AT&T Shows No Sign of Slowing Down

While fellow telecom giant Verizon is struggling with subscriber losses, AT&T (NYSE: T) put up strong numbers in its first-quarter report Wednesday morning. Postpaid phone net adds topped 300,000, mobility service revenue jumped 4.1%, and the fiber business continued to grow at a blistering pace.

The wireless industry faces headwinds from a potential economic slowdown and unpredictable tariff policies from the Trump administration, but it was largely business as usual for AT&T in the first quarter.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

A focus on bundling

There are two core components to AT&T's current strategy. First, the company is taking a customer-first approach with policies like its AT&T Guarantee program, which provides bill credits to customers for wireless or fiber outages. By prioritizing customer satisfaction, the company can win and retain customers without needing to resort to pricey promotions and deals.

Second, AT&T is pushing its wireless-fiber bundle. As of the first quarter, more than 40% of AT&T fiber households also subscribe to the company's wireless plans. As AT&T noted during its analyst day event last year, customers with both fiber and wireless subscriptions are more satisfied, less likely to churn, and have higher lifetime values than other types of customers.

This strategy is clearly working. AT&T added 324,000 net postpaid phone subscribers in the first quarter and maintained a low churn rate of 0.83%. In contrast, competitor Verizon lost a similar number of subscribers during its own first quarter. AT&T also added 261,000 fiber subscribers, marking the 21st consecutive quarter of at least 200,000 net fiber adds. Internet Air, AT&T's fixed wireless internet offering aimed at areas without fiber access, added 181,000 subscribers.

Growth in consumer wireless and fiber more than offset continued weakness in the business wireline segment. The company is transitioning from legacy services to fiber, a process that's knocking down revenue. While business wireline revenue dropped 9.1% year over year, overall service revenue still rose 1.2% on the strength of the company's other segments.

Sticking with its guidance

AT&T reiterated its full-year guidance along with its first-quarter report, a testament to the confidence the company has in its strategy. Mobility revenue is expected to grow by 2% to 3%, consumer fiber revenue should expand by a mid-teens percentage, and free cash flow excluding contributions from DirecTV is expected to surpass $16 billion. AT&T expects the sale of its 70% stake in DirecTV to close in mid-2025.

AT&T's balance sheet has been improving over the past few years as the company paid down debt related to ill-fated media acquisitions of the past. AT&T is now within its target net-debt-to-adjusted EBITDA range, which is the trigger for the company restarting share buybacks. AT&T plans to begin buying back shares sometime in the second quarter.

There are certainly risks facing the company this year. While smartphones are currently not subject to tariffs, that situation could change at any time, making promotions involving free or discounted phones more costly for wireless providers. In addition, an economic slowdown could lead to customers delaying bill payments or seeking out cheaper wireless plans, both of which would hurt AT&T's profit and cash flow.

While a change in economic conditions could threaten AT&T's ability to hit its guidance this year, the company's customer-friendly approach and bundling strategy is paying off.

Should you invest $1,000 in AT&T right now?

Before you buy stock in AT&T, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and AT&T wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $561,046!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $606,106!*

Now, it’s worth noting Stock Advisor’s total average return is 811% — a market-crushing outperformance compared to 153% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 21, 2025

Timothy Green has positions in AT&T. The Motley Fool recommends Verizon Communications. The Motley Fool has a disclosure policy.