Core Viewpoint - AT&T has shown strong performance in the stock market but experienced a pullback after failing to raise guidance following its second quarter results, which investors had anticipated after Verizon's positive outlook [1][13]. Subscriber Growth - AT&T added 479,000 retail postpaid subscribers in the second quarter, including 401,000 retail postpaid phone additions, benefiting from Verizon's price hike [2]. - The company lost 34,000 prepaid subscribers, which is considered less significant compared to postpaid subscribers [2]. Revenue Performance - Overall mobility-segment revenue increased by 6.7% to $21.8 billion, with mobility service revenue rising by 3.5% to $16.9 billion and equipment sales surging by 18.8% to $5 billion [3]. - Broadband ARPU climbed by 7.5% to $71.16, while fiber ARPU rose by 6.2% to $73.26, contributing to total consumer broadband revenue growth of 5.8% to $3.5 billion [4]. Fiber Investment Strategy - AT&T plans to ramp up fiber investments to reach 4 million new locations per year, aiming to double its fiber locations to 60 million by 2030 [5]. - The investment will be supported by new tax provisions allowing immediate full depreciation of certain assets [6]. Wireline Segment Challenges - The business wireline segment saw a 9.3% revenue decrease to $4.3 billion, shifting from an operating profit of $102 million to a loss of $201 million [8]. - Adjusted EBITDA for this segment fell by 11.3% to $1.3 billion [9]. Financial Highlights - Total revenue rose by 3.5% to $30.8 billion, with adjusted EPS increasing by 5.8% to $0.54, surpassing Wall Street expectations [9]. - AT&T generated $9.8 billion in operating cash flow and $4.4 billion in free cash flow, maintaining a dividend payout of over $2 billion with a coverage ratio of 2.2 times [10]. Future Guidance - The company maintained its guidance, projecting mobility service revenue growth of 3% or better and adjusted EPS between $1.97 to $2.07, down from $2.26 in 2024 [11][12]. - Future capital expenditures are expected to be between $23 billion to $24 billion annually in 2026 and 2027, with projected free cash flow exceeding $18 billion in 2026 and $19 billion in 2027 [12]. Competitive Landscape - AT&T is aggressively competing with Verizon in subscriber additions by offering better deals and maintaining lower prices [13]. - The company aims to leverage tax benefits from the "One Big, Beautiful Bill" to enhance its fiber network, especially as Verizon expands its fiber network through the acquisition of Frontier Communications [14]. Valuation Comparison - Despite the stock's pullback, AT&T trades at a forward P/E of about 13.5 based on 2025 earnings estimates, compared to Verizon's forward P/E of 9 [15]. - The valuation gap and higher yield of Verizon (about 6%) suggest a preference for Verizon over AT&T, although both companies are seen as strong long-term investments [16].

Government Policy - The Biden administration is seen as contributing to a problem [1] - The "Big, Beautiful Bill" is suggested as a potential solution [1]

Investment Rating - The report maintains a positive outlook on Emerging Markets (EM), indicating a favorable investment environment due to the depreciation of the USD and supportive local currency bond flows [1][19]. Core Insights - The depreciation of the USD is expected to continue benefiting EM local debt returns, with significant inflows into EM local currency funds observed recently [1][19]. - The report highlights the importance of upcoming US Treasury auctions as potential indicators for EM performance, particularly in the context of equity and fixed income returns [14][19]. - Structural international positions are not shifting significantly, which is likely to sustain inflows into EM credit and local currency bonds [19][20]. Summary by Sections Emerging Markets Overview - The report discusses the ongoing depreciation of the USD and its implications for EM, suggesting that tariffs-related issues may continue to limit USD strength [1][14]. - Local currency bond flows are expected to be supported by both external and internal factors, with recent performance tracking positively [19]. Asia Focus - In China, the USDCNY is below fixing levels, and upcoming fixings will be crucial for assessing policy bias, with expectations for lower rates from the PBoC [2][32]. - Indonesia is highlighted as a bullish opportunity, with expectations for the IDR to appreciate due to returning portfolio inflows and a favorable economic backdrop [37][38]. - The Philippines is expected to see a gradual decline in yields, with current underperformance likely to be short-lived as supply dynamics improve [42][44]. CEEMEA and LatAm Insights - In Israel, economic fundamentals are becoming more relevant as the conflict nears resolution, with inflation and growth trajectories under scrutiny [3][48]. - Colombia's fiscal rule suspension and labor reform efforts are noted, with macroeconomic data showing resilience despite a cautious outlook on cash positions [3]. - The report maintains a neutral stance on rates in CEEMEA while expressing a positive outlook on duration in Mexico and Brazil [29][30].