T · Earnings call · 2026Q3T · Full report

Free Cash Flow and Liquidity

AT&T INC. · 2026-10-21 · Importance 60 · Surprise 24 · In source text

Third-quarter free cash flow was approximately $5 billion, essentially unchanged from the third quarter of 2025; fourth-quarter free cash flow is expected to be approximately $6 billion versus $4.2 billion a year earlier. AT&T maintained its full-year 2026 free-cash-flow outlook of more than $18 billion. The company ended the quarter with net debt to adjusted EBITDA of 3.13x, up from 2.68x in the second quarter after purchasing $23 billion of EchoStar spectrum licenses. Management expects leverage to return to around its 2.5x target during 2029, using EBITDA growth, excess cash flow, and anticipated 2027 proceeds from the fiber JV and Mexico sale.

Key facts

• AT&T expects net debt to adjusted EBITDA to return to its target level in the 2.5x range during 2029.
• AT&T plans to use excess cash flow and proceeds in 2027 from closing its fiber joint venture and planned sale of AT&T Mexico wireless business to repay debt.
• AT&T's Q3 2026 free cash flow was approximately $5 billion, essentially stable compared with Q3 2025.
• AT&T recorded an approximately $800 million employee separation charge in Q3 2026 that will impact cash primarily in 2027.
• AT&T said device promotions remain at the same level and customers ultimately bear higher device prices; AT&T pays for phones, tablets and gateways upfront and collects over time, typically over the customer's lifetime.
• AT&T's net debt to adjusted EBITDA was 3.13x at Q3 2026-end, up from 2.68x in Q2, reflecting its $23 billion purchase of EchoStar spectrum licenses at the end of July.

Impact estimates