This year's volatile stock market makes telecom titan AT&T (T 0.18%) look like an appealing investment. It's a mature, dividend-paying company with a history of reliable earnings, providing a measure of stability amid the market chaos.

AT&T's impressive performance over the past several quarters offers even more reason to invest. Yet the company's shares recently hit a 52-week low, and it's not just the stock market's overall decline that pushed the share price down.

Before making a decision about the stock, it's worth examining the factors that make AT&T a compelling buy, as well as why investors may want to cross it off their investment lists.

AT&T's renewed focus on its telecom business

AT&T underwent a transformation under CEO John Stankey. Before he became the CEO in 2020, AT&T spent billions of dollars building an entertainment empire. This decision mired the company in massive debt just as it needed to invest billions more to expand its 5G wireless network.

Entertainment companies are spending billions to produce streaming content. AT&T couldn't keep pace while also undertaking a costly build-out of its 5G network.

So Stankey divested AT&T's entertainment holdings, returning the company to its telecommunications roots. The last of its major media assets merged with cable company Discovery to form Warner Bros. Discovery in April. This transformation lets AT&T focus time, money, and resources on its core telecom business.

Strong customer growth

AT&T's renewed focus on its telecom operations has proven successful. In the second quarter, the company added 813,000 net new mobile phone subscriptions in the coveted postpaid customer segment, the telecom industry's most valuable customers. This was the highest Q2 total in over a decade.

AT&T's Q2 results were no anomaly. The company closed out 2021 with more postpaid phone net additions than the previous 10 years combined.

AT&T is on track to do even better this year. For the first half of 2022, AT&T's postpaid phone net adds stood at 1.5 million, outpacing 2021's 1.4 million.

These strong customer gains helped propel revenue growth. AT&T's Q2 revenue totaled $29.6 billion, up 2.2% from last year's $29 billion when adjusting for divested businesses. The U.S. telecom market is highly competitive, so AT&T's consistent success capturing customers is an impressive feat.

AT&T's fiber-optic success

AT&T is also successfully growing broadband adoption thanks to its faster, more reliable fiber-optic internet product. Q2 consumer broadband revenue rose 5.6% year over year, driven by a nearly 28% increase in fiber sales.

With the growth of remote work during the coronavirus pandemic, demand for higher-quality home internet has increased. This helped AT&T steadily expand broadband revenue over the past two years.

Broadband revenue contributed $2.4 billion in Q2, as net additions of new fiber customers in the first half of 2022 rose nearly 26% year over year. While fiber is still a small revenue contributor compared to the wireless business, AT&T stated it expects to see continued growth in customer numbers "for the foreseeable future."

This assessment is not hyperbole. The broadband industry is forecast to expand from $84.5 billion this year to more than $102 billion in 2027. AT&T's fiber business is further buoyed by the U.S. government's passage of the Infrastructure Investment and Jobs Act last year, which allocates $65 billion in funding to broadband expansion.

AT&T is less reliable as income investment

Despite the company's success, AT&T stock has trended downward since the company released its Q2 results on July 21. The key driver of the stock decline was AT&T's announcement that it was cutting its 2022 free cash flow (FCF) forecast by $2 billion.

Costs increased more than anticipated while the company was spending $1.7 billion more than in 2021 to expand its 5G and fiber networks, forcing the FCF forecast reduction. The ensuing stock price decline is understandable given FCF's role in funding dividend payments.

The news casts a pall over AT&T as an income stock. Any investor considering AT&T for its dividend, which offers an attractive yield over 6%, will need to monitor the company's FCF situation in coming quarters.

Time to wait

AT&T has challenges to overcome after transitioning back to a pure telecommunications company earlier this year, but it still compares favorably to rival Verizon.

Yet if AT&T's free cash flow troubles continue in the second half of 2022, the stock may tumble. The best approach right now is to wait for the release of Q3 results to evaluate if a disturbing free cash flow trend is emerging.

Third-quarter results will be released on Oct. 20. It might be wise to hold off on any investment decisions until then.