Analysis: AT&T 1Q-2026 results: increased fiber penetration, FWA momentum, D2D deals, and mobile/home internet bundles
AT&T reported first-quarter results today, achieving its fastest-ever year-over-year organic growth in its advanced connectivity convergence rate, with nearly 45% of advanced home internet subscribers also choosing AT&T wireless. Customers are increasingly purchasing their internet and wireless together from AT&T, highlighting the strength of the company’s differentiated, investment-led strategy to drive converged advanced connectivity at scale.
“We saw our best first quarter ever for Advanced Connectivity internet customer net additions, demonstrating the solid foundation of assets we have built,” said John Stankey, AT&T Chairman and CEO. “We’re uniquely positioned to deliver more of what customers want — fiber and 5G all from one provider on the nation’s largest advanced converged network, backed by the AT&T Guarantee. The actions we’ve taken this quarter are evidence of how we are improving the customer value proposition, scaling faster, and accelerating growth.”
AT&T reported $31.5 billion in consolidated operating revenues, representing a 2.9% year-over-year (YoY) increase and outperforming Street estimates of $31.22 billion. This growth was largely driven by the Advanced Connectivity segment, which generated $22.15 billion in consumer revenues, up from $20.97 billion in the prior-year period.
- Wireless Performance: Mobility services posted mostly flat $16.94 billion in revenue, compared to $16.65 billion in Q1 2025.
- Legacy Decommissioning: Legacy revenues fell 25.3% YoY to $1.8 billion. The aggressive copper-to-fiber migration continues, with 85% of wire centers now approved for legacy service cessation.
- Strategic Sunsetting: 30% of these wire centers are slated for total decommissioning by late 2026, coinciding with the loss of 270,000 DSL subscribers this quarter.
The shift toward high-speed, durable connectivity is evidenced by the growth of AT&T’s Fiber and Fixed Wireless Access (FWA) portfolios.
- Fiber Penetration: AT&T recorded 292,000 fiber net additions, bringing the total subscriber base to 12.5 million. The current passings stand at 37.5 million locations, with 32.7 million owned/operated and 4.8 million via joint ventures (JVs).
- FWA Momentum: AT&T Internet Air added 239,000 customers in the quarter (up from 181,000 in Q1 2025), reaching a total of 1.73 million subscribers.
- Roadmap to 60 Million: AT&T remains on track to reach 60 million fiber locations by 2030 through organic expansion, the Gigapower JV, and open-access agreements.
AT&T is evolving its “NetworkCo” model to optimize capital intensity and market reach.
- Lumen Asset Integration: Recently acquired fiber assets from Lumen will be transferred into a JV structure. CFO Pascal Desroches expects to finalize an agreement with an equity partner for these assets in 2H 2026.
- Convergence and “One Connect”: The “One Connect” platform is the cornerstone of AT&T’s converged strategy.
- Bundle Adoption: 42% of advanced home internet customers (5.68 million) also subscribe to mobile services.
- Fiber-Mobile Synergy: Among fiber-specific customers, the mobility bundle penetration rate is 40.2% (4.74 million).
- The “One Connect” Roadmap: CEO John Stankey views the platform as an iterative engine, beginning with BYOD (Bring Your Own Device) and eventually expanding into tailored family plans.
More from CEO Stankey:
“We made further progress at positioning AT&T as the preferred provider for connecting consumers and businesses to the internet. We closed our transaction with Lumen, ahead of schedule, adding 1.1 million fiber customers, and over 4 million fiber locations. We’re pleased with the progress we’re making as we integrate these assets in several major metro areas and position the business for faster growth. Early indicators are positive. We now offer fiber services throughout our distribution channels in these areas, which has driven sales activity well above pre-transaction trends. We’re executing the steps to scale engineering, construction and service delivery in the acquired geographies, expected as we move into the back half of the year, will achieve steady improvement in fiber and wireless customer growth in these areas. When we focus on customers needs and invest in the experience and products they want, we find success, and in the first quarter, we gave customers more reasons to choose AT&T. We expanded the AT&T guarantee to cover internet Air and launched a new flagship app to deliver a simple digital-first experience to customers.We also launched AT&T OneConnect, which enables customers to easily connect all their eligible devices at home and on the go, and eliminates the need to buy internet access twice. We refreshed our Unlimited Your Way plans to deliver more value. All these moves are based on a consistent set of principles that drive our approach to serving customers the way they want to be served, with offers that deliver simplicity, value and choice and converged connectivity.After years of industry-leading investments in our fiber and wireless network, we believe that we have now established a structural advantage that others will not catch. We reached more than 90 million customer locations across the country with our advanced internet services, over either fiber or 5G. We believe this provides us with more scalable reach and converged connectivity than any of our peers, including a meaningful scale and performance advantage in fiber. This is an advantage we’re growing as we ramp our deployment at a faster pace than anyone else. Today, we reach over 37 million customer locations with fiber, and we’re on track to reach 60 million plus locations by the end of the decade.”
NTNs and D2D:
Regarding its choice of AST SpaceMobile for direct-to-device (D2D) connectivity for its smartphones, Stankey said, “I think it’s natural that we work with LEO partners that have the capabilities to solve that problem, to integrate those offerings into our services,” Stankey said Tuesday on AT&T’s Q1 2026 earnings call. “My goal would be that I have a good, strong wholesale relationship, and it may not just be with one of them. It may be with more than one of them.”
Besides AST SpaceMobile, Stankey said he expects SpaceX/Starlink to have a “robust direct-to-device capability,” as well as Amazon Leo and potentially a fourth NTN satellite internet company. SpaceX is developing a next-generation D2D offering with spectrum it’s acquiring from EchoStar, and Amazon plans to introduce a new D2D offering in 2028 amid its recent deal to acquire Globalstar. AT&T has a deal with Amazon Leo to connect business customers that are out of reach of terrestrial wireless and wireline networks, but it has not yet signed a D2D-specific deal with Amazon’s satellite and services unit.
Image Credit: Jose Luis Stephens/Alamy Stock Photo
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Market Analysis – The Fiber Coverage Gap:
Despite strong growth, analysts remain cautious regarding AT&T’s convergence ceiling. With fiber currently available in only about 20% of the U.S., the primary concern is whether AT&T can maintain competitive parity in non-fiber regions.
- Potential Underperformance Risk: In markets where AT&T relies on legacy copper or wholesale third-party access, it may struggle to match the churn reduction and ARPU (Average Revenue Per User) lift seen in its “Fiber + Wireless” footprint.
- Mitigation Strategy: The success of the “60-million-locations fiber by 2030” roadmap which is the primary driver of AT&Ts increased spending. Also, the scaling of Internet Air as a “bridge” technology will be critical in preventing regional underperformance.
Fiber Build-Out and Location Targets:
- 2026 Milestone: AT&T expects to exceed 40 million total fiber locations by the end of 2026.
- Build Cadence: The company is targeting an organic deployment pace of 4 million new locations per year by the end of 2026. After 2026, this rate is projected to increase to approximately 5 million additional spots annually.
- Funding Mechanism: To support this acceleration, AT&T plans to reinvest $3.5 billion in cost savings specifically into the fiber build-out over the 2026–2027 period.
- “There’s no path for AT&T to have a fiber footprint that will cover more than a third of the country. Will AT&T be consigned to losing share in the other two thirds?” MoffettNathanson analyst Craig Moffett asked in a research note to clients posted after AT&T’s earnings call.
Despite the high CapEx, AT&T CFO Pascal Desroches reaffirmed that the company remains on track to deliver $18 billion+ in free cash flow (FCF) for 2026.
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References:
https://www.lightreading.com/satellite/at-t-might-look-beyond-ast-spacemobile-for-d2d
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