Shares of AT&T (T) trade at 7.4 times earnings, compared with 22.5 for the S&P 500. Anyone buying at that level needs to understand exactly how the company is shifting its priorities. During its third-quarter 2024 call in October 2024, executives focused heavily on reaching their target for debt measured against profit. Today, the messaging has changed. So what is management talking up instead?
AT&T Lifted Its 2026 Buyback Target
During its second-quarter 2026 call in July, the company raised its 2026 buyback target to about $10 billion from $8 billion. This increase, management said, pulls forward the repurchases previously scheduled through 2028. Executives noted the stock traded at a “very suppressed valuation” and indicated they would likely favor buying back more.
On the October 2024 call, executives assured investors that AT&T remained on schedule to hit its target for net debt to adjusted EBITDA. That metric divides debt, net of cash, by adjusted EBITDA, a measure of operating profit. The ratio falls when the company retires debt or its profit grows. While management still acknowledges the debt target, the public focus has pivoted to returning cash to shareholders.
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The Debt Ratio Was Set To Rise After EchoStar
The telecom giant’s debt equals 103% of its market value, compared with 20.1% for the S&P 500. The debt ratio stood at 2.8 times on the October 2024 call and dropped to 2.53 times by the end of 2025. It then rose when AT&T closed its Lumen fiber deal, reaching 2.68 times at the end of the second quarter of 2026.
On the July call, executives projected the ratio would increase to about 3.2 times following the close of the EchoStar spectrum deal. The company estimated the ratio would return to a target range of about 2.5 times roughly three years after the deal closed. Ultimately, AT&T chose to boost its buybacks in the exact same year it expected its debt ratio to rise.
Is AT&T’s Change Of Focus A Concern For You?
For investors, this shift in focus is more concerning than comforting, as the cash going to repurchases is cash that could otherwise pay down debt. Management expects buybacks and dividends to total about $18 billion in 2026, a figure it called essentially 100% of its free cash flow outlook. That leaves little of 2026’s free cash flow available for debt reduction.
An argument can be made on the other side. Adjusted EBITDA in the second quarter rose 5.2% from a year earlier. Growing operating profit alone brings the debt ratio down over time, even if no actual debt is repaid.
