AT&T: A Filament in the Network

by

The matter of AT&T (T 0.66%) presents itself not as a simple chronicle of corporate performance, but as a curious footnote within the vast, ever-expanding library of capital. To speak of “growth” in relation to such a behemoth is, at first glance, a category error. A redwood does not grow in the manner of a sapling; it accretes, expands its dominion through subtle, almost imperceptible means. The recent pronouncements regarding its projected earnings, therefore, demand a closer, more oblique examination.

The prevailing consensus, as recorded in the apocryphal Codex Mercatorum, views AT&T as a mature entity, a fixed point in the fluctuating landscape of telecommunications. A provider of essential services, yes, but scarcely a source of exponential returns. This assessment, however, fails to account for a peculiar, almost subterranean current flowing beneath the surface – a network of fiber-optic cables, extending like the veins of a forgotten god.

The Labyrinthine Infrastructure

For years, AT&T has been engaged in a project of infrastructural expansion, a silent construction of a digital labyrinth. The recent acquisition from Lumen (LUMN +29.37%) – a transfer of territory akin to a cartographic dispute – has brought this ambition into sharper relief. By year’s end, they anticipate reaching over 40 million customer locations – a 25% expansion of their digital realm. Consider this not merely as a logistical achievement, but as an act of subtle dominion, the laying of a new foundation upon which future calculations will be made.

It is, of course, a mere filament within the larger network – wireless service still accounting for approximately 70% of revenue, fiber-optic connectivity a comparatively modest 15%. But within that seeming insignificance lies the potential for disproportionate influence. The Codex notes a consistent conversion rate – roughly 40% of those with access to AT&T’s fiber service ultimately subscribe. An additional 8 million potential connections, yielding 3.2 million new customers, represents a 30% increase in this particular segment. A small shift, perhaps, but one that ripples outwards, altering the equilibrium of the whole.

The saturation of the wireless market – a closed system, offering diminishing returns – makes this expansion all the more significant. The pursuit of incremental gains through price adjustments is a futile exercise, a Sisyphean task. Fiber, however, offers a different path – a means of accessing new value, of constructing new possibilities. The average revenue per fiber customer – $73 per month – suggests a potential addition of nearly $3 billion annually. A sum that, while not astronomical, is sufficient to reshape expectations.

The CFO, Pascal Desroches, spoke of adjusted EPS in the $2.25 to $2.35 range for 2026, with a double-digit CAGR through 2028. These projections, while seemingly mundane, must be understood as a reflection of this underlying shift – a subtle recalibration of the company’s trajectory.

Loading widget...

Reflections in a Distant Mirror

The anticipated growth – a low-double-digit percentage – is hardly revolutionary. Yet, within the context of a mature, saturated market, it represents a notable achievement. Analysts, ever cautious, currently predict a slightly above 10% annual increase in per-share profits. A modest figure, perhaps, but one that warrants closer inspection.

For income investors, this projected improvement strengthens the company’s ability to sustain its dividend payments – currently funded by a payout ratio of just over 50%. Moreover, it raises the possibility of resuming annual dividend increases, a practice suspended in 2022. Whether this will materialize remains to be seen, but the potential is undeniable.

Even in the absence of such a resumption, the stock’s forward-looking price-to-earnings ratio of less than 10, coupled with a dividend yield exceeding 4%, presents a compelling argument for bullish sentiment. It is a faint signal, to be sure, but one that resonates within the larger patterns of the market – a reflection, perhaps, of a distant, unseen mirror.

Read More

2026-02-08 20:33