AT&T Margin Surges as Copper Network Shutdowns Accelerate

AT&T (T) has achieved a significant boost in its adjusted EBITDA margin, reaching 39.1% in the second quarter of 2026, marking a multi-year best. This performance comes as the telecommunications giant continues its strategy to phase out legacy copper network services. Total revenue saw a 2.3% increase year-over-year, while adjusted EBITDA grew 5.2%, demonstrating operating leverage as the company shifts focus to advanced connectivity.

AT&T is actively discontinuing legacy services in over 30% of its wire centers, with the FCC clearing copper voice shutdowns in approximately 60% of California's affected areas. These shutdowns are designed to reduce the company's cost structure. Legacy service revenue has fallen 26% year-over-year, with corresponding EBITDA declining 46%. In contrast, Advanced Connectivity service revenue grew 5.1%, and its EBITDA increased by 8%. Advanced Connectivity now accounts for over 90% of total service revenue and nearly all of the adjusted EBITDA, highlighting the success of this strategic pivot.

Despite pressures on fiber average revenue per user (ARPU), which fell 1.3% year-over-year, AT&T is acquiring new customers. Approximately 42.5% of its advanced home internet customers also subscribe to AT&T's postpaid wireless service, and the company added 147,000 consumer postpaid wireless accounts in the second quarter, its strongest performance in over three years. The stock trades at 8.2 times trailing earnings and has declined 6.8% over the past year, underperforming the S&P 500's 20.5% gain. Management has increased its 2026 buyback program from $8 billion to approximately $10 billion.