One headline from SpaceX was enough to rattle the biggest names in US telecom. According to CNBC, SpaceX struck a deal to acquire a spectrum license this week, and shares of AT&T (NYSE:T), Verizon, and T-Mobile all took a beating as investors pictured satellites beaming service straight to phones.
AT&T makes money two ways most people touch daily: wireless plans on smartphones and high-speed internet piped into homes and businesses, mostly over fiber. Both come as monthly subscriptions, which makes for a steady stream of cash, a predictability that regularly places entry-level telecom plays on lists like the 10 Best Stocks for Beginners with Little Money.
So is the sell-off a sign the moat is cracking, or a scare that misreads where AT&T’s real edge sits? The answer depends less on what’s happening in orbit than on what’s buried under neighborhood streets.
AT&T (T) Got Hit by a SpaceX Scare. Is Its Moat Really Cracking?
Fiber Is the Real Fortress
AT&T’s advantage isn’t just its wireless network. It’s the pairing of wireless with fiber, and that pairing is getting tighter. In the second quarter of 2026, 42.5% of households with AT&T’s advanced home internet also took its wireless service. Customers who bundle tend to stick around, since leaving means rewiring both the phone bill and the home connection.
The numbers back it up. Postpaid phone churn (the share of monthly subscribers who leave) came in at just 0.86% in the second quarter, while the company added 432,000 postpaid phone customers. It also added 367,000 fiber subscribers and 279,000 fixed wireless customers in the same stretch.
The footprint keeps growing, too. AT&T reached 38.6 million fiber locations, adding more than 1 million during the quarter, and aims for more than 40 million by the end of 2026 and more than 60 million by 2030. The Lumen fiber deal, which closed earlier this year, feeds that push, a strategy that also sets it apart from cable-reliant broadband rivals.
The Shrinking Past Barely Matters
The growth side now carries the company. Advanced Connectivity service revenue reached $23.5 billion in the second quarter, up 5.1%, while the legacy business saw revenue drop 25.9%. Management expects that legacy unit to become immaterial by the end of 2029.
That shift shows up in profits. Adjusted EPS rose to $0.65 from $0.54 a year earlier, and free cash flow hit $4.7 billion. Management reiterated full-year 2026 adjusted EPS guidance of $2.25 to $2.35 and expects free cash flow of more than $18 billion this year, more than $19 billion in 2027, and more than $21 billion in 2028.
That cash is heading to shareholders. AT&T is accelerating 2026 buybacks to about $10 billion and keeping its annualized dividend at $1.11 per share, as part of more than $45 billion in planned returns from 2026 through 2028.
Can a Satellite Steal Your Phone Plan?
That’s the worry behind the sell-off. If SpaceX can deliver cell service from space on its own spectrum, wireless gains a deep-pocketed rival, and pricing could come under pressure. It’s a fair fear for any carrier, and one that weighs on the largest US wireless carriers together.
But the threat lands unevenly. A satellite can carry a signal to a phone. It can’t run a fiber line into a home. AT&T’s most defensible customers are the converged households tied to both services, and that’s exactly the group it’s spending $23 billion to $24 billion a year in capital investment to expand. The risk is real for pure wireless pricing. It’s much weaker against the bundle.
Priced Like Nothing Is Growing
The market isn’t paying up for any of this. AT&T trades at 9.49 times forward earnings, as of October 9, well below the sector’s 12.35 and close to its own five-year average of 9.18. Put plainly, investors are paying less than $10 for every $1 of expected earnings.
That would make sense for a company in decline. AT&T isn’t one. Analysts expect EPS growth of 9.88% in 2027, and management is guiding to a double-digit compound annual growth rate in adjusted EPS through 2028. A stock with earnings growth near 10% expected while trading under 10 times earnings is a mismatch, one that showcases the kind of income resilience highlighted among These Lesser-Known Dividend Stocks that Have Raised Payouts for 70 Straight Years.
The catch: the valuation sat near this level before the SpaceX news. The discount isn’t new; the fear is that hedge fund interest cooled slightly, with 68 funds holding the stock in the most recent quarter, down from 72 in the prior one. Short interest stands at 1.91% of the float, which points to fairly limited bearish positioning.
A Scare, Not a Breach
For now, the evidence points to a business whose moat is widening on the ground even as a new rival appears overhead. For income-focused investors who can tolerate headline-driven swings, the setup looks attractive at under 10 times earnings, backed by rising fiber reach and cash flow.
What would change the picture? Signs that satellite service is pulling customers away, such as postpaid phone churn climbing meaningfully, or converged household growth stalling. The third-quarter report later this month is the first chance to check.
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