AT&T has been quietly dealing with growing customer problems in recent months as competition in the wireless industry intensifies. In response, it just launched a multibillion-dollar move to give it a leg up on its competitors.
According to AT&T’s latest earnings report, AT&T’s postpaid phone churn rate (the proportion of customers who canceled their phone service) reached 0.98% in the fourth quarter of 2025. This is 13 basis points higher than the churn rate reported during the same period in 2024.
Additionally, AT&T had 255,000 prepaid phone customers cut ties with the company during the quarter, resulting in a churn rate of 2.89% in the segment, a 16 basis point increase year over year.
During a Jan. 28 earnings call, AT&T CEO John Stankey acknowledged a surge in “switching activity” in the wireless market.
“Are there some macro factors that are slowing down the growth of new entrants in the traditional postpaid voice space? There are certainly aspects of that,” he said.
While AT&T faces stiff competition from top rivals like Verizon and T-Mobile, which have been increasing the number of deals and discounts they offer customers, recent billing changes could also force customers to flee.
For example, last April, AT&T lowered its autopay discount from $10 to $5 for customers who pay with a debit card and eliminated it entirely for customers who pay with a credit card.
Additionally, AT&T was criticized last year for allegedly hitting customers with higher-than-expected monthly bills, with the company luring customers away from rival phone carriers with deep discounts.
AT&T is aggressively bundling its phone and Internet services to lure customers back amid mounting customer churn, and it just acquired assets from a growing rival to ramp up its efforts.
AT&T has officially completed its $5.75 billion acquisition of Lumen’s mass-market fiber optic business, according to a recent press release. AT&T’s fiber optic Internet service now covers 32 states.
“This investment will create good-paying jobs, boost America’s connectivity, and bring the benefits of high-speed connectivity to more communities across the country,” Stankey said in the release.
With this acquisition, AT&T automatically adds 1 million fiber customers in more than 4 million fiber locations to its portfolio. The phone operator expects the total number of fiber sites to exceed 60 million by the end of 2030.
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AT&T’s move comes after Stankey said during the company’s earnings call last week that acquiring Lumen’s fiber assets would allow the phone carrier to offer fiber internet service to customers at more competitive prices.
“As we complete work on our fiber sites, we believe we will be able to provide customers with Internet access at a lower marginal cost structure than any competitor with industry-leading product performance,” Stankey said.
“We view this as a structural advantage that provides us with the flexibility to price and position fiber services to reach customers in underserved categories and geographies and ultimately achieve higher penetration,” he added. “This includes value-conscious consumers who are currently served by networks with lower capacity and higher marginal costs.”
He also emphasized that the company’s rapid expansion of fiber-optic Internet will benefit its wireless business, allowing it to sell more converged products to customers.
“Beyond 2026, we plan to expand fiber coverage to approximately 5 million locations per year by the end of this decade,” Stankey said. “We expect this will drive rapid expansion of our opportunity to sell both fiber and 5G to homes and businesses at unparalleled scale.”
AT&T’s reliance on bundled phone and internet services to its customers is part of a growing trend, with more Americans across the country choosing these bundles to save money, an Optimum survey last year showed.
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About 70% of Americans would consider a mobile bundle, while 62% Will consider internet bundling.
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return, 80% Believe in bundling internet and mobile services More affordable rather than separate services.
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approximately quarter of Americans will possible 2026 Subscription Bundle.
Source: Best
Gabriel Torres, vice president of mobile product management at Optimum, said in a statement to CableTV.com: “The increasing reliance on digital technologies in daily life, from social media engagement to online learning and remote working, is fueling the need for comprehensive connectivity solutions.”
“Additionally, the desire for cost-effective options that simplify billing and provide added value are important motivations for consumers when choosing to bundle services,” he added.
AT&T has high hopes that acquiring Lumen’s fiber optic assets will bolster its financial position. The phone operator expects annual fiber optic revenue to reach $900 million.
It also expects total wireless services revenue to grow 2% to 3% annually over the next three years.
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In a research note obtained by TheStreet, Morgan Stanley equity analyst Benjamin Swinburne and his team said AT&T’s fiber expansion will help the phone carrier’s stock outperform its rivals. Based on this outlook, Morgan Stanley maintained its overweight (OW) rating on AT&T stock and raised its price target (PT) on AT&T stock.
“Despite concerns about increased competition in wireless and broadband, AT&T’s strategy of rapidly deploying fiber across much of the U.S. and leveraging this expansion to drive aggregate connectivity revenue appears to be going well,” the analysts wrote. “We raised our estimates and maintain overweight with a PT of $30.”
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This article was originally published by TheStreet on February 4, 2026, and first appeared in the Retail section. Click here to add TheStreet as your preferred source.
