In recent months, AT&T has quietly struggled with a growing customer problem amid increased competition in the wireless industry. In response, it just made a billion-dollar move to give itself an edge over its rivals.
During the fourth quarter of 2025, AT&T posted a postpaid loss, the rate of customers who canceled their phone service, reaching 0.98%, according to its latest earnings report. This is 13 basis points higher than the loss rate reported for the same time period in 2024.
Additionally, AT&T saw 255,000 prepaid phone customers cut ties with the company during the quarter, leading to segment loss reaching 2.89%, up 16 basis points year-over-year.
During an earnings call on Jan. 28, AT&T CEO John Stankey acknowledged that there has been an increase in “switching activity” in the wireless market.
“Are there macro factors slowing new entrants into traditional postpaid voice? There’s certainly some aspect to that,” he said.
While AT&T faces stiff competition from top rivals like Verizon and T-Mobile, which have increased the number of deals and discounts they offer customers, recent billing changes may also have sent customers fleeing.
For example, last April, AT&T reduced its auto-pay discount from $10 to $5 for customers who pay their bills with a debit card and eliminated it entirely for those who pay with a credit card.
In addition, AT&T was criticized last year for allegedly hitting customers with higher-than-expected monthly bills after luring them away from rival carriers with deep discounts.
Amid mounting customer losses, AT&T is betting big on bundling phone and Internet services to win back customers, and it just acquired assets from a growing rival to boost those efforts.
AT&T has officially completed its $5.75 billion acquisition of Lumen Mass Markets fiber business, according to a recent press release. AT&T’s fiber internet service is now available in 32 states.
“This investment will create good-paying jobs, boost connectivity across the U.S. and bring the benefits of high-speed connections to more communities across the country,” Stankey said in the news release.
Through the acquisition, AT&T automatically added 1 million fiber subscribers to more than 4 million fiber locations in its portfolio. The telco expects to reach more than 60 million total fiber locations by the end of 2030.
Related: AT&T is betting big on a new tactic to keep customers from switching
The move from AT&T comes after Stankey said during the company’s earnings call last week that the acquisition of Lumen’s fiber assets will allow the carrier to offer fiber Internet service to customers at more competitive prices.
“When we complete our work at the fiber location, we believe we are able to provide that customer with Internet access at a lower marginal cost structure than any competitor with industry-leading product performance,” Stankey said.
“We see this as a structural advantage that gives us the flexibility to price and position our fiber services to reach customers in underserved categories and geographies and ultimately achieve greater penetration,” he added. “This includes value-conscious consumers who are currently served by networks with lower capacity and higher marginal costs.”
He also pointed out that the company’s rapid expansion of fiber Internet will benefit its wireless business, allowing it to sell more converged offerings to customers.
“Beyond 2026, we plan to expand our fiber coverage by approximately 5 million locations annually by the end of this decade,” Stankey said. “We expect this will lead to the rapid expansion of our opportunity to sell fiber and 5G together to both households and businesses at an unprecedented scale.”
AT&T’s reliance on bundling phone and Internet service to its customers follows a growing trend in which more Americans across the country are opting for these bundled deals to save money, according to a survey conducted by Optimum last year.
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Approximate 70% of Americans would consider a mobile package, while 62% would consider an internet package.
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Also, 80% i think the bundling of internet and mobile services is more accessible than separation of services.
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Approximate a quarter of the Americans would be probable subscribe to a package in 2026.
Source: Optimum
“The growing reliance on digital technology in everyday life, from social media engagement to online learning and remote working, is fueling demand for complete connectivity solutions,” Gabriel Torres, vice president of mobile product management at Optimum, said in a statement to CableTV.com.
“Additionally, the desire for cost-effective options that simplify billing and provide added value is a significant motivator for consumers when choosing bundled services,” he added.
AT&T has high hopes that the acquisition of Lumen fiber assets will boost its financial profile. The phone operator expects $900 million in annual fiber revenue.
It also expects total wireless service revenue to grow by 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 carrier’s stock outperform its competitors. With this outlook, Morgan Stanley maintained its Overweight (OW) rating and raised its price target (PT) on AT&T stock.
“AT&T’s strategy to rapidly deploy fiber across much of the United States and leverage that expansion to generate consolidated revenue from connectivity appears to be on track, despite fears of increased wireless and broadband competition,” the analysts wrote. “We collect estimates and stay OW with a PT of $30.”
Related: Verizon CEO shifts gears after 2.25 million customers leave
This story was originally published by TheStreet on February 4, 2026, where it first appeared in the Retail section. Add TheStreet as a favorite source by clicking here.