AT&T Inc. (T) delivered solid fourth-quarter results on Wednesday, and the story is basically what you'd expect from a telecom company in 2025: the new stuff is growing nicely, the old stuff is slowly dying, and management is spending billions to make sure the transition happens as smoothly as possible.

Operating revenues hit $33.47 billion for Q4 2025, up 3.6% year-over-year and comfortably ahead of the analyst consensus of $32.87 billion. Adjusted earnings came in at 52 cents per share, beating expectations of 46 cents.

The revenue growth came from exactly where you'd want it: mobility, consumer wireline, and the company's Mexico operations all posted gains. The trouble spot? Business Wireline, where revenue fell 7.5% as legacy and transitional services continue their inevitable decline.

The Growth Engine: Wireless and Fiber

Mobility sales grew 5.3% in the quarter, while Consumer Wireline climbed 2.9%. Those are the businesses AT&T is betting its future on, and the numbers suggest the strategy is working.

The company added 421,000 postpaid phone net subscribers, though that's down from 482,000 the year before. And there's a bit of customer-retention trouble brewing: postpaid phone churn rose to 0.98% from 0.85%, while prepaid churn increased to 2.89% from 2.73%. Average revenue per user for postpaid phones also dipped slightly, down 0.3% to $56.57.

But here's an interesting data point: 42% of households using AT&T fiber also subscribe to the company's wireless service. That kind of bundle penetration is exactly what telecom companies dream about—it's stickier and more profitable than selling services separately.

On the fiber front, AT&T added 283,000 AT&T Fiber net subscribers and picked up 221,000 AT&T Internet Air customers. The company is aggressively expanding its fiber footprint, and those additions show real momentum.

Financial Performance: Strong But Mixed

Adjusted EBITDA climbed to $11.2 billion from $10.8 billion in the prior-year quarter. That's the good news. Net income, however, fell to $4.2 billion from $4.4 billion a year earlier.

Operating cash flow declined to $11.3 billion from $11.9 billion, while free cash flow came in at $4.2 billion, down from $4.0 billion. Capital expenditures for the quarter totaled $6.8 billion, reflecting the company's continued investment in infrastructure.

Looking at segment performance, the Mobility segment's operating income grew 4.5% to $6.4 billion, with margins holding relatively steady at 26.3% compared to 26.5% a year ago. Consumer Wireline showed impressive improvement, with operating margin nearly doubling to 15.1% from 8.0%. Business Wireline remained in the red with a 3.9% operating margin loss, though that's narrower than the 4.6% loss from the prior year.

Overall operating income reached $5.8 billion, up from $5.3 billion in the same quarter last year.

The Outlook: Betting Big on 5G and Fiber

AT&T is making some aggressive projections based on its heavy investments in 5G and fiber, along with planned acquisitions of Lumen's mass-market fiber business and spectrum from EchoStar.

For 2026 through 2028, the company expects low-single-digit annual service revenue growth. Adjusted EBITDA should grow 3% to 4% in 2026, then accelerate to 5% or better by 2028 as gains in what AT&T calls "Advanced Connectivity" more than offset declines in legacy services.

The company is guiding for adjusted EPS of $2.25 to $2.35 in 2026—notably above the analyst consensus of $2.21—and is targeting double-digit earnings growth on a compound annual basis through 2028. Management expects the pending acquisitions to slightly pressure earnings in 2026 and 2027 before adding to them starting in 2028.

AT&T plans to invest $23 billion to $24 billion annually in capital expenditures from 2026 through 2028. Free cash flow targets are ambitious: $18 billion or more in 2026, $19 billion or more in 2027, and $21 billion or more in 2028.

The company expects Advanced Connectivity service revenue to grow in the mid-single digits each year, with 5%+ growth in 2026 that includes roughly 100 basis points from the planned Lumen retail fiber subscriber acquisition. Advanced Connectivity EBITDA should grow in the mid-to-high single digits annually, including 6%+ growth in 2026.

The Legacy Problem

Here's where things get interesting. AT&T expects Legacy service revenue—basically the old copper-based network business—to fall more than 20% in 2026. The company is actively shutting down its copper network across most of its footprint by the end of 2029 and migrating customers to 5G and fiber.

Management expects Legacy revenue to become "immaterial" by the end of 2029 and anticipates the segment will generate negative EBITDA after 2027 until it can eliminate most direct copper-network operating costs. That's a polite way of saying: we're managing the decline of a dying business, and it's going to cost us money before we can fully shut it down.

AT&T also noted on its earnings call that fiber deployment costs per passing have been rising about 2% annually, reflecting ongoing cost pressures. And first-quarter results will include incremental spending as the company prepares to integrate the retail operations it's acquiring from Lumen.

The Deals

AT&T expects to close its acquisition of Lumen's mass-markets fiber business and wireless-spectrum licenses in early 2026. The company also agreed in August to buy assets from EchoStar in a $23 billion deal.

In an interesting structural move, AT&T plans to put the Lumen assets into a subsidiary and then sell partial ownership to an equity partner. That should help manage the financial impact while still giving AT&T operational control.

Shareholder Returns

AT&T is planning to return more than $45 billion to shareholders from 2026 to 2028 through dividends and buybacks. That's a substantial commitment.

The company will maintain its current annualized dividend at $1.11 per share. It plans to complete repurchases under its existing $10 billion authorization by the end of 2026, then begin buybacks under another $10 billion authorization already approved by the board. Management expects to repurchase about $8 billion of stock in 2026 and continue buybacks at a steady pace through 2028, subject to board approval.

Price Action: AT&T shares gained 2.70% to $23.63 in premarket trading on Wednesday.