AT&T’s CEO says convergence is part of the structural realignment of the telecom industry
Key Highlights
- AT&T expects the convergence rate to reach 50%, driven by fiber and wireless integration, as part of a broader industry realignment towards bundled services.
- The company plans to expand its fiber footprint to 40 million locations by 2025 and over 45 million by 2030, supported by the Lumen fiber asset acquisition.
- Fiber convergence rate increased by 200 basis points year-over-year, highlighting the success of fiber and 5G bundling strategies.
- AT&T added over 500,000 fiber internet customers in recent quarters, with fiber revenues up 13.6% year-over-year, demonstrating strong consumer demand.
- Future growth is driven by expanding fiber reach, increasing customer penetration, and leveraging fiber-wireless convergence to boost revenue streams.
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AT&T continues to maintain a bullish outlook on the fiber-based wireline broadband and wireless convergence opportunity, which it expects to improve as it expands its footprint into new markets organically and through its pending acquisition of Lumen’s consumer fiber assets.
Speaking to investors during its fourth-quarter 2025 earnings call, John Stankey, CEO of AT&T, said the company expects the convergence rate to continue to rise and sees it as part of a “structural realignment of the industry.”
“I expect the convergence rate to continue improving,” he said. “We've shared that we have an objective during our investor conference in December that we've got plans in place that we're going to drive that to 50%.”
“We're in a structural realignment of the industry and ultimately this is going to be an industry of converged providers that operate assets that allow for consolidated services to businesses and consumers,” he said. “Looking at what bundled rates were when there were other compelling bundles in the market, we approach periods of time where 80% of consumers were bundling and certainly I would expect that at some point in time over the long haul.”
Over the past two quarters, AT&T added more than half a million AT&T Fiber Internet customers, representing nearly 30% growth in net adds versus 2024.
The company estimates that its share of postpaid phone subscribers is 10 percentage points higher in areas where it offers fiber.
Stankey noted that fiber customers also take AT&T wireless services. “Our fiber convergence rate climbed 200 basis points year over year to 42%, which is our fastest annual increase since we began tracking this metric,” he said. “This is further evidence that where we have fiber, we win with fiber and 5G. The impact of this success on our wireless business is material.”
Ramping fiber build pace
A key element of AT&T’s convergence strategy is the ongoing expansion of its fiber network. This trend will be bolstered by its Gigapower venture and the completion of its Lumen consumer fiber asset acquisition.
Set to be completed in the first quarter, AT&T expects the Lumen fiber acquisition to add approximately $900 million of annualized fiber revenues.
The service provider has set a goal to reach 40 million locations with fiber by the end of the year, up from 32 million at the end of 2025. Within its traditional wireline operating region, AT&T expects its annual fiber construction pace to ramp from 3 million new locations in 2025 to a run rate of 4 million by the end of this year.
Stankey said that it also “expects to accelerate the availability of our fiber internet services outside of these areas following our acquisition of Lumen's fiber assets and build capabilities.”
Looking beyond 2026, the service provider plans to expand its fiber reach by about 5 million locations annually through the end of this decade.
As a result of this fiber build, Stankey said it will have an even bigger customer funnel for fiber and wireless bundle sales.
“We expect this to drive rapid expansion of our opportunity to sell fiber and 5G together, to both households and businesses at unmatched scale,” he said. “The size and pace of our fiber deployment has positioned us to achieve these objectives with consistent execution and a high degree of capital efficiency.”
As it moves forward with its wireless and fiber expansion plans, AT&T is finding that it is not only adding wireless customers to existing fiber broadband accounts, but also that more wireless customers are purchasing fiber broadband service.
“The actual number of accounts that we see that we're growing, it's not just adding wireless customers to existing fiber accounts, but we're actually pulling existing wireless accounts, adding fiber, and the new accounts that we're establishing in the market are from many of these growth segments,” said Jeff McElfresh, COO at AT&T. “So, from that perspective, we plan for the competitive intensity to continue.”
AT&T also sees an opportunity to raise the wireless subscriber reach in the new Lumen fiber territories it will acquire.
“We're acquiring a fiber network with only 25% customer penetration, which is well below AT&T fiber penetration of 40%,” Stankey said. “We estimate that fewer than 20% of these customers also subscribe to our wireless services. This is less than half of the convergence rate we've achieved in our current fiber footprint.”
Fiber and wireless drive revenues
In the consumer market, AT&T once again saw a positive uptick in both AT&T Fiber and Internet Air, while its cable competitors, such as Comcast, continue to see broadband declines.
AT&T’s consumer Wireline fiber revenues were $2.2 billion, up 13.6% year over year. The service provider added 283,000 AT&T Fiber subscribers and 221,000 AT&T Internet Air subscribers, representing more than half a million combined advanced home internet net additions for the second consecutive quarter.
Revenues for the whole year totaled $125.6 billion, up 2.7% from $122.3 billion in 2024, up 2.7%. AT&T attributed the results to higher Mobility, Consumer Wireline and Mexico revenues, partially offset by a decline in Business Wireline.
But the company is not content to rest on its laurels.
Looking forward, AT&T has forecast growth in its wireline and wireless segments.
It expects its advanced home Internet service revenues to grow organically by 20% or more annually through 2028, consistent with the annual growth rate in this segment over the past two years.
Stankey said the “primary driver of this outlook is growth in customer relationships as we expand the reach of AT&T Inc. Fiber and the availability of Internet air as we complete our 5G network modernization and continue to deploy spectrum from our EchoStar transaction.”
Likewise, AT&T forecasts total wireless service revenue growth of 2% to 3% annually over the next three years.
Stankey said the “primary driver of this outlook is growth in consumer and customer relationships as we continue to gain wireless subscriber share through convergence in areas where we offer fiber and fixed wireless Internet services.”
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Sean Buckley
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