Jan 28 (Reuters) - AT&T forecast annual profit above market expectations on Wednesday, on bets that its wireless and fiber network expansion would allow the U.S. carrier to tap growing 5G and high-speed internet demand, sending its shares up more than 4%.
The bullish forecast hinges on AT&T's infrastructure push, anchored by two major deals — a nearly $6 billion purchase of Lumen's consumer fiber business and a $23 billion acquisition of EchoStar's spectrum licenses.
The deals are expected to close early this year and help AT&T lure customers from rivals with faster internet speeds and improved mobile coverage, capitalizing on demand for broadband as remote work, streaming and connected devices drive data consumption higher.
The company said 42% of fiber households have also signed up for its 5G mobile service, drawn by discounts for bundling the services.
"Following our acquisition of Lumen's fiber assets.. we expect to reach over 40 million customer locations with our fiber services by the end of this year," CEO John Stankey said.
AT&T said it expects 2028 free cash flow to be more than $21 billion, compared with analysts' estimate for $19.61 billion, according to data compiled by LSEG.
Texas-based AT&T added 283,000 fiber customers in the fourth quarter, above 272,320 expected by analysts at Visible Alpha.
Starting first quarter, AT&T will reorganize its reporting into three segments, with the new advanced connectivity segment covering domestic 5G and fiber services that accounted for roughly 90% of 2025 revenue.
The other two segments are legacy, which includes copper-based voice and data services, and Latin America, representing AT&T's Mexico wireless operations.
AT&T said it expected adjusted profit to be between $2.25 and $2.35 per share in 2026, above estimates of $2.21, according to data compiled by LSEG.
The company added 421,000 net monthly bill-paying wireless phone subscribers in the fourth quarter, compared with 421,510 additions expected by analysts from Visible Alpha.
(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Arun Koyyur)
