AT&T reports quarterly earnings next week, and traders are zeroing in on one number: postpaid phone net adds. The metric is the clearest signal of customer demand and how the carrier is faring against rivals. But a new analyst call has added a fresh layer of concern — Starlink.
Why postpaid phone adds matter most
Not all subscribers are created equal. Postpaid phone customers bring higher average revenue per user (ARPU) and lower churn than prepaid, tablet, or IoT connections. That's why Wall Street watches net adds so closely. Stable or improving churn without heavy discounting would be a positive sign for margins. Fiber broadband net adds also matter — they help justify the billions AT&T has poured into its network and support long-term cash flow.
The Starlink factor
Wells Fargo initiated coverage on AT&T with an Underweight rating and an $18 price target. The bank specifically cited Starlink as a competitive threat. Fixed wireless access from SpaceX's satellite network is a growing risk to subscriber growth and ARPU, the analysts argued. Cable MVNOs add more pressure. AT&T has to balance promotions to attract customers with protecting margins and free cash flow — especially since the dividend remains a key draw for income investors.
What the numbers need to show
Investors want to see that AT&T can keep adding postpaid phone customers without resorting to unsustainable deals. If churn stays low and ARPU holds steady, the company can defend its payout. But if competition forces deeper discounts, free cash flow could take a hit. The dividend is a must-cover for management, so any sign of strain would rattle the stock.
Wells Fargo's $18 target is well below AT&T's recent trading range. The bank isn't alone in its caution — the broader telecom sector faces pressure from cable and fixed wireless alternatives. But AT&T's fiber buildout and postpaid base give it some insulation, at least for now.
The earnings report will land in a few days. Traders will be watching net adds, churn, and any mention of Starlink on the conference call.
