AT&T shares tumbled 6.3% on Wednesday, closing at $21.96 and marking the worst performance in the S&P 500, even as the telecom giant reported better-than-expected third-quarter earnings and raised its 2026 profit outlook. The sell-off was driven by concerns over wireless competition from SpaceX's Starlink Mobile and a sequential slowdown in postpaid phone subscriber additions.
Earnings beat and raised outlook
The company posted revenue of $32.3 billion, up 5.3% year over year and above the $31.69 billion consensus estimate from FactSet. Adjusted earnings came in at 65 cents per share, surpassing the 60 cents analysts had forecast. AT&T also lifted its 2026 adjusted earnings guidance to approximately $2.40 per share, up from the $2.25 to $2.35 range provided in July.
CEO John Stankey highlighted the company's confidence in its competitive position, announcing plans to accelerate share repurchases to roughly $10 billion this year. The company reaffirmed its annualized dividend of $1.11 per share, which at Tuesday's closing price implied a yield of 4.7%, well above the S&P 500's second-quarter yield of 1.07%.
Subscriber growth slows
Despite the strong financial results, investors focused on the company's subscriber metrics. AT&T added 379,000 postpaid phone subscribers in the third quarter, down from 432,000 in the previous quarter. Postpaid customers, who pay monthly, are a key source of recurring revenue for telecom operators.
SpaceX's Starlink Mobile raises competitive concerns
SpaceX's plans to expand Starlink into a major US mobile carrier have added to worries about the competitive landscape. The company is acquiring low-band spectrum to support the effort, and its COO said Starlink Mobile has surpassed 22 million monthly users, a 37% increase from the prior quarter.
Stankey urged investors not to overstate the threat, noting that AT&T typically operates between six and eight carriers of low-band spectrum in metropolitan areas, while SpaceX holds only one. He also argued that wireless performance depends on more than spectrum, including the ability to deliver reliable service indoors—pointing out that in Chicago, 40% to 45% of mobile traffic originates inside buildings. Building a network with comparable coverage would require significant investment and time, he added.
Fiber network and satellite opportunities
Stankey acknowledged that low-Earth-orbit satellites could help telecom companies serve rural areas more economically and reduce customer losses in less densely populated regions. He also emphasized AT&T's fiber infrastructure as a key competitive advantage, stating that fiber-based broadband combined with wireless service offers a durable customer proposition.
AT&T reported a record quarter for internet net additions across fiber and fixed wireless, and noted that more than 90% of mapped US data centers are within 10 miles of its fiber network.
This article is for informational purposes only and does not constitute financial advice.
