AT&T closes billion-dollar acquisition to win back customers

In recent months, AT&T has quietly struggled with growing customer woes amid growing competition in the wireless industry. In response, it made a billion-dollar move to give it a leg up on its rivals.

In the fourth quarter of 2025, AT&T saw its postpaid phone churn, with the rate of customers canceling their phone service reaching 0.98%, according to its most recent earnings report. This is 13 basis points higher than the churn reported during the same period in 2024.

Additionally, AT&T saw 255,000 prepaid phone customers disconnect from the company during the quarter, resulting in 2.89% of the segment, up 16 basis points year-over-year.

During an earnings call on January 28, AT&T CEO John Stankey acknowledged a spike in “switching activity” in the wireless market.

“Are there macro factors that are undermining the growing new entrants to traditional postpaid voice? Certainly, there are some aspects,” he said.

While AT&T faces stiff competition from top rivals like Verizon and T-Mobile, which are increasing the number of deals and discounts they offer customers, recent billing changes may also be pushing customers to flee.

For example, in April of last year, AT&T reduced its auto-pay discount from $10 to $5 for customers paying bills with a debit card and eliminated it entirely for those paying with a credit card.

In addition, AT&T came under fire last year for charging customers with higher-than-expected monthly bills by luring them with big discounts from rival phone carriers.

Amid growing customer losses, AT&T is betting big on bundling its phone and Internet services to lure back customers, and it has acquired assets from a growing rival to ramp up these efforts.

AT&T has officially completed its $5.75 billion acquisition of Lumen’s mass market fiber business, according to a recent press release. Now, AT&T’s fiber Internet service is available in 32 states.

“This investment will create good-paying jobs, boost U.S. connectivity and bring the benefits of high-speed connectivity to many communities across the country,” Stankey said in a press release.

Through the acquisition, AT&T automatically added 1 million fiber customers to its portfolio in more than 4 million fiber locations. The phone carrier expects to reach 60 million total fiber locations by the end of 2030.

Related: AT&T bets big on new strategy to keep customers from switching

The move from AT&T comes after the company said during the company’s earnings call last week that the acquisition of Lumen’s fiber assets will allow the phone carrier to offer customers its fiber Internet service at more competitive prices.

“As we complete our work in the fiber space, we believe we are able to provide customer access to the Internet at a lower marginal cost structure than any competitor with industry-leading product performance,” Stankey said.

“We see this as a structural advantage that gives us flexibility in the pricing and positioning of our fiber services to reach customers in underserved segments and geographies and ultimately achieve higher penetration,” he added. “This includes price-conscious consumers, who are currently served by networks with low capacity and high marginal costs.”

He also emphasized that the company’s rapid fiber Internet expansion will benefit its wireless business by enabling it to sell more converged offerings to customers.

“After 2026, we plan to expand our fiber access to approximately 5 million locations annually by the end of this decade,” Stankey said. “We expect this to rapidly expand our opportunity to sell fiber and 5G together, providing unmatched scale to both households and businesses.”

AT&T’s reliance on offering bundled phone and Internet services to its customers follows a growing trend where more Americans across the country are opting for these bundled deals to save money, according to an Optimum survey last year.

• approx 70% Americans will consider mobile bundles, while 62% Will consider an internet bundle.

• Also, 80% It is believed to be bundling internet and mobile services More affordable rather than separating services.

• approx a quarter Americans will possibility Subscribe to the bundle in 2026.
  Source: Optimum

“Increasing reliance on digital technology in everyday life, from social media engagement to online learning and remote work, is fueling the demand for comprehensive connectivity solutions,” Gabriel Torres, vice president of mobile product management at Optimum, said in a statement to CableTV.com.

“Additionally, the desire for cost-effective options that simplify billing and provide added value is an important motivator for consumers when choosing bundled services,” he added.

AT&T has high hopes that the acquisition of Lumen’s fiber assets will boost its financial profile. The phone carrier expects $900 million in annual fiber revenue.

It expects total wireless service revenue to grow 2% to 3% annually over the next three years.

More Telecom News:

In a research note obtained by TheStreet, Morgan Stanley equity analyst Benjamin Swinburne and his team said AT&T’s fiber expansion will help the phone carrier’s stock outperform its competitors. With this view, Morgan Stanley maintained its Overweight (OW) rating and raised its price target (PT) on AT&T’s stock.

“Despite AT&T’s fears of increased competition in wireless and broadband, its strategy to rapidly deploy fiber across much of the U.S. and leverage expansion to drive consolidated connectivity revenue appears well on track,” the analysts wrote. “We raise estimates and remain OW with $30 PT.”

RELATED: Verizon CEO shifts gears after 2.25 million customers depart

This story was originally published by TheStreet on February 4, 2026, where it first appeared in the Retail section. Add TheStreet as a preferred source by clicking here.