10-Q: AT&T Q2 2026 Earnings: Revenue Growth Driven by Advanced Connectivity

AT&T Inc. reported increased revenues in Q2 2026, primarily driven by its Advanced Connectivity segment, including the acquisition of Lumen's fiber business, while Legacy segment revenues declined.

Summary

• AT&T Inc. reported total operating revenues of $31.56 billion for the three months ended June 30, 2026, an increase from $30.85 billion in the same period of 2025.
• For the six months ended June 30, 2026, total operating revenues were $63.06 billion, up from $61.47 billion in the prior year.
• Operating income from continuing operations for the second quarter of 2026 was $7.04 billion, an increase from $6.50 billion in Q2 2025.
• Net income attributable to AT&T for the second quarter was $4.63 billion, compared to $4.50 billion in the prior year.
• The Advanced Connectivity segment showed strong growth, with service revenues up 5.1% for the quarter, driven by fiber and wireless services.
• The Legacy segment experienced a significant revenue decline of 25.9% for the quarter, reflecting ongoing decommissioning of the copper-based network.
• The Latin America segment saw revenue growth of 16.1% for the quarter, largely due to favorable foreign exchange impacts.
• Capital expenditures for the first six months of 2026 were $10.58 billion, an increase from $9.17 billion in the same period of 2025.

Sentiment

Score: 6

Explanation: StockSavvy.ai views this as a neutral to slightly positive report, with solid revenue growth in key segments offset by declines in legacy operations and increased interest expenses.

Positives

• Total operating revenues increased by 2.3% to $31.56 billion in Q2 2026 compared to Q2 2025.
• Operating income from continuing operations increased by 8.3% to $7.04 billion in Q2 2026.
• Advanced Connectivity segment operating income increased by 20.3% to $7.35 billion in Q2 2026.
• Advanced Connectivity segment operating income margin improved to 25.7% in Q2 2026 from 22.2% in Q2 2025.
• Latin America segment operating revenues increased by 16.1% to $1.22 billion in Q2 2026.
• Acquisition of Lumen's mass markets fiber business contributed to revenue growth in the Advanced Connectivity segment.
• Common stock repurchase program continues, with $1.30 billion remaining under the 2024 authorization and $10 billion under the 2026 authorization as of June 30, 2026.

Negatives

• Legacy segment operating revenues decreased by 25.9% to $1.63 billion in Q2 2026.
• Legacy segment operating income decreased by 45.5% to $523 million in Q2 2026.
• Latin America segment operating income decreased by 17.4% to $38 million in Q2 2026.
• Interest expense increased by 13.8% to $1.88 billion in Q2 2026.
• Equity in net income (loss) of affiliates decreased significantly due to the sale of interest in DIRECTV.
• The company's debt ratio increased to 52.8% at June 30, 2026, from 51.7% at June 30, 2025.

Risks

• Adverse economic and political changes, public health emergencies, and access to financial markets.
• Increases in benefit plan costs due to investment returns, discount rates, mortality assumptions, and healthcare trends.
• Final outcomes of FCC and other government agency proceedings, including judicial reviews and regulatory efforts.
• Changes in tax laws and regulations, and disputes with taxing jurisdictions.
• U.S. and foreign laws and regulations regarding intellectual property, privacy, and data protection.
• Intense competition and the ability to offer competitive pricing and services.
• Disruptions in the supply chain impacting the acquisition of goods and services.
• Potential litigation and arbitration outcomes.

Future Outlook

The company expects continued revenue growth as it invests further in its fiber footprint. The decline in Business transitional and other revenues (VPN and wholesale services) is expected to continue.

Management Comments

• The company's financial results from continuing operations are summarized in the discussions that follow, with additional analysis in the Segment Results section.
• Operating revenues increased reflecting higher Advanced Connectivity fiber and wireless revenues, with fiber revenues including the impact of acquiring Lumen's mass markets fiber business.
• The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins.
• We expect revenue growth to continue as we invest further in building our fiber footprint.
• The Legacy segment revenues decreased driven by lower demand for legacy services, which we expect to continue as we decommission our copper-based legacy network.

Industry Context

StockSavvy.ai notes that AT&T's Q2 2026 results reflect the ongoing industry shift towards advanced connectivity services like 5G and fiber, with a strategic divestment from legacy copper-based networks. The acquisition of Lumen's fiber business aligns with this trend, aiming to bolster market share in high-growth areas.

Comparison to Industry Standards

• AT&T's Advanced Connectivity segment operating income margin of 25.7% in Q2 2026 is strong, indicating efficient operations in its core growth areas.
• The company's EBITDA margin of 42.0% for the Advanced Connectivity segment in Q2 2026 suggests robust operational cash flow generation.
• The decline in Legacy segment revenues and margins is consistent with the broader industry trend of phasing out older copper-based infrastructure in favor of newer technologies.
• Competitors like Verizon and T-Mobile are also heavily investing in 5G and fiber expansion, making AT&T's strategic focus on these areas crucial for maintaining market position.

Legal Proceedings

• Appeals challenging FCC digital discrimination rules were consolidated in the Eighth Circuit, which vacated the rules on May 6, 2026, requiring the FCC to adopt new rules.

Stakeholder Impact

• Shareholders may see continued revenue growth from advanced connectivity services, but legacy segment declines could impact overall profitability.
• Employees in legacy operations may be impacted by ongoing decommissioning efforts.
• Customers in the Advanced Connectivity segment benefit from expanded fiber and 5G services.
• Suppliers may see changes in demand based on network build-outs and decommissioning activities.

Next Steps

• Continue investing in fiber footprint expansion.
• Continue decommissioning of copper-based legacy network.
• Plan to sell a controlling interest in Forged Fiber 37 Services, LLC to an equity partner.
• Complete the acquisition of FCC licenses in the 600 MHz and 3.45 GHz bands from EchoStar Corporation by the end of July 2026.

Key Dates

Recommendation

The report shows steady performance with growth in key areas like Advanced Connectivity, but the significant decline in the Legacy segment and increased interest expenses warrant a cautious 'hold' rating. The successful integration of acquired assets and continued execution on fiber build-out are key factors to monitor.

Keywords

telecommunications, fiber, wireless, 5G, connectivity, broadband, revenue, operating income