What Should AT&T Stock Holders Take From Its Third Quarter

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AT&T (T) shares fell 6.4% on October 21, 2026, the day the company reported fiscal Q3 2026. The S&P 500 rose 0.6% during the same session. That morning, AT&T raised its full-year profit outlook while leaving its free cash flow forecast and range for core profit growth untouched. So where did the higher outlook come from?

AT&T's Higher Outlook Came From Lower Depreciation

On the October 21 call, management said the raise primarily reflected lower depreciation under held-for-sale accounting for AT&T Mexico, a business the company has agreed to sell. AT&T now expects full-year adjusted EPS in the $2.40 range, up from its previous range of $2.25 to $2.35. That means most of the higher figure comes from how the company accounts for a departing business, rather than from adding customers or increasing sales.

Earnings for the quarter beat forecasts, with adjusted EPS reaching $0.65 against a consensus of $0.61. Revenue matched expectations at $32.3 billion. Even so, the stock decline was far steeper than the drops its peers recorded during the same session. Verizon fell 2.2% and T-Mobile fell 2.5%.

Did AT&T's Forecast For Its Business Change?

Not by much. Management maintained its fiscal 2026 forecast for adjusted EBITDA growth, the company's core profit measure, at 3% to 4%. The company now expects to hit the upper portion of that range. The full-year free cash flow forecast stayed at $18 billion.

This steady outlook follows a strong quarter. Service revenue grew 3.8% from a year earlier, marking what management called its best performance in more than four years. Adjusted EBITDA grew more than 5% for a second consecutive quarter.

The fourth quarter looks harder. Management expects adjusted EBITDA growth in the period to suffer from year-over-year increases in marketing and other customer acquisition costs. These higher expenses are tied to an extended device launch cycle and a wider push to sell fiber.

What AT&T Said About Fiber Prices

Average revenue per fiber customer fell 4% from a year earlier in fiscal Q3 2026. Management tied the decline to introductory prices for new customers, discounts for subscribers who also buy AT&T wireless, and growth among lower-paying Quantum brand customers in territories acquired from Lumen. The company expects a similar year-over-year decline in the fourth quarter.

AT&T is using lower prices to win households where it can later sell wireless service. By the end of the quarter, nearly 43% of its advanced home internet customers, a group including both fiber and Internet Air, also held a postpaid wireless account with the company. When the call turned to fiber prices in AT&T's established fiber markets, management said it did not want to focus on that alone, pointing to service revenue and customer growth.

Average revenue per fiber customer is the figure to watch when AT&T reports fiscal Q4 2026, expected in January 2027.

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