Industry Overview - The telecom sector demonstrated strong performance over the past year, with the S&P Telecom Select Industry Index gaining over 40%, significantly outperforming the S&P 500, which rose by 22% [1] - The positive outlook for the sector is supported by optimistic AI forecasts and expectations of interest rate cuts, influenced by President Trump's advocacy for lower rates [1] Verizon Communications - Verizon reported strong second-quarter 2025 results, with adjusted earnings of $1.22 per share, up from $1.15 in the prior year, beating the Zacks Consensus Estimate by 4 cents [3][4] - Total operating revenues increased by 5.2% to $34.5 billion, driven by growth in service revenues and higher wireless equipment revenues, surpassing the consensus estimate of $33.58 billion [4] - For 2025, Verizon anticipates wireless service revenue growth of 2%-2.8%, adjusted EBITDA growth of 2.5%-3.5%, and adjusted earnings growth of 1%-3%, with cash flow projected at $37-$39 billion and capital expenditure estimated at $17.5-$18.5 billion [5] AT&T - AT&T also reported strong second-quarter 2025 results, with adjusted earnings rising to 54 cents per share from 51 cents a year ago, exceeding the Zacks Consensus Estimate by 3 cents [6][7] - GAAP operating revenues increased by 3.5% year over year to $30.85 billion, primarily due to higher Mobility service and equipment sales, beating the consensus mark of $30.53 billion [8] - The company is focused on investing in key areas such as 5G and fiber, while adjusting its business strategy to adapt to market changes for long-term growth [7] ETFs in Focus - Several exchange-traded funds (ETFs) provide exposure to the U.S. telecom industry, including: - Vanguard Communication Services ETF (VOX), with AT&T at 4.3% and Verizon at 4%, gaining 3.4% over the past month [10] - Fidelity MSCI Communication Services Index ETF (FCOM), with 4.2% exposure to AT&T and 4% to Verizon, adding 3.5% over the past month [11] - iShares U.S. Telecommunications ETF (IYZ), with approximately 14% exposure to AT&T and 13% to Verizon, increasing by 1.3% over the past month [12] - SPDR S&P Telecom ETF (XTL), with 3.6% exposure to AT&T and 3.56% to Verizon, gaining 6.8% over the past month [13]

AT&T is working with advisers to sell its Mexico unit after struggling for more than a decade to gain ground on billionaire Carlos Slim’s dominant carrier in the country https://t.co/REx12dF2YZ ...

Group 1 - The OBBB Act allows companies to immediately deduct domestic capital costs, enhancing cash flow and providing a form of "interest-free loan" for local investments [1][5] - 19% of companies in the Russell 3000 index mentioned the OBBB Act's impact in their earnings calls, indicating its broad influence across various sectors [2] - AT&T expects to save up to $8 billion in cash taxes from 2025 to 2027, with $3.5 billion allocated for fiber network expansion, crucial for 5G competition [2] Group 2 - General Dynamics and Northrop Grumman are benefiting from the OBBB Act, with Northrop Grumman anticipating $200 million to $250 million in cash tax benefits this year [3] - Johnson & Johnson acknowledges the OBBB Act as a means to clear funding obstacles for its $55 billion domestic investment plan, promoting job creation and innovation [3] - Companies like Ford and Boeing are still assessing the OBBB Act's financial impact, reflecting varying sensitivities across industries [4] Group 3 - The OBBB Act injects short-term financial vitality into U.S. companies, accelerating R&D and equipment upgrades, but long-term effects depend on the interplay of tariffs and domestic costs [5]

Group 1 - The core takeaway from AT&T Inc.'s Q2'25 earnings presentation is the higher operating margins and robust free cash flows [1] - The company unfortunately missed its target for fiber net additions during the quarter [1]

Core Perspective - AT&T is undergoing a significant transformation under CEO John Stankey to adapt to modern demands for speed and mobility, moving away from its legacy copper network towards fiber optic and wireless infrastructure [1][5]. Company Strategy - Stankey emphasizes the need for AT&T to "disrupt itself" and has initiated a cultural shift within the company, prioritizing a tech-style, market-based culture over traditional corporate values [3][5]. - The company plans to phase out most of its copper network in the US by the end of 2029, which is part of its strategy to remain relevant in a competitive landscape [3][5]. Financial Performance - AT&T's stock has seen a 22% increase this year, outperforming competitors T-Mobile (8.25%) and Verizon (6.7%), indicating a positive market response to its strategic refocus on fundamentals [4]. - The company reported strong second-quarter earnings, driven by growth in wireless and fiber subscribers, and anticipates a multi-year tax benefit of up to $8 billion from the One Big Beautiful Bill Act [11]. Workforce Changes - AT&T's workforce currently stands at approximately 141,000 employees, with ongoing reductions to align more closely with competitors like Verizon (99,000) and T-Mobile (70,000) [14]. - The company has implemented a strict return-to-office mandate, leading to further workforce reductions, as Stankey indicated a willingness to let go of employees not aligned with the new company direction [15][16]. Competitive Landscape - AT&T is focusing on building extensive wireless and fiber optic networks to compete against Verizon, T-Mobile, and smaller operators, aiming to attract more customers through bundled services [5][10]. - Analysts suggest that AT&T's renewed focus on core competencies and a simplified strategy may enhance its profile among investors, contrasting with past misallocations of capital into non-core assets [19][20].

Group 1 - The new tax law, referred to as the "OBBB," is praised by companies for enhancing consumer capacity and releasing funds, allowing immediate expensing of domestic capital costs for various enterprises [1] - 19% of companies in the Russell 3000 index mentioned the new tax regulation during their earnings calls, indicating a significant awareness and potential impact on corporate strategies [1] - Companies can now fully deduct expenses related to R&D, new equipment, and property in one go, which is expected to save funds and accelerate equipment procurement and facility upgrades [1] Group 2 - Johnson & Johnson views the tax law favorably, linking it to their previously announced $55 billion investment plan in the U.S. and expressing optimism about job creation and innovation [2] - AT&T anticipates saving up to $8 billion in cash taxes from 2025 to 2027, planning to allocate approximately $3.5 billion to expand its fiber network [2] - PACCAR and General Dynamics report increased business inquiries due to released funds, with PACCAR projecting a 4% to 6% growth in parts sales this quarter [3] Group 3 - Companies like Booz Allen and United Rentals have raised their free cash flow expectations by $200 million and $400 million, respectively, due to tax incentives [3] - Northrop Grumman expects to receive $200 million to $250 million in cash tax benefits this year, while Roper Technologies anticipates a tax reduction of about $150 million and $120 million in benefits next year [3] - Some companies, such as Ford and Sherwin-Williams, are still assessing the financial impact of the new tax law, while Boeing does not foresee significant effects this year [3] Group 4 - The tax law may encourage companies to expand their operations in the U.S., but it could also lead to increased costs, complicating the overall financial landscape [4] - Ongoing tariff negotiations add complexity to the situation, suggesting that the financial benefits of the tax law may not be straightforward for all companies [4]

Core Insights - AT&T, Inc. has achieved a stock gain of 46.8% over the past year, outperforming the Wireless National industry growth of 24% and the S&P 500's growth of 20.9% [1][8] - The company has outperformed competitors such as Verizon and T-Mobile, which gained 7.6% and 27.3% respectively during the same period [2][8] Key Growth Drivers - The Communication segment is experiencing strong subscriber momentum and growth in postpaid average revenue per user, with net fiber additions of 243,000 and 203,000 subscribers added in the second quarter [3] - AT&T's fiber broadband network has expanded to 30 million locations, with a goal of reaching 60 million by 2030, supported by the acquisition of Lumen's fiber connectivity business [3] - The One Big Beautiful Bill Act is expected to catalyze AT&T's fiber densification process, projecting $12.3 billion in revenues from the broadband business by 2025, indicating a 9.8% year-over-year growth [3] Portfolio Optimization - The company is divesting non-core assets, including a 70% stake in DIRECTV, to focus on its primary growth engines: 5G and fiber broadband services [4][8] Technological Advancements - AT&T has deployed a third-party RAN automation application in its live network, enhancing optimization and fostering an open multi-vendor ecosystem [5] - The collaboration with AST SpaceMobile has led to successful voice and text communications using AT&T's network, expanding coverage in remote areas [6][9] Competitive Landscape - AT&T faces significant competition from Comcast, Verizon, and T-Mobile, with T-Mobile adding 495,000 postpaid phone net customers in the second quarter [10][11] - Verizon's acquisition of Frontier Communications is expected to strengthen its fiber Internet business, posing challenges to AT&T's growth initiatives [11] Revenue Challenges - The Business Wireline segment is experiencing a decline in net sales due to lower demand for legacy services, with projected revenues of $17.91 billion by 2025, indicating a 4.8% year-over-year decline [12] Estimate Revisions - Earnings estimates for 2025 have increased by 0.49% to $2.04, while estimates for 2026 remain unchanged at $2.24 [14] Valuation Metrics - AT&T's shares are trading at a price/earnings ratio of 12.83, which is lower than the industry average of 13.27 but above its historical mean of 11.32 [16] Overall Business Outlook - The company benefits from solid customer engagement in the wireless sector and a resilient business model, with strategic collaborations expected to support long-term growth [18] - However, intensifying competition and macroeconomic challenges are concerns for future margins [19]

Group 1 - AT&T will host a webcast featuring Jeremy Legg, the chief technology officer, at the KeyBanc Technology Leadership Forum on August 11, 2025, starting at 11 a.m. ET [2][4] - The webcast will be available live and for replay on the AT&T Investor Relations website, encouraging viewers to join a few minutes early [3][4] - AT&T serves over 100 million U.S. customers and nearly 2.5 million businesses, providing services from traditional phone calls to advanced 5G wireless and multi-gig internet offerings [4]

Core Viewpoint - AT&T announced the dual listing of its common stock on NYSE Texas, effective August 1, 2025, while maintaining its primary listing on the New York Stock Exchange [1][2]. Company Commitment to Texas - AT&T has a long-standing relationship with the New York Stock Exchange, dating back to September 4, 1901, and is proud to strengthen its commitment to Texas through this dual listing [2][4]. - The company has invested nearly $13 billion in Texas network infrastructure from 2020 to 2024 and donated over $43 million across the state, with nearly $11 million aimed at bridging the digital divide [4][5]. Community Engagement - AT&T operates 14 Connected Learning Centers in Texas to enhance connectivity and support local communities [4]. - The company employs nearly 24,000 individuals in Texas, contributing to the state's innovation and business growth [5]. Historical Significance - AT&T is one of only 12 companies that have been listed on the New York Stock Exchange for over 120 years, highlighting its historical significance in the financial market [2]. Business Operations - AT&T serves more than 100 million U.S. families and nearly 2.5 million businesses, providing services that range from traditional phone calls to advanced 5G wireless and multi-gig internet offerings [6].

Retirement is complicated and you only get once chance to do it right. Don't miss out because you didn't know what was out there. Analyst's Disclosure:I/we have a beneficial long position in the shares of T either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's ...