Investing.com -- Barclays has downgraded AT&T to Equal Weight from Overweight, warning that the telecom group’s valuation now largely reflects the operational improvements achieved in recent years.
In a note to clients, Barclays said the telecom sector has entered a “different growth phase,” with a shift from the low churn, low upgrade environment of recent years toward one of “higher churn and higher upgrade activity across all operators.”
The bank noted that AT&T will generate roughly the same net customer additions in 2024 as in 2020, but only by achieving “~25% more in gross adds to get to this growth.”
Barclays said industry churn has risen as promotions, price increases, and government subsidy cuts converge, while cable players have also intensified competition with aggressive offers.
“High volumes in 2Q may have also benefited from pull-forward of demand due to tariff-related noise,” the analysts wrote.
While AT&T’s free cash flow growth outlook remains strong, Barclays pointed out that the company has little excess capital available after its $23 billion spectrum acquisition, leaving debt reduction as a priority.
“The one variable that could help offset this impact is faster growth in FWA due to excess spectrum, but this is unlikely to scale fast enough,” the bank said.
AT&T’s shares have rallied sharply, with valuation now standing at a premium to Verizon for the first time in nearly two decades.
“With industry tailwinds now starting to moderate and growth optionality being fully priced in, we downgrade AT&T to EW,” Barclays concluded.
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Barclays downgrades AT&T as valuation reflects operational gains
Published 1 month ago
Oct 1, 2025 at 2:31 PM
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