T-PA · AT&T Inc.

AT&T’s Q1 2026 results reflect a pivotal transition phase: accelerating exit from Legacy infrastructure while scaling converged 5G/fiber offerings. Income from continuing operations declined 10.1% YoY to $4.2 billion, primarily due to $256 million in pre-tax merger-related costs—including amortization of intangible assets and transaction/legal expenses—associated with the February 2, 2026 close of the Lumen mass markets fiber acquisition. Despite this drag, Advanced Connectivity segment revenues grew 4.7% YoY to $28.5 billion, fueled by 27.3% growth in advanced home internet revenue (driven by 21.2% fiber revenue growth inclusive of Lumen customers) and over 100% growth in AT&T Internet Air (AIA) revenue. Operating income margin in that segment expanded 210 bps to 24.1%, reflecting disciplined cost management—transformation initiative savings and lower content licensing fees more than offsetting higher equipment, selling, and network costs tied to increased wireless sales volumes and Lumen integration. Meanwhile, Legacy segment revenues plunged 25.3% YoY to $1.8 billion as copper-based service demand continued collapsing, and its operating income margin contracted 840 bps to 34.6%—a function of absent prior-year vendor credits and shifting cost allocation. Latin America revenues rose 20.8% YoY to $1.2 billion, but Mexico’s operating income margin fell 270 bps to 1.7% amid foreign exchange headwinds and higher equipment/bad debt costs. Capital return remained robust: $2.3 billion in share repurchases during the quarter, with $13.5 billion remaining under active authorizations. The company reaffirmed strategic focus on fiber and 5G convergence, explicitly realigning segments to track progress against legacy network decommissioning—a structural shift underscored by the reclassification of Forged Fiber as discontinued operations.