AT&T Inc. (T) shares traded at $22.71 early Wednesday, flat with Tuesday's close, as investors weighed the telecom giant's reaffirmed financial targets against rising competition from low-Earth-orbit (LEO) satellite broadband providers like SpaceX's Starlink and Amazon's Project Kuiper. The stock had risen 0.93% on Tuesday to close at $22.71, bucking a broader market downturn that saw Dow futures slip 0.74%, S&P 500 futures lose 0.81%, and Nasdaq 100 futures drop 1.28% early Wednesday amid tech selling, geopolitical tensions around Iran, and a key inflation reading.
CFO Reaffirms Guidance at Mizuho Conference
Chief Financial Officer Pascal Desroches, speaking at the Mizuho Technology Conference, reiterated AT&T's 2026 outlook and maintained the company's second-quarter free-cash-flow (FCF) target of $4.0 billion to $4.5 billion. This reaffirmation comes after a first quarter heavy with investment, where revenue rose 2.9% to $31.5 billion and adjusted EBITDA came in at $11.8 billion, but free cash flow slipped to $2.5 billion from $3.1 billion a year earlier as AT&T accelerated fiber network builds.
Desroches emphasized that the current spending cycle is designed to generate stronger future cash flows, not just larger capital expenditure lines. He also projected stronger wireless service revenue growth in the second quarter compared to the first, as well as improved consolidated adjusted EBITDA growth, with home internet additions continuing to gain momentum.
Fiber vs. Satellite: The Core Debate
Addressing the competitive threat from LEO satellite broadband, Desroches pushed back firmly, arguing that satellites are only viable in very rural areas, while most urban and suburban markets are already well-served by cheaper, denser fiber, cable, fixed-wireless, and wireless options. He stated, "AI doesn't exist without our connectivity," and highlighted AT&T's focus on building an "AI-ready" network, with fiber as the go-to broadband technology due to its symmetrical speeds, low latency, and lower unit costs for bandwidth.
Oppenheimer analysts recently labeled SpaceX's Starlink as a disruptor to the $1.6 trillion U.S. communications market, citing legacy broadband names like AT&T, Verizon, and T-Mobile as most exposed to faster subscriber and revenue losses. However, Desroches countered that LEO satellites face inherent limitations compared to terrestrial fiber networks.
Lumen Integration and Financial Commitments
Desroches also provided an update on the integration of Lumen's fiber assets, which AT&T acquired for $5.8 billion, adding approximately 4.5 million fiber passings. While the penetration rate on these acquired assets is currently 25%—below AT&T's national average of 40%—he noted that local response has been positive, though the acquired build team has not yet reached full installation speed.
AT&T reiterated its commitment to return over $45 billion to shareholders between 2026 and 2028 through dividends and share buybacks. The company also targets reducing its net debt-to-adjusted EBITDA ratio to approximately 2.5x within about three years after closing the EchoStar spectrum deal, which is valued at $23 billion and still subject to regulatory approval.
Risks and Upcoming Catalysts
Despite the optimistic tone, risks remain. AT&T's plans depend on maintaining elevated network spending, successfully integrating Lumen, securing regulatory sign-offs, and driving sufficient wireless and broadband growth to protect margins. The company's latest 10-Q filing highlights competition, spectrum availability, network rollout, new technologies, and the ability to finance additional wireless spectrum as key risk factors. Faster-than-expected subscriber losses from satellite broadband could pressure free cash flow and buyback plans.
As of March 31, AT&T reported $137.0 billion in notes and debentures, with $6.8 billion in long-term debt due within the next year. The company's next major test comes on July 22, when it reports second-quarter earnings before the New York Stock Exchange opens, followed by a conference call at 8:30 a.m. ET. Investors will be looking for concrete evidence that AT&T can hit its $4.0-$4.5 billion free-cash-flow target, deliver wireless service revenue gains, and accelerate advanced home internet growth—not just further strategic rhetoric.
