U.S. Telecom Growth Remained Strong in 2Q26, but Operators' Customer Acquisition and Monetization Paths Diverged Significantly

Overview

Bernstein believes that U.S. telecom industry mobile and broadband net additions were broadly strong in 2Q26, but should not be interpreted simply as broad-based, homogeneous improvement. Operators are pursuing customers through pricing, cost control, fiber expansion, converged bundles, and value positioning, resulting in meaningful divergence in scale growth, customer quality, and unit-revenue trends. T-Mobile's decision to stop disclosing certain key customer metrics also adds uncertainty to a complete assessment of industry net additions.

Core views

The mobile market remains resilient, with postpaid phone net additions generally exceeding expectations among major participants and churn continuing to decline.Verizon drove a return to positive customer net additions by rolling back price increases, improving its value proposition, and delivering cost savings, though its ARPA still declined year over year.AT&T's fiber capabilities, lower FWA mix, and fiber-mobile converged customer-acquisition model provide it with a more balanced growth foundation.Year-over-year improvement in the broadband industry was mainly driven by satellite services and expanded fiber coverage; cable operators' broadband customer losses have not fundamentally reversed.FWA net additions weakened year over year, potentially reflecting operators' shift toward fiber, stabilization following higher market penetration, and intensifying satellite competition.Broadband ARPU pressure remains widespread. Converged discounts and free mobile-line promotions dilute revenue in the short term, although some cable operators expect improvement in 2H26 as free lines convert to paid plans.

Analysis framework

The report combines quarterly operator disclosures, market consensus expectations, and estimates of industry net additions to compare postpaid phone net additions, churn, ARPA, broadband net additions, FWA, fiber coverage, and convergence penetration across peers. It also notes that differing metric definitions across companies and T-Mobile's disclosure changes limit strict comparability.

Methodology notes

• Valuation methodsDCF

  Discounted Cash Flow Valuation

  The report uses DCF for covered companies and references current trading multiples in setting terminal-value assumptions. For example, AT&T's target-price model uses an 8% WACC and a 0.0% perpetual growth rate.

• Operational ComparisonPeer Operating Metrics Comparison

  Comparison of customer growth, churn, and unit revenue

  It compares the growth quality of operators through postpaid phone net additions, postpaid phone churn, ARPA, broadband net additions, and ARPU, while explicitly noting differences in ARPA definitions.

• Market StructureTechnology Pathway and Competitive Landscape Analysis

  Competition among fiber, FWA, satellite, and cable broadband

  It views fiber expansion, FWA penetration, satellite services, and converged bundles as key variables determining broadband share, customer retention, and unit revenue.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• AT&T

  Core Preferred Name

  Strengths

  Leading fiber operations and a lower FWA customer mix reduce satellite risk, while fiber-plus-mobile convergence should continue driving mobile customer scale growth.

  Weaknesses

  Converged discounts and the addition of lower-ARPU Lumen customers pressure near-term fiber ARPU.

  Comparison

  Relative to T-Mobile and Verizon, AT&T's broadband growth is more fiber-dependent; relative to cable operators, it has stronger defensiveness in fiber competition.

  Risks

  Irrational wireless or broadband pricing, failure of convergence to reduce churn or lift mobile share, and higher capital expenditures from fiber expansion and spectrum auctions.

• Verizon

  Cautiously Positive Near Term

  Strengths

  Cost savings support lower pricing to win customers without materially sacrificing margins; churn has declined and mobile net additions have recovered materially; the Frontier acquisition creates broadband opportunities.

  Weaknesses

  ARPA declined 1.4% year over year, leaving the quality of growth and sustainability of its pricing strategy to be validated.

  Comparison

  Customer-scale recovery is better than last year, but unit-revenue trends are weaker than those of AT&T and T-Mobile.

  Risks

  Intensifying price competition, delayed return to positive ARPA, underperformance in FWA and fiber execution, and Frontier integration risk.

• T-Mobile US

  Neutral, Near-Term Narrative Under Pressure

  Strengths

  ARPA grew 3.7% year over year, with premium-plan penetration and new-account upgrades supporting monetization; it has the lowest churn.

  Weaknesses

  It has higher FWA exposure and has stopped disclosing certain customer net-add metrics, reducing external transparency into growth quality.

  Comparison

  ARPA growth leads peers, but it is more vulnerable than AT&T and Verizon to satellite taking broadband share.

  Risks

  Stronger satellite competition, an increasingly saturated FWA market, and tariff modernization potentially causing a short-term rise in account churn.

• Comcast

  Neutral, Remains Under Pressure

  Strengths

  Market-strategy adjustments and the "Legendary February" marketing campaign delivered year-over-year improvement; future conversion of free mobile lines to paid could improve ARPU.

  Weaknesses

  Residential broadband remains in net loss, broadband ARPU declined 3.8% year over year, and competitive pressures are broad-based.

  Comparison

  Relative to telecom operators, Comcast faces greater pressure from fiber, competition for premium customers, FWA, and satellite.

  Risks

  Promotions fail to translate into sustained customer acquisition, free-line conversion to paid underperforms expectations, ARPU remains pressured, and broadband losses widen.

• Charter Communications

  Neutral, Remains Under Pressure

  Strengths

  Its mobile business still has room for penetration gains from a low base; better converged connectivity products and pricing could improve long-term customer acquisition.

  Weaknesses

  2Q26 residential broadband net loss was -166,000, below expectations and worse year over year; broadband ARPU declined 1.5% year over year.

  Comparison

  Like Comcast, it is affected by multi-technology competition, but its current broadband net-add performance and relative performance versus market expectations are weaker.

  Risks

  FWA and fiber competition limiting pricing and customer acquisition, significant slowing in mobile growth, low returns on incremental network capital expenditure, and poor management of a high debt burden.

Key data

• AT&T Postpaid Phone Net Adds432,000About 100,000 above market expectations and higher than 401,000 in 2Q25.
• Verizon Postpaid Phone Net Adds184,000A significant improvement from -9,000 in 2Q25 and about 90,000 above market expectations.
• Postpaid Phone ChurnVerizon 0.92%; T-Mobile 0.85%; AT&T 0.86%All three companies achieved sequential and year-over-year declines in 2Q26.
• Mobile ARPA Year over YearT-Mobile +3.7%; AT&T +2.2%; Verizon -1.4%T-Mobile's growth excludes M&A effects; definitions are not fully comparable across companies.
• FWA Residential Customer Net AddsApproximately 700,000Combined estimate for T-Mobile, AT&T, and Verizon, slightly below 2Q25.
• AT&T Fiber Net Adds344,000Management described this as its best-ever second quarter; fiber coverage reached 38.6 million.
• Verizon Fiber Net Adds155,000Includes residential and business customers; the company expects coverage to exceed 32 million by year-end.
• Comcast Residential Broadband Net Loss-167,000Improved from -201,000 in 2Q25, but the competitive environment remains intense.
• Charter Residential Broadband Net Loss-166,000Approximately 20,000 below expectations and worsened by more than 50,000 year over year.
• Broadband ARPU Year over YearComcast -3.8%; Charter -1.5%; AT&T Fiber -1.3%Converged discounts, promotions, and the addition of lower-ARPU customers are weighing on short-term unit revenue.

Impact & implications

The investment implication is that the industry is not experiencing a simple demand recovery; rather, competitive strategies are reallocating growth and revenue. AT&T offers a relatively resilient investment case through fiber, converged offerings, and lower FWA exposure. Verizon may benefit in the near term from cost savings and a recovery in customer growth, but needs to validate a return to positive ARPA and broadband synergies following the Frontier acquisition. T-Mobile's near-term narrative is pressured by slower FWA growth and potential satellite diversion. Even if cable operators improve churn through pricing and marketing adjustments, they must still contend with fiber in premium markets, FWA in value markets, and satellite competition.

Risks

• T-Mobile and cable MVNOs may adopt aggressive wireless pricing, triggering more intense competition for customers.
• Cable operators' broadband pricing strategies, changes in consumer perceptions, and satellite expansion may weaken the competitive positions of fiber and FWA.
• Fiber-mobile convergence may not continue to reduce churn or generate incremental mobile share.
• FWA growth may slow after penetration increases, or satellite services may capture demand more quickly in fringe and low-density areas.
• Operators may increase capital expenditures to expand fiber coverage and participate in future spectrum auctions.
• Different company disclosure definitions and T-Mobile's reduced disclosure of key metrics may widen errors in industry-data comparison and forecasting.

What to watch

• Whether T-Mobile restores disclosures of postpaid phone, FWA, and fiber customer metrics or provides alternative transparent data.
• When Verizon's ARPA turns positive year over year in the fourth quarter as management expects, and whether cost savings continue to support net additions.
• AT&T's fiber net additions, penetration after reaching 38.6 million coverage, and whether a higher share of converged customers results in lower churn.
• Whether quarterly FWA net additions remain below the prior-year period, and the actual contribution of satellite services to second-home broadband and uncovered markets.
• Comcast's and Charter's broadband net losses, conversion of free mobile lines to paid, and the extent of ARPU improvement in 2H26.
• The impact of fiber expansion, Frontier and Lumen asset integration, and competitive pricing on capital expenditures and returns.