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

Core Insights - AT&T is recognized as a solid company with strong dividend payments, but it is not considered a growth stock despite expected profit improvements in the near future [1] Group 1: Business Growth Drivers - The primary driver of AT&T's anticipated growth is its fiber-optic broadband segment, which has seen significant investment, including a recent $5.8 billion acquisition of Lumen's fiber business [4] - AT&T plans to expand its fiber service footprint to over 40 million customer locations by the end of this year, marking a 25% increase from 32 million locations at the end of 2025 [4] Group 2: Revenue Composition - Approximately 70% of AT&T's revenue is derived from wireless services, while less than 15% comes from fiber-optic connectivity for consumers and businesses [5] - Despite being a smaller segment, the fiber business is projected to be a significant profit growth engine, with 40% of consumers who can subscribe to AT&T's broadband service doing so [6] Group 3: Customer Growth Potential - An additional 8 million locations are expected to lead to 3.2 million new paying broadband customers, increasing the customer base from 10.6 million to 13.6 million, representing a 30% growth [6] - The average fiber customer pays around $73 per month, which could result in nearly $3 billion in additional annual revenue [6] Group 4: Financial Projections - AT&T's CFO provided guidance indicating adjusted EPS is expected to be in the range of $2.25 to $2.35 by 2026, with a projected double-digit compound annual growth rate (CAGR) through 2028 [7] - Analysts predict a low-double-digit growth rate for AT&T's per-share profits, estimated to increase by just over 10% annually through 2028 [7]