AT&T reported third-quarter 2026 revenues of $32.3 billion on 21 October, up 5.3 percent, and adjusted earnings per share of $0.65, up from $0.54 a year earlier. Diluted earnings per share from continuing operations were $0.13, compared with $1.29 a year earlier, because the quarter included a non-cash impairment charge on its held-for-sale Mexico wireless business and employee separation charges, while the year-ago figure included a gain on the sale of the DIRECTV investment. Adjusted EBITDA was $12.5 billion, up 5.4 percent, and free cash flow was $5.0 billion, against $4.9 billion. AT&T raised its outlook for 2026 adjusted earnings per share to about $2.40 and lowered its long-term outlook for capital investment.
The argument that the quarter was strong rests on customer growth and cash. AT&T added more than one million advanced connectivity customers for the second consecutive quarter, driven by net additions across fiber, fixed wireless and postpaid phones, and it grew its base of converged customers by about 350,000. The company said it had its best consolidated service revenue growth in more than four years. Cash from operating activities from continuing operations was $10.5 billion, up from $10.2 billion, and AT&T returned about $4.8 billion to shareholders in the quarter, including $2.8 billion of share repurchases. It still plans to return more than $45 billion to shareholders between 2026 and 2028, and to reach more than 60 million fiber locations by the end of 2030.
The counter-argument is that reported profit fell sharply and the legacy business is shrinking fast. Operating income was $4.1 billion, against adjusted operating income of $7.6 billion, and income from continuing operations was $1.3 billion, so the gap between the reported and adjusted figures is large. Capital expenditures were $5.1 billion, and capital investment was $5.6 billion, and the company still expects its net debt to return to its target level of about 2.5 times adjusted EBITDA only during 2029. Legacy service revenue is expected to fall by more than 20 percent in 2026 and to be immaterial by the end of 2029, and the company has agreed to sell AT&T Mexico to Grupo Televisa and Fintech Holdings, so its 2027 and 2028 outlook excludes that business.
The report matters because AT&T is shifting from copper to fiber and wireless, and the figures show that the shift is lifting revenue and cash. Its long-term outlook includes service revenue growth in the low-single-digit range each year, adjusted EBITDA growth in the upper part of 3 percent to 4 percent in 2026, and adjusted earnings per share growing at a double-digit rate over three years through 2028. Lower long-term capital investment could free up more cash for shareholders if the company holds to the plan. Advanced connectivity service revenue is expected to grow 5 percent or more in 2026, with its EBITDA growing 6 percent or more, while legacy EBITDA is expected to turn negative after 2027.
AT&T reported growth in the business it is investing in and a reduction in the one it is leaving, and it raised its earnings outlook. The impairment shows the cost of exiting Mexico.
