AT&T’s Strategic Network Overhaul: A Cost-Cutting Catalyst?

AT&T shares opened trading in New York today at $23.69, following confirmation this week of two significant strategic initiatives. The company finalized a spectrum acquisition valued at approximately $1.018 billion and received regulatory approval to decommission a substantial portion of its legacy copper network. These moves are central to management's plan to enhance network capacity and operational efficiency, raising the question of whether they can deliver lasting cost reductions.

Market interest from institutional investors appears to be growing. Sweden's Fjärde AP Fonden, a state pension fund, increased its stake in AT&T by 18.2%, bringing its total holdings to over 2.19 million shares. Financially, the company's ability to sustain its dividend remains a key focus for income-oriented shareholders. For the first nine months of 2025, AT&T generated $12.4 billion in free cash flow, comfortably covering dividend distributions of $6.2 billion.

The stock's valuation metrics appear conservative, with a price-to-earnings ratio hovering near 7.7 based on current pricing. Revenue growth for 2025 has been modest, in the range of 1.7% to 2%, suggesting a stabilization of the core business. From a technical perspective, the share price currently trades below its key moving averages, with the 50-day average at $24.83 and the 200-day average at $26.66.

Should investors sell immediately? Or is it worth buying AT&T?

A Dual-Pronged Infrastructure Strategy

The first pillar of this week's announcements involves spectrum. On Tuesday, AT&T completed the purchase of selected spectrum licenses from Array Digital Infrastructure. The $1.018 billion transaction primarily secures 700 MHz and 3.45 GHz licenses, which the telecom giant intends to deploy strategically to expand 5G capacity and coverage in regional markets.

Running in parallel is a major infrastructure modernization effort. The Federal Communications Commission (FCC) granted approval, following a standard 31-day review period, for AT&T to retire more than 30% of its outdated copper network across 18 states. This shift affects wire centers encompassing roughly 90,000 customer access lines. The company has stated it currently spends about $6 billion annually to maintain its copper infrastructure. Management anticipates long-term savings on operational costs and energy consumption by migrating services to fiber-optic and 5G-centric platforms.

Upcoming Catalysts and Market Outlook

The next significant milestone for investors will be the release of fourth-quarter earnings, scheduled for January 28 before the market opens. Market experts are forecasting earnings per share of $0.54, matching the result from the previous quarter. A stronger-than-anticipated report could provide the momentum needed to push the share price above its 50-day moving average, while an in-line or weaker result may lead to a period of consolidation. The next dividend payment of $0.2775 per share is scheduled for February 2.