AT&T (T 1.21%) is the third-largest wireless carrier in the U.S., serving over 90 million customers. Wireless generates the majority of the company's roughly $120 billion in annual revenue. AT&T also operates a growing fiber broadband business and provides business services nationwide.
After spinning off DirecTV and WarnerMedia to refocus on core operations, AT&T is now investing heavily in infrastructure. The company recently closed a $23 billion EchoStar (SATS 2.49%) spectrum acquisition and announced a $5.75 billion deal for Lumen Technologies' fiber assets.
Yet shares trade at roughly half the valuation of the benchmark S&P 500 while yielding over 4%. Before you chase that bargain, however, you may want to consider why AT&T stock commands such a steep discount to the broader market.
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Buying assets on the cheap
AT&T acquired 600 MHz and 3.45 GHz wireless spectrum licenses from EchoStar for $23 billion in August 2025. The deal delivers midband spectrum AT&T can deploy quickly to add network capacity, plus low-band spectrum for better building penetration and rural coverage.
The 3.45 GHz licenses are particularly valuable because AT&T already uses this band so there's no need to redesign antennas or reconfigure base stations. That helps close the network quality gap with T-Mobile and Verizon Communications.
Beyond the technical benefits, the acquisition removes EchoStar as a potential fourth wireless carrier. EchoStar spent over a decade accumulating spectrum while its Boost Mobile brand never gained traction. AT&T now eliminates a potential disruptor while forcing Boost onto its network under a wholesale agreement. The deal won't deliver immediate benefits. Analysts estimate roughly three years until it becomes accretive to earnings.
Building the fiber future
AT&T expects to reach 60 million fiber locations by the end of the decade through continued investment and the $5.75 billion acquisition of Lumen Technologies' consumer fiber business, announced in May 2025. The Lumen deal adds about 4 million homes for roughly $1,300 per location, which is well below typical construction costs.
NYSE: T
Key Data Points
Fiber creates powerful bundling opportunities with wireless service. AT&T added 288,000 fiber net customers in the third quarter, while consumer fiber broadband revenue surged 16.8% year over year.
As AT&T shuts down legacy copper networks (planned for 2027 to 2029), consumer broadband margins should expand significantly. Cable competitors like Cable One that don't carry legacy baggage generate earnings before interest, taxes, depreciation, and amortization (EBITDA) margins well above 50%.
Why the discount persists
AT&T stock trades at roughly half the S&P 500's price-to-earnings (P/E) ratio because investors remember the DirecTV and Time Warner acquisitions that destroyed enormous shareholder value. Those deals left AT&T drowning in debt that eventually forced a dividend cut in 2022.
More concerning is what's happening today. AT&T has improved its debt position from 3.2 times EBITDA in early 2021 to around 2.5 times currently, reaching management's target. Yet instead of maintaining that discipline, the company announced the $23 billion EchoStar acquisition -- which will push leverage back to 3 times EBITDA -- along with significant share buybacks, suggesting old habits may be returning.
The wireless business continues to grow but faces intensifying competition. AT&T added 405,000 postpaid phone customers in the third quarter, with mobility service revenue up 2.3% year over year. However, rising device subsidies and marketing costs to win customers are putting pressure on margins.
The valuation vs. value question
AT&T trades at roughly half the S&P 500's valuation multiple while delivering a dividend yield greater than 4%, putting it in high-yield territory. Moreover, the company generates substantial free cash flow that comfortably covers its dividend.
But a low multiple is not a free lunch. AT&T has earned its discount with past missteps. The EchoStar deal strengthens the network, and fiber is a credible growth engine. But the burden of proof is on management. Until AT&T demonstrates clean execution -- no big acquisitions, no premature buybacks, continued deleveraging -- the valuation gap will likely persist.
