Telecom titan AT&T is shifting its focus towards its burgeoning fiber internet business, leveraging its existing infrastructure to minimize capital expenditures. While building a comprehensive fiber network remains a costly venture, the payoff lies in securing long-term customer commitments. By 2025, AT&T aims to reach a staggering 30 million potential customers, although only a fraction will subscribe to the service.
As of Q2 2025, AT&T boasted approximately 8.8 million fiber connections, with 27.8 million locations within its network’s reach. Excluding business clients, the company’s fiber penetration rate stood at around 40%. To drive growth, AT&T can adopt three key strategies: expanding its network to encompass more locations, increasing penetration rates by convincing more households and businesses to subscribe, and implementing price hikes.
Average monthly revenue per fiber customer rose to $69 in Q2 2024, up from $61.65 two years prior. A forthcoming price increase, set to take effect on November 10, will raise monthly prices by $5, translating to a 7.2% increase. This move, combined with network expansion and penetration rate growth, is expected to propel fiber revenue at a double-digit pace in 2025.
AT&T’s capital expenditures will total between $21 billion and $22 billion this year, primarily allocated towards its wireless and fiber networks. Despite this outlay, the company anticipates free cash flow of $17 billion to $18 billion, up from $16.8 billion in 2023. The fiber business has reached an annual revenue run rate of $7.2 billion, poised for continued double-digit growth.
As AT&T’s fiber buildout matures, the business will generate substantial cash flow, given the minimal maintenance requirements and decades-long lifespan of fiber lines. The company’s stock has surged over 50% in the past year, yet still trades at less than 9x its free-cash-flow guidance midpoint. While no longer undervalued, AT&T remains an attractive investment opportunity, offering a compelling blend of growth and cash generation potential.
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