AT&T closes billion-dollar acquisition to win back customers

Core Insights - AT&T is facing increasing customer churn and competition in the wireless industry, prompting a significant acquisition to enhance its service offerings [1][5][14] Customer Churn and Competition - In Q4 2025, AT&T's postpaid phone churn reached 0.98%, up 13 basis points from the previous year [1] - The prepaid segment experienced a churn of 2.89%, an increase of 16 basis points year over year, with 255,000 customers leaving [2] - CEO John Stankey noted a rise in "switching activity" among customers, influenced by macroeconomic factors [2] Billing Changes and Customer Sentiment - AT&T's billing changes, including a reduction in autopay discounts, have contributed to customer dissatisfaction [3][9] - The company faced criticism for unexpectedly high monthly bills after attracting customers with discounts [4] Strategic Acquisition - AT&T completed a $5.75 billion acquisition of Lumen's Mass Markets fiber business, expanding its fiber internet service to 32 states [5][6] - This acquisition added 1 million fiber subscribers and is expected to enhance AT&T's competitive pricing in the fiber market [6][7] Future Growth and Financial Expectations - The company anticipates $900 million in annualized fiber revenues from the acquisition and expects wireless service revenue growth of 2% to 3% annually over the next three years [14] - Analysts from Morgan Stanley believe AT&T's fiber expansion will lead to stock outperformance, raising the price target to $30 [15][16] Market Trends and Consumer Preferences - A significant portion of Americans (70%) would consider mobile bundles, and 80% believe bundling services is more affordable [17] - The demand for comprehensive connectivity solutions is driven by the increasing reliance on digital technology in daily life [12][13]