AT&T Inc. (NYSE: T) shares dropped 3.3% to close at $22.77 on Thursday, as investors digested a Supreme Court ruling against the company and a Wall Street downgrade highlighting competitive threats from satellite broadband providers. The stock touched an intraday low of $22.34, with trading volume exceeding 82 million shares.
The decline stood out against a broadly firm market. The S&P 500 rose 0.41%, while the Dow Jones Industrial Average gained 1.73% to close at a record high. The tech-heavy Nasdaq lagged, pressured by a drop in semiconductor stocks following Broadcom's results.
SpaceX kicked off its investor roadshow on Thursday ahead of its June 12 IPO, targeting a $75 billion raise at a $1.75 trillion valuation, according to Reuters. This development is casting a shadow over AT&T's fiber-centric strategy, as low Earth orbit (LEO) satellites—capable of reducing latency—are increasingly seen as a viable consumer internet option.
Legal pressures also weighed on the sector. The U.S. Supreme Court ruled 8-1 that the FCC can use internal procedures to issue fines, siding with regulators against AT&T and Verizon. The FCC had fined AT&T $57 million and Verizon $47 million for allegedly selling customer location data without permission. Both companies paid the penalties but challenged the method in court. Verizon shares fell 3.8% to $44.87, and T-Mobile dropped 2.4% to $177.02, dragging the entire wireless sector lower.
Oppenheimer downgraded AT&T to "Perform" from "Outperform," warning that LEO satellite rivals could threaten long-term broadband growth and potentially mobile services. Analyst Timothy Horan noted that satellite operators could add over 2 million subscribers annually and capture about 10% of the fixed broadband market by 2030, driven by strong regulatory support. AT&T's fiber-heavy exposure makes it more vulnerable than other telecoms but less so than cable companies.
In response to competitive pressures, AT&T announced Wednesday it will streamline its fiber home internet plans to four speed tiers—300 Mbps, 500 Mbps, 1 GIG, and 5 GIG—effective June 7. Customers bundling wireless and internet could save up to $420 per year. Jenifer Robertson, executive vice president of AT&T Consumer, described the new plans as "packed with value, savings."
AT&T's first-quarter results offered some positive signals. The company reported $31.5 billion in revenue and 294,000 net postpaid phone additions, while free cash flow stood at $2.5 billion, down year-over-year due to increased fiber spending. AT&T remains on track to reach more than 40 million fiber locations by 2026 and over 60 million by 2030. CEO John Stankey called it the "best first quarter ever" for advanced connectivity internet customer additions, though investors now focus on the cost of sustaining that growth.
Not all satellite news is negative for carriers. In May, Verizon, AT&T, and T-Mobile announced a joint venture to use satellite direct-to-device technology to fill rural coverage gaps. The FCC also approved EchoStar's sale of wireless spectrum to SpaceX and AT&T. FCC Chairman Brendan Carr told Reuters that Starlink has a "very clear pathway" to enter the direct-to-cell business.
The key risk for AT&T is that if satellite broadband eats into the market faster than expected, the company could face heavy fiber build costs alongside weaker customer growth and pricing power. Conversely, if that risk materializes slowly or in a smaller segment, Thursday's drop may simply reflect a sentiment shift rather than a fundamental change in direction.
Investors will get more clarity on June 9, when AT&T CFO Pascal Desroches speaks at the Mizuho Technology Conference. The company is also scheduled to report second-quarter earnings on July 22 before the market opens.
