AT&T Convergence Playbook Scaling, Volumes Accelerating; AFL Top Pick

研报英文原文证据摘录

AT&T Convergence Playbook Scaling, Volumes Accelerating; AFL Top Pick

Following better 2Q ACS revenue,

we raise our 3Q segment revenue to $23.88b (+6.0% y/y) on higher wireless service

revenue and 4% higher business fiber and advanced connectivity service revenue of

$2.04b (+11.3% y/y). On the business side, management noted AT&T Business has

“turned the corner” and now expects the segment to remain a driver of ACS revenue

growth going forward. However, we reduce Advanced Home Internet (AHI) revenue 4%

to $3.04b (+25.9% y/y), with higher volumes offset by lower entry pricing as AT&T seeds

converged-bundle sell-in. CFO Desroches framed the deliberate trade-off, noting the

goal is “not to maximize ARPU of individual products, but instead to maximize total

Advanced Connectivity service revenues.” The lower AHI revenue also reflects some

fiber ARPU dilution from the Lumen transaction, with standalone fiber ARPU (ex-

Lumen) roughly flat y/y. Following stronger 2Q segment EBITDA, we modestly raise our

3Q EBITDA estimate to $12.35b (+7.4% y/y); we attribute the slight deceleration from

2Q’s 8% growth to seasonally higher costs, incremental investment in standing up

operations in the Lumen footprint, and success-based opex from accelerating wireless

and AHI volumes. AT&T reiterated full-year ACS guidance of service revenue growth

of 5%+ and EBITDA growth of 6%+, with the segment entering 2H26 with strong

momentum. Desroches flagged that modestly softer broadband revenue could potentially

be offset by upside to wireless, keeping total segment guidance intact. Accordingly, we

no longer expect AHI revenue growth of 30%+ given the lower ARPUs, despite better

volumes. Reflecting this, our FY26 ACS service revenue estimate rises to $94.24b

(+5.2% y/y vs.