AT&T's Q3 2026 Shows Momentum, but Risks Remain

What happened

AT&T reported Q3 2026 results with its best consolidated service revenue growth in more than four years, driven by strong Advanced Connectivity net adds. The company added over 1 million Advanced Connectivity customers for a second consecutive quarter and grew converged relationships by about 350,000. Management raised its 2026 adjusted EPS outlook and lowered long-term capital investment plans while reaffirming target of 60 million fiber locations by 2030. These developments partially address prior concerns about subscriber growth and capital intensity, but the press release omits key metrics such as ARPU trends, churn, and post-EchoStar leverage. Until those details are disclosed, the improvement in revenue growth and profitability guidance is encouraging but does not fully resolve the competitive and balance-sheet risks previously highlighted.

Implication

The reported acceleration in service revenue and the upward EPS revision suggest AT&T's convergence strategy is gaining traction, supporting the bull case. However, the absence of ARPU, churn, and margin data means the wireless price war risk remains unquantified, and the company may still be buying growth via promotions. The lowered long-term capital investment guidance is a notable positive for future free cash flow and deleveraging, aligning with the master report's requirement for FCF durability and leverage improvement. If subsequent disclosures confirm stable or improving wireless ARPU and margins alongside lower capex, the thesis shifts toward a buy, with the potential to break above $27. Conversely, if the revenue growth is margin-dilutive and leverage stays elevated, the stock could remain rangebound, and the WAIT rating would persist until clearer evidence emerges.

Thesis delta

The Q3 2026 release shifts the thesis modestly positive by demonstrating robust subscriber growth and an upward revision to EPS guidance, countering earlier concerns about demand. The lowered long-term capital investment plan directly addresses the free cash flow and leverage hurdles that underpinned the prior WAIT rating. However, the thesis remains contingent on confirming that growth is not achieved at the expense of margins and that post-EchoStar leverage is on a declining trajectory, so the rating moves from WAIT to WAIT with a positive bias rather than to BUY.