AT&T Inc. shares have fallen 13.9% over the past six months, a decline that contrasts sharply with the Wireless National industry's 104.6% growth during the same period. This underperformance, which also lags the Zacks Computer & Technology sector and the S&P 500, raises questions about whether the company's heavy capital expenditures and debt load can be sustained in a fiercely competitive market.
In peer comparisons, AT&T has underperformed Verizon Communications Inc., which saw its stock drop 7.1%, but it has outpaced T-Mobile US, Inc., whose shares lost 19%. The U.S. wireless market remains highly competitive, with carriers relying on promotions and incentives to retain customers. While AT&T's postpaid phone average revenue per user rose in the second quarter, spending on promotions offsets some benefits from pricing actions. Competition is intensifying across all telecommunications verticals, with fiber, fixed wireless, and cable providers targeting similar customer bases. Verizon is rapidly expanding its fiber infrastructure nationwide, while T-Mobile modernizes its 5G network, making it harder for AT&T to monetize subscriber growth.
To maintain a competitive edge, AT&T must continue heavy spending on fiber, wireless infrastructure, and spectrum. However, the company ended the second quarter with $144 billion in total debt and a net debt-to-adjusted EBITDA ratio of 2.68X. Management expects leverage to rise to roughly 3.2X following the EchoStar transaction before returning to its 2.5X target over time. With plans for annual capital investment of $23-$24 billion and approximately $10 billion in share repurchases during 2026, AT&T has limited room to absorb weak operating performance caused by market volatility and macro headwinds.
The phase-out of copper infrastructure is eroding earnings from the company's Legacy division. During the second quarter of 2026, revenue from this segment dropped 25.9% on a year-over-year basis, while operating income plunged 45.5% to $523 million.
Conversely, AT&T is broadening its fiber presence and bundling home internet with mobile plans to boost customer retention. During the second quarter of 2026, the firm gained 367,000 fiber subscribers and 279,000 fixed wireless users, driving a 27.3% year-over-year increase in Advanced Home Internet revenues. AT&T reached 38.6 million fiber locations and plans to exceed 40 million by the end of 2026 and 60 million by 2030. The convergence strategy is gaining traction, with 42.5% of advanced home Internet customers also holding an AT&T wireless plan.
Wireless subscriber growth continues to support the business. AT&T added 432,000 postpaid phone customers in the second quarter, while postpaid phone churn remained low at 0.86%. The company's wireless network modernization program was reported as more than 60% complete in August 2026. Additionally, AT&T is deploying newly acquired 600 MHz spectrum to improve network capacity, coverage, and reliability in indoor and rural locations.
Earnings estimates for AT&T have moved down 1% to $2.33 for fiscal 2026 and 0.4% to $2.56 for fiscal 2027 over the past 60 days. From a valuation standpoint, AT&T trades at a forward earnings multiple of 9.76, significantly lower than the industry average of 37.1.
Zacks Investment Research assigns AT&T a Zacks Rank #3 (Hold), suggesting a balanced outlook where new investors should approach the stock cautiously.