AT&T Inc. 10-Q Summary: Quarter Ended June 30, 2026
Business Context and Reporting Period
This filing covers the quarterly period ended June 30, 2026. AT&T Inc. is a large accelerated filer operating in the telecommunications and technology sectors. The reporting period reflects a strategic realignment of segments to focus on "Advanced Connectivity" (5G and fiber) while managing the decline of "Legacy" copper-based operations. A significant event during the period was the acquisition of Lumen Technologies' Mass Markets fiber business on February 2, 2026, for $5.756 billion, which is classified as discontinued operations pending a sale of a controlling interest.
Key Financial Metrics
| Metric (in millions) | Q2 2026 | Q2 2025 | 6 Months 2026 | 6 Months 2025 |
|---|---|---|---|---|
| Total Operating Revenues | $31,558 | $30,847 | $63,064 | $61,473 |
| Operating Income | $7,038 | $6,501 | $13,696 | $12,255 |
| Net Income (Attributable to Common) | $4,591 | $4,464 | $8,384 | $8,859 |
| Diluted EPS | $0.66 | $0.62 | $1.20 | $1.22 |
| Operating Cash Flow (6mo) | $18,396 (2026) vs $18,812 (2025) | |||
| Capital Expenditures (6mo) | $10,577 (2026) vs $9,174 (2025) | |||
| Total Debt | $143,954 (June 30, 2026) | |||
| Cash and Equivalents | $17,570 (June 30, 2026) |
Material Changes vs. Prior Period
- Revenue Growth: Total operating revenues increased 2.3% in Q2 and 2.6% for the six months, driven by growth in Advanced Connectivity (wireless and fiber) and favorable foreign exchange impacts in Latin America. This offset a 25.9% decline in Legacy segment revenues due to copper network decommissioning.
- Profitability: Operating income rose 8.3% in Q2 and 11.8% for the six months. Operating margins improved to 22.3% in Q2 from 21.1% in the prior year, aided by lower depreciation on fully depreciated legacy assets.
- Expense Dynamics: Interest expense increased 13.8% in Q2 due to higher debt balances and rates. Operations and support expenses rose due to higher wireless sales volumes, bad debt expenses, and costs associated with the Lumen fiber acquisition.
- Segment Performance:
- Advanced Connectivity: Operating income increased 20.3% in Q2. Wireless service revenue grew 3.3%, and Advanced Home Internet revenue surged 27.3%.
- Legacy: Operating income fell 45.5% in Q2 as revenues declined.
- Latin America: Revenues grew 16.1% in Q2, but operating income dropped 17.4% due to unfavorable foreign exchange rates and higher bad debt.
Guidance, Outlook, and Risks
- Strategic Transactions: AT&T anticipates closing a transaction to purchase FCC licenses from EchoStar Corporation for approximately $23 billion by the end of July 2026. The company plans to fund this using cash on hand and term loan borrowings.
- Capital Allocation: The company repurchased approximately 174 million shares for $4.435 billion in the first six months of 2026. As of June 30, 2026, approximately $11.3 billion remains available under stock repurchase authorizations.
- Dividends: Common stock dividends totaled $0.5550 per share for the six months ended June 30, 2026.
- Risks and Contingencies:
- Regulatory: The Eighth Circuit vacated FCC digital discrimination rules in May 2026, requiring the FCC to adopt new rules. The company faces ongoing regulatory scrutiny regarding broadband access and spectrum licensing.
- Market Risk: The company utilizes cross-currency swaps with a notional value of $36.037 billion to hedge foreign currency and interest rate risks.
- Discontinued Operations: The Lumen fiber assets are held-for-sale in a subsidiary (Forged Fiber), creating uncertainty regarding the final sale terms and timing.
Investor Verification Checklist
- EchoStar Transaction: Verify the closing status and funding structure of the pending $23 billion spectrum acquisition from EchoStar.
- Debt Profile: Review the weighted average interest rate of the debt portfolio (4.4% as of June 30, 2026) and the impact of rising rates on future interest expense.
- Legacy Decline: Monitor the rate of revenue erosion in the Legacy segment and the associated cost savings from copper network decommissioning.
- Discontinued Operations: Track the progress of the sale of the controlling interest in Forged Fiber (Lumen assets) to understand the final financial impact.
- Subscriber Metrics: Validate the reported growth in fiber connections (up 22.8% YoY) and the stability of wireless churn rates (1.12% in Q2 2026).