AT&T Beats on Q3 2026 Earnings, Raises EPS Outlook to $2.40 Range, But Shares Slide on Capex and Delayed Deleveraging Target

AT&T topped Wall Street's revenue and adjusted earnings estimates for the third quarter of 2026 and raised its full-year adjusted EPS outlook to the "$2.40 range," yet shares fell more than 5% in premarket trading on Oct. 21, 2026, as investors focused on capital spending plans and a longer timeline to reduce debt, according to GuruFocus and Schaeffer's Research.

A Beat-and-Raise Quarter, With an Accounting Wrinkle

AT&T's reported diluted EPS from continuing operations came in at just $0.13, down sharply from $1.29 a year earlier, according to the company's earnings release. That drop reflects a non-cash impairment charge tied to the company's held-for-sale Mexico wireless business and employee separation costs, while the year-ago period had benefited from a gain on the sale of AT&T's DIRECTV investment. Adjusted EPS, which strips out those items, rose to $0.65 from $0.54 a year earlier.

On the earnings call, AT&T's finance chief detailed the two adjustments behind the swing: a $2.6 billion non-cash impairment related to the agreement to sell AT&T Mexico, and roughly $800 million in employee separation charges that will mostly hit cash in 2027, according to a transcript published by stockanalysis.com. The impairment did not affect third-quarter segment results, the company said in its earnings materials covered by StockTitan.

Looking ahead, AT&T raised its full-year 2026 adjusted EPS outlook to the $2.40 range from a prior forecast of $2.25 to $2.35, primarily because of lower depreciation expense tied to held-for-sale accounting for the Mexico unit, per the same call transcript. The company also said it plans roughly $10 billion in share repurchases this year, according to GuruFocus.

Record Internet Additions, In-Line Wireless Growth

AT&T posted a record 769,000 total consumer and business Advanced Connectivity internet net adds, split between 442,000 fiber and 327,000 fixed wireless connections, the company reported. Postpaid phone net adds came in at 379,000, with postpaid phone churn of 0.92%.

Within the consumer segment specifically, AT&T logged 696,000 advanced home internet net adds, including 416,000 AT&T Fiber and 280,000 Internet Air additions, which the company's finance chief called a record quarter for combined net adds across those two services, per the stockanalysis.com transcript.

The postpaid phone result landed short of the roughly 387,410 additions Wall Street had expected, according to Schaeffer's Research, while Investor's Business Daily characterized wireless subscriber growth as merely meeting expectations rather than exceeding them. Fiber ARPU fell 4% year over year, which the company attributed to introductory pricing, discounts tied to a growing base of converged accounts, and a larger mix of lower-ARPU Quantum-brand fiber customers in territories acquired from Lumen. Management said it expects a similar year-over-year ARPU decline in the fourth quarter.

AT&T reported reaching more than 39 million total consumer and business fiber locations and said it remains on track for more than 40 million by the end of 2026 and over 60 million by the end of 2030.

Why the Stock Fell: Capex and a Pushed-Out Deleveraging Target

Despite the earnings and guidance beat, investors zeroed in on AT&T's capital spending trajectory and balance sheet. The company trimmed its long-term capital investment plan by about $1 billion annually, to a range of $22 billion to $23 billion in both 2027 and 2028, while keeping its goal of surpassing 60 million fiber locations by decade's end. On the call, the finance chief said $300 million to $400 million of that reduction comes from removing AT&T Mexico wireless capex, with the remainder from build efficiencies, and that the freed-up capital would be reallocated into the business primarily through working capital supporting customer acquisition investments, as well as higher interest payments.

Leverage also moved higher. AT&T ended the third quarter with net debt to adjusted EBITDA of 3.13 times, up from 2.68 times in the second quarter, which the company attributed to its $23 billion purchase of spectrum licenses from EchoStar that closed at the end of July. AT&T still expects to return to its 2.5 times target during 2029 — a timeline GuruFocus reported was pushed back by the recent spectrum purchases.

Management also flagged fourth-quarter cost pressure, pointing to higher marketing and customer acquisition spending tied to an extended device launch cycle and an expanded fiber go-to-market push, plus roughly $100 million in unfavorable vendor dispute settlements concentrated in the legacy segment, according to the earnings call transcript and a separate report from Yahoo Finance.

Satellite Competition in the Background

The selloff also coincided with renewed investor attention on satellite-based competition. Schaeffer's Research noted that investors were still weighing SpaceX's purchase of 800 MHz spectrum, which has raised concerns that Starlink Mobile could become a direct-to-cell competitor. SpaceX said this month, and confirmed on its earnings call Tuesday, that it plans to turn Starlink into a major U.S. mobile carrier and is buying a block of low-band spectrum to do it, according to Yahoo Finance.

AT&T CEO John Stankey pushed back on the idea that this represents an imminent threat, telling analysts, "I wouldn't over-rotate on what I would call one carrier of low-band spectrum," and noting that AT&T itself operates between six and eight carriers of low-band spectrum in a typical metro area, according to Yahoo Finance's account of the call. Stankey described low-earth-orbit satellite constellations as "fantastic for delivering bandwidth to rural areas" but argued the most durable combination for customers remains "a fiber-fed broadband customer with a great wireless service on top of it," predicting fixed wireless adoption would eventually see "some kind of a peak and then a downward trajectory."

Stankey also tied AT&T's fiber footprint to artificial intelligence infrastructure demand, saying more than 90% of mapped U.S. data centers sit within 10 miles of AT&T fiber, per the call transcript. Yahoo Finance reported that Amazon Web Services uses AT&T to connect its sites and that the carrier is working with Microsoft on high-capacity connectivity needs.

A Leadership Handoff

The quarter also marked outgoing CFO Pascal Desroches' final earnings call before Deputy CFO Jennifer Biry takes over the role after the new year, Yahoo Finance reported.

Bottom Line

AT&T delivered the kind of top- and bottom-line beat, record broadband additions, and raised EPS guidance that might typically lift a stock, and Schaeffer's Research noted the shares have finished higher after nine of the last ten earnings reports. This time, however, premarket trading pointed to a different reaction, with shares down more than 5% from Tuesday's $23.42 close as investors weighed sustained capital spending needs, a leverage ratio pushed higher by the EchoStar spectrum deal, and a deleveraging target now pegged to 2029 against the backdrop of emerging satellite-based wireless competition.