AT&T (T) Q2 FY2026: Revenue $31.56B, Margin 22.3%; Pre-Tax Income -4.5%, Debt $143.9B on Lumen Deal

AT&T, one of the three largest U.S. telecom carriers, reported Q2 FY2026 total revenue of $31.56 billion (+2.3% YoY) and operating income of $7.04 billion (+8.3%). Adjusted EPS came in at $0.65, beating the consensus estimate of $0.59, while revenue fell slightly short of the consensus forecast of $31.8 billion. (Adjusted EPS, consensus, and revenue estimates are not disclosed in the 10-Q; figures are based on the company's earnings release and media reports on the day of announcement.) Notably, GAAP diluted EPS per the 10-Q was $0.66, actually higher than the adjusted figure.

However, the operating income improvement did not flow through to net income. Pre-tax income from continuing operations was $5.82 billion, down 4.5% from $6.10 billion a year earlier, and H1 net income fell from $9.55 billion to $9.19 billion, a 3.8% decline. Q2 net income's modest 3.1% increase was entirely driven by a sharp drop in income tax expense—from $1.24 billion to $0.78 billion (-36.6%), as the effective tax rate fell from 20.3% to 13.5%.

The business mix shift is underway. Advanced Connectivity (5G + fiber) segment operating income surged 20.3% to $7.35 billion, while the copper-based Legacy segment saw operating income plunge 45.5% to $0.52 billion. The February 2, 2026 acquisition of Lumen Mass Markets' fiber assets for $5.756 billion added $7.54 billion to long-term debt over six months and increased interest expense by 13.8%, amplifying financial leverage.