AT&T (T) shares rose 4.3% in pre-market trade on Wednesday after the company reported second-quarter earnings that beat Wall Street expectations, providing CEO John Stankey a platform to push back against analyst concerns about competition from SpaceX's Starlink. In an interview with CNBC, Stankey dismissed worries about satellite competitors, stating they are entering the market late and must catch up with decades of infrastructure investment already made by established carriers. The earnings beat came as AT&T reported earnings per share of $0.65, topping the $0.59 consensus estimate, though revenue of $31.6 billion missed the $31.8 billion forecast. Stankey's comments addressed Wall Street's persistent concerns about satellite-based competition, which intensified after a June 26 Financial Times report stated SpaceX president Gwynne Shotwell told IPO roadshow investors that SpaceX intends to launch a Starlink-branded retail mobile service for U.S. consumers. The telecom industry has faced increased scrutiny over whether low-earth-orbit satellite constellations could disrupt traditional wireless carriers' subscriber growth.
T stock was among the top trending tickers on Stocktwits at the time of writing. Retail sentiment around the company improved to 'neutral' from 'bearish' territory over the past day, and chatter rose to 'normal' from 'low' levels. Platform data showed an over 180% jump in message volume in the last 24 hours.
AT&T CEO Says Company Handles 98% of Traffic Without Satellite Partner
In the CNBC interview, Stankey addressed speculation over whether AT&T could eventually partner with Starlink through a wholesale agreement. He said the company doesn't currently see a need for satellite service as a core part of its distribution strategy because AT&T already handles more than 98% of traffic across its converged customer network.
"I don't feel a need right now that I need to have a satellite partner as a main distribution vehicle for me because I don't think it addresses a part of the market that I can't get to on my own," he said.
Stankey also said satellite competitors entering the market do not currently address a meaningful gap in AT&T's coverage. "There are going to be new competitors, and there are going to be folks that come in. But the reality is that they're coming to the game very late after this industry has been established. They have to catch up with substantial amounts of infrastructure investment that's been going on for decades," he said.
June 26 Report Triggered Starlink Competition Concerns
The trigger came June 26, when the Financial Times reported that SpaceX president Gwynne Shotwell told IPO roadshow investors that SpaceX intends to launch a Starlink-branded retail mobile service for U.S. consumers, potentially building its own terrestrial wireless network. The report reframed Starlink from a carrier partner into a direct competitor for AT&T's more than 109 million mobile subscribers.
AT&T Joint Venture Allows Multiple Satellite Provider Options
When asked whether AT&T would prefer to work with Elon Musk's Starlink or Amazon-backed satellite services if needed, Stankey rejected the idea of choosing a single provider. He pointed to the joint venture AT&T formed with Verizon (VZ) and T-Mobile (TMUS), saying it allows the carriers to work with multiple satellite operators, including SpaceX, Amazon and AST SpaceMobile (ASTS), for the small percentage of coverage that falls outside their terrestrial networks.
AT&T Reports Q2 EPS of $0.65, Revenue of $31.6 Billion
AT&T reported earnings per share of $0.65, ahead of Wall Street expectations of $0.59, according to Koyfin. Revenue came in at $31.6 billion, slightly below analysts' consensus estimate of $31.8 billion.
The company added more than one million strategic customer accounts, its strongest pace in three years, alongside nearly 370,000 fiber subscribers and 430,000 postpaid wireless subscribers.
Retail Traders Question Analyst Downgrades After CEO Comments
Many retail investors on Stocktwits argued that the market had overstated the competitive threat from Starlink in recent weeks. One trader questioned whether analysts who cut price targets over satellite competition would now reverse those calls following Stankey's comments and the company's results.
Another said the quarter could help ease investor concerns that Starlink would significantly disrupt the U.S. wireless market, which continues to be dominated by AT&T and its larger telecom peers.
Oppenheimer, Wells Fargo, Morgan Stanley Issued Downgrades and Target Cuts
After SpaceX president Gwynne Shotwell told IPO roadshow investors that SpaceX intends to launch a Starlink-branded retail mobile service for U.S. consumers in June, a slew of commentary from Wall Street followed. Oppenheimer downgraded AT&T to 'Perform' from 'Outperform', warning that low-earth-orbit satellite constellations pose a structural threat to the company's broadband and mobile subscriber growth.
Earlier this month, Wells Fargo initiated coverage of T stock with an 'Underweight' rating and an $18 price target, implying nearly 15% downside, with analyst Steven Cahall writing that "outside of T's fiber footprint we think competition will be fierce" and that AT&T's wireless additions look "most at-risk."
Morgan Stanley also cut its price target to $25 from $30 earlier this month, but kept an 'Overweight' rating on AT&T shares, noting that "the fear of the unknown has led many to shoot first and ask questions later in Telecom."
While satellite connectivity remains an emerging competitive force, AT&T's CEO views it as a complementary technology for hard-to-reach areas rather than a replacement for decades of investment in terrestrial wireless and fiber infrastructure.
FAQ
What did AT&T report for Q2 earnings?
AT&T reported earnings per share of $0.65, ahead of Wall Street expectations of $0.59, according to Koyfin. Revenue came in at $31.6 billion, slightly below analysts' consensus estimate of $31.8 billion. The company added more than one million strategic customer accounts, its strongest pace in three years, alongside nearly 370,000 fiber subscribers and 430,000 postpaid wireless subscribers.
Why did AT&T CEO push back on Starlink competition concerns?
CEO John Stankey told CNBC that satellite competitors are entering the market late and must catch up with decades of infrastructure investment already made by established carriers. He said AT&T handles more than 98% of traffic across its converged customer network and doesn't currently see a need for satellite service as a core part of its distribution strategy because satellite competitors do not address a meaningful gap in AT&T's coverage.
