T Q4 Deep Dive: Fiber Expansion and Convergence Strategy Drive Growth Outlook

Telecommunications conglomerate AT&T (NYSE:T) announced better-than-expected revenue in Q4 CY2025, with sales up 3.6% year on year to $33.47 billion. Its non-GAAP profit of $0.52 per share was 11.6% above analysts’ consensus estimates.

Is now the time to buy T? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

AT&T’s fourth quarter saw a positive market reaction, as the company outperformed Wall Street expectations on both revenue and profit. Management credited continued growth in 5G and fiber subscribers, noting that postpaid phone and fiber net additions each surpassed one million for the year. CEO John Stankey emphasized that investments in advanced connectivity, particularly the expansion of fiber and fixed wireless offerings, were key contributors to customer gains. Stankey noted, “The result of this operating momentum was the best year for consumer broadband subscriber growth in a decade.”

Looking ahead, management framed guidance around accelerating customer growth and increasing profitability through expanded fiber reach and deeper wireless-fiber convergence. AT&T expects the planned Lumen fiber asset acquisition to materially boost its addressable market, while ongoing cost transformation initiatives and a focus on digital and AI-driven efficiencies are projected to support margin expansion. CFO Pascal Desroches stated, “We expect annual cash taxes of approximately $1 billion to $1.5 billion through 2028,” highlighting long-term free cash flow growth as a foundation for increased shareholder returns. The company expects to return over $45 billion to shareholders over the next three years.

Key Insights from Management’s Remarks

Management attributed the quarter’s results to momentum in advanced connectivity, with strong execution in fiber expansion and strategic investments underpinning both subscriber growth and profitability.

• 5G and Fiber Subscriber Growth: Postpaid phone and fiber net additions remained robust, with AT&T reporting over 1.5 million postpaid phone net adds and more than 1 million fiber net adds for the year, reflecting sustained demand for high-speed connectivity.
• Convergence Strategy Impact: The company’s strategy to bundle wireless and fiber services drove higher customer retention and deeper relationships. The fiber convergence rate rose to 42%, with management aiming for 50% and potentially beyond as more customers adopt combined services.
• Acquisitions Fueling Expansion: Agreements to acquire EchoStar spectrum and Lumen fiber assets are set to significantly expand AT&T’s market reach. Management expects these assets to increase the fiber footprint from 32 million to 40 million locations by year-end, with further annual expansion planned.
• Cost Efficiency and Transformation: Over $1 billion in cost savings were achieved in the quarter, driven by operational efficiencies, AI adoption, and digital migration of customer transactions. Management plans to accelerate efficiency gains, targeting an additional $4 billion in annual cost savings by 2028.
• Shift in Segment Reporting: Starting next quarter, AT&T will report results for advanced connectivity (wireless and fiber) separately from legacy operations, increasing transparency into growth drivers and the returns from recent investments.

Drivers of Future Performance

AT&T’s guidance is grounded in expanding fiber availability, scaling converged offerings, and executing on cost transformation to drive both revenue growth and margin improvement.

• Fiber and Converged Services Expansion: AT&T plans to accelerate fiber deployment, reaching 40 million locations by year-end and targeting annual expansion of 5 million locations through the decade. Management sees this as the key to driving growth in both consumer and business segments, with the Lumen acquisition expected to add $900 million in annualized fiber revenue in 2026.
• Cost Transformation and Digital Efficiencies: The company expects to achieve $4 billion in annual cost savings by 2028, leveraging AI, process simplification, and legacy network shutdowns. These initiatives are projected to improve margins and support durable free cash flow growth.
• Risks From Competitive and Pricing Dynamics: Management highlighted ongoing promotional intensity in wireless and broadband markets. While disciplined pricing and bundled offers are expected to mitigate churn, temporary ARPU pressure is anticipated as more customers adopt multi-product bundles, especially in competitive geographies.

Catalysts in Upcoming Quarters

Looking to the coming quarters, the StockStory team will be monitoring (1) the pace of fiber buildout and successful integration of Lumen assets, (2) improvements in convergence rates and the ability to upsell combined wireless-fiber packages, and (3) the realization of targeted cost savings and the impact of digital initiatives on operating margins. Additionally, any shifts in competitive pricing or promotional activity could influence customer acquisition and retention trends.

AT&T currently trades at $24.04, up from $23.02 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).

Now Could Be The Perfect Time To Invest In These Stocks

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.