AT&T Inc. released second-quarter results that addressed concerns about cash depletion from network investments. While consolidated revenue reached $31.6 billion, slightly below forecasts, the company demonstrated strong operational performance through adjusted earnings per share of $0.65, surpassing analyst expectations of $0.59.
Free cash flow generation emerged as a key strength, totaling $4.7 billion and representing a 6.3% increase year-over-year. This result exceeded management’s guidance range of $4.0 billion to $4.5 billion, directly countering bearish narratives about the sustainability of shareholder returns amid extensive 5G and fiber infrastructure spending. Adjusted EBITDA climbed 5.2% year-over-year to $12.3 billion, with the adjusted EBITDA margin expanding by 110 basis points to 39.1%.
Subscriber metrics showed particularly strong momentum. The company added 432,000 postpaid phone users, significantly exceeding analyst expectations of 338,500, while acquiring more than 1 million advanced connectivity subscribers through fiber and fixed wireless growth.
Despite operational strength, AT&T’s valuation appeared disconnected from its performance. The stock traded at approximately 6.7x projected EV/EBITDA, a discount to both Verizon at 7.3x and T-Mobile at 8.8x, and below AT&T’s own five-year historical average of 7.5x to 8x. Competitive pressures from emerging entrants such as satellite-based alternatives were characterized as largely overstated, with such technologies serving primarily complementary functions in remote areas rather than direct threats to terrestrial networks.
At the end of the first quarter, 72 hedge funds held AT&T positions, down from 77 in the prior period, while short interest remained low at 1.81% of float. Management signaled confidence through a $10 billion share repurchase authorization increase, complementing a dividend yield of 4.8%.
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