AT&T Posts 6 Percent EPS Gain in Q2

AT&T reported strong Q2 2025 results, with adjusted EPS of $0.54 and GAAP revenue of $30.8 billion both exceeding analyst expectations, fueled by robust 5G and fiber subscriber growth. Free cash flow increased 10% year-over-year to $4.4 billion, enabling $1.0 billion in share repurchases. While the Mobility and Consumer Wireline segments, particularly fiber broadband, showed growth, the Business Wireline segment continued its revenue decline and operated at a loss, contributing to overall margin pressure. The company is strategically focused on expanding its 5G and fiber networks, projecting low single-digit consolidated service revenue growth for FY2025 and targeting double-digit adjusted EPS growth by 2027, supported by network investments and anticipated tax savings.

Analysis

AT&T's Q2 2025 results surpassed analyst expectations, with adjusted EPS of $0.54 and GAAP revenue of $30.8 billion, reflecting a successful strategic focus on 5G and fiber. The Consumer Wireline segment was a key driver, posting nearly 19% year-over-year growth in fiber broadband revenue and an EBITDA margin expansion of over three percentage points. The Mobility segment also delivered revenue growth of nearly 7%, though profitability was challenged by a 1.5 percentage point drop in EBITDA margin due to higher customer churn, which rose to 0.87%. These strengths were materially offset by the persistent structural decline in the Business Wireline segment, where revenue contracted 9.3% and the unit recorded a $201 million operating loss. This weakness is expected to continue, with management guiding for a low double-digit percentage decline in the segment's EBITDA for FY2025. Financially, the company demonstrated strength by increasing free cash flow 10% to $4.4 billion, enabling $1.0 billion in share repurchases, and outlined a plan to reinvest anticipated tax savings of $6.5-$8.0 billion into network expansion.

Key Decisions for Investors

• Investors should evaluate AT&T on its ability to offset the structural decline in its Business Wireline segment with sustained high-teens growth in fiber broadband and disciplined margin management in its core Mobility unit.
• Pay close attention to the Mobility segment's customer churn, as the recent increase to 0.87% and the corresponding 1.5 percentage point margin decline represent a key risk to profitability in the company's largest division.
• Monitor the company's capital allocation, specifically the balance between its $4 billion share repurchase program, capital investments exceeding $22 billion, and progress on reducing its $120.3 billion net debt.
• The successful execution of the copper-to-fiber transition, aided by regulatory tailwinds and future tax savings, remains the pivotal long-term catalyst, and progress toward the 2027 double-digit adjusted EPS growth target should be a key performance indicator.