AT&T's Secret Weapon for 2026: Why Fiber Could Drive Double-Digit EPS Growth

Telecom powerhouse AT&T (NYSE: T) is surely a respectable institution and a large dividend payer. But is it a maturation stock? Hardly.

Except, for the foreseeable future, it's going to beryllium putting up growth-like nett improvement.

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That's the large takeaway from its caller fourth-quarter net league call. And the main operator of this maturation is simply a portion of its concern that investors typically ignore.

That portion is fiber-optic broadband. After respective years of important spending connected this infrastructure, including its caller $5.8 cardinal acquisition of overmuch of Lumen's (NYSE: LUMN) fibre business, things are yet coming together. As CEO John Stankey commented during January's net call, "We expect to scope implicit 40 cardinal lawsuit locations with our fibre services by the extremity of this year, up from 32 cardinal astatine the extremity of 2025." That's a 25% footprint enlargement successful conscionable 1 year.

AT&T is much than conscionable fiber-based broadband, of course. In fact, astir 70% of its gross comes from providing wireless service, portion little than 15% of its gross stems from consumer-facing and business-serving fiber-optic connectivity.

That doesn't mean this comparatively tiny concern can't beryllium an important nett maturation motor for the large telco, though. A accordant 40% of consumers who can subscribe to AT&T's broadband work extremity up doing so. An further 8 cardinal crossings should construe into an further 3.2 cardinal paying broadband customers soon enough, upping this business's headcount by astir 30%, from 10.6 cardinal consumers to 13.6 million. That's important fixed however saturated the United States' wireless marketplace is now, offering small successful the mode of maturation imaginable beyond terms increases. AT&T's mean fibre lawsuit is paying connected the bid of $73 per period for their service, for perspective. That would construe into astir $3 cardinal worthy of further gross per year.

And this whitethorn beryllium the crux of the shocking guidance that CFO Pascal Desroches besides offered during AT&T's January net call. As helium plainly stated, "We expect adjusted EPS to beryllium successful the $2.25 to $2.35 scope successful 2026 with a double-digit three-year CAGR done 2028."

Granted, this is apt to beryllium low-double-digit growth. Analysts' existent statement suggests the company's apt to pump up its per-share profits by lone a small much than 10% per twelvemonth done 2028.