AT&T's third-quarter earnings from continuing operations fell to $0.13 a share from $1.29 because of a $2.6 billion non-cash charge on AT&T Mexico, the wireless business it agreed eight days before the report to sell for $2 billion.
Adjusted earnings, which exclude the charge and other items AT&T treats as non-recurring, rose to $0.65 a share from $0.54, according to the company's earnings release filed with the SEC on Wednesday. Revenue rose 5.3 per cent to $32.3 billion. Both earnings comparisons are distorted. The adjusted one is distorted less.
What was the impairment?
A write-down of AT&T Mexico to the value of the sale. AT&T agreed on 13 October to sell its Mexico wireless business, the whole of its Latin America segment, to Grupo Televisa and Fintech Holdings, a deal we reported at $2 billion in cash. The release says AT&T applied held-for-sale accounting as of 30 September and "recorded a non-cash impairment charge of $2.6 billion at Corporate and Other that did not impact third-quarter segment results." A business classed as held for sale is carried at no more than its expected sale price, less costs, so, on our reading, the charge is roughly AT&T's measure of how far the business's book value exceeded what the buyers are paying; the release does not itemise it. By this publication's arithmetic, the charge is about 1.3 times the headline price.
The release gives the full reconciliation. GAAP earnings of $0.13 plus $0.41 for the Mexico impairment, $0.09 for employee separation charges and $0.02 for benefit-related, transaction, legal and other items equals $0.65. A year earlier the distortion ran the other way: GAAP earnings of $1.29 included a $0.79 gain on the sale of AT&T's DIRECTV stake. GAAP operating income was $4.1 billion and adjusted operating income $7.6 billion, against $6.1 billion and $6.6 billion.
How did the business itself do?
It added internet customers at a record pace and held its wireless growth. Advanced Connectivity, AT&T's segment for wireless, fiber and fixed wireless, grew service revenue 6.1 per cent to $23.9 billion and operating income 18.9 per cent to $7.6 billion. The release reports:
| Measure | Q3 2026 | |---|---| | Internet net additions | 769,000 (442,000 fiber, 327,000 fixed wireless) | | Postpaid phone net additions | 379,000 | | Postpaid phone churn | 0.92% a month | | Advanced home internet revenue | $2.98 billion, up 23.4% | | Legacy segment revenue | $1.52 billion, down 24.5% | | Free cash flow | $5.0 billion, against $4.9 billion |
Part of the home internet growth comes from Lumen's mass-market fiber business, which AT&T bought on 2 February. Legacy, the copper network AT&T is closing down, keeps shrinking. "Our asset base positions us well for the AI era, with a leading position in fiber," John Stankey, chairman and chief executive, said in the release.
Is the $24 billion buyback new?
No. AT&T said it "maintains" its plan to return $45 billion or more to shareholders in 2026 to 2028, including $24 billion or more of share repurchases, about $10 billion of it this year, and its $1.11 annual dividend. It bought back $2.8 billion of stock in the quarter and returned about $4.8 billion in all. What changed is the spending around it. AT&T raised its 2026 adjusted EPS outlook to "the $2.40 range" and lowered capital investment guidance to $23 billion to $24 billion for 2026 and $22 billion to $23 billion a year in 2027 and 2028. Its free cash flow targets are $18 billion or more in 2026, $19 billion or more in 2027 and $21 billion or more in 2028.
| Year | Free cash flow target | Capital investment | |---|---|---| | 2026 | $18 billion or more | $23 billion to $24 billion | | 2027 | $19 billion or more | $22 billion to $23 billion | | 2028 | $21 billion or more | $22 billion to $23 billion |
The three targets add to at least $58 billion, by this publication's arithmetic, so the buybacks are about 41 per cent of the planned cash and the full $45 billion return about 78 per cent.
What about the debt?
It went up. Total debt was $159.6 billion and net debt $149.8 billion at the end of September, both higher than three months earlier because the EchoStar spectrum purchase closed, the release says. AT&T expects its ratio of net debt to adjusted EBITDA to return to about 2.5 times during 2029. The fiber assets bought from Lumen sit in a subsidiary called Forged Fiber 37, classed as held for sale, in which AT&T has agreed to sell a controlling stake.
What to watch
Whether the lower capital budget and the customer growth can coexist. AT&T says it remains on track to reach more than 40 million fiber locations by the end of 2026 and more than 60 million by the end of 2030, with less money for building. The Mexico sale, expected to close in the first quarter of 2027, takes the business out of AT&T's outlook from next year. The fourth-quarter report will show whether fiber additions hold near 442,000 while capex falls.
All AT&T figures, the impairment and its location, the EPS reconciliation, the customer figures, the outlook, the capital return plan, debt figures and the John Stankey quotation come from AT&T's third-quarter press release, Exhibit 99.1 to its Form 8-K filed with the SEC on 21 October 2026. The $2 billion sale price and the expected first-quarter 2027 closing come from our report of 16 October, which drew on AT&T's 13 October announcement. The sum of the free cash flow targets, the buyback share of it and the comparison of the charge with the sale price are this publication's arithmetic. The analysis is our own.
Topics businessAT&Ttelecombuybacksfree cash flowearnings
