Estimating Q2 Earnings for Big Telecoms

The three telecom giants reported Q2 earnings in three days, and now that the market has had time to digest, a theme is emerging in the sector.

One positive trend from the three reports last week is that telecommunications companies are no longer paying for growth through promotions or sponsorships. All three companies grew their earnings per share (EPS) year-over-year (YOY) in Q2, reflecting strong retention economies and subscriber growth. Additionally, all three of the increased shareholders returned through buybacks and dividends, which is a signal to the market that management thinks it is sitting on a cheap stock.

To pick a winner for Q2, we’ll have to break down the earnings reports in detail. Despite the gains, subscribers, and increased cash flow, not all stocks responded the same way after their release. The sector as a whole may have been very healthy in recent years, but not all carriers are experiencing the same highs.

AT&T: Q2 Metrics Show Convergence Thesis Opens New Opportunities for Growth

Shares of AT&T Inc. NYSE: T rose more than 3% following its July 22 earnings release, driven by faster growth and lower attrition as its resources converge. In its Q2 2026 results, the company reported a clear EPS hit and a small revenue miss, but the underlying numbers are the true driver of the reaction. AT&T added 432,000 postpaid phone subscribers and 646,000 Internet subscribers, more than 147,000 of which were new accounts, not just additional lines. Home internet service is a key area, with revenues growing 27% year-over-year (YOY), and executives expect fiber internet to reach more than 40 million homes by the end of the year.

Another bullish beacon is the surprisingly low churn rate in Q2 despite carrier price increases. Postpaid wireless churn dropped to 0.86% YOY, indicating that less than 1% of customers cancel their plans each month. Additionally, 42% of home Internet customers now subscribe to AT&T wireless, supporting the ‘convergence’ concept of selling wireless and Internet services to the same households. Q2 metrics show that this strategy is not only driving growth and profitability but also reducing churn rates.

Management also reaffirmed full-year EPS guidance of $2.25 to $2.35 and free cash flow guidance of $18 billion while committing to $45 billion in shareholder returns by 2028. The share repurchase program was increased from $8 billion to $10 billion, as CEO John Stankey cited improved cash flow and stock value (10.29 times forward earnings). If there’s one fly in the ointment, it’s the dividend, which remains frozen at $1.11 a year through 2022 and continues to stand without repayment obligations.

IT-Mobile: Subtitle Numbers Shroud Murky Guidance Caused Sales

IT-Mobile US Inc. NASDAQ: TMUS it’s the only one of three to sell following its Q2 2026 earnings release, which may seem odd given that it beat EPS estimates by more than 15 percent and raised adjusted cash flow guidance to a range of $18.4 billion to $18.8 billion. But while the company grew subscribers above consensus, the total 277,000 postpaid account additions represented a 13% YOY decline.

IT-Mobile doesn’t publish phone exchange prices (only account prices), but management prepared the market for a weak Q3 due to “modernization,” that is, price increases. Q3 postpaid account guide with just 250,000 additions likely to result in a sale. The disappointing results followed a strong start to the year in Q1, and the market punished the mistakes.

It should be noted that despite weak subs and difficult guidance, earnings growth appears to be real. Average revenue per account (ARPA) grew 2% to $152.91, and management guided full-year ARPA to 2.5% to 3%. IT-Mobile is deliberately trading off monetization capacity, accepting low subscriber growth in exchange.

Verizon: Cash Flow King Delivers Biggest Surprise Ever

Verizon Communications Inc. NYSE: VZ called the game this quarter thanks to a big beat in subscribers and guidance increases. Expectations were high coming into the Q2 2026 report, but the company exceeded EPS projections (6.6% YOY growth) despite missing revenue by an estimated 2.5% compared to consensus. However, the most impressive numbers were the subscriber metrics. Verizon added 184,000 postpaid phone nets in Q2, beating consensus expectations of 106,000 and a sharp decline from Q2 2025 when the company is lost phone subscribers. The company also added 348,000 broadband subs, bringing the total for the first half to over one million. The phone’s replacement improved 84 points, which is an impressive feat when paired with low acquisition and maintenance costs.

Management expects mobile and broadband service revenue to grow 3% in Q3 and 4% in Q4, and boost full-year EPS estimates to $4.99 to $5.04 and free cash flow to $21.9 billion to $22.1 billion. The cash flow has bolstered Verizon’s industry-best dividend, which now yields 6.25% and pulls in about 31% of free cash flow. Verizon also has a 20-year history of increasing dividend payouts, making it the most favorable shareholder for the major telecoms.

If Verizon’s report contains a red flag, it’s that record profits and cash flow are subject to declining revenue. Management expects revenue growth to start in the second half of the year, but this guidance projection is now the most important of any of the big three calls. A strong Q3 is needed to confirm which trajectory is realistic.

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