher wireless device sales volumes and the sale of higher-priced devices. The segment achieved 401,000 postpaid phone net adds with industry-leading churn of 0.87%.

Business Wireline segment continued to face secular pressures with revenues declining 9.3% to $4.3 billion. Legacy and transitional services declined 17.3%, though this was partially offset by 3.5% growth in fiber and advanced connectivity services. Operating expenses decreased 3.0% due to ongoing transformation initiatives, though the segment reported an operating loss of $201 million compared to $102 million income in the prior year.

Consumer Wireline segment showed strong momentum with revenues increasing 5.8% to $3.5 billion. This growth was driven by broadband revenue growth of 10.5%, with fiber revenues increasing 18.9%. The segment delivered positive broadband net adds for the eighth consecutive quarter, adding 243,000 AT&T Fiber customers and 203,000 AT&T Internet Air customers. Broadband ARPU increased 7.5% to $71.16.

Latin America segment faced foreign exchange headwinds with revenues declining 4.4% to $1.1 billion. However, the segment showed operational improvements with operating income of $46 million compared to $6 million in the prior year, and EBITDA increased 12.9% to $201 million. The segment added 235,000 total wireless net adds including 183,000 postpaid subscribers.

The Communications segment overall generated revenues of $29.7 billion, up 3.9% year-over-year, with operating income increasing 0.9% to $7.1 billion, demonstrating the resilience and growth potential of AT&T’s connectivity portfolio.

AT&T announced significant strategic benefits from the One Big Beautiful Bill Act, which will provide substantial tax savings and enable accelerated network investment:

One Big Beautiful Bill Act Impact

• Cash Tax Savings: $6.5 to $8.0 billion expected during 2025-2027, including $1.5-2.0 billion in 2025 and $2.5-3.0 billion in each of 2026 and 2027
• Network Investment: $3.5 billion of savings will accelerate fiber deployment to 4 million locations per year by end of 2026
• Pension Funding: $1.5 billion contribution to employee pension plan by end of 2026, achieving ~95% funding
• Fiber Expansion: Target of 50 million in-region fiber locations by 2030, over 60 million including Lumen acquisition

The company’s fiber strategy continues to show strong execution, with AT&T having passed more than 30 million customer locations with fiber and eclipsing 1 million total AT&T Internet Air customers. The agreement to acquire substantially all of Lumen’s Mass Markets fiber business will further strengthen AT&T’s connectivity portfolio.

Key strategic developments include:

• Completion of DIRECTV divestiture with sale of remaining 70% stake to TPG on July 2, 2025
• Continued focus on 5G network leadership with investments in network modernization
• Expansion of fixed wireless access through AT&T Internet Air product
• Ongoing transformation initiatives to improve operational efficiency

These initiatives position AT&T to capitalize on the growing demand for connectivity services while maintaining financial flexibility through strong cash flow generation and strategic capital allocation.

AT&T provided updated guidance for 2025, reflecting strong year-to-date performance and the impact of tax savings from the One Big Beautiful Bill Act:

Full Year 2025 Expectations

• Consolidated service revenue growth in the low-single-digit range
• Mobility service revenue growth of 3% or better
• Consumer fiber broadband revenue growth in the mid-to-high teens
• Adjusted EBITDA growth of 3% or better
• Mobility EBITDA growth of approximately 3%
• Business Wireline EBITDA decline in the low-double-digit range
• Consumer Wireline EBITDA growth in the low-to-mid-teens range
• Capital investment in the $22 to $22.5 billion range
• Free cash flow in the low-to-mid $16 billion range
• Adjusted EPS of $1.97 to $2.07
• Share repurchases of $4 billion for 2025

Long-Term Outlook (2026-2027)

• Consolidated service revenue growth in the low-single-digit range annually
• Adjusted EBITDA growth of 3% or better annually
• Adjusted EPS accelerating to double-digit percentage growth in 2027
• Capital investment in the $23 to $24 billion range annually (updated due to tax savings)
• Free cash flow of $18 billion+ in 2026 and $19 billion+ in 2027

The updated guidance reflects AT&T’s confidence in its strategic execution and the significant benefits from the One Big Beautiful Bill Act. The company continues to operate the business to achieve the strategy outlined at its 2024 Analyst & Investor Day, with enhanced capital deployment enabled by the tax savings.