AT&T (T.US) beats Q2 earnings and wireless user growth expectations, delivers solid results amid SpaceX competition concerns

According to Zhitong Finance APP, amid widespread investor anxiety over the potential competitive threat from SpaceX (SPCX.US), AT&T (T.US) has delivered a set of results that exceeded expectations. In the second quarter ended June 30, the Dallas-based telecom operator added 432,000 new wireless phone subscribers, significantly higher than Wall Street’s previous forecast of 325,000. Following the earnings report, as of press time, AT&T's pre-market share price was up about 4%, though it remains down nearly 10% year-to-date.

Key Data: Wireless Subscribers Surpass Expectations, Profit Metrics Fully Met

In the three months ended June 30: Net new wireless phone subscribers: 432,000, far exceeding analysts’ previous forecast of 325,000.

Revenue: $31.6 billion, up 2.3% year-on-year, slightly below the market expectation range of $31.8 to $32 billion.

Adjusted EBITDA: $12.3 billion, slightly higher than expected, a key indicator of financial health.

Adjusted earnings per share: $0.65, higher than the market expectation of $0.59.

Full-year guidance: Reiterated the goal of adjusted EPS of $2.25 to $2.35 for fiscal 2026 and free cash flow above $18 billion.

AT&T CFO Pascal Desroches had previously stated at an investor meeting that the year-on-year growth rate of wireless service revenue further improved in the second quarter compared to the first.

Business Highlights: Significant Effect of Bundling Model, Continued Expansion of Fiber Broadband

Amid an increasingly fierce price war in the mobile user market, AT&T has launched a series of aggressive discounts and incentive measures over the past year. In particular, the "wireless + fiber" bundle model has become the core growth engine.

Data shows that among households purchasing AT&T's home broadband service, 42.5% also buy the company's mobile phone services. This successful "convergence model" has allowed AT&T to be the first among the three major carriers to establish differentiated competitive barriers.

In March, AT&T announced a new all-inclusive pricing structure for broadband and wireless services. For fiber broadband, analysts estimate the company added about 287,000 users this quarter, roughly in line with wireless net adds, reflecting a "dual engine" growth pattern.

Shareholder Returns: $45 Billion Return Plan Provides Cushion

In an environment of uncertain competition, AT&T’s shareholder return commitment provides important support for its share price. The company reiterated its long-term financial guidance through 2028, planning to return $45 billion to shareholders via dividends and share buybacks over that period. For the full year 2026, the company expects to repurchase approximately $8 billion in common shares.

AT&T’s current annual cash dividend remains at $1.11 per share, with a dividend yield of about 5%, still attractive to income-oriented investors amid interest rate volatility.

Competitive Threat: Starlink’s "Sword of Damocles"

Despite impressive financial results, AT&T faces a real challenge from SpaceX (SPCX.US), owned by Elon Musk. So far this year, AT&T’s share price has fallen about 10%, with investor concern over Starlink’s entry into the wireless communications market being a core suppressing factor.

SpaceX’s ambition has advanced from being a "satellite broadband supplement provider" to a "direct challenger to terrestrial mobile networks." In June, reports indicated that SpaceX had informed investors it planned to offer mobile services directly to U.S. consumers and had begun talks with Charter Communications about a joint consumer mobile service. SpaceX’s IPO prospectus has explicitly positioned Starlink Mobile as a direct competitor to Verizon, AT&T, and T-Mobile.

On the spectrum front, SpaceX completed an aggressive layout last year: In May 2026, the FCC officially approved SpaceX’s $17 billion acquisition of wireless spectrum licenses from EchoStar, while AT&T acquired 50MHz of spectrum in the same transaction for about $23 billion. This means SpaceX now has the capability to independently operate direct-to-smartphone satellite services in its own spectrum bands.

As for defensive measures, in May this year, AT&T, Verizon, and T-Mobile made a rare announcement to form a joint venture to advance direct-to-device (D2D) satellite services. The joint venture aims to consolidate spectrum resources and help satellite service providers reach more users via a unified platform, eliminating wireless dead zones in the U.S., including rural areas. This move has been widely interpreted as a "group defense" strategy by the three major carriers against SpaceX.

Bernstein analysts believe AT&T has found "a more isolated battlefield" in the telecommunications price war. Over the past seven quarters, AT&T has consistently exceeded analysts’ earnings per share expectations.

TD Cowen analyst Gregory Williams pointed out that it is unlikely for any operator to sign an MVNO wholesale network agreement with SpaceX — "the wireless industry has already suffered enough from cable MVNOs." However, he also acknowledged that, due to its strong position in fiber networks, AT&T may be the "least affected" among the big three operators.

JPMorgan analyst Sebastiano Petti believes that Starlink is more of "a long-term Sword of Damocles hanging over the U.S. wireless market, rather than a near-term fundamental threat," predicting that SpaceX won’t begin building a U.S. terrestrial network until 2028 at the earliest, with consumer offerings coming in 2029.

Fiber Business: AT&T’s "Moat" and "Achilles’ Heel"

In the view of analysts, AT&T’s fiber business is both its greatest competitive advantage and the key variable in its response to Starlink’s impact.

Wells Fargo expects fiber business revenue to rise from 8% of total revenue in 2026 to 14% by 2032, with fiber coverage growing from around 21 million locations to 54 million. However, Cahall warns that AT&T customers outside fiber coverage areas remain highly vulnerable to Starlink’s competition.

AT&T’s Q2 bundling data underscores the strategic value of fiber — 42.5% of broadband users also purchased mobile services. The company also completed the acquisition of Lumen’s fiber customers ahead of schedule, adding about 1.1 million fiber customers and expanding coverage by over 4 million fiber locations.

Bernstein believes it is this convergence advantage that could put AT&T in a relatively favorable position in the contest with SpaceX. But Wells Fargo maintains a pessimistic outlook, arguing that even with fiber boosting its position, AT&T still faces the greatest risk of net subscriber loss and share erosion, and, citing concerns about the Starlink deal, assigns AT&T an "underweight" rating and an $18 price target.

Outlook: An Unavoidable “Satellite-Terrestrial” Competition

AT&T’s financial report sends a dual signal: solid short-term operations but sustained long-term strategic pressure. The outperformance in user growth proves AT&T still possesses strong execution in the current competitive environment. But the threat from SpaceX is not a short-term fluctuation — it is a structural challenge to the traditional telecom operator business model: satellite Internet is reopening control over coverage, access to marginal customers, and pricing power in rural areas previously monopolized by terrestrial networks.

The outcome of this war will depend on several key variables: whether SpaceX can successfully acquire terrestrial spectrum in the 2027 auction and build its own mobile network; whether the three major carriers’ satellite joint venture can effectively balance SpaceX’s challenge; and whether AT&T’s fiber expansion can cover enough users to offset Starlink’s encroachment.

As Starlink transforms from a rural broadband provider into a global connectivity platform integrating broadband, mobile, and hybrid satellite-terrestrial networks, the usual “price war” between AT&T and its traditional rivals is evolving into a cross-era “satellite-terrestrial” paradigm war. As Musk’s low-Earth-orbit constellation redefines the meaning of “connectivity” at extremely low cost, the moat of terrestrial base stations is gradually being eroded.

SpaceX is now valued at around $2 trillion, has about $110 billion in available capital, and boasts roughly 10.3 million global Starlink users — numbers that mean AT&T is no longer facing just a “satellite supplement network,” but a potentially disruptive player with deep capital reserves, full-spectrum ownership, and a massive user base.

AT&T is choosing to reinforce its moat through a "converged model," respond to challenges with "group defense," and safeguard its bottom line with "shareholder returns." But whether these measures will be effective against SpaceX — the "elephant in the room" — will be the most important investment question for the telecom sector in the coming quarters.