Markets
AT&T Fell 6% on a Beat and a Raised Outlook Because 379,000 Phone Additions Missed and Starlink Mobile Is Still Coming. Verizon and T-Mobile Fell With It
AT&T earned an adjusted $0.65 a share in the third quarter against $0.60 expected, on revenue of $32.3 billion against $31.69 billion, raised its 2026 profit outlook and said it would accelerate buybacks to about $10 billion this year. The shares still fell 6.45% to $21.91 on October 21, because postpaid phone net additions of 379,000 came in below the 387,410 consensus, a $2.6 billion impairment on the Mexican business landed in the GAAP numbers, and chief executive John Stankey spent part of the call asking investors not to overstate the threat from SpaceX's spectrum purchase. Verizon fell 2.20% and T-Mobile 2.54%; the communication-services sector was the day's worst.
AT&T delivered the quarter and the market priced the competitor. Adjusted earnings of $0.65 a share beat the $0.60 consensus, revenue of $32.3 billion beat $31.69 billion, adjusted EBITDA rose 5.4% to $12.5 billion, and the company raised its full-year profit outlook and said it would bring forward share repurchases to about $10 billion in 2026. The GAAP figure carried a $2.6 billion non-cash impairment on the Mexican wireless business, which is held for sale. None of that mattered against two lines: postpaid phone net additions of 379,000, below the 387,410 Bloomberg consensus in the first full quarter of iPhone 18 promotions, and the question every analyst asked about Starlink.
The shares fell 6.45% to $21.91, with a low of $21.79, their second drop of more than 6% this month. The first was on October 9, when SpaceX agreed to buy a nationwide low-band spectrum portfolio from Grain Management for about $8 billion and said it would build Starlink into a mobile carrier, a day on which AT&T lost 9.8%, Verizon 8.7% and T-Mobile 13.3%. Wednesday's report gave investors the first chance to hear management's answer, and John Stankey's was that the spectrum SpaceX holds does not support the competitive threat being priced; the market took the fact that he had to say it as the news. Verizon fell 2.20% to $43.56 and T-Mobile 2.54% to $153.75, the communication-services ETF lost 1.11%, the worst sector on a day the S&P 500 rose 0.58%, and the three carriers are now down between 6% and 16% in two weeks.
The arithmetic the market is doing is simple. SpaceX reported 13.6 million Starlink consumer subscribers on Tuesday, a connectivity business growing 69% a year, a first quarterly profit of $4.4 billion and capital spending of $19.6 billion in a quarter; its market value is several times AT&T's, and it can fund a wireless entry from its AI revenue without borrowing. AT&T's case is that a satellite operator with low-band spectrum still needs towers, handsets, retail distribution and a decade of network build to take a postpaid customer, and that a 379,000-add quarter with low churn is what a stable franchise looks like. Both can be true, and the stock at $21.91, roughly 7 times earnings with a dividend yield above 5%, is pricing the probability that the second becomes irrelevant before the first is proven wrong.
The next data points are Verizon's report on October 23 and T-Mobile's on October 28, and then whatever SpaceX says about Starlink Mobile pricing. What AT&T's day shows is that in a sector where the incumbents are valued on stability, a credible new entrant changes the multiple before it changes a single subscriber number, and a beat on every line cannot buy that back in one call.