AT&T Inc. (NYSE: T) delivered a solid first-quarter 2025 earnings report that showcased significant momentum in its core connectivity businesses, underpinning a cautiously optimistic outlook for the telecommunications giant. While there was a slight miss on adjusted earnings per share, it drew only limited concern.
[content-module:CompanyOverview|NYSE:T]The company's underlying operational strength stood out, particularly with subscriber growth that outpaced key rivals.
Additionally, management reaffirmed full-year guidance, underscoring confidence in their outlook. The imminent launch of a substantial share repurchase program further enhances the company’s position.
Altogether, these factors present a compelling picture of a company successfully executing its strategic turnaround.
The results suggest AT&T is effectively leveraging its investments in 5G and fiber to attract high-value customers and is now poised to enhance shareholder returns.
Winning the Network Wars
AT&T demonstrated strong customer acquisition and retention in the first quarter, adding 324,000 postpaid phone subscribers, exceeding analyst forecasts and contrasting with Verizon's (NYSE: VZ) reported losses. This performance suggests AT&T is gaining mobile market share, likely due to bundled services and network perception. Customer loyalty remained high, with postpaid phone churn at a low 0.83%.
AT&T Fiber continued its growth trajectory, adding 261,000 net subscribers, marking the 21st consecutive quarter with over 200,000 additions.
This consistent growth reflects strong demand for high-speed fiber and the success of AT&T's buildout, which now reaches 29.5 million locations. Although legacy broadband declines affected the overall broadband net additions (137,000), the strategic emphasis remains on fiber migration.
This subscriber growth drove revenue increases, with Mobility service revenue up 4.1% year over year to $16.7 billion and Consumer Fiber revenue surging 19.0% to $2.1 billion.
Improvements in average revenue per user (ARPU) further indicate profitable growth, reaching $56.56 for wireless and $72.85 for fiber, which aligns with management's strategy. The success of AT&T's convergence strategy is evident, with over 40% of AT&T Fiber households also subscribing to AT&T wireless.
AT&T's Financials Show Strength
AT&T demonstrated stable financial performance, evidenced by its subscriber metric success and overall results. Consolidated revenues grew by 2.0% year-over-year to $30.63 billion, slightly surpassing the estimated $30.39 billion. The strength of the Mobility and Consumer Wireline sectors primarily drove this growth.
Adjusted earnings per share (EPS) increased from the previous year to $0.51 but fell short of the $0.52 consensus by a single cent. Despite this minor miss, AT&T reaffirmed its full-year outlook.
Key profitability metrics remained strong, with Adjusted EBITDA rising by 4.4% year-over-year to $11.5 billion. Free cash flow (FCF) also showed significant growth, increasing by 13.5% to $3.1 billion from $2.8 billion in the prior year.
This healthy FCF highlights the company's effectiveness in translating operational performance into cash, which supports dividend payments, debt reduction, and the recently confirmed share repurchases.
Strategy Execution Unlocks Shareholder Value
[content-module:DividendStats|NYSE:T]Management's confidence was clear as they reiterated all full-year 2025 financial guidance, including targets for over $16 billion in FCF and Adjusted EPS between $1.97 and $2.07. The company is on track to achieve its primary strategic goal of deleveraging.
It currently operates within its target net leverage range (Net Debt-to-Adjusted EBITDA) of 2.5x and anticipates formally reaching this target in the first half of 2025.
Reaching this leverage goal unlocks the next phase of capital returns. AT&T announced plans to commence share repurchases under its authorized $10 billion program in the second quarter of 2025.
This marks a significant catalyst, potentially boosting EPS and signaling management's belief in the stock's value. This tranche is part of a larger plan to return over $40 billion to shareholders through 2027 via dividends and buybacks.
The current $1.11 annual dividend, yielding around 4.0%, appears well-covered, with the guided FCF implying a sustainable payout ratio near 50%. The planned mid-year closing of the DIRECTV stake sale will further streamline operations.
Is There Still Value With AT&T?
Following a significant stock price appreciation exceeding 60% over the past year, assessing AT&T's current valuation is key. Trading at approximately 12.7 times forward earnings estimates, the valuation seems reasonable for a mature company demonstrating renewed vigor, especially considering its attractive dividend yield. Its low beta (0.42) also suggests lower relative market volatility.
The Q1 results prompted positive analyst price target revisions, crediting the operational improvements. While the consensus target near $28.00 implies limited immediate upside from recent levels around $27.70, the initiation of the buyback program provides a tangible catalyst that should support the share price and enhance per-share earnings over time.
Risks, primarily the substantial debt load and intense competition, remain well-managed within the company's current strategic framework.
A Clearer Connection to Growth and Returns for AT&T
AT&T's first-quarter performance reinforces that its strategic focus on core connectivity yields tangible results. The company is successfully attracting high-value wireless and fiber customers, generating robust free cash flow, and making disciplined progress on strengthening its balance sheet.
The confirmation of imminent share buybacks adds a significant positive catalyst. For investors seeking a combination of a stable, well-covered dividend yield near 4% and potential for moderate capital appreciation, driven by buybacks and steady execution, AT&T presents an increasingly solid proposition.
While navigating a competitive landscape, the Q1 results strongly suggest AT&T is establishing a clearer connection to a more focused and rewarding future for its shareholders.
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