AT&T lifts buyback target to $10bn on strong Q2 cash flow

AT&T raised its 2026 share repurchase target to roughly $10 billion from a previous $8 billion, citing stronger-than-expected second-quarter free cash flow and expanding margins. The telecom group generated $4.7 billion in free cash flow during the period and reiterated its full-year guidance of more than $18 billion. The increased authorization is contingent upon the closing of AT&T's expected spectrum deal with EchoStar.

Underlying profitability improved across the board. Consolidated revenue grew 2.3% year-over-year, while service revenue increased 2.7%. Adjusted EBITDA rose 5.2%, pushing the margin up 110 basis points to 39.1%.

Adjusted earnings per share climbed more than 20% to $0.65, up from $0.54 a year earlier. CFO Pascal Desroches attributed the earnings expansion primarily to EBITDA growth and lower depreciation expenses. The company maintained its full-year forecast for low-single-digit service revenue growth and adjusted EBITDA growth of 3% to 4%.

Adjusted EPS is still expected to land between $2.25 and $2.35 for the full year. This leaves the company's valuation heavily dependent on management's ability to execute the $10 billion buyback program. The capital return framework provides a clear floor for the stock in a capital-intensive sector.

The financial momentum was driven by subscriber gains in AT&T's core connectivity businesses. The company added over 1 million "Advanced Connectivity" subscribers across fiber, fixed wireless, and postpaid phone plans. All three categories posted higher net additions than a year earlier, with fiber and combined fiber and fixed wireless additions hitting second-quarter records.

"Earlier this year, we provided an outlook for accelerated growth and execution of our strategy. That's exactly what we delivered in the second quarter," said Chairman and CEO John Stankey. Management continues to push convergence between home internet and wireless as its primary operational lever.

For investors, the quarter's significance lies in the transition from heavy network spending to tangible shareholder returns. AT&T's ability to expand EBITDA margins while growing free cash flow suggests its infrastructure investments are yielding efficient returns. Executives noted that leverage ratios will normalize over time as the company deploys excess cash.