Omnicom's 2026 Investment Strategy in AI and Omni Platform Growth

Key factors driving AT&T’s strong financial results in Q1 2026

AT&T’s “strong” first-quarter 2026 performance is best explained by a combination of (1) improving demand for its converged fiber + wireless offerings, (2) execution and scaling benefits from continued fiber buildout and recent fiber asset acquisitions, and (3) ongoing cost transformation that supported profitability even as the company accelerated capital spending.

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1) Converged customer momentum boosted core service growth

Management emphasized that AT&T’s Q1 results show clear evidence of its “investment-led strategy in fiber and 5G,” with results consistent with prior outlook. ¹

Customer and convergence indicators cited for Q1 2026 include:

• 584,000 total net additions of fiber and fixed wireless advanced Internet customers in Q1 2026, described as AT&T’s best-ever first quarter result in the context of six consecutive quarters with over 0.5 million consumer and business net adds. ¹
• Acceleration in purchasing wireless and Internet together: 42% of advanced home Internet customers also choose AT&T Wireless, and excluding the Lumin transaction the convergence rate approached 45% organically—an increase of more than 3 percentage points YoY, described as AT&T’s fastest-ever convergence growth rate. ¹
• Management tied these dynamics to better customer outcomes, stating converged customers show stronger brand love, higher Net Promoter Scores, and stay longer (with additional improvement expected as more customers purchase both services from AT&T). ¹

Why this matters financially: AT&T explicitly stated that at a consolidated level, its growth is “increasingly driven” by gains in fiber and fixed wireless Internet customers and by success growing customer accounts that choose AT&T for both Internet and wireless. ²

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2) Fiber scaling and integration of acquired assets supported sales activity and growth

AT&T also pointed to operational progress from its fiber expansion and acquisition activity.

Acquisition and deployment progress highlighted in Q1:

• AT&T “closed” the Lumin transaction ahead of schedule, adding 1.1 million fiber customers and over 4 million fiber locations, and management described early integration indicators as positive. ³
• Management said AT&T now offers fiber services throughout distribution channels in acquired metro areas, and that this has driven sales activity well above pre-transaction trends. ³
• AT&T described plans to scale engineering, construction, and service delivery in acquired geographies expected to drive steady improvement in fiber and wireless customer growth in the back half of 2026. ³

Financial impact channel: AT&T’s advanced home Internet and overall service growth cited in the quarter was materially supported by fiber/customer-base gains. For example, Advanced home Internet service revenues grew 27.3% YoY, and management stated this included 2 months of revenues from fiber customers in acquired geographies that added ~650 basis points to reported growth. ⁴

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3) Strong service revenue and EBITDA trends—supported by cost transformation

On the consolidated income metrics, AT&T reported continued top-line and earnings improvement (with some mix effects on margins).

Consolidated results (Q1 2026):

• Total revenues up 2.9% YoY and service revenues up 1.4% YoY. ²
• Adjusted EBITDA up 2.3% YoY, while adjusted EBITDA margin decreased 30 bps to 37.4%. ²
• Management attributed an important portion of prior-year comparison strength to a ~$100 million benefit in Q1 2025 related to vendor resolution, implying part of the year-over-year comparability. ²

Cost transformation as a profitability stabilizer:

• AT&T stated it made “good progress” on transformation initiatives targeting $4 billion annual cost savings by end of 2028, including items such as force optimization, federal rationalization, AI enablement efficiency gains, accelerated digitalization, and reductions to legacy operations/support costs. ²
• Management explicitly expected improved adjusted EBITDA growth in Q2 as comparisons normalize and as additional cost actions are implemented. ²

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4) Accelerated capital investment for fiber deployment drove scale—while free cash flow moderated

AT&T’s Q1 “strong results” were not driven by cash generation in the same way; rather, cash flow reflected heavier investment consistent with scaling fiber and fixed wireless.

Free cash flow and capex relationship:

• AT&T reported free cash flow (FCF) of $2.5 billion, described as at the high end of its $2 billion–$2.5 billion outlook from January. ²
• Management also stated FCF declined by roughly $600 million YoY, “driven primarily by higher capital investment of $5.1 billion” as AT&T accelerated fiber deployment. ²

So, the same strategic push (fiber expansion) that supports higher future revenue growth also temporarily absorbs cash.

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5) Advanced Connectivity segment performance and business services stabilization

AT&T’s segment framing supports that the “growth engine” is largely concentrated in Advanced Connectivity.

Segment-level points for Q1 2026:

• Under AT&T’s new segment reporting, over 90% of consolidated revenue and nearly all of adjusted EBITDA are generated by the Advanced Connectivity segment. ⁵
• Service revenues in Advanced Connectivity were up 3.6% YoY, and wireless service revenues grew 1.7% YoY, with management noting this was consistent with maintaining stable ARPU while growing the customer base. ⁵
• Management attributed wireless service growth primarily to customer-base growth, citing 294,000 postpaid phone net adds in Q1, and said postpaid ARPU was flat YoY. ⁵

Business services stabilization (important for “overall” results):

• AT&T stated Advanced Connectivity business service revenues stabilized YoY for the first time ever in Q1, reflecting improved growth in fiber and 5G offsetting declines in transitional services such as VPN. ⁶
• Management further explained that this stabilization “doesn’t happen without some new business account growth,” and they were optimistic about carrying momentum forward. ⁷

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Bottom line

The key drivers of AT&T’s strong Q1 2026 results, based on management’s commentary in the excerpts, are:

1. Converged fixed + mobile customer momentum (including very strong fiber/fixed wireless net adds and rising convergence rates). ¹²
2. Fiber scale-up and integration execution, especially from the Lumin transaction, supporting sales activity above pre-transaction trends and boosting advanced home Internet growth. ³⁴
3. Sustained earnings growth (Adjusted EBITDA up 2.3% YoY) supported by ongoing cost transformation, even as EBITDA margin dipped due to mix and investment/comparison dynamics. ²
4. Capital intensity for fiber deployment, which limited year-over-year free cash flow but enabled the revenue and customer gains. ²
5. Advanced Connectivity-driven service growth and business services stabilization, including fiber/5G offsetting declines in legacy transitional products. ⁵⁶⁷

All of these factors point to a quarter where AT&T’s strategy is producing measurable customer and service gains, while cash flow reflects the ongoing buildout required to sustain those improvements. ¹³²⁴