AT&T (AT&T (T)) shares jumped more than 4% in premarket trading Wednesday after the telecom giant reported second-quarter earnings that beat Wall Street expectations — even if revenue came in a bit light.

The company, which is fighting for customers in a brutally competitive U.S. wireless market, reported revenue of $31.56 billion, up 2.3% from a year ago but below the analyst consensus of $31.80 billion. Adjusted earnings came in at 65 cents per share, comfortably above the 59 cents analysts were looking for.

Advanced Connectivity Drives Growth

AT&T's largest business segment, Advanced Connectivity, saw revenue rise 4.1% year over year, fueled by 5.1% growth in service revenue. The Legacy segment, which the company is winding down as it phases out its copper network, continued to shrink — revenue there fell 25.9%.

Latin America was a bright spot, with revenue up 16.1%, helped by favorable exchange rates and growth in postpaid wireless subscribers.

The company added 646,000 high-speed internet customers during the quarter, including 367,000 fiber subscribers and 279,000 fixed wireless customers.

Wireless Subscriber Growth Beats Expectations

AT&T reported 432,000 postpaid phone net additions, up from 401,000 a year earlier and well above the Wall Street consensus of 325,264, according to Bloomberg.

The gains came as major U.S. wireless carriers continue to use promotions, bundled services, and combined wireless-home internet offerings to attract customers in a highly competitive market.

Postpaid phone churn — a key measure of customer retention — improved slightly to 0.86% from 0.87% a year earlier.

The company said 42.5% of households with its advanced home internet service also subscribe to AT&T Wireless. AT&T launched simplified all-in pricing for broadband and wireless services in March and recently increased prices for some customers.

Profit and Cash Flow Improve

Adjusted EBITDA increased to $12.34 billion from $11.73 billion a year earlier. Net income rose to $5.01 billion, compared with $4.86 billion in the prior-year quarter.

Operating cash flow increased to $10.80 billion from $9.76 billion, while free cash flow rose to $4.67 billion from $4.39 billion. Capital expenditures totaled $5.70 billion during the quarter.

Satellite Competition Remains in Focus

Investors continue to keep an eye on potential competitive threats from SpaceX (SpaceX (SPCX)), following reports that the company is exploring direct-to-consumer mobile services and has discussed a potential consumer wireless partnership with Charter Communications (Charter Communications (CHTR)).

In May, AT&T joined Verizon (Verizon (VZ)) and T-Mobile (T-Mobile (TMUS)) in a joint venture designed to expand satellite connectivity for mobile customers — a move widely seen as a response to growing satellite-based competition.

AT&T Reaffirms Long-Term Outlook

AT&T reiterated its financial outlook for 2026 through 2028. The company continues to expect low-single-digit annual service revenue growth over the period and reaffirmed adjusted EBITDA growth of 3% to 4% in 2026, improving to 5% or better by 2028 as growth in Advanced Connectivity offsets declines in the Legacy business.

AT&T also reaffirmed its 2026 adjusted EPS forecast of $2.25 to $2.35, compared with the analyst consensus estimate of $2.32. The company maintained its forecast for a double-digit compound annual growth rate in adjusted EPS through 2028.

The telecom provider reiterated annual capital investment of $23 billion to $24 billion between 2026 and 2028. It also maintained its free cash flow outlook of at least $18 billion in 2026, $19 billion in 2027, and $21 billion in 2028.

AT&T expects Advanced Connectivity service revenue to grow in the mid-single digits annually, including more than 5% growth in 2026. The company also reaffirmed mid-to-high single-digit annual EBITDA growth for the segment, including more than 6% growth this year.

Legacy service revenue is still expected to decline by more than 20% in 2026 before becoming immaterial by the end of 2029.

The company said its fiber network now reaches 38.6 million consumer and business locations. It expects to surpass 40 million by the end of 2026 and exceed 60 million by 2030.

AT&T Dividend and Share Repurchases

AT&T reaffirmed plans to return more than $45 billion to shareholders through dividends and share repurchases between 2026 and 2028. The company maintained its annualized dividend of $1.11 per share and reiterated plans to repurchase about $24 billion of stock during the period, including approximately $10 billion in 2026.

AT&T Price Action

AT&T shares were up 4.40% at $23.23 during premarket trading on Wednesday.