U.S. telecommunications conglomerate AT&T (T) delivered strong fourth-quarter and full-year results that showcased the company’s forward-looking momentum in retaining subscriber profitability while maintaining consolidated financial performance to continue expanding the business’s core 5G and wireless internet services.

The company added 482,000 post-paid net adds during the fourth quarter of 2024 with an additional 307,000 AT&T Fiber net adds, and 324,000 during Q1 for 2025, marking the 21th consecutive quarter of positive net adds over 200,000.

In total, the company ended 2024 with 1.7 million post-paid phone adds and 1.0 million AT&T Fiber net adds. The telecommunications giant holds an industry-leading post-paid phone churn rate of 0.83% (Q1 2025) and 0.76% (2024 full year).

AT&T has continued to grow its quarterly customer base, even as the pool of potential new subscribers tightens in an increasingly saturated and competitive market.

In Q1 2025, the company beat earnings expectations with solid post-paid and fiber net additions, maintaining momentum despite broader industry headwinds. AT&T is focusing on more competitive service offerings, expanding high-speed internet infrastructure, and improving free cash flow to support bottom-line growth over the coming years.

A Guarantee Customers Want

Pulling new customers has become an immensely competitive predicament. For one, customers are returning to more modest service packages and looking to opt for cheaper alternatives that suit their budgets. Secondly, major wireless service providers continue to outbid one another with highly attractive product offerings.

However, instead of having to give away brand new devices in a bid to win over a customer that could jump ship once their contract ends, AT&T is looking at doing things differently this year with their Guarantee Service program that would credit customers should they experience outages or connectivity issues.

Customers will be credited based on outage periods. Wireless customers who experience an outage of 60 minutes or more, and fiber customers with an outage of 20 minutes or more,will receive a bill credit equating to a full day of service. The service guarantee is extended to small business customers.

It is a first-of-its-kind guarantee, and AT&T is betting big on the promise of its network service delivery. Though a widespread outage would be costly for the company, the strategy aims at retaining current customers, even once their contracts have matured, and potentially attracting new customers frustrated by their current wireless providers.

The Guarantee Program could potentially boost the company’s home fiber customer base, and potentially see further additions in the upcoming quarters.

AT&T reported a 40.3% penetration rate in the first quarter of 2025. The company has been extending its fiber footprint, with 29.5 million consumer and business locations passing with fiber in 2025. Still, there is a lot of room for more growth in this category, and it would align with the company’s forward-looking strategy that aims to increase fiber service coverage.

Financials

Strong quarterly and yearly results have helped to position the company with strong momentum to further take advantage of new opportunities that will help drive customer acquisition and retention, and boost network modernization efforts.

For starters, AT&T reported $30.6 billion in company revenues, with operating income of $5.8 billion, and adjusted operating income of $6.4 billion. Overall, the quarter marked steady growth, slightly exceeding expectations despite early-year market headwinds. AT&T still prioritizes 5G and fiber-powered service bundles, with the aim to keep subscribers on board and boost free cash flow in the years ahead.

Elsewhere, the company reported net income of $4.7 billion, an increase from $3.8 billion in Q1 2024, with an adjusted EBITDA of $11.5 billion. The company’s equity in net income from affiliates, mainly tied to DIRECTV, has reached $1.4 billion, compared to $300 million in the same quarter a year ago, primarily due to cash distributions that exceeded its equity carrying value.

Boosting cash flow is a long-term measure of the company, and free cash flow of $3.1 billion for the reported quarter was up from $2.8 billion year over year. Over the full year of 2024, free cash flow of $17.6 billion represented an increase of $900 million year over year.

Guidance for 2025 to 2027 is projected to see the company deliver $1.0 billion in free cash flow annually, which would result in free cash flow of $18.0 billion by 2027.

Total diluted earnings per share (EPS) came in at $0.61 and adjusted EPS of $0.51, versus $0.47 and $0.48 respectively year-over-year. The company maintained a net profit margin of 9.55%, which compares to the wider industry and outperforms nearly 75% of industry peers.

Considering the return on equity (ROE) of 16.73%, analysts forecast that the telecommunications company will deliver a 2.15 EPS for the fiscal 2025 year. Perhaps not surprisingly, T is expected to post modest EPS growth over the next five years, averaging 5.51% per year until 2029.

First-quarter financial delivery supported stock performance with T climbing over 2% in post-market trading. Since the start of the year, share prices have gained 26.2%, while performance for the 12 months through early June stands around 61.6%.

Considering that the company delivered a 3.95% dividend yield, and a pay-to-earnings (P/E) ratio of 17.17, there stands to be plenty of room for the company to grow its shareholder base and deliver more promising long-term returns.

How AT&T Compares to Verizon and T-Mobile

It is important to compare AT&T’s valuation metrics with industry competitors like Verizon (VZ) and T-Mobile (TMUS), in order to evaluate its appeal as an investment:

Why These Metrics Matter:

• P/E Ratio: This ratio tells us how much investors are paying for each dollar of earnings. AT&T is showing average growth expectations while being balanced with a stable income profile, with a P/E of 17.17, between T-Mobile (24.01) and Verizon (10.45).
• EV/EBITDA: This is a cleaner way to gauge enterprise value relative to earnings. AT&T’s EV/EBITDA is at 7.89x, which currently sits slightly below Verizon, and considerably lower than the 12.27x of T-Mobile, suggesting that AT&T is not unreasonably valued against its operational earnings.
• Dividend Yield: Appealing to investors focused on income, AT&T has a high dividend yield of 3.95%. T-Mobile offers a much lower yield, which reflects its reinvestment focus, and Verizon offers a high yield of 6.17%.
• Free Cash Flow Yield: With a strong FCF yield of ~10.5%, AT&T shows solid cash flow performance relative to its market cap. This supports both its dividend and capital investments and while roughly in line with Verizon, remains ahead of T-Mobile.
• ROE: Showcasing solid profitability, AT&T’s return on equity stands at 16.73%. It remains efficient in generating returns from shareholders’ capital, albeit being lower than both T-Mobile (19.23%) and Verizon (19.52%).

Upbeat Forward-Looking Momentum

AT&T’s attempt at providing customers a guarantee that would entice them to stick around with the company for longer, and attract new subscribers, could help them achieve their forward-looking guidance expected in the coming years.

For one, the company is building on expanding its high-capacity open network, which will largely be modernized to support 5G networks with more robust open technology, with the aim of having 300 million+ people covered with deep mid-band 5G by 2026.

The improvement of network support will enable faster download speeds, better product enhancement and GenAI innovation. Secondly, broadband continues to see improvements, with the company expecting to reach 50 million+ locations with fiber by 2029. Along with this, AT&T wants to surpass 45 million locations through organic fiber deployment and aims to serve more than five million fiber locations through its joint venture with BlackRock.

From a financial standpoint, AT&T could reach these achievements in the coming years but would require the company to release product and service offerings that retain paying subscribers and distance the company from market peers.

Cybersecurity as a Strategic Priority

In the coming years, the company is looking to further diversify its investment in forward-looking digital development efforts. One of the most critical areas for both opportunity and risk is cybersecurity. For AT&T, this means that as the volume of connected devices and network traffic grows, protecting customers becomes a core business priority and no longer only a technical concern.

Consumer trust loss is one of the biggest impacts to recover from, according to IBM’s 2024 Cost of a Data Breach report. Additionally, the average cost of a breach in the telecom sector was over $4.8 million and with more personal data traveling over AT&T’s infrastructure than ever before, cybersecurity plays a very important role in keeping up both revenue and reputation.

AT&T’s response to this has been to both expand its internal capabilities and to promote accessible consumer tools. The company’s cybersecurity spinoff company LevelBlue, is focused on addressing key issues relating to threat identification and risk response. It leverages both artificial intelligence (AI) and machine learning (ML) to extend community network capabilities and ensure a more threat intelligence platform capable of handling widespread attacks.

Protecting the Consumer in Real Time

Mobile scams and network-based breaches are rising as more consumers rely on their smartphones for everything from banking to business communication.

Laurent Alain Amar, the founder of Control+ told me in an interview that the real risk isn’t just scams, it’s the speed at which they happen.

“We see thousands of mobile accounts breached each day,” says Amar. “Unlike big tech platforms, Control+ doesn’t track your behavior or sell your data, it steps in the moment a threat is detected and blocks it before it can spread.”

It’s evident that public Wi-Fi remains one of the biggest weak points. In 2023, 25% of hacks occurred in restaurants or cafes, with airports and hotels close behind. As AT&T builds out its cybersecurity strategy alongside fiber and 5G, tools like Control+ highlight the growing demand for accessible, real-time defense.

Further outlook shows the company aiming to boost mobility service revenue between 2% to 3% annually, while fiber broadband revenue growth is expected to be in the mid-teens annually. In total, AT&T expects these adjustments to consolidate service revenue growth in the low-single-digit range from 2025 until 2027.

These ambitions aren’t impossible to achieve, and AT&T has the capacity to fulfill this guidance, however, this is not to say that competitors couldn’t do the same. Nothing is stopping other wireless carriers from rolling out similar guarantee programs, or perhaps taking a more aggressive approach and offering highly attractive product options.

AT&T is in a position to maintain its competitive advantage, and looking ahead, there’s still enough room for the company to grow even as market competition remains a robust obstacle for the wireless service provider.

Should You Buy AT&T?

Considering the improvements the company has made in recent years regarding revenue profitability, and maintaining a strong free cash flow position AT&T is an attractive option for investors looking to leverage the company’s robust market dominance and business competitiveness.

The changing market, along with more serious market competition, has already seen AT&T adjust its forward-looking strategy and aims to deliver more diversified product and service offerings to capture market share. However, this could be a short-lived opportunity should market peers roll out similar offerings at a more affordable price point.

AT&T has delivered clear guidance on how it is looking to maintain its top position in the market, and perhaps the wider industry. The company is well-positioned to achieve its long-term goals while delivering robust growth in a fast-changing consumer environment.