AT&T raised its 2026 share repurchase target to approximately $10 billion, up from a previous goal of $8 billion, during its second-quarter 2026 earnings call in July. The company stated that this increase pulls forward repurchases originally scheduled to occur through 2028. This shift marks a distinct change in management messaging from the third-quarter 2024 call, when executives emphasized their progress toward debt reduction targets.
Management indicated that the stock was trading at a "very suppressed valuation" and signaled a preference for increased buybacks. As of the reporting period, AT&T shares trade at 7.4 times earnings. The company's debt currently equals 103% of its market value, compared with 20.1% for the S&P 500.
The decision to expand buybacks coincides with a projected increase in the company's leverage. On the October 2024 call, the net debt to adjusted EBITDA ratio stood at 2.8 times. By the end of 2025, this ratio had decreased to 2.53 times before rising to 2.68 times at the end of the second quarter of 2026 following the closure of the Lumen fiber deal. Executives projected that the ratio would rise further to about 3.2 times after the close of the EchoStar spectrum deal, which was completed in late July.
AT&T expects its net debt to adjusted EBITDA ratio in its third-quarter 2026 report to land in that expected 3.2 times range. The company estimates it will take roughly three years for the ratio to return to its target range of about 2.5 times after the EchoStar deal closes. Despite this anticipated leverage increase, management chose to boost share repurchases in the same year.
For investors, this strategy presents a trade-off between returning capital and reducing debt. Management expects total buybacks and dividends to reach about $18 billion in 2026, a figure it described as essentially 100% of its free cash flow outlook. This allocation leaves limited free cash flow available for debt reduction during that period.
However, operating performance provides a counterweight to the increased leverage. Adjusted EBITDA in the second quarter rose 5.2% from a year earlier. Growth in operating profit can lower the debt ratio over time even without direct debt repayment. The shift in focus from debt reduction to shareholder returns leaves holders to assess whether the company's prioritization aligns with their risk tolerance.