Additional information on our geographical distribution of revenues is contained in Note 4 of Item 8.
GOVERNMENT REGULATION
Facilities-based wireless communications providers in the United States, like AT&T, must be licensed by the FCC to provide communications services at specified spectrum frequencies within defined geographic areas and must comply with FCC rules and policies governing the use of the spectrum. The FCC’s rules have a direct impact on whether the wireless industry has sufficient spectrum available to support the high-quality, innovative services our customers demand. Wireless licenses are issued for a fixed time period, typically 10 to 15 years, and we must seek renewal of these licenses. While the FCC has generally renewed licenses, the FCC has authority to both revoke a license for cause and to deny a license renewal if a renewal is not in the public interest. Additionally, while wireless communications providers’ prices and service offerings have historically not been subject to prescriptive regulation, the federal government and various states periodically consider new regulations and legislation relating to various aspects of wireless services.
The Communications Act of 1934 and other related laws give the FCC broad authority to regulate the U.S. operations of our interstate telecommunications services. In addition, our ILEC subsidiaries are subject to regulation by state governments, which have the power to regulate intrastate rates and services, including local, long-distance and network access services, provided such state regulation is consistent with federal law. Some states have eliminated or reduced regulations on our retail offerings. These subsidiaries are also subject to the jurisdiction of the FCC with respect to intercarrier compensation, interconnection, and interstate and international rates and services, including interstate access charges. Access charges are a form of intercarrier compensation designed to reimburse our wireline subsidiaries for the use of their networks by other carriers.
We continue to support regulatory and legislative measures and efforts at both the federal and state levels to minimize and/or moderate regulatory burdens that are no longer appropriate in a competitive communications market and that inhibit our ability to compete more effectively and offer services wanted and needed by our customers, including initiatives to transition services from traditional networks to all IP-based networks. At the same time, we also seek to ensure that legacy regulations are not further extended to broadband or wireless services, which are subject to vigorous competition.
Our subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulatory authorities in the market where service is provided.
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For a discussion of significant regulatory issues directly affecting our operations, please see the information contained under the headings “Operating Environment and Trends of the Business” and “Regulatory Landscape” of Item 7, which information is incorporated herein by reference.
IMPORTANCE, DURATION AND EFFECT OF LICENSES
Certain of our subsidiaries own or have licenses to various patents, copyrights, trademarks and other intellectual property necessary to conduct business. Many of our subsidiaries also hold government-issued licenses or franchises to provide wireline or wireless services. Additional information relating to regulations affecting those rights is contained under the heading “Operating Environment and Trends of the Business” of Item 7. We actively pursue patents, trademarks and service marks to protect our intellectual property within the United States and abroad. We maintain a significant global portfolio of patents, trademarks and service mark registrations. We have also entered into licenses that permit other companies to utilize certain of our patents, trademarks, service marks, and technologies, in exchange for payments and subject to appropriate safeguards and restrictions. As we transition our network from a switch-based network to an IP, software-based network, we have increasingly entered into licensing agreements with software developers.
We periodically license third-party patents and other intellectual rights in exchange for payments. We also receive claims from third parties asserting that our products, services or technologies infringe on their patents or other intellectual property rights. These claims could require us to pay damages or acquire license rights, stop offering the relevant products or services, and/or cease network functions or other activities. While the outcome of any litigation is uncertain, we do not believe that the resolution of any of these infringement claims or the expiration or non-renewal of any of our intellectual property rights would have a material adverse effect on our results of operations.
MAJOR CUSTOMERS
No customer accounted for 10% or more of our consolidated revenues in 2024, 2023 or 2022.
COMPETITION
Competition continues to increase for communications and digital services from traditional and nontraditional competitors. Technological advances have expanded the types and uses of services and products available. In addition, lack of or a reduced level of regulation of comparable legacy services has lowered costs for alternative communications service providers. As a result, we face continuing competition as well as some new opportunities in significant portions of our business.
Wireless We face substantial competition in our wireless businesses. Under current FCC rules, multiple licensees, who provide wireless services on the cellular, PCS, Advanced Wireless Services, 700 MHz and other spectrum bands, may operate in each of our U.S. service areas. Our competitors include two national wireless providers; a larger number of regional providers and resellers of each of those providers’ services; and certain cable companies. In addition, we face competition from providers who offer voice, text messaging and other services as applications on data networks. We are one of three facilities-based providers in Mexico (retail and wholesale), with the most significant market share controlled by América Móvil. We may experience significant competition from companies that provide similar services using other communications technologies and services. While some of these technologies and services are now operational, others are being developed or may be developed. We compete for customers based principally on service/device offerings, price, network quality, coverage area and customer service.
Broadband The desire for high-speed data on demand, including video, is continuing to lead customers to terminate their traditional wired or copper-based services and use our fiber or fixed wireless services or competitors’ wireless, satellite and internet-based services. In most U.S. markets, we compete for customers with large cable companies and wireless broadband providers for high-speed internet and voice services.
Legacy Voice and Data We continue to lose legacy voice and data subscribers due to industry-wide secular declines and competitors (e.g., wireless, cable and VoIP providers) who can provide comparable services at lower prices because they are not subject to traditional telephone industry regulation (or the extent of regulation they are subject to is in dispute), utilize different technologies or promote a different business model. In most U.S. markets, we compete for customers with large cable companies and other smaller telecommunications companies.
Additionally, we provide local and interstate telephone and switched services to other service providers, primarily large internet service providers using the largest class of nationwide internet networks (internet backbone), wireless carriers, other telephone companies, cable companies and systems integrators. These services are subject to additional competitive pressures from the development of new technologies, the introduction of innovative offerings and increasing satellite, wireless, fiber-optic and cable transmission capacity for services.
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RESEARCH AND DEVELOPMENT
AT&T scientists and engineers conduct research in a variety of areas, including IP networking, advanced network design and architecture, network and cybersecurity, network operations support systems and data analytics. The majority of the development activities are performed to create new services and to invent tools and systems to manage secure and reliable networks for us and our customers. Research and development expenses were $955 in 2024, $954 in 2023, and $1,236 in 2022.
HUMAN CAPITAL
Number of Employees As of December 31, 2024, we employed approximately 140,990 persons.
Employee Development We believe our success depends on our employees’ success and that all employees must have the skills they need to thrive. We offer training and elective courses that give employees the opportunity to enhance their skills. We also intend to help cultivate the next generation of talent that will lead our company into the future by providing employees with educational opportunities through our internal training organization.
Labor Contracts Approximately 43% of our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. After expiration of collective bargaining agreements, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached. The main contract set to expire in 2025 covers approximately 9,000 employees in Arkansas, Kansas, Missouri, Oklahoma and Texas and is set to expire in April.
Compensation and Benefits In addition to salaries, we provide a variety of benefit programs to help meet the needs of our employees. These programs cover active and former employees and may vary by subsidiary and region. These programs include 401(k) plans, pension benefits, and health and welfare benefits, among many others. In addition to our active employee base, at December 31, 2024, we had approximately 496,000 retirees and dependents who were eligible to receive retiree benefits.
We review our benefit plans to maintain competitive packages that reflect the needs of our workforce. We also adapt our compensation model to provide fair and inclusive pay practices across our business. We are committed to pay equity for employees who hold the same jobs, work in the same geographic area, and have the same levels of experience and performance.
Employee Wellness We provide our employees access to flexible and convenient health and welfare programs and workplace accommodations. We have prioritized self-care and emphasized a focus on wellness and providing flexible scheduling or time-off options.
Inclusion We believe that championing inclusion does more than just make us a better company, it contributes to a world where people are empowered to be their very best and it leads to a workforce that is representative of, and responsive to, the broad customer base that we serve. That is why we are committed to inclusion and one of the reasons why our company purpose is “to connect people to greater possibilities.” This emanates from our unwavering pledge to ensure that employees feel included when they join AT&T, and are provided with opportunities for advancement, training and development to realize their full potential while working for the company.
We believe in attracting and hiring talented people who represent a mix of backgrounds and experiences. At AT&T, we have employee groups that reflect our large and varied workforce. These affinity groups provide opportunities for professional enrichment, leadership, community engagement, market development and networking. It is important that our employees feel they are included, valued, and are fully engaged in our success.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this document, including the matters contained under the heading “Cautionary Language Concerning Forward-Looking Statements,” you should carefully read the matters described below. We believe that each of these matters could materially affect our business. Most, if not all, of these factors are beyond our ability to control.
Macro-Economic Factors:
Adverse changes in the U.S. securities markets, increasing interest rates, rising inflation and medical costs could materially increase our benefit plan costs and future funding requirements.
Our costs to provide current benefits and funding for future benefits are subject to increases, primarily due to continuing increases in medical and prescription drug costs, in part due to inflation, and can be affected by lower returns on assets held by our pension and other benefit plans, which are reflected in our financial statements for that year. In calculating the recognized benefit costs, we have made certain assumptions regarding future investment returns, interest rates and medical costs. These
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assumptions could change significantly over time and could be materially different than originally projected. Lower than assumed investment returns, an increase in our benefit obligations, and higher than assumed medical and prescription drug costs will increase expenses.
The Financial Accounting Standards Board (FASB) requires companies to recognize the funded status of defined benefit pension and postretirement plans as an asset or liability in their statement of financial position and to recognize changes in that funded status in the year in which the changes occur. We have elected to reflect the annual adjustments to the funded status in our consolidated statement of income. Therefore, an increase in our costs or adverse market conditions will have a negative effect on our operating results.
Significant adverse changes in capital markets could result in the deterioration of our defined benefit plans’ funded status.
Inflationary pressures on costs, such as inputs for devices we sell and network components, labor and distribution costs, may impact our network construction, our financial condition or results of operations.
As a provider of telecommunications and technology services, we sell handsets, wireless data cards, wireless computing devices and customer premises equipment manufactured by various suppliers for use with our voice and data services and depend on suppliers to provide us, directly or through other suppliers, with items such as network equipment, customer premises equipment, and wireless-related equipment such as mobile hotspots, handsets, wirelessly enabled computers, wireless data cards and other connected devices for our customers. In recent years, the costs of these inputs and the costs of labor necessary to develop, deploy and maintain our networks and our products and services have increased. In addition, many of these inputs are subject to price fluctuations from a number of factors, including, but not limited to, market conditions, demand for raw materials used in the production of these devices and network components, severe weather, energy costs, currency fluctuations, supplier capacities, governmental actions, import and export requirements (including tariffs), and other factors beyond our control. Inflationary and supply pressures may continue into the future and could have an adverse impact on our ability to source materials.
Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products and services, may not be successful. Higher product or service prices may result in reductions in sales volume or increases in subscriber churn. Consumers may be less willing to pay a price differential for our products and services and may increasingly purchase lower-priced offerings, or may forego some purchases altogether, during a period of inflationary pressure or an economic downturn. To the extent that price increases are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result in significant decreases in sales volume, our business, financial condition or operating results may be adversely affected. Furthermore, we may not be able to offset any cost increases through productivity and cost-saving initiatives.
Adverse changes in global financial markets could limit our ability and our larger customers’ and suppliers’ ability to access capital or increase the cost of capital needed to fund business operations.
In recent years, uncertainty surrounding global growth rates, inflation and the interest rate environment produced volatility in the credit, currency and equity markets. Volatility may affect companies’ access to the credit markets, leading to higher borrowing costs, or, in some cases, the inability to fund ongoing operations. In addition, we contract with large financial institutions to support our own treasury operations, including contracts to hedge our exposure to interest rates and foreign exchange and the funding of credit lines and other short-term debt obligations, including commercial paper. These financial institutions face stricter capital-related and other regulations in the United States and Europe, as well as ongoing legal and financial issues concerning their loan portfolios, which may hamper their ability to provide credit or raise the cost of providing such credit.
A company’s cost of borrowing is affected by evaluations given by various credit rating agencies, and these agencies have been applying tighter credit standards when evaluating debt levels and future growth prospects. While we have been successful in continuing to access the credit and fixed income markets when needed, adverse changes in the financial markets could render us either unable to access these markets or able to access these markets only at higher interest costs and with restrictive financial or other conditions, severely affecting our business operations. Additionally, downgrades of our credit rating by the major credit rating agencies could increase our cost of borrowing and also impact the collateral we would be required to post under certain agreements we have entered into with our derivative counterparties, which could negatively impact our liquidity. Further, valuation changes in our derivative portfolio due to interest rates and foreign exchange rates could require us to post collateral and thus may negatively impact our liquidity.
Our international operations increase our exposure to political instability, to changes in the international economy and to regulation on our business, and these risks could offset our expected growth opportunities.
We have international operations, particularly in Mexico, and other countries worldwide where we need to comply with a wide variety of complex local laws, regulations and treaties, and are subject to evolving political environments. In addition, we are
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exposed to, among other factors, fluctuations in currency values, changes in relationships between U.S. and foreign governments, war or other hostilities, and other regulations that may materially affect our earnings. Involvement with foreign firms also exposes us to the risk of being unable to control the actions of those firms and therefore exposes us to risks associated with our obligation to comply with the Foreign Corrupt Practices Act (FCPA). Violations of the FCPA could have a material adverse effect on our operating results.
Industry-Wide Factors:
Changes to federal, state and foreign government regulations and decisions in regulatory proceedings, as well as private litigation, could further increase our operating costs and/or alter customer perceptions of our operations, which could materially adversely affect us.
Our subsidiaries providing wired services are subject to significant federal and state regulation, while many of our competitors are not. In addition, our subsidiaries and affiliates operating outside the United States are also subject to the jurisdiction of national and supranational regulatory authorities in the markets where service is provided. Our wireless subsidiaries are regulated to varying degrees by the FCC and in some instances, by state and local agencies. Adverse regulations and rulings by the courts, the FCC or states relating to broadband and wireless deployment,, could impede our ability to manage our networks and recover costs and lessen incentives to invest in our networks. The continuing growth of IP-based services, especially when accessed by wireless devices, has created or potentially could create conflicting regulation between the FCC and various state and local authorities, which may involve lengthy litigation to resolve and may result in outcomes unfavorable to us. In addition, in response to the Federal Aviation Administration (FAA) questioning whether cell sites transmitting C-Band spectrum could impact radio altimeter equipment on airplanes, we voluntarily committed to temporary, precautionary measures near certain airports through January 1, 2028, which may have limited impacts to deployments and services. In addition, increased public focus on a variety of issues related to our operations, such as privacy issues, government requests or orders for customer data, and concerns about global climate change, have led to proposals or new legislation at state, federal and foreign government levels to change or increase regulation on our operations, which could result in additional costs of compliance or litigation. Enactment of new privacy laws and regulations could, among other things, adversely affect our ability to collect data and offer targeted advertisements or result in additional costs of compliance or litigation. Should customers decide that our competitors offer a more customer-friendly environment, our competitive position, results of operations or financial condition could be materially adversely affected.
Extreme weather events and other potential effects of climate change may impose risk of damage to our infrastructure, our ability to provide services, and may cause changes in federal, state and foreign government regulation, all of which may result in potential adverse impact to our financial results.
The potential physical effects of extreme weather events and other potential effects of climate change, such as increased frequency and severity of storms, floods, fires, freezing conditions, sea-level rise and other climate-related events, could damage our networks and cause disruptions in our services, which could adversely affect our operations, infrastructure and financial results. Operational impacts resulting from the potential physical effects of climate change, such as damage to our network infrastructure, could result in increased costs and loss of revenue. While we currently do not believe the potential losses or costs associated with the physical effects of climate change will be material, it is difficult to accurately and precisely calculate the future impacts of the physical effects of climate change given the dynamic nature of climate change’s impacts on the environment.
Continuing growth in and the converging nature of wireless and broadband services will require us to deploy significant amounts of capital and require ongoing access to spectrum in order to provide attractive services to customers.
Wireless and broadband services are undergoing rapid and significant technological changes and a dramatic increase in usage, including, in particular, the demand for faster and seamless usage of data across mobile and fixed devices. The COVID-19 pandemic accelerated these changes and also resulted in higher network utilization, as more customers consumed bandwidth from changes in work and learn from home trends. Streaming, augmented reality, “smart” technologies, user generated content and artificial intelligence (AI) are expected to continue to drive greater demand for broadband. We must continually invest in our networks in order to improve our wireless and broadband services to meet this increasing demand and changes in customer expectations while remaining competitive. Improvements in these services depend on many factors, including continued access to and deployment of adequate spectrum and the capital needed to expand our wireline network to support transport of these services. In order to stem broadband subscriber losses to cable competitors in our non-fiber wireline areas, we have been expanding our all-fiber wireline network. We must maintain and expand our network capacity and coverage for transport of data, including video, and voice between cell and fixed landline sites. To this end, we participate in spectrum auctions and continue to deploy software and other technology advancements in order to efficiently invest in our network.
We have spent, and plan to continue spending, significant capital and other resources on the ongoing development and deployment of our 5G and fiber networks. This deployment and other network service enhancements and product launches may
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not occur as scheduled or at the cost expected due to many factors, including unexpected inflation, delays in determining equipment and wireless handset operating standards, supplier delays, software issues, increases in network and handset component costs, regulatory permitting delays for tower sites or enhancements, or labor-related delays. Deployment of new technology also may adversely affect the performance of the network for existing services. If we cannot acquire needed spectrum, if our 5G and fiber offerings fail to gain acceptance in the marketplace or if we otherwise fail to deploy the services customers desire on a timely basis with acceptable quality and at reasonable costs, then our ability to attract and retain customers, and, therefore, maintain and improve our operating margins, could be materially adversely affected. In 2023, the FCC’s statutory authority to conduct spectrum auctions lapsed and it is uncertain when Congress will act to reauthorize it. Also in 2023, the federal government released a national spectrum strategy that focused on spectrum sharing but did not include terms of future spectrum sharing model(s) or specific timelines to make additional spectrum bands available for 5G and future generations of service. As a result, the federal government’s ability and intent to make sufficient spectrum available to the industry in needed timeframes and on terms suitable for mobile broadband network deployments remains uncertain.
Increasing competition could materially adversely affect our operating results.
We have multiple wireless competitors in each of our service areas and compete for customers based principally on service/device offerings, price, network quality, reliability, speed, coverage area and customer service. In addition, we are facing growing competition from providers offering services using advanced wireless technologies and IP-based networks, among others. We expect market saturation to continue, which may cause the wireless industry’s customer growth rate to moderate in comparison with historical growth rates, leading to increased competition for customers, including from strategic alliances in converged connectivity. Our share of industry sales could be reduced due to aggressive pricing or promotional strategies pursued by competitors. We also expect that our customers’ growing demand for high-speed video and data services will place constraints on our network capacity. These competition and capacity constraints will continue to put pressure on pricing and margins as companies compete for potential customers. Additionally, we may not be able to accurately predict future consumer demands or the success of new services in markets. Our ability to address these issues will depend, among other things, on continued improvement in network quality and customer service and our ability to price our products and services competitively as well as effective marketing of attractive products and services. These efforts will involve significant expenses and require strategic management decisions on, and timely implementation of, equipment choices, network deployment and service offerings. In addition, a sustained decline in a reporting unit’s revenues and earnings has resulted in the past, and may again result in the future, in a significant negative impact on its fair value, requiring us to record an impairment charge, which could have an adverse impact on our results of operations.
Intellectual property rights may be inadequate to take advantage of business opportunities, which may materially adversely affect our operations.
We may need to spend significant amounts of money to protect our intellectual property rights. Any impairment of our intellectual property rights, including due to changes in U.S. or foreign intellectual property laws or the absence of effective legal protections or enforcement measures, could materially adversely impact our operations.
Incidents or public assertions leading to damage to our reputation or questions about our business conduct, and any resulting lawsuits, claims or other legal proceedings, could have a material adverse effect on our business.
We believe that our brand image, awareness and reputation strengthen our relationship with consumers and contribute significantly to the success of our business. Our reputation and brand image could be negatively affected by a number of factors, including quality or reliability issues related to our services, products and operations; cybersecurity incidents and data breaches, including our actual or perceived responses thereto; regulatory compliance; governance issues; our actual or perceived position or lack of position on social and other sensitive matters; and the conduct of our employees and former employees. Our ability to attract and retain employees is highly dependent upon our commitment to an inclusive workplace, ethical business practices and other qualities.
We currently are, and may in the future be, named as a defendant in lawsuits, claims and other legal proceedings that arise in the ordinary course of our business based on alleged acts of misconduct by employees. These actions seek, among other things, compensation for alleged personal injury (including claims for loss of life), workers’ compensation, employment discrimination, sexual harassment, workplace misconduct, wage and hour claims and other employment-related damages, compensation for breach of contract, statutory or regulatory claims, negligence or gross negligence, punitive damages, consequential damages, and civil penalties or other losses or injunctive or declaratory relief. The outcome of any allegations, lawsuits, claims or legal proceedings is inherently uncertain and could result in significant costs, damage to our brands or reputation and diversion of management’s attention from our business. In 2023, The Wall Street Journal published a series of articles alleging that lead-clad telecommunications cables are a public-health hazard or may pose environmental risks. We are currently subject to litigation and have received inquiries from government authorities as a result of these assertions. We may be subject to additional litigation, government investigations and potentially new regulation or legislation relating to lead-clad cables. Any damage to our reputation or payments of significant amounts as a result of any of these issues, even if reserved, could materially and adversely affect our business, ability to serve customers, reputation, financial condition, results of operations and cash flows.
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Our business is subject to risks related to public health crises.
Public health crises and resulting mitigation measures have in the past, and may in the future, cause a negative effect on our operating results. These effects include, but are not limited to, closure of retail stores; impact on our customers’ ability to pay for our products and services; reduction in international roaming revenue; and reduced staffing levels in call centers and field operations. We also have in the past, and may in the future, incur significantly higher expenses attributable to infrastructure investments and increased labor costs due to public health crises.
Company-Specific Financial Factors:
Customer adoption of new software-based technologies may require higher-quality services from us, and meeting these demands could create supply chain issues and could increase capital costs.
The communications industry has experienced rapid changes in the past several years. An increasing number of our customers are using mobile devices as their primary means of viewing video. In addition, businesses and government bodies are broadly shifting to wireless-based services for homes and infrastructure to improve services to their respective customers and constituencies. We have spent, and continue to spend, significant capital to shift our wired network to software-based technology and are expanding 5G wireless technology to address these demands. We have entered and continue to enter into a significant number of software licensing agreements and continue to work with software developers to provide network functions in lieu of installing switches or other physical network equipment in order to respond to rapid developments in wireless demand. While software-based functionality can be changed much more quickly than, for example, physical switches, the rapid pace of development means that we may increasingly need to rely on single-source and software solutions that have not previously been deployed in production environments. Should this software not function as intended or our license agreements provide inadequate protection from intellectual property infringement claims, we could be forced to either substitute (if available) or else spend time to develop alternative technologies at a much higher cost and incur harm to our reputation for reliability, and, as a result, our ability to remain competitive could be materially adversely affected.
We depend on various suppliers to provide equipment to operate our business and satisfy customer demand, and interruption or delay in supply can adversely impact our operating results.
We depend on suppliers to provide us, directly or through other suppliers, with items such as network equipment, customer premises equipment and wireless-related equipment such as mobile hotspots, handsets, wirelessly enabled computers, wireless data cards and other connected devices for our customers. In some instances, we depend on key single-source suppliers to provide important inputs where there are few alternative suppliers available. These suppliers could fail to provide equipment on a timely or cost-effective basis, or fail to meet our performance expectations, for a number of reasons, including difficulties in obtaining export licenses for certain technologies, inflationary pressures, inability to secure component parts, general business disruption, natural disasters, safety issues, economic and political instability, including the outbreak of war and other hostilities, and public health emergencies. These factors have caused, and may again cause, delays in the development, manufacturing (including the sourcing of key components) and shipment of products to the extent that we or our suppliers are impacted. In certain limited circumstances, suppliers have been unable to supply products in a timely fashion, affecting our ability to provide products and services precisely as and when requested by our customers. It is possible that, in some circumstances, we could be forced to switch to a different key supplier or be unable to meet customer demand for certain products or services. Because of the cost and time lag that can be associated with transitioning from one supplier to another, our business could be substantially disrupted if we were required to, or chose to, replace the products of one or more key suppliers with products from another source, especially if the replacement became necessary on short notice. Any such disruption could increase our costs, decrease our operating efficiencies and have a negative effect on our operating results.
Increasing costs to provide services and failure to renew agreements on favorable terms, or at all, could adversely affect operating margins.
Our operating costs, including customer acquisition and retention costs, could continue to put pressure on margins and customer retention levels.
A number of our competitors offering comparable legacy services that rely on alternative technologies and business models are typically subject to less regulation, and therefore are able to operate with lower costs. These competitors generally can focus on discrete customer segments since they do not have regulatory obligations to provide universal service. Also, these competitors have cost advantages compared to us, due in part to operating on newer, more technically advanced and lower-cost networks with a nonunionized workforce, lower employee benefits and fewer retirees. We are transitioning services from our copper-based network and seeking regulatory approvals, where needed, at both the state and federal levels. If we do not obtain regulatory approvals for our network transition or obtain approvals with onerous conditions, we could experience significant cost and competitive disadvantages.
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A significant portion of our workforce is represented by labor unions, and we could incur additional costs or experience work stoppages as a result of the renegotiation of our labor contracts.
As of December 31, 2024, approximately 43% of our workforce was represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. While we have labor contracts in place with these unions, with subsequent negotiations we have in the past and could in the future incur additional costs and/or experience work stoppages, which could adversely affect our business operations.
We may not realize or sustain the expected benefits from our business transformation initiatives, and these efforts could have a materially adverse effect on our business, operations, financial condition, results of operations and competitive position.
We have been and will be undertaking certain transformation initiatives, which are designed to reduce costs, enable legacy rationalization, streamline and modernize distribution and customer service, remove redundancies and simplify and improve processes and support functions. Our focus is on supporting added customer value with an improved customer experience. We intend for these efficiencies to enable increased investments in our strategic areas of focus, which include improving broadband connectivity (for example, fiber and 5G). We also expect these initiatives to drive efficiencies and improved margins. If we do not successfully manage and timely execute these initiatives, or if they are inadequate or ineffective, we may fail to meet our financial goals and achieve anticipated benefits, improvements may be delayed, not sustained or not realized, and our business, operations and competitive position could be adversely affected. Further, we are using and intend to further use artificial intelligence (AI)-driven efficiencies in our network design and operations, software development, sales, marketing, customer support services and general and administrative costs. The models used in those products, particularly generative AI models, may produce output or take action that is incorrect, release private or confidential information, reflect biases included in the data on which they are trained, infringe on the intellectual property rights of others, or be otherwise harmful. Any of these risks could expose us to liability or adverse legal or regulatory consequences and harm our reputation and the public perception of our business or the effectiveness of our security measures.
Unfavorable litigation or governmental investigation results could require us to pay significant amounts or lead to onerous operating procedures.
We are subject to a number of lawsuits both in the United States and in foreign countries, including, at any particular time, claims relating to antitrust, patent infringement, wage and hour, personal injury, environmental, customer data and privacy violations, cyberattacks, regulatory proceedings, breach of contract, and selling and collection practices. We also spend substantial resources complying with various government standards, which may entail related investigations and litigation. In the wireless and wireline area, we also face current and potential litigation relating to alleged adverse health effects on customers or employees who use such technologies including, for example, wireless devices. We may incur significant expenses defending such suits or government charges and may be required to pay amounts or otherwise change our operations in ways that could materially adversely affect our operations or financial results.
Cyberattacks impacting our networks, systems or data or those of our suppliers or vendors may have a material adverse effect on our operations or results of operations.
Cyberattacks – including through the use of malware, computer viruses, distributed denial of services attacks, ransomware attacks, credential harvesting, social engineering and other means for obtaining unauthorized access to or disrupting the operation of our networks and systems or accessing our data and those of our suppliers, vendors and other service providers – could have a material adverse effect on our operations or results of operations. As a critical infrastructure service provider, the Company believes that it is a particularly attractive target for such cyberattacks, including from nation states and highly sophisticated, state-sponsored, or otherwise well-funded actors, and the Company experiences heightened risk from time to time as a result of geopolitical events.
Cyberattacks can cause equipment or network failures, copying or loss of information, including sensitive personal information of customers or employees or proprietary information, as well as disruptions to our or our customers’, suppliers’ or vendors’ operations, which could result in significant expenses, potential investigations and legal liability, a loss of current or future customers and reputational damage. Additional resources and management attention may be necessary to respond to government inquiries and requirements, including potentially conflicting demands and requirements from multiple government agencies. Moreover, the amount and scope of insurance that we maintain against losses resulting from any such events or security breaches may not be sufficient to cover our losses or otherwise adequately compensate us for any disruptions to our business that may result. As our networks evolve, they are becoming increasingly reliant on software and cloud technologies to handle growing demands for data consumption. Cyberattacks against the Company and its suppliers and vendors have occurred in the past, including from highly sophisticated, state-sponsored actors as noted above, and will continue to occur in the future and are increasing in frequency, scope and potential harm over time. For example, in July 2024, the Company disclosed a cybersecurity incident on Item 1.05 of Form 8-K relating to the copying of mobile customer call data.
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Due to the complexity and interconnectedness of our systems and those of our suppliers, vendors and other service providers, the process of enhancing our protective measures can itself create a risk of systems disruptions and security issues. Further, the use of artificial intelligence and machine learning by cybercriminals may increase the frequency and severity of cybersecurity attacks against us or our suppliers, vendors and other service providers. In addition, despite our efforts to detect unlawful intrusions, an attack may persist for an extended period of time before being detected, and, following detection, it may take considerable time for us to obtain sufficient information about the nature, scope and timing of the incident as well as the impact or reasonably likely impact on us. Indeed, as cyberattacks become increasingly sophisticated, a post-attack investigation may not be able to ascertain the entire scope of the attack’s impact.
Extensive and costly efforts are undertaken to develop and test systems before deployment and to conduct ongoing monitoring and updating to prevent and withstand such attacks. While the Company may have contractual rights to assess the effectiveness of many of its suppliers’ and vendors’ systems and protocols, the Company cannot know or assess the effectiveness of all of our providers’ systems and controls at all times. While, to date, we have not been subject to a cyberattack that has had a material adverse effect on our operations or results of operations, the preventive actions we take, or our suppliers or vendors take, to reduce the risks associated with cyberattacks may be insufficient to repel or mitigate the effects of a major cyberattack in the future.
Natural disasters, extreme weather conditions or terrorist or other hostile acts could cause damage to our infrastructure and result in significant disruptions to our operations.
Our business operations could be subject to interruption by equipment or network failures caused by human error, system failures, unauthorized access to our network and critical infrastructure, power outages, terrorist or other hostile acts, including acts of war, and natural disasters, such as flooding, hurricanes and forest fires. Such events could cause significant damage to the infrastructure upon which our business operations rely, resulting in degradation or disruption of service to our customers, as well as significant recovery time and expenditures to resume operations. Our system redundancy and other measures we take to protect our infrastructure and operations from the impacts of such events may be ineffective or inadequate to sustain our operations through all such events. Any of these occurrences could result in lost revenues from business interruption, damage to our reputation and reduced profits.
Increases in our debt levels to fund spectrum purchases, or other strategic decisions could adversely affect our ability to finance future debt at attractive rates and reduce our ability to respond to competition and adverse economic trends.
We have incurred debt to fund significant acquisitions, as well as spectrum purchases needed to compete in our industry. While we believe such decisions were prudent and necessary to take advantage of both growth opportunities and respond to industry developments, we did experience credit rating downgrades from historical levels. Banks and potential purchasers of our publicly traded debt may decide that these strategic decisions and similar actions we may take in the future, as well as expected trends in the industry, will continue to increase the risk of investing in our debt and may demand a higher rate of interest, impose restrictive covenants or otherwise limit the amount of potential borrowing. Additionally, our capital allocation plan is focused on, among other things, managing our debt level going forward. Any failure to successfully execute this plan could adversely affect our cost of funds, liquidity, competitive position and access to capital markets.
Our business may be impacted by changes in tax laws and regulations, judicial interpretations of the same or administrative actions by federal, state, local and foreign taxing authorities.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In many cases, the application of existing, newly enacted or amended tax laws (such as the U.S. Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022) may be uncertain and subject to differing interpretations, especially when evaluated against ever-changing products and services provided by our global telecommunications and technology businesses. In addition, tax legislation has been introduced or is being considered in various jurisdictions that could significantly impact our tax rate, tax liabilities and carrying value of deferred tax assets or deferred tax liabilities. Any of these changes could materially impact our financial performance and our tax provision, net income and cash flows.
We are also subject to ongoing examinations by taxing authorities in various jurisdictions. Although we regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of provisions for taxes, there can be no assurance as to the outcome of these examinations. In the event that we have not accurately or fully described, disclosed or determined, calculated or remitted amounts that were due to taxing authorities or if the ultimate determination of our taxes owed is for an amount in excess of amounts previously accrued, we could be subject to additional taxes, penalties and interest, which could materially impact our business, financial condition and operating results.
If the distribution of WarnerMedia, together with certain related transactions, were to fail to qualify for non-recognition treatment for U.S. federal income tax purposes under audit, then we could be subject to significant tax liability.
In connection with the WarnerMedia/Discovery Transaction, AT&T received a favorable Private Letter Ruling from the Internal Revenue Service (IRS). Nonetheless, the IRS or another applicable tax authority could determine on audit that the distribution by us of WarnerMedia to our stockholders and certain related transactions should be treated as taxable transactions
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| AT&T Inc. |
| Dollars in millions except per share amounts |
if it determines that any of the facts, representations or undertakings made in connection with the request for the ruling were incorrect or are violated. We may be entitled to indemnification from Warner Bros. Discovery (Warner Bros.) in the case of certain breaches of representations or undertakings by Warner Bros. under the tax matters agreement related to the WarnerMedia/Discovery Transaction. However, we could potentially be required to pay such tax prior to reimbursement from Warner Bros., and such indemnification is subject to Warner Bros.’ credit risk. If the IRS or another tax authority were to so conclude, there could be a material adverse impact on our business, financial condition, results of operations and cash flows.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this report contains forward-looking statements that are subject to risks and uncertainties, and actual results could differ materially. Many of these factors are discussed in more detail in the “Risk Factors” section. We claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.
The following factors could cause our future results to differ materially from those expressed in the forward-looking statements:
•Adverse economic and political changes, public health emergencies and our ability to access financial markets on favorable terms.
•Increases in our benefit plans’ costs, including due to worse-than-assumed investment returns and discount rates, mortality assumptions, medical cost trends, or healthcare laws or regulations.
•The final outcome of FCC and other federal, state or foreign government agency proceedings (including judicial review of such proceedings) and legislative and regulatory efforts involving issues important to our business, including, without limitation, pending Notices of Apparent Liability; the transition from legacy technologies to IP-based infrastructure, including the withdrawal of legacy TDM-based services; universal service; broadband deployment; wireless equipment siting regulations; E911 services; rules concerning digital discrimination; competition policy; privacy; net neutrality; copyright protection; availability of new spectrum on fair and reasonable terms; and wireless and satellite license awards and renewals, and our response to such legislative and regulatory efforts.
•Enactment of or changes to state, local, federal and/or foreign tax laws and regulations, and actions by tax agencies and judicial authorities, and the resolution of disputes with any taxing jurisdictions, pertaining to our subsidiaries and foreign investments.
•U.S. and foreign laws and regulations regarding intellectual property rights protection and privacy, personal data protection and user consent, which are rapidly evolving.
•Our ability to compete in an increasingly competitive industry and against competitors that can offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including non-regulation of comparable alternative technologies and/or government-owned or subsidized networks, and our response to such competition and emerging technologies.
•Disruptions in our supply chain that have a material impact on our ability to acquire needed goods and services.
•The development and delivery of attractive and profitable wireless and broadband offerings and devices, including our ability to match speeds offered by competitors; and the availability, cost and/or reliability of technologies required to provide such offerings.
•Our ability to adequately fund additional wireless spectrum and network development, deployment and maintenance; and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
•Our ability to manage growth in wireless data services, including network quality.
•The outcome of pending, threatened or potential litigation and arbitration.
•The impact from major equipment, software or other failures or errors that disrupt our networks or cyber incidents; the effect of security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; severe weather conditions or other natural disasters including earthquakes and forest fires; public health emergencies; energy shortages; or wars or terrorist attacks.
•The issuance by the FASB or other accounting oversight bodies of new or revised accounting standards.
•The uncertainty surrounding further congressional action regarding spending and taxation, which may result in changes in government spending and affect the ability and willingness of businesses and consumers to spend in general.
•Our ability to realize or sustain the expected benefits of our business transformation initiatives, which are designed to reduce costs, enable legacy rationalization, streamline distribution, remove redundancies and simplify and improve processes and support functions.
•Our ability to successfully complete divestitures, as well as achieve our expectations regarding the financial impact of completed and/or pending transactions.
Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future earnings.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
the oversight responsibility to review and discuss with management the Company’s privacy and data security, including cybersecurity, risk exposures, policies and practices, and the steps management has taken to detect, monitor and control such risks and the potential impact of those exposures on our business, financial results, operations and reputation. These reports and presentations are provided by officers with responsibility for privacy and data security, who include our .
Chief Security Office/CISO
, which is charged with management-level responsibility for all aspects of network and information security within the Company. Led by our CISO and comprised of a large team of highly trained security professionals across multiple countries, the CSO is responsible for:a.establishing the policies, standards and requirements for the security of AT&T’s computing and network environments;
b.protecting AT&T-owned and -managed assets and resources against unauthorized access by monitoring potential security threats, correlating network events and overseeing the execution of corrective actions;
c.promoting compliance with AT&T’s security policies and network and information security program in a consistent manner on network systems and applications; and
d.providing security thought leadership in the global security arena.
The CISO also works closely with AT&T Legal to oversee compliance with legal, regulatory and contractual security requirements.
and is generally designed to identify and respond to security incidents and threats in a timely manner to minimize the loss or compromise of information assets and to facilitate incident resolution.
We maintain continuous and near-real-time security monitoring of the AT&T network for investigation, action and response to network security events. This security monitoring leverages tools, where available, such as near-real-time data correlation, situational awareness reporting, active incident investigation, case management, trend analysis and predictive security alerting. We assess, identify and manage risks from cybersecurity threats through various mechanisms, which from time to time may include tabletop exercises to test our preparedness and incident response process, business unit assessments, control gap analyses, threat modeling, impact analyses, internal audits, external audits, penetration tests and engaging third parties to conduct analyses of our information security program. We conduct vulnerability testing and assess identified vulnerabilities for severity, the potential impact to AT&T and our customers, and likelihood of occurrence. We regularly evaluate security controls to maintain their functionality in accordance with security policy. We also obtain cybersecurity threat intelligence from recognized forums, third parties and other sources as part of our risk assessment process. In addition, as a critical infrastructure entity, we collaborate
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| AT&T Inc. |
| Dollars in millions except per share amounts |
Impact of Cybersecurity Risk
our business strategy, results of operations or financial condition. For a discussion of cybersecurity risk, please see the information contained under the heading “Cyberattacks impacting our networks, systems or data or those of our suppliers or vendors may have a material adverse effect on our operations or results of operations” of Item 1A.
ITEM 2. PROPERTIES
Our properties do not lend themselves to description by character and location of principal units. At December 31, 2024, of our total property, plant and equipment, central office equipment represented 29%; outside plant (including cable, wiring and other non-central office network equipment) represented 27%; other equipment, comprised principally of wireless network equipment attached to towers, furniture and office equipment and vehicles and other work equipment, represented 25%; land, building and wireless communications towers represented 12%; and other miscellaneous property represented 7%.
For our Communications segment, substantially all of the installations of central office equipment are located in buildings and on land we own. Many garages, administrative and business offices, wireless towers, telephone centers and retail stores are leased. Property on which communications towers are located may be either owned or leased.
ITEM 3. LEGAL PROCEEDINGS
We are a party to numerous lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. As of the date of this report, we do not believe any pending legal proceedings to which we or our subsidiaries are subject are required to be disclosed as material legal proceedings pursuant to this item.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
As of February 1, 2025
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| Name | Age | Position | Held Since |
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| John T. Stankey | 62 | Chief Executive Officer and President | 7/2020 |
| F. Thaddeus Arroyo | 61 | Chief Strategy and Development Officer | 5/2022 |
| Pascal Desroches | 60 | Senior Executive Vice President and Chief Financial Officer | 4/2021 |
Edward W. Gillespie | 63 | Senior Executive Vice President - External and Legislative Affairs, AT&T Services, Inc. | 4/2020 |
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| Kellyn S. Kenny | 47 | Chief Marketing and Growth Officer | 5/2022 |
| Lori M. Lee | 59 | Global Marketing Officer and Senior Executive Vice President - Human Resources and International | 8/2023 |
| Jeremy Legg | 55 | Chief Technology Officer, AT&T Services, Inc. | 5/2022 |
| David R. McAtee II | 56 | Senior Executive Vice President and General Counsel | 10/2015 |
| Jeffery S. McElfresh | 54 | Chief Operating Officer | 5/2022 |
The above executive officers have held high-level managerial positions with AT&T or its subsidiaries for more than the past five years, except for Mr. Desroches, Mr. Gillespie, Ms. Kenny and Mr. Legg. Executive officers are not appointed to a fixed term of office.
Mr. Desroches was previously Executive Vice President - Finance of AT&T from November 2020 to March 2021, Executive Vice President and Chief Financial Officer of WarnerMedia from June 2018 to November 2020, and Executive Vice President and Chief Financial Officer of Turner from January 2015 to June 2018.
Mr. Gillespie was previously Managing Director of Sard Verbinnen & Co. from June 2018 to April 2020, Founder and Principal of Ed Gillespie Strategies from February 2009 to December 2016, and Counselor to the President for George W. Bush, Executive Office of the President at The White House, from July 2007 to January 2009.
Ms. Kenny was previously Chief Marketing and Growth Officer, AT&T Communications, LLC from November 2020 to May 2022. Prior to that she was Global Chief Marketing Officer of Hilton Worldwide Holdings from January 2018 to June 2020 and Vice President of Marketing for Uber Technologies from April 2016 to January 2018.
Mr. Legg was previously Chief Technology Officer - AT&T Technology Services of AT&T from June 2020 to April 2022, Chief Technology Officer of WarnerMedia from December 2018 to June 2020, and Chief Technology Officer of Turner from June 2015 to December 2018.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange under the ticker symbol “T”. The number of stockholders of record as of December 31, 2024 and 2023 was 712,700 and 749,207. The number of stockholders of record as of January 31, 2025, was 710,181. We declared dividends on common stock, on a quarterly basis, totaling $1.11 per share in 2024 and 2023.
STOCK PERFORMANCE GRAPH
The comparison above assumes $100 invested on December 31, 2019, in AT&T common stock and the following Standard & Poor’s (S&P) Indices: S&P 500 Index and S&P 500 Communication Services Index. Total return equals stock price appreciation plus reinvestment of dividends.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
A summary of our repurchases of common stock during the fourth quarter of 2024 is as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
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| (a) | (b) | (c) | (d) |
| Period | Total Number of Shares (or Units) Purchased1,2 |
Average Price Paid Per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs1 | Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs1 |
October 1, 2024 – | | | | |
October 31, 2024 | 424,825 | | $ | 22.12 | | 36,300 | | 143,695,672 |
November 1, 2024 – | | | | |
November 30, 2024 | 504 | | $ | 22.54 | | — | | 143,695,672 |
December 1, 2024 – | | | | |
December 31, 2024 | 128,898 | | $ | 22.57 | | — | | $ | 10,000 | |
| Total | 554,227 | | $ | 22.22 | | 36,300 | | |
1 In March 2014, our Board of Directors approved an authorization to repurchase up to 300 million shares of our common stock. The authorization had no expiration date. In December 2024, our Board of Directors approved an authorization to repurchase up to $10,000 of common stock and terminated the March 2014 authorization. No repurchases were made in December 2024 under the March 2014 authorization. The December 2024 authorization has no expiration date. |
2 Of the shares purchased, 517,927 shares were acquired through the withholding of taxes on the vesting of restricted stock and performance shares or in respect of the exercise price of options. |
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
AT&T Inc. is referred to as “we,” “AT&T” or the “Company” throughout this document. AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc., and the names of the particular subsidiaries and affiliates providing the services generally have been omitted. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technology industries. You should read this discussion in conjunction with the consolidated financial statements and accompanying notes (Notes).
Our Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this document generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10‑K for the fiscal year ended December 31, 2023.
On April 8, 2022, we closed our transaction to combine substantially all of our previous WarnerMedia segment (WarnerMedia) with a subsidiary of Discovery, Inc (Discovery). Upon the separation and distribution of WarnerMedia, the WarnerMedia business met the criteria for discontinued operations. For discontinued operations, we also evaluated transactions that were components of AT&T’s single plan of a strategic shift, including dispositions that did not individually meet the criteria due to materiality, and determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd. (Playdemic). These businesses are reflected in the accompanying financial statements as discontinued operations, including for periods prior to the consummation of the WarnerMedia/Discovery Transaction. (See Notes 6 and 24)
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| AT&T Inc. |
| Dollars in millions except per share amounts |
We have two reportable segments: Communications and Latin America. Our segment results presented in Note 4 and discussed below follow our internal management reporting. Each segment’s percentage calculation of total segment operating revenue is derived from our segment results table in Note 4. Segment operating income is primarily attributable to our Communications segment due to prior-years operating losses in Latin America. Percentage increases and decreases that are not considered meaningful are denoted with a dash.
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| | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Operating Revenues | | | | | |
| Communications | $ | 117,652 | | $ | 118,038 | | $ | 117,067 | | (0.3) | % | 0.8 | % |
Latin America | 4,232 | | 3,932 | | 3,144 | | 7.6 | | 25.1 | |
| Corporate | 452 | | 458 | | 530 | | (1.3) | | (13.6) | |
| AT&T Operating Revenues | $ | 122,336 | | $ | 122,428 | | $ | 120,741 | | (0.1) | % | 1.4 | % |
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| Operating Income | | | | | |
| Communications | $ | 27,095 | | $ | 27,801 | | $ | 26,736 | | (2.5) | % | 4.0 | % |
Latin America | 40 | | (141) | | (326) | | — | | 56.7 | |
| Segment Operating Income | 27,135 | | 27,660 | | 26,410 | | (1.9) | | 4.7 | |
| Corporate | (2,902) | | (2,961) | | (2,890) | | 2.0 | | (2.5) | |
| Certain significant items | (5,184) | | (1,238) | | (28,107) | | — | | 95.6 | |
| AT&T Operating Income (Loss) | $ | 19,049 | | $ | 23,461 | | $ | (4,587) | | (18.8) | % | — | % |
The Communications segment accounted for approximately 97% of our 2024 and 2023 total segment operating revenues and accounted for substantially all segment operating income in 2024 and 2023. This segment provides services to businesses and consumers located in the United States and businesses globally. Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets. This segment contains the following business units:
•Mobility provides nationwide wireless service and equipment.
•Business Wireline provides advanced ethernet-based fiber services, fixed wireless services, IP Voice and managed professional services, as well as legacy voice and data services and related equipment, to business customers.
•Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services, and AIA services, to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services.
The Latin America segment accounted for approximately 3% of our 2024 and 2023 total segment operating revenues and less than 1% of segment operating income in 2024. This segment provides wireless service and equipment in Mexico.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
RESULTS OF OPERATIONS
Consolidated Results Our financial results from continuing operations are summarized in the following table. We then discuss factors affecting our overall results from continuing operations. Additional analysis is discussed in our “Segment Results” section. We also discuss our expected revenue and expense trends for 2025 in the “Operating Environment and Trends of the Business” section.
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| | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Operating revenues | | | | | |
| Service | $ | 100,135 | | $ | 99,649 | | $ | 97,831 | | 0.5 | % | 1.9 | % |
| Equipment | 22,201 | | 22,779 | | 22,910 | | (2.5) | | (0.6) | |
| Total Operating Revenues | 122,336 | | 122,428 | | 120,741 | | (0.1) | | 1.4 | |
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| Operating expenses | | | | | |
| Operations and support | 77,632 | | 78,997 | | 79,809 | | (1.7) | | (1.0) | |
| Asset impairments and abandonments and restructuring | 5,075 | | 1,193 | | 27,498 | | — | | (95.7) | |
| Depreciation and amortization | 20,580 | | 18,777 | | 18,021 | | 9.6 | | 4.2 | |
| Total Operating Expenses | 103,287 | | 98,967 | | 125,328 | | 4.4 | | (21.0) | |
| Operating Income (Loss) | 19,049 | | 23,461 | | (4,587) | | (18.8) | | — | |
| Interest expense | 6,759 | | 6,704 | | 6,108 | | 0.8 | | 9.8 | |
| Equity in net income of affiliates | 1,989 | | 1,675 | | 1,791 | | 18.7 | | (6.5) | |
| Other income (expense) – net | 2,419 | | 1,416 | | 5,810 | | 70.8 | | (75.6) | |
| Income (Loss) from Continuing Operations Before Income Taxes | 16,698 | | 19,848 | | (3,094) | | (15.9) | | — | |
| Income (Loss) from Continuing Operations | $ | 12,253 | | $ | 15,623 | | $ | (6,874) | | (21.6) | % | — | % |
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OVERVIEW
Operating revenues decreased in 2024, reflecting declines in Business Wireline service, primarily due to continued declines in legacy services, and Mobility equipment revenues, offset by higher Mobility service, Consumer Wireline and Mexico revenues.
Operations and support expenses decreased in 2024, reflecting lower Mobility equipment costs resulting from lower wireless sales volumes and expense declines from our continued transformation efforts, including lower personnel charges.
Asset impairments and abandonments and restructuring increased in 2024. The increase in 2024 was primarily due to a third-quarter noncash goodwill impairment charge of $4,422 associated with our Business Wireline reporting unit. We performed an interim goodwill impairment test of the Business Wireline reporting unit and concluded that the calculated fair value was lower than the book value, which was driven by a faster-than-previously anticipated industry-wide secular decline of legacy services (see Note 9). Noncash charges in 2024 also included restructuring charges, including termination fees associated with our network modernization program to deploy commercial scale open radio access network (Open RAN).
Noncash charges in 2023 primarily relate to severance and restructuring charges, as well as the abandonment of non-deployed wireless equipment associated with our Open RAN network modernization program.
Depreciation and amortization expense increased in 2024, primarily due to the shortening of estimated economic lives of wireless network equipment that will be replaced earlier than originally anticipated with our Open RAN network modernization efforts. Also contributing to higher depreciation expense was the impact of ongoing capital spending for strategic initiatives such as fiber and network upgrades.
Operating income decreased in 2024 and increased in 2023. Our operating margin was 15.6% in 2024, compared to 19.2% in 2023, and (3.8)% in 2022, which included noncash goodwill impairment charges of $24,812.
Interest expense increased in 2024, primarily due to lower capitalized interest associated with spectrum acquisitions, mostly offset by lower debt balances. Interest expense in 2023 also includes distributions on Mobility preferred interests, which were repurchased on April 5, 2023 (see Note 16).
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| AT&T Inc. |
| Dollars in millions except per share amounts |
Equity in net income of affiliates increased in 2024. The increase reflects cash distributions received by AT&T in excess of the carrying amount of our investment in DIRECTV, partially offset by the performance of our investment in DIRECTV (see Notes 10 and 19).
Other income (expense) – net increased in 2024. The increase was primarily driven by actuarial remeasurement of benefit plan assets and obligations, with an actuarial loss of $56 in 2024, compared to net actuarial and settlement losses of $1,594 in 2023 (see Note 14). Also contributing to the increase was the prior-year write-down of our SKY Mexico equity investment. These increases were partially offset by lower pension and postretirement benefit credits and lower returns on other benefit-related investments.
Income tax expense increased in 2024. While our income before income taxes decreased in 2024, it includes a goodwill impairment associated with our Business Wireline reporting unit, which is not deductible for tax purposes and results in a higher effective tax rate. Our effective tax rate was 26.6% in 2024, 21.3% in 2023, and (122.2)% in 2022. The effective tax rate in 2022 was also impacted by goodwill impairments, which are not deductible for tax purposes.
Segment Results Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We evaluate segment performance based on operating income as well as EBITDA and/or EBITDA margin. See “Discussion and Reconciliation of Non-GAAP Measures” for a reconciliation of EBITDA and EBITDA margin to the most comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles.
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COMMUNICATIONS SEGMENT | | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Segment Operating Revenues | | | | | |
| Mobility | $ | 85,255 | | $ | 83,982 | | $ | 81,780 | | 1.5 | % | 2.7 | % |
| Business Wireline | 18,819 | | 20,883 | | 22,538 | | (9.9) | | (7.3) | |
| Consumer Wireline | 13,578 | | 13,173 | | 12,749 | | 3.1 | | 3.3 | |
| Total Segment Operating Revenues | $ | 117,652 | | $ | 118,038 | | $ | 117,067 | | (0.3) | % | 0.8 | % |
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Segment Operating Income (Loss) | | | | | |
| Mobility | $ | 26,314 | | $ | 25,861 | | $ | 23,812 | | 1.8 | % | 8.6 | % |
| Business Wireline | (88) | | 1,289 | | 2,290 | | — | | (43.7) | |
| Consumer Wireline | 869 | | 651 | | 634 | | 33.5 | | 2.7 | |
| Total Segment Operating Income | $ | 27,095 | | $ | 27,801 | | $ | 26,736 | | (2.5) | % | 4.0 | % |
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Operating revenues decreased in 2024, driven by declines in our Business Wireline business unit, which reflects lower demand for legacy services and product simplification, as well as the absence of revenues from our cybersecurity business that was contributed to a new cybersecurity joint venture, LevelBlue, in the second quarter of 2024. Revenue declines were also driven by lower Mobility equipment revenue. These decreases were partially offset by increases in Mobility service revenue and our Consumer Wireline business unit, driven by gains in wireless and broadband services.
Operating income decreased in 2024 and increased in 2023. The 2024 operating income reflects a decrease in operating income from our Business Wireline business unit, partially offset by increases in our Mobility and Consumer Wireline business units. Our Communications segment operating income margin was 23.0% in 2024, 23.6% in 2023 and 22.8% in 2022. Our Communications segment EBITDA margin was 39.5% in 2024, 38.3% in 2023 and 37.1% in 2022.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
Communications Business Unit Discussion
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Mobility Results | | | | | |
| | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Operating revenues | | | | | |
| Service | $ | 65,373 | | $ | 63,175 | | $ | 60,499 | | 3.5 | % | 4.4 | % |
| Equipment | 19,882 | | 20,807 | | 21,281 | | (4.4) | | (2.2) | |
| Total Operating Revenues | 85,255 | | 83,982 | | 81,780 | | 1.5 | | 2.7 | |
| | | | | |
| Operating expenses | | | | | |
| Operations and support | 48,724 | | 49,604 | | 49,770 | | (1.8) | | (0.3) | |
| Depreciation and amortization | 10,217 | | 8,517 | | 8,198 | | 20.0 | | 3.9 | |
| Total Operating Expenses | 58,941 | | 58,121 | | 57,968 | | 1.4 | | 0.3 | |
| Operating Income | $ | 26,314 | | $ | 25,861 | | $ | 23,812 | | 1.8 | % | 8.6 | % |
The following tables highlight other key measures of performance for Mobility:
| | | | | | | | | | | | | | | | | |
Subscribers | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Postpaid | 89,200 | 87,104 | 84,700 | 2.4 | % | 2.8 | % |
| Postpaid phone | 72,749 | 71,255 | 69,596 | 2.1 | | 2.4 | |
| Prepaid | 19,023 | 19,236 | 19,176 | (1.1) | | 0.3 | |
| Reseller | 9,628 | 7,468 | 6,043 | 28.9 | | 23.6 | |
Total Mobility Subscribers1 | 117,851 | 113,808 | 109,919 | 3.6 | % | 3.5 | % |
1Effective with our first-quarter 2024 reporting, we have removed connected devices from our total Mobility subscribers, consistent with industry standards and our key performance metrics. Connected devices include data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems. |
| | | | | | | | | | | | | | | | | |
Mobility Net Additions | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Postpaid Phone Net Additions | 1,653 | 1,744 | 2,868 | (5.2) | % | (39.2) | % |
| Total Phone Net Additions | 1,525 | 1,801 | 3,272 | (15.3) | | (45.0) | |
| | | | | |
Postpaid2 | 2,250 | 2,315 | 4,091 | (2.8) | | (43.4) | |
| Prepaid | (102) | 128 | 479 | — | | (73.3) | |
| Reseller | 2,020 | 1,279 | 462 | 57.9 | | — | |
Mobility Net Subscriber Additions1 | 4,168 | 3,722 | 5,032 | 12.0 | % | (26.0) | % |
| | | | | |
Postpaid Churn3 | 0.92 | % | 0.98 | % | 0.97 | % | (6) | BP | 1 | BP |
Postpaid Phone-Only Churn4 | 0.76 | % | 0.81 | % | 0.81 | % | (5) | BP | — | BP |
1Excludes migrations between wireless subscriber categories, including connected devices, and acquisition-related activity during the period. |
2In addition to postpaid phones, includes tablets and wearables and other. Tablet net adds (losses) were 167, (68) and 203 for the years ended December 31, 2024, 2023 and 2022, respectively. Wearables and other net adds were 430, 639 and 1,020 for the years ended December 31, 2024, 2023 and 2022, respectively. |
3Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month by the total number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period, excluding the impact of disconnections resulting from our 3G network shutdown in February 2022. |
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
Service revenue increased during 2024, largely due to growth from subscriber gains and higher postpaid average revenue per subscriber (ARPU).
ARPU
ARPU increased in 2024 and reflects pricing actions.
Churn
The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Postpaid churn and postpaid phone-only churn were lower in 2024.
Equipment revenue decreased in 2024, primarily driven by lower wireless device sales volumes. The decrease was partially offset by sales of higher-priced phones in 2024.
Operations and support expenses decreased in 2024, largely due to lower equipment and selling costs driven by lower wireless sales volumes, partially offset by higher network costs.
Depreciation expense increased in 2024, primarily due to shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our Open RAN deployment and network transformation, and ongoing capital spending for network upgrades and expansion, which we expect to continue through 2025.
Operating income increased in 2024 and 2023. Our Mobility operating income margin was 30.9% in 2024, 30.8% in 2023 and 29.1% in 2022. Our Mobility EBITDA margin was 42.8% in 2024, 40.9% in 2023 and 39.1% in 2022.
| | | | | | | | | | | | | | | | | |
Business Wireline Results | | | | | |
| | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Operating revenues | | | | | |
| Service | $ | 18,064 | | $ | 20,274 | | $ | 21,891 | | (10.9) | % | (7.4) | % |
| Equipment | 755 | | 609 | | 647 | | 24.0 | | (5.9) | |
| Total Operating Revenues | 18,819 | | 20,883 | | 22,538 | | (9.9) | | (7.3) | |
| | | | | |
| Operating expenses | | | | | |
| Operations and support | 13,352 | | 14,217 | | 14,934 | | (6.1) | | (4.8) | |
| Depreciation and amortization | 5,555 | | 5,377 | | 5,314 | | 3.3 | | 1.2 | |
| Total Operating Expenses | 18,907 | | 19,594 | | 20,248 | | (3.5) | | (3.2) | |
Operating Income (Loss) | $ | (88) | | $ | 1,289 | | $ | 2,290 | | — | % | (43.7) | % |
Service revenues decreased in 2024, driven by lower demand for legacy voice, data and network services along with product simplification, partially offset by growth in fiber and connectivity services. We expect these trends to continue. Revenue declines also were impacted by the absence of revenues from our cybersecurity business that was contributed to LevelBlue and higher intellectual property sales in the prior year.
Equipment revenues increased in 2024, driven by higher customer premises equipment sales, which can vary from year to year based on the nature of services purchased.
Operations and support expenses decreased in 2024, primarily driven by lower personnel costs associated with ongoing transformation initiatives, lower network access and customer support expenses and the contribution of our cybersecurity business. Partially offsetting the decreases were higher vendor credits in 2023 and higher equipment costs in 2024. As part of our transformation activities, we expect operations and support expense improvements to continue in 2025 as we further right size our operations in alignment with the strategic direction of the business.
Depreciation expense increased in 2024, primarily due to ongoing capital investment for strategic initiatives such as fiber, which we expect to further increase in 2025.
Operating income decreased in 2024 and 2023. Our Business Wireline operating income margin was (0.5)% in 2024, 6.2% in 2023 and 10.2% in 2022. Our Business Wireline EBITDA margin was 29.1% in 2024, 31.9% in 2023 and 33.7% in 2022.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
| | | | | | | | | | | | | | | | | |
Consumer Wireline Results | | | | | |
| | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Operating revenues | | | | | |
| Broadband | $ | 11,212 | | $ | 10,455 | | $ | 9,669 | | 7.2 | % | 8.1 | % |
| Legacy voice and data services | 1,265 | | 1,508 | | 1,746 | | (16.1) | | (13.6) | |
| Other service and equipment | 1,101 | | 1,210 | | 1,334 | | (9.0) | | (9.3) | |
| Total Operating Revenues | 13,578 | | 13,173 | | 12,749 | | 3.1 | | 3.3 | |
| | | | | |
| Operating expenses | | | | | |
| Operations and support | 9,048 | | 9,053 | | 8,946 | | (0.1) | | 1.2 | |
| Depreciation and amortization | 3,661 | | 3,469 | | 3,169 | | 5.5 | | 9.5 | |
| Total Operating Expenses | 12,709 | | 12,522 | | 12,115 | | 1.5 | | 3.4 | |
| Operating Income | $ | 869 | | $ | 651 | | $ | 634 | | 33.5 | % | 2.7 | % |
The following tables highlight other key measures of performance for Consumer Wireline:
| | | | | | | | | | | | | | | | | |
Connections | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| Broadband Connections | | | | | |
| Total Broadband and DSL Connections | 14,079 | | 13,890 | | 13,991 | 1.4 | % | (0.7) | % |
Broadband1 | 13,987 | | 13,729 | | 13,753 | | 1.9 | | (0.2) | |
| Fiber Broadband Connections | 9,331 | | 8,307 | | 7,215 | | 12.3 | | 15.1 | |
| | | | | |
| Voice Connections | | | | | |
| Retail Consumer Switched Access Lines | 1,310 | 1,651 | 2,028 | (20.7) | | (18.6) | |
Consumer VoIP Connections | 1,653 | 1,953 | 2,311 | (15.4) | | (15.5) | |
| Total Retail Consumer Voice Connections | 2,963 | 3,604 | 4,339 | (17.8) | % | (16.9) | % |
1Includes AIA. |
| | | | | | | | | | | | | | | | | |
Broadband Net Additions | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| |
| Total Broadband and DSL Net Additions | 189 | (101) | (169) | — | % | 40.2 | % |
Broadband Net Additions1 | 258 | (24) | | (92) | | — | | 73.9 | |
| Fiber Broadband Net Additions | 1,024 | 1,092 | 1,223 | (6.2) | % | (10.7) | % |
1Includes AIA. |
Broadband revenues increased in 2024, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU, partially offset by declines in copper-based broadband services.
Legacy voice and data service revenues decreased in 2024, reflecting the continued decline in demand for these services in favor of other technologies, such as wireless and fiber.
Other service and equipment revenues decreased in 2024, reflecting the continued decline in the number of VoIP customers.
Operations and support expenses decreased in 2024, driven by lower customer support costs, lower marketing expense and savings from cost initiatives, offset by higher network-related costs as our fiber build scales.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
Depreciation expense increased in 2024, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, which we expect to further increase in 2025.
Operating income increased in 2024 and 2023. Our Consumer Wireline operating income margin was 6.4% in 2024, 4.9% in 2023 and 5.0% in 2022. Our Consumer Wireline EBITDA margin was 33.4% in 2024, 31.3% in 2023 and 29.8% in 2022.
| | | | | | | | | | | | | | | | | |
LATIN AMERICA SEGMENT | | | | Percent Change |
| 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
Segment Operating revenues | | | | | |
| Service | $ | 2,668 | | $ | 2,569 | | $ | 2,162 | | 3.9 | % | 18.8 | % |
| Equipment | 1,564 | | 1,363 | | 982 | | 14.7 | | 38.8 | |
Total Segment Operating Revenues | 4,232 | | 3,932 | | 3,144 | | 7.6 | | 25.1 | |
| | | | | |
Segment Operating expenses | | | | | |
| Operations and support | 3,535 | | 3,349 | | 2,812 | | 5.6 | | 19.1 | |
| Depreciation and amortization | 657 | | 724 | | 658 | | (9.3) | | 10.0 | |
Total Segment Operating Expenses | 4,192 | | 4,073 | | 3,470 | | 2.9 | | 17.4 | |
| Operating Income (Loss) | $ | 40 | | $ | (141) | | $ | (326) | | — | % | 56.7 | % |
The following tables highlight other key measures of performance for Mexico:
| | | | | | | | | | | | | | | | | |
| Subscribers | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| |
| Postpaid | 5,837 | | 5,236 | | 4,925 | | 11.5 | % | 6.3 | % |
| Prepaid | 17,486 | | 16,663 | | 16,204 | | 4.9 | | 2.8 | |
| Reseller | 253 | | 417 | | 474 | | (39.3) | | (12.0) | |
| Mexico Wireless Subscribers | 23,576 | | 22,316 | | 21,603 | | 5.6 | % | 3.3 | % |
| | | | | |
Mexico Wireless Net Additions | | | | | |
| | | | Percent Change |
| (in 000s) | 2024 | 2023 | 2022 | 2024 vs. 2023 | 2023 vs. 2022 |
| |
| Postpaid | 601 | | 311 | | 118 | | 93.2 | % | — | % |
| Prepaid | 823 | | 459 | | 1,147 | | 79.3 | | (60.0) | |
| Reseller | (164) | | (57) | | (24) | | — | | — | |
| Mexico Wireless Net Additions | 1,260 | | 713 | | 1,241 | | 76.7 | % | (42.5) | % |
|
Service revenues increased in 2024, reflecting growth in subscribers and ARPU, partially offset by unfavorable foreign exchange impacts.
Equipment revenues increased in 2024, driven by higher equipment sales, partially offset by unfavorable foreign exchange impacts.
Operations and support expenses increased in 2024, driven by increased equipment and selling costs resulting from higher sales, partially offset by favorable impact of foreign exchange.
Depreciation expense decreased in 2024, driven by lower in-service assets and favorable impact of foreign exchange.
Operating income improved in 2024 and 2023. Our Mexico operating income margin was 0.9% in 2024, (3.6)% in 2023 and (10.4)% in 2022. Our Mexico EBITDA margin was 16.5% in 2024, 14.8% in 2023 and 10.6% in 2022.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
2025 Revenue Trends We expect revenue growth in our wireless and broadband businesses as customers demand instant connectivity and higher speeds made possible by wireless network enhancements through 5G deployment and our fiber network expansion. We believe that our simplified go-to-market strategy for 5G in underpenetrated markets will continue to contribute to wireless subscriber and service revenue growth and that expansion of our fiber footprint and our multi-gig offerings will drive greater demand for broadband services on our fast-growing fiber network, as well as increasing our converged customers that have both wireless and fiber.
As we expand our fiber reach, we will be orienting our business portfolio to leverage this opportunity to offset continuing declines in legacy Business Wireline products by growing connectivity with small to mid-sized businesses. We plan to use our strong fiber and wireless assets, broad distribution and integrated product offerings to strengthen our overall market position. We will continue to rationalize our product portfolio with a longer-term shift of the business to fiber and mobile connectivity, and growth in value-added services. As customers are demanding faster and more reliable services, we are decommissioning our legacy copper network and enhancing our offerings to include services that provide better experiences over new technologies, such as AT&T Internet Air.
2025 Expense Trends During 2025, we expect expense trends consistent with the prior year, and that we will continue to focus on efficiency, led by our cost transformation initiative. We expect the spending required to support growth and efficiency initiatives, primarily our continued deployment of fiber and 5G, to pressure expense trends in 2025. These investments will help prepare us to meet increased customer demand for enhanced wireless and broadband services, including video streaming, augmented reality, “smart” technologies, user generated content and artificial intelligence (AI). The software benefits of our 5G wireless technology should result in a more efficient use of capital and lower network-related expenses in the coming years. Furthermore, to the extent customers upgrade their handsets in 2025, the expenses associated with those device sales are expected to contribute to higher costs.
We continue to transform our operations to be more efficient and effective. We are restructuring businesses, working with regulators and customers to sunset legacy networks, improving customer service and ordering functions through digital transformation, sizing our support costs and staffing with current activity levels, and reassessing overall benefit costs. We also expect cost savings through AI-driven efficiencies in our network design and operations, software development, sales, marketing, customer support services and general and administrative costs.
Market Conditions In recent years, uncertainty surrounding global growth rates, inflation and an increasing interest rate environment continued to produce volatility in the credit, currency and equity markets. We expect ongoing pressure on pricing during 2025 as we respond to the geopolitical and macroeconomic environment and our competitive marketplace, especially in wireless services.
Included on our consolidated balance sheets are assets held by benefit plans for the payment of future benefits. Our pension plans are subject to funding requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA). We expect only minimal ERISA contribution requirements to our pension plans for 2025. Investment returns on these assets depend largely on trends in the economy, and a weakness in the equity, fixed income and real asset markets could require us to make future contributions to the pension plans. In addition, our policy of recognizing actuarial gains and losses related to our pension and other postretirement plans in the period in which they arise subjects us to earnings volatility caused by changes in market conditions; however, these actuarial gains and losses do not impact segment performance as they are required to be recorded in “Other income (expense) – net.” Changes in our discount rate, which are tied to changes in the bond market, and changes in the performance of equity markets, may have significant impacts on the valuation of our pension and other postretirement obligations at the end of 2025 (see “Critical Accounting Policies and Estimates”).
Expected Growth Areas Over the next few years, we expect our growth to come from wireless and IP-based fiber broadband services. We provide integrated services to diverse groups of customers in the U.S. on a converged telecommunications network utilizing different technological platforms. In 2025, our key initiatives include:
•Continuing our wireless subscriber momentum and 5G deployment, with expansion of wireless subscribers in underpenetrated markets and converged customers.
•Continuing our fiber deployment, improving fiber penetration, growing AT&T Internet Air services, accelerating subscriber growth and increasing broadband revenues.
•Deploying Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, fostering lower network costs, improved operational efficiencies and allowing for continued investment in our fast-growing broadband network.
•Continuing to drive efficiencies and a competitive advantage through cost transformation initiatives and product simplification.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
Wireless We expect to continue to deliver revenue growth in the coming years. We are in a period of rapid growth in wireless video and data usage and believe that there are substantial opportunities available for next-generation integrated services that combine technologies and services. As of December 31, 2024, we served 141 million wireless subscribers in North America, with 118 million in the United States.
Our LTE technology covers over 440 million people in North America, and in the United States, we cover all major metropolitan areas and over 336 million people. When combined with our upgraded backhaul network, we provide enhanced network capabilities and superior mobile broadband speeds for data and video services. In December 2018, we introduced the nation’s first commercial mobile 5G service and expanded that deployment nationwide in July 2020. At December 31, 2024, our network covers more than 314 million people with 5G technology in the United States and North America.
Our networks covering both the U.S. and Mexico have enabled our customers to use wireless services without roaming on other companies’ networks. We believe this seamless access will prove attractive to customers and provide a significant growth opportunity. At December 31, 2024, we provided LTE coverage to over 104 million people in Mexico.
Integration of Wireless and Fiber Services The communications industry has evolved into internet-based technologies capable of converging the offering of wireline and wireless services. As the owner and operator of scaled wireless and fiber networks, we plan to continue to focus on expanding our wireless network capabilities and providing broadband offerings that allow customers to integrate their home or business fixed services with their mobile service. In January 2022, we launched our multi-gig rollout, which brings the fastest internet to AT&T Fiber customers in select locations with symmetrical 2 gig and 5 gig tiers. We intend to continue to develop and provide unique integrated mobile and broadband/fiber solutions.
REGULATORY LANDSCAPE
AT&T subsidiaries operating within the United States are subject to federal and state regulatory authorities. While these issues may apply only to certain subsidiaries, the words “we,” “AT&T” and “our” are used to simplify the discussion. The following discussions are intended as a condensed summary of the issues rather than as a comprehensive legal analysis and description of all of these specific issues.
International Regulation
Our subsidiaries operating outside the United States are subject to the jurisdiction of regulatory authorities in the territories in which the subsidiaries operate. Our licensing, compliance and advocacy initiatives in foreign countries primarily enable the provision of enterprise (i.e., large business) services globally and wireless services in Mexico.
The General Data Protection Regulation went into effect in Europe in May of 2018. This regulation created a range of new compliance obligations and significantly increased financial penalties for noncompliance. AT&T processes and handles personal data of its customers and subscribers, employees of its enterprise customers and its employees.
U.S. Regulation
In the Telecommunications Act of 1996 (Telecom Act), Congress established a national policy framework intended to bring the benefits of competition and investment in advanced telecommunications facilities and services to all Americans by opening all telecommunications markets to competition and reducing or eliminating regulatory burdens that harm consumer welfare. Nonetheless, since then, the FCC and some state regulatory commissions have maintained, re-imposed or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies. Recently, the FCC’s regulatory approach has depended on control of the executive branch, eliminating a variety of antiquated and unnecessary regulations in a number of areas, while imposing or re-imposing regulations in other areas. We continue to support regulatory and legislative measures and efforts, at both the state and federal levels, to reduce inappropriate regulatory burdens that inhibit our ability to compete effectively and offer needed services to our customers, including initiatives to transition services from traditional networks to all IP-based networks. At the same time, we also seek to ensure that legacy regulations are not further extended to broadband or wireless services, which are subject to vigorous competition. We have organized the following discussion by service impacted.
Internet Until 2015, the FCC classified fixed and mobile consumer broadband internet access services as information services subject to minimal regulation. In 2015, the FCC reclassified such services as telecommunications services subject to broader regulation by the FCC and imposed “net neutrality rules.” Since then, the FCC has twice reversed course, most recently again reclassifying such services as telecommunications services subject to broader regulation by the FCC in an order adopted on April 25, 2024. Multiple trade associations and other parties challenged the FCC’s reclassification decision in appeals consolidated in the U.S. Court of Appeals for the Sixth Circuit. The trade associations petitioned the Sixth Circuit to stay the FCC’s order. On August 1, 2024, the Sixth Circuit issued a stay of the FCC order pending review of the appeals, holding that broadband providers are likely to succeed on the merits. On January 2, 2025, the Sixth Circuit issued an order granting the petition for review and setting aside the FCC net neutrality order, holding that broadband internet access service is an information service.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
At least one state has adopted legislation regulating the rates of fixed broadband service. In 2021, New York enacted the Affordable Broadband Act (ABA), requiring ISPs offering “fixed” mass-market broadband service, including fixed wireless, to offer discounted plans to low-income customers. In June 2021, the ABA was enjoined by a federal district court, which found the ABA preempted by federal law. In April 2024, the Second Circuit overruled and vacated the district court order. In August 2024, trade associations asked the Supreme Court to review the Second Circuit’s decision. On December 16, the Supreme Court issued an order denying the request. Those associations have since requested rehearing of that Supreme Court decision. Under an agreement with the New York Attorney General, the law began to be enforced on January 15, 2025. In response, AT&T announced that it would no longer offer its AT&T Internet Air fixed wireless service in New York. Other states could consider similar legislation.
Since 2018, some states have adopted legislation or issued executive orders that established state net neutrality rules, including California and Vermont. We expect additional states may seek to impose net neutrality requirements in the future.
On November 15, 2023, the FCC adopted rules to “facilitate” equal access to broadband and prevent digital discrimination in broadband access. The rules, which became effective March 22, 2024, prohibit covered entities from implementing policies or practices not justified by genuine issues of technical or economic feasibility, that differentially impact consumers’ access to broadband internet access service based on prohibited characteristics (including income level, race, and ethnicity) or that have such differential impact, whether intentional or not. The rules broadly apply prospectively to all aspects of an ISP’s service that could impact a consumer’s ability to access broadband, including deployment, marketing, and credit checks, among other things. We may be required to answer complaints alleging that the company has violated the FCC rules and those complaints may seek relief, including changes to our business practices or civil forfeitures that could result in significant costs or reputational harm. It is currently uncertain how the FCC will implement and enforce these new rules. Several business associations have filed appeals challenging the rules and several of those appeals have been consolidated in the Eighth Circuit, which held oral argument on September 25, 2024.
Privacy-related legislation continues to be adopted or considered in a number of jurisdictions. Legislative, regulatory and litigation actions could result in increased costs of compliance, further regulation or claims against broadband internet access service providers and others, and increased uncertainty in the value and availability of data.
Infrastructure Investment On November 15, 2021, the Infrastructure Investment and Jobs Act (IIJA) was signed into law. The legislation appropriates $65,000 to support broadband deployment and adoption. The National Telecommunications and Information Agency (NTIA) is responsible for distributing more than $48,000 of this funding, including $42,500 in state grants for broadband deployment projects in unserved and underserved areas through the Broadband, Equity, Access and Deployment (BEAD) Programs. NTIA and states are in the process of administering these grants. Where appropriate, AT&T has applied for, and in some cases has been awarded, and may continue to apply for grants under this or other government infrastructure programs.
Wireless Industry-wide network densification and 5G technology expansion efforts, which are needed to satisfy extensive demand for video and internet access, will involve significant deployment of “small cell” equipment. This increases the importance of local permitting processes that allow for the placement of small cell equipment in the public right-of-way on reasonable timelines and terms. The FCC has adopted multiple Orders streamlining federal, state, and local wireless structure review processes that had the tendency to delay and impede deployment of small cell and related infrastructure used to provide telecommunications and broadband services. Additional spectrum will be needed industrywide for 5G and future services. In 2023, the FCC’s statutory authority to conduct spectrum auctions lapsed and it is uncertain when Congress will reauthorize it. Also in 2023, the federal government released a national spectrum strategy that focused on spectrum sharing but did not include terms of future spectrum sharing model(s) or specific timelines to make additional spectrum bands available for 5G and future generations of service. As a result, the federal government’s ability and intent to make sufficient spectrum available to the industry in needed timeframes and on terms suitable for mobile broadband network deployments remains uncertain.
In June and November 2020, the FCC issued Declaratory Rulings clarifying the limits on state and local authority to deny applications to modify existing structures to accommodate wireless facilities. In September 2024, the Ninth Circuit Court of Appeals resolved challenges to those Declaratory Rulings, largely sustaining the FCC’s rulings. The decision ensures that the FCC retains the ability to remove state and local regulations that could delay or impede spectrum and technology upgrades on existing cell site facilities.
In recent years, the FCC took several actions to make spectrum available for 5G services, including the auction of 280 MHz of mid-band spectrum previously used for satellite service (the “C-Band” auction) and 39 GHz band spectrum. AT&T obtained spectrum in these auctions. The FCC also made 150 MHz of mid-band CBRS spectrum available, to be shared with Federal incumbents, which enjoy priority. In addition, in 2022, the FCC completed Auction 110, in which AT&T won 40 MHz of 3.45 GHz spectrum nationwide at a cost of $9,079. (See Note 6)
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
ACCOUNTING POLICIES AND STANDARDS
Critical Accounting Policies and Estimates Because of the size of the financial statement line items they relate to or the extent of judgment required by our management, some of our accounting policies and estimates have a more significant impact on our consolidated financial statements than others.
Pension and Postretirement Benefits Our actuarial estimates of retiree benefit expense and the associated significant weighted-average assumptions are discussed in Note 14. Our assumed weighted-average discount rates for pension and postretirement benefits of 5.70% and 5.60%, respectively, at December 31, 2024, reflect the hypothetical rate at which the projected benefit obligations could be effectively settled or paid out to participants. We determined our discount rate based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows for the obligations. These bonds had an average rating of at least Aa3 or AA- by the nationally recognized statistical rating organizations, denominated in U.S. dollars, and generally not callable, convertible or index linked. For the year ended December 31, 2024, when compared to the year ended December 31, 2023, we increased our pension discount rate by 0.70%, resulting in a decrease in our pension plan benefit obligation of $1,994, and increased our postretirement discount rate by 0.60%, resulting in a decrease in our postretirement benefit obligation of $317.
Our expected long-term rate of return is 7.75% on pension plan assets and 4.00% on postretirement plan assets for 2024 and 2025. Our expected return on plan assets is calculated using the actual fair value of plan assets. If all other factors were to remain unchanged, we expect that a 0.50% decrease in the expected long-term rate of return would cause 2025 combined pension and postretirement cost to increase $136, which under our accounting policy would be adjusted to actual returns in the current year upon remeasurement of our retiree benefit plans.
We recognize gains and losses on pension and postretirement plan assets and obligations immediately in “Other income (expense) – net” in our consolidated statements of income. These gains and losses are generally measured annually as of December 31, and accordingly, will normally be recorded during the fourth quarter, unless an earlier remeasurement is required. Should actual experience differ from actuarial assumptions, the projected pension benefit obligation and net pension cost and accumulated postretirement benefit obligation and postretirement benefit cost would be affected in future years. See Note 14 for additional discussions regarding our assumptions.
Asset Valuations and Impairments Goodwill and other indefinite-lived intangible assets are not amortized but tested at least annually on October 1 for impairment. For impairment testing, we estimate fair values using models that predominantly rely on the expected cash flows to be derived from the reporting unit or use of the asset. Long-lived assets are reviewed for impairment whenever events or circumstances indicate that the book value may not be recoverable over the remaining life. Inputs underlying the expected cash flows include, but are not limited to, subscriber counts, revenue per user, capital investment and acquisition costs per subscriber, and ongoing operating costs. We based our assumptions on a combination of our historical results, trends, business plans and marketplace participant data.
Annual Goodwill Testing
Goodwill is tested on a reporting unit basis by comparing the estimated fair value of each reporting unit to its book value. If the fair value exceeds the book value, then no impairment is measured. We estimate fair values using an income approach (also known as a discounted cash flow model) and market multiple approaches. The income approach utilizes our future cash flow projections with a perpetuity value discounted at an appropriate weighted average cost of capital. The market multiple approach uses the multiples of publicly traded companies whose services are comparable to those offered by the reporting units.
During the third quarter of 2024, we updated the long-term strategic plan of our Business Wireline reporting unit. The updated plans reflected lower long-term projected future cash flows associated with the industry-wide secular decline, including a faster-than-previously anticipated decline of legacy services. We identified this as an impairment indicator and performed an interim quantitative goodwill impairment test of our Business Wireline reporting unit. The interim impairment test methodology was consistent with our approach for annual impairment testing (see Note 1), using similar models updated with our current view of key inputs and assumptions. We concluded that the calculated fair value of the Business Wireline reporting unit was lower than the book value, resulting in a noncash goodwill impairment charge of $4,422 for the entirety of our Business Wireline reporting unit goodwill.
As of October 1, 2024, the calculated fair values of the reporting units with remaining goodwill exceeded their book values in all circumstances in excess of 10%. If either the projected long-term growth rates declined by 0.5%, if the projected long-term
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| AT&T Inc. |
| Dollars in millions except per share amounts |
EBITDA margin declined by 0.5%, or if the weighted average cost of capital increased by 0.5%, the fair values would still be higher than the book value of the reporting units.
The fair values of our remaining reporting units could be negatively impacted by future sustained declines in macroeconomic or business conditions, higher discount rates or declines in the value of AT&T stock and could result in goodwill impairment charges in future periods.
U.S. Wireless Licenses
The fair value of U.S. wireless licenses is assessed using a discounted cash flow model (the Greenfield Approach) and a qualitative corroborative market approach based on auction prices, depending upon auction activity. The Greenfield Approach assumes a company initially owns only the wireless licenses and makes investments required to build an operation comparable to current use. These licenses are tested annually for impairment on an aggregated basis, consistent with their use on a national scope for the United States. For impairment testing, we assume subscriber and revenue growth will trend up to projected levels, with a long-term growth rate reflecting expected long-term inflation trends. We assume churn rates will initially exceed our current experience but decline to rates that are in line with industry-leading churn. We used a discount rate of 8.75%, based on the optimal long-term capital structure of a market participant and its associated cost of debt and equity for the licenses, to calculate the present value of the projected cash flows. If either the projected rate of long-term growth of cash flows or revenues declined by 0.5%, or if the discount rate increased by 0.5%, the fair values of these wireless licenses would still be higher than the book value. The fair value of these wireless licenses exceeded their book values by more than 10%.
Income Taxes Our estimates of income taxes and the significant items giving rise to the deferred assets and liabilities are shown in Note 13 and reflect our assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these estimates. Actual income taxes could vary from these estimates due to future changes in income tax law or the final review of our tax returns by federal, state or foreign tax authorities.
We use our judgment to determine whether it is more likely than not that we will sustain positions that we have taken on tax returns and, if so, the amount of benefit to initially recognize within our financial statements. We regularly review our uncertain tax positions and adjust our unrecognized tax benefits (UTBs) in light of changes in facts and circumstances, such as changes in tax law, interactions with taxing authorities and developments in case law. These adjustments to our UTBs may affect our income tax expense. Settlement of uncertain tax positions may require use of our cash.
New Accounting Standards
See Note 1 for discussion of recently issued or adopted accounting standards.
OTHER BUSINESS MATTERS
Environmental We are subject from time to time to judicial and administrative proceedings brought by various governmental authorities under federal, state or local environmental laws. We reference in our Forms 10-Q and 10-K certain environmental proceedings that could result in monetary sanctions (exclusive of interest and costs) of three hundred thousand dollars or more. However, we do not believe that any of those currently pending will have a material adverse effect on our results of operations.
LIQUIDITY AND CAPITAL RESOURCES
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Continuing operations for the years ended December 31, | 2024 | 2023 | 2022 |
Cash provided by operating activities | $ | 38,771 | | $ | 38,314 | | $ | 35,812 | |
Cash used in investing activities | (17,490) | | (19,660) | | (26,899) | |
Cash used in financing activities | (24,708) | | (15,614) | | (59,564) | |
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At December 31, | 2024 | 2023 | |
Cash and cash equivalents | $ | 3,298 | | $ | 6,722 | | |
Total debt | 123,532 | | 137,331 | | |
We had $3,298 in cash and cash equivalents available at December 31, 2024, decreasing $3,424 since December 31, 2023. Cash and cash equivalents included cash of $2,149 and money market funds and other cash equivalents of $1,149. Approximately $1,268 of our cash and cash equivalents were held in accounts outside of the U.S. and may be subject to restrictions on repatriation.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
In 2024, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, distributions from DIRECTV and sales of idle Rabbi Trust assets and other investments. These inflows were exceeded by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses. The cash generated from operating activities was used to fund capital expenditures and vendor financing payments, repay short-term borrowings and long-term debt, and dividend payments to stockholders. We maintain availability under our credit facilities and our commercial paper program to meet our short-term liquidity requirements.
Refer to “Contractual Obligations” discussion below for additional information regarding our cash requirements.
Cash Provided by Operating Activities from Continuing Operations
During 2024, cash provided by operating activities was $38,771, compared to $38,314 in 2023, reflecting the timing of working capital associated with device payments, as well as the expansion of committed, cost-efficient receivable sales programs, and operational growth, partially offset by higher cash tax payments.
We actively manage the timing of our supplier payments for operating items to optimize the use of our cash. Among other things, we seek to make payments on 90-day or greater terms, while providing the suppliers with access to bank facilities that permit earlier payments at their cost (referred to as supplier financing program). In addition, for payments to suppliers of handset inventory, as part of our working capital initiatives, we have arrangements that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (referred to as direct supplier financing). The net impact of direct supplier financing, including principal and interest payments, was to improve cash from operating activities $661 in 2024 and decrease cash from operating activities $299 in 2023. All supplier financing payments are due within one year. (See Note 22)
Cash Used in Investing Activities from Continuing Operations
During 2024, cash used in investing activities totaled $17,490, consisting primarily of $20,263 (including interest during construction) for capital expenditures. During 2024, net FirstNet sustainability payments were $237. In 2024, we received a return of investment of $928 from DIRECTV representing distributions in excess of cumulative equity in earnings from DIRECTV (see Note 10) and sold Rabbi Trust and other investments totaling $2,575.
For capital improvements, we have negotiated favorable vendor payment terms of 120 days or more (referred to as vendor financing) with some of our vendors, which are excluded from capital expenditures and reported as financing activities. Vendor financing payments were $1,792 in 2024, compared to $5,742 in 2023. Capital expenditures in 2024 were $20,263, and when including $1,792 cash paid for vendor financing, capital investment was $22,055 ($1,540 lower than the prior year).
The vast majority of our capital expenditures are spent on our networks, including product development and related support systems. In 2024, we placed $700 of productive assets (primarily software) in service under vendor financing arrangements (compared to $2,651 in 2023).
The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements. In 2025, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be in the $22,000 range.
Cash Provided by or Used in Financing Activities from Continuing Operations
In 2024, cash used in financing activities totaled $24,708 and was comprised of debt repayments, payments of dividends and vendor financing payments.
A tabular summary of our debt activity during 2024 is as follows:
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| First
Quarter | Second
Quarter | Third
Quarter | Fourth
Quarter | Full Year 2024 |
| Net commercial paper borrowings | $ | 428 | | $ | 262 | | $ | (2,686) | | $ | — | | $ | (1,996) | |
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| Repayments: | | | | | |
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USD notes | $ | (2,300) | | $ | (1,615) | | $ | — | | $ | (2,575) | | $ | (6,490) | |
EUR notes | (2,181) | | (32) | | — | | — | | (2,213) | |
| CAD notes | — | | (442) | | — | | — | | (442) | |
CHF notes | — | | — | | — | | (467) | | (467) | |
| Other | (204) | | (136) | | (203) | | (142) | | (685) | |
| Repayments of long-term debt | $ | (4,685) | | $ | (2,225) | | $ | (203) | | $ | (3,184) | | $ | (10,297) | |
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| AT&T Inc. |
| Dollars in millions except per share amounts |
The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2% as of December 31, 2024 and as of December 31, 2023. We had $122,116 of total notes and debentures outstanding at December 31, 2024. This also included Euro, British pound sterling, Canadian dollar, Swiss franc and Australian dollar denominated debt that totaled approximately $30,685.
At December 31, 2024, we had $5,089 of long-term debt maturing within one year. We had no outstanding commercial paper borrowings or other short-term borrowings on December 31, 2024. The weighted average interest rate on our outstanding short-term borrowings was approximately 6.0% as of December 31, 2023.
During 2024, we paid $1,792 of cash under our vendor financing program, compared to $5,742 in 2023. Total vendor financing payables included in our December 31, 2024 consolidated balance sheet were $1,448, with $749 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).
In December 2024, our Board of Directors approved a $10,000 share repurchase authorization and terminated the March 2014 authorization, under which approximately 144 million shares were available for repurchase. At December 31, 2024, we had $10,000 remaining from our common stock repurchase authorization approved by the Board of Directors in December 2024.
We paid dividends on common and preferred shares of $8,208 in 2024, compared with $8,136 in 2023. Dividends on common stock declared by our Board of Directors totaled $1.11 per share in 2024 and in 2023. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities.
Our 2025 financing activities will focus on managing our debt level and paying dividends, subject to approval by our Board of Directors, and repurchasing common stock when deemed appropriate. We plan to fund our financing uses of cash through a combination of cash from operations, issuance of debt and asset sales. The timing and mix of any debt issuance and/or refinancing will be guided by credit market conditions and interest rate trends.
Credit Facilities
The following summary of our various credit and loan agreements does not purport to be complete and is qualified in its entirety by reference to each agreement filed as exhibits to our Annual Report on Form 10-K.
We use credit facilities as a tool in managing our liquidity status. We currently have a $12,000 revolving credit agreement that terminates on November 18, 2029 (Revolving Credit Agreement). No amount was outstanding under the Revolving Credit Agreement as of December 31, 2024.
We also utilize other external financing sources, which include various credit arrangements supported by government agencies to support network equipment purchases as well as a commercial paper program.
Our Revolving Credit Agreement contains covenants that are customary for an issuer with an investment grade senior debt credit rating as well as a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1. As of December 31, 2024, we were in compliance with the covenants for our credit facilities.
Collateral Arrangements
Most of our counterparty collateral arrangements require cash collateral posting by AT&T only when derivative market values exceed certain thresholds. Under these arrangements, which cover the majority of our $34,884 derivative portfolio, counterparties are still required to post collateral. During 2024, we received $477 of cash collateral, on a net basis. Cash postings under these arrangements vary with changes in credit ratings and netting agreements. (See Note 12)
Other
Our total capital consists of debt (long-term debt and debt maturing within one year), redeemable noncontrolling interest and stockholders’ equity. Our capital structure does not include debt issued by our equity method investments. At December 31, 2024, our debt ratio was 50.7%, compared to 53.5% at December 31, 2023 and 56.1% at December 31, 2022. The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances, repayments and reclassifications related to redemption of noncontrolling interests.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
A significant amount of our cash outflows for continuing operations is related to tax items, acquisition of spectrum through FCC auctions and benefits paid for current and former employees:
•Total taxes incurred, collected and remitted by AT&T during 2024 and 2023 were $16,968 and $16,877. These taxes include income, franchise, property, sales, excise, payroll, gross receipts and various other taxes and fees.
•Total domestic spectrum acquired primarily through FCC auctions, including cash, exchanged spectrum, auction deposits and spectrum relocation and clearing costs, was approximately $380 in 2024, $2,940 in 2023 and $10,200 in 2022.
•Total health and welfare benefits provided to certain active and retired employees and their dependents totaled approximately $2,550 in 2024 and $2,990 in 2023, with $736 paid from plan assets in 2024, compared to $624 in 2023. Of those benefits, approximately $2,290 related to medical and prescription drug benefits in 2024, compared to $2,730 in 2023. We paid $2,447 of pension benefits out of plan assets in 2024, compared to $4,863 in 2023.
Contractual Obligations
Our contractual obligations as of December 31, 2024, and the estimated timing of payment, are in the following table:
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| Payments Due By Period |
| Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than
5 Years |
Long-term debt obligations1 | $ | 135,952 | | $ | 5,399 | | $ | 14,962 | | $ | 13,823 | | $ | 101,768 | |
Interest payments on long-term debt2 | 90,504 | | 5,549 | | 10,300 | | 9,326 | | 65,329 | |
Purchase obligations3 | 27,997 | | 9,916 | | 10,982 | | 5,495 | | 1,604 | |
Operating lease obligations4 | 25,475 | | 4,789 | | 7,693 | | 5,015 | | 7,978 | |
FirstNet sustainability payments5 | 16,449 | | 420 | | 2,462 | | 3,132 | | 10,435 | |
Unrecognized tax benefits (UTB)6 | 9,912 | | 245 | | — | | — | | 9,667 | |
Other finance obligations7 | 8,802 | | 1,522 | | 2,039 | | 1,566 | | 3,675 | |
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| Total Contractual Obligations | $ | 315,091 | | $ | 27,840 | | $ | 48,438 | | $ | 38,357 | | $ | 200,456 | |
1Represents principal or payoff amounts of notes, debentures and credit agreement borrowings at maturity (see Note 11). Foreign debt includes the impact from hedges, when applicable.
2Includes credit agreement borrowings.
3We expect to fund the purchase obligations with cash provided by operations or through incremental borrowings. The minimum commitment for certain obligations is based on termination penalties that could be paid to exit the contracts. (See Note 21)
4Represents operating lease payments (see Note 8).
5Represents contractual commitment to make sustainability payments over the 25-year contract. These sustainability payments represent our commitment to fund FirstNet’s operating expenses and future reinvestment in the network, which we own and operate. FirstNet has a statutory requirement to reinvest funds that exceed the agency’s operating expenses, which we anticipate to be $15,000. (See Note 20)
6The noncurrent portion of the UTBs is included in the “More than 5 Years” column, as we cannot reasonably estimate the timing or amounts of additional cash payments, if any, at this time (see Note 13).
7Represents future minimum payments under the Crown Castle and other arrangements (see Note 18), payables subject to extended payment terms (see Note 22) and finance lease payments (see Note 8).
Certain items were excluded from this table because the year of payment is unknown and could not be reliably estimated, we believe the obligations are immaterial, or the settlement of the obligation will not require the use of cash. These items include: deferred income tax liability of $58,939 (see Note 13); net postemployment benefit obligations of $9,595 (including current portion); and other noncurrent liabilities of $8,292.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES
We also evaluate segment and business unit performance based on EBITDA, which is defined as operating income excluding depreciation and amortization, and/or EBITDA margin, which is defined as EBITDA divided by total revenue. EBITDA is used as part of our management reporting, and we believe EBITDA to be a relevant and useful measurement to our investors as it measures the cash generation potential of our business units. EBITDA does not give effect to depreciation and amortization expenses incurred in operating income nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies.
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| 2024 | | 2023 | | 2022 |
Communications Segment | | | | | |
Operating income | $ | 27,095 | | | $ | 27,801 | | | $ | 26,736 | |
Add: Depreciation and amortization expense | 19,433 | | | 17,363 | | | 16,681 | |
EBITDA | $ | 46,528 | | | $ | 45,164 | | | $ | 43,417 | |
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Operating income margin | 23.0 | % | | 23.6 | % | | 22.8 | % |
EBITDA margin | 39.5 | % | | 38.3 | % | | 37.1 | % |
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Mobility | | | | | |
| Operating income | $ | 26,314 | | | $ | 25,861 | | | $ | 23,812 | |
| Add: Depreciation and amortization expense | 10,217 | | | 8,517 | | | 8,198 | |
| EBITDA | $ | 36,531 | | | $ | 34,378 | | | $ | 32,010 | |
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| Operating income margin | 30.9 | % | | 30.8 | % | | 29.1 | % |
| EBITDA margin | 42.8 | % | | 40.9 | % | | 39.1 | % |
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Business Wireline | | | | | |
| Operating income | $ | (88) | | | $ | 1,289 | | | $ | 2,290 | |
| Add: Depreciation and amortization expense | 5,555 | | | 5,377 | | | 5,314 | |
| EBITDA | $ | 5,467 | | | $ | 6,666 | | | $ | 7,604 | |
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| Operating income margin | (0.5) | % | | 6.2 | % | | 10.2 | % |
| EBITDA margin | 29.1 | % | | 31.9 | % | | 33.7 | % |
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Consumer Wireline | | | | | |
| Operating income | $ | 869 | | | $ | 651 | | | $ | 634 | |
| Add: Depreciation and amortization expense | 3,661 | | | 3,469 | | | 3,169 | |
| EBITDA | $ | 4,530 | | | $ | 4,120 | | | $ | 3,803 | |
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| Operating income margin | 6.4 | % | | 4.9 | % | | 5.0 | % |
| EBITDA margin | 33.4 | % | | 31.3 | % | | 29.8 | % |
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Latin America Segment | | | | | |
| Operating income | $ | 40 | | | $ | (141) | | | $ | (326) | |
| Add: Depreciation and amortization expense | 657 | | | 724 | | | 658 | |
| EBITDA | $ | 697 | | | $ | 583 | | | $ | 332 | |
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| Operating income margin | 0.9 | % | | (3.6) | % | | (10.4) | % |
| EBITDA margin | 16.5 | % | | 14.8 | % | | 10.6 | % |
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| AT&T Inc. |
| Dollars in millions except per share amounts |
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks primarily from changes in interest rates and foreign currency exchange rates. These risks, along with other business risks, impact our cost of capital. It is our policy to manage our debt structure and foreign exchange exposure in order to manage capital costs, control financial risks and maintain financial flexibility over the long term. In managing market risks, we employ derivatives according to documented policies and procedures, including interest rate swaps, interest rate locks, foreign currency exchange contracts and combined interest rate foreign currency contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We do not foresee significant changes in the strategies we use to manage market risk in the near future.
One of the most significant assumptions used in estimating our postretirement benefit obligations is the assumed weighted-average discount rate, which is the hypothetical rate at which the projected benefit obligations could be effectively settled or paid out to participants. We determined our discount rate based on a range of factors, including a yield curve composed of the rates of return on several hundred high-quality, fixed income corporate bonds available at the measurement date and corresponding to the related expected durations of future cash outflows for the obligations. In recent years, the discount rates have been increasingly volatile, and on average have been lower than in historical periods. Lower discount rates used to measure our pension and postretirement plans result in higher obligations. Future increases in these rates could result in lower obligations, improved funded status and actuarial gains.
Interest Rate Risk
The majority of our financial instruments are medium- and long-term fixed-rate notes and debentures. Changes in interest rates can lead to significant fluctuations in the fair value of these instruments. The principal amounts by expected maturity, average interest rate and fair value of our liabilities that are exposed to interest rate risk are described in Notes 11 and 12. In managing interest expense, we control our mix of fixed- and floating-rate debt through term loans, floating- rate notes, and interest rate swaps. We have established interest rate risk limits that we closely monitor by measuring interest rate sensitivities in our debt and interest rate derivatives portfolios.
Our foreign-denominated long-term debt has been swapped from fixed-rate or floating-rate foreign currencies to fixed-rate U.S. dollars at issuance through cross-currency swaps, removing interest rate risk and foreign currency exchange risk associated with the underlying interest and principal payments. Likewise, periodically we enter into interest rate locks to partially hedge the risk of increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We expect gains or losses on our cross-currency swaps and interest rate locks to offset the losses and gains in the financial instruments they hedge.
We had no interest rate swaps and no interest rate locks at December 31, 2024.
Foreign Exchange Risk
We principally use foreign exchange contracts to hedge costs and debt denominated in foreign currencies. We are also exposed to foreign currency exchange risk through our foreign affiliates and equity investments in foreign companies.
Through cross-currency swaps, our foreign-denominated debt has been swapped from fixed-rate or floating-rate foreign currencies to fixed-rate U.S. dollars at issuance, removing interest rate and foreign currency exchange risk associated with the underlying interest and principal payments. We expect gains or losses in our cross-currency swaps to offset the gains and losses in the financial instruments they hedge. We had cross-currency swaps with a notional value of $34,884 and a fair value of $(4,076) outstanding at December 31, 2024.
For the purpose of assessing specific risks, we use a sensitivity analysis to determine the effects that market risk exposures may have on the fair value of our financial instruments and results of operations. We had no foreign exchange forward contracts at December 31, 2024.
REPORT OF MANAGEMENT
The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles. The integrity and objectivity of the data in these financial statements, including estimates and judgments relating to matters not concluded by year end, are the responsibility of management, as is all other information included in the Annual Report, unless otherwise indicated.
The financial statements of AT&T Inc. (AT&T) have been audited by Ernst & Young LLP, Independent Registered Public Accounting Firm. Management has made available to Ernst & Young LLP all of AT&T’s financial records and related data, as well as the minutes of stockholders’ and directors’ meetings. Furthermore, management believes that all representations made to Ernst & Young LLP during its audit were valid and appropriate.
Management maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by AT&T is recorded, processed, summarized, accumulated and communicated to its management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms.
Management also seeks to ensure the objectivity and integrity of its financial data by the careful selection of its managers, by organizational arrangements that provide an appropriate division of responsibility and by communication programs aimed at ensuring that its policies, standards and managerial authorities are understood throughout the organization.
The Audit Committee of the Board of Directors meets periodically with management, the internal auditors and the independent auditors to review the manner in which they are performing their respective responsibilities and to discuss auditing, internal accounting controls and financial reporting matters. Both the internal auditors and the independent auditors periodically meet alone with the Audit Committee and have access to the Audit Committee at any time.
Assessment of Internal Control
The management of AT&T is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. AT&T’s internal control system was designed to provide reasonable assurance to the company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.
AT&T management assessed the effectiveness of the company’s internal control over financial reporting as of December 31, 2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013 framework). Based on its assessment, AT&T management believes that, as of December 31, 2024, the company’s internal control over financial reporting is effective based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report, has issued an attestation report on the company’s internal control over financial reporting.
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| /s/John T. Stankey | /s/Pascal Desroches . |
| John T. Stankey | Pascal Desroches |
Chief Executive Officer
and President | Senior Executive Vice President
and Chief Financial Officer |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of AT&T Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AT&T Inc. (the Company) as of December 31, 2024 and 2023, the related consolidated statements of income, comprehensive income, cash flows and changes in stockholders’ equity for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 12, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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| Discount rates used in determining pension and postretirement benefit obligations |
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Description of the Matter | At December 31, 2024, the Company’s defined benefit pension obligation was $30,944 million and exceeded the fair value of pension plan assets of $27,919 million, resulting in an unfunded benefit obligation of $3,025 million. Additionally, at December 31, 2024, the Company’s postretirement benefit obligation was $6,339 million and exceeded the fair value of postretirement plan assets of $1,144 million, resulting in an unfunded benefit obligation of $5,195 million. As explained in Note 14 to the consolidated financial statements, the Company updates the assumptions used to measure the defined benefit pension and postretirement benefit obligations, including discount rates, at December 31 or upon a remeasurement event. The Company determines the discount rates used to measure the obligations based on the development of a yield curve using high-quality corporate bonds selected to yield cash flows that correspond to the expected timing and amount of the expected future benefit payments. |
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| Auditing the defined benefit pension and postretirement benefit obligations was complex due to the judgmental nature of the actuarial assumptions made by management, primarily the discount rates, used in the Company’s measurement process. The discount rates have a significant effect on the measurement of the defined benefit pension and postretirement benefit obligations, and auditing the discount rates was complex because it required an evaluation of the credit quality of the corporate bonds used to develop the discount rates and the correlation of those bonds’ cash inflows to the timing and amount of future expected benefit payments. |
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How We
Addressed the Matter in Our
Audit
| We obtained an understanding, evaluated the design and tested the operating effectiveness of certain controls over management’s review of the determination of the discount rates used in the defined benefit pension and postretirement benefit obligations calculations. |
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To test the determination of the discount rates used in the calculation of the defined benefit pension and postretirement benefit obligations, we performed audit procedures that focused on evaluating, with the assistance of our actuarial specialists, the determination of the discount rates, among other procedures. For example, we evaluated the selected yield curve used to determine the discount rates applied in measuring the defined benefit pension and postretirement benefit obligations. As part of this assessment, we considered the credit quality of the corporate bonds that comprised the yield curve and compared the timing and amount of cash flows at maturity with the expected amounts and duration of the related benefit payments. |
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| Evaluation of goodwill for impairment |
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Description of the Matter
| At December 31, 2024, the Company’s goodwill balance was $63,432 million. As discussed in Note 1 to the consolidated financial statements, reporting unit goodwill is tested at least annually for impairment. Estimating fair value in connection with the impairment evaluation involves the utilization of discounted cash flow and market multiple approaches. |
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Auditing management’s annual goodwill impairment test for the Consumer Wireline reporting unit was complex because the estimation of fair value involves subjective management assumptions, such as the projected terminal growth rate, projected long-term EBITDA margin, and weighted average cost of capital, and complex valuation methodologies, such as the discounted cash flow and market multiple approaches. Assumptions used in these valuation models are forward-looking, and changes in these assumptions can have a material effect on the determination of fair value. |
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How We Addressed the
Matter in Our
Audit
| We obtained an understanding, evaluated the design and tested the operating effectiveness of certain controls over the Company’s impairment evaluation processes. Our procedures included testing controls over management’s review of the valuation models and its determination of the significant assumptions described above. |
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Our audit procedures to test management’s impairment evaluations included, among others, assessing the valuation methodologies and significant assumptions discussed above and the underlying data used to develop such assumptions. For example, we compared the significant assumptions to current industry, market and economic trends, and other guideline companies in the same industry. Where appropriate, we evaluated whether changes to the Company’s business and other factors would affect the significant assumptions. We also assessed the historical accuracy of management’s estimates and performed independent sensitivity analyses. We involved our valuation specialists to assist us in evaluating the methodologies and auditing the assumptions used to calculate the estimated fair value of the Consumer Wireline reporting unit. |
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/s/
We have served as the Company’s auditor since 1999.
February 12, 2025
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of AT&T Inc.
Opinion on Internal Control Over Financial Reporting
We have audited AT&T Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, AT&T Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated February 12, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Report of Management. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/
February 12, 2025
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| AT&T Inc. |
| Dollars in millions except per share amounts |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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| Consolidated Statements of Income | | | | | |
| 2024 | | 2023 | | 2022 |
| Operating Revenues | | | | | |
| Service | $ | | | | $ | | | | $ | | |
| Equipment | | | | | | | | |
| Total operating revenues | | | | | | | | |
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| Operating Expenses | | | | | |
| Cost of revenues | | | | | |
| Equipment | | | | | | | | |
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Other cost of revenues (exclusive of depreciation and amortization shown separately below) | | | | | | | | |
| Selling, general and administrative | | | | | | | | |
| Asset impairments and abandonments and restructuring | | | | | | | | |
| Depreciation and amortization | | | | | | | | |
| Total operating expenses | | | | | | | | |
| Operating Income (Loss) | | | | | | | () | |
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| Other Income (Expense) | | | | | |
| Interest expense | () | | | () | | | () | |
| Equity in net income of affiliates | | | | | | | | |
| Other income (expense) – net | | | | | | | | |
| Total other income (expense) | () | | | () | | | | |
| Income (Loss) from Continuing Operations Before Income Taxes | | | | | | | () | |
| Income tax expense on continuing operations | | | | | | | | |
| Income (Loss) from Continuing Operations | | | | | | | () | |
| Loss from discontinued operations, net of tax | | | | | | | () | |
| Net Income (Loss) | | | | | | | () | |
| Less: Net Income Attributable to Noncontrolling Interest | () | | | () | | | () | |
| Net Income (Loss) Attributable to AT&T | $ | | | | $ | | | | $ | () | |
| Less: Preferred Stock Dividends | () | | | () | | | () | |
| Net Income (Loss) Attributable to Common Stock | $ | | | | $ | | | | $ | () | |
| Basic Earnings (Loss) Per Share from continuing operations | $ | | | | $ | | | | $ | () | |
| Basic Loss Per Share from discontinued operations | $ | | | | $ | | | | $ | () | |
| Basic Earnings (Loss) Per Share Attributable to Common Stock | $ | | | | $ | | | | $ | () | |
| Diluted Earnings (Loss) Per Share from continuing operations | $ | | | | $ | | | | $ | () | |
| Diluted Loss Per Share from discontinued operations | $ | | | | $ | | | | $ | () | |
| Diluted Earnings (Loss) Per Share Attributable to Common Stock | $ | | | | $ | | | | $ | () | |
The accompanying notes are an integral part of the consolidated financial statements.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
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Consolidated Statements of Comprehensive Income | | | | | |
| 2024 | | 2023 | | 2022 |
| | | | | |
| Net income (loss) | $ | | | | $ | | | | $ | () | |
| Other comprehensive income (loss), net of tax: | | | | | |
| Foreign Currency: | | | | | |
Translation adjustment, net of taxes of $(), $ and $ | () | | | | | | | |
Reclassification adjustment included in net income (loss), net of taxes of $(), $ and $ | | | | | | | | |
Distributions of WarnerMedia, net of taxes of $, $ and $() | | | | | | | () | |
| Securities: | | | | | |
Net unrealized gains (losses), net of taxes of $(), $ and $() | () | | | | | | () | |
Reclassification adjustment included in net income (loss), net of taxes of $, $ and $ | | | | | | | | |
| Derivative Instruments: | | | | | |
Net unrealized gains (losses), net of taxes of $, $ and $() | | | | | | | () | |
Reclassification adjustment included in net income (loss), net of taxes of $, $ and $ | | | | | | | | |
Distributions of WarnerMedia, net of taxes of $, $ and $() | | | | | | | () | |
| Defined benefit postretirement plans: | | | | | |
Net prior service (cost) credit arising during period, net of taxes of $, $ and $ | | | | | | | | |
Amortization of net prior service credit included in net income (loss), net of taxes of $(), $() and $() | () | | | () | | | () | |
Distributions of WarnerMedia, net of taxes of $, $ and $ | | | | | | | | |
| Other comprehensive income (loss) | () | | | () | | | () | |
| Total comprehensive income (loss) | | | | | | | () | |
| Less: Total comprehensive income attributable to noncontrolling interest | () | | | () | | | () | |
| Total Comprehensive Income (Loss) Attributable to AT&T | $ | | | | $ | | | | $ | () | |
The accompanying notes are an integral part of the consolidated financial statements.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
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Consolidated Balance Sheets |
| December 31, |
| 2024 | | 2023 |
| Assets | | | |
| Current Assets | | | |
| Cash and cash equivalents | $ | | | | $ | | |
Accounts receivable – net of related allowance for credit loss of $ and $ | | | | | |
| Inventories | | | | | |
| Prepaid and other current assets | | | | | |
| Total current assets | | | | | |
| Property, Plant and Equipment – Net | | | | | |
| Goodwill – Net | | | | | |
| Licenses – Net | | | | | |
| Other Intangible Assets – Net | | | | | |
| Investments in and Advances to Equity Affiliates | | | | | |
| Operating Lease Right-Of-Use Assets | | | | | |
| Other Assets | | | | | |
| Total Assets | $ | | | | $ | | |
| Liabilities and Stockholders’ Equity | | | |
| Current Liabilities | | | |
| Debt maturing within one year | $ | | | | $ | | |
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| Accounts payable and accrued liabilities | | | | | |
| Advanced billings and customer deposits | | | | | |
| Dividends payable | | | | | |
| Total current liabilities | | | | | |
| Long-Term Debt | | | | | |
| Deferred Credits and Other Noncurrent Liabilities | | | |
| Deferred income taxes | | | | | |
| Postemployment benefit obligation | | | | | |
| Operating lease liabilities | | | | | |
| Other noncurrent liabilities | | | | | |
| Total deferred credits and other noncurrent liabilities | | | | | |
| Redeemable Noncontrolling Interest | | | | | |
| Stockholders’ Equity | | | |
Preferred stock ($ par value, authorized at December 31, 2024 and December 31, 2023): | | | |
Series A ( issued and outstanding at December 31, 2024 and December 31, 2023) | | | | | |
Series B ( issued and outstanding at December 31, 2024 and December 31, 2023) | | | | | |
Series C ( issued and outstanding at December 31, 2024 and December 31, 2023) | | | | | |
Common stock ($ par value, authorized at December 31, 2024 and December 31, 2023: issued at December 31, 2024 and December 31, 2023) | | | | | |
| Additional paid-in capital | | | | | |
| Retained earnings (deficit) | | | | () | |
Treasury stock ( at December 31, 2024 and at December 31, 2023, at cost) | () | | | () | |
| Accumulated other comprehensive income | | | | | |
| Noncontrolling interest | | | | | |
| Total stockholders’ equity | | | | | |
| Total Liabilities and Stockholders’ Equity | $ | | | | $ | | |
The accompanying notes are an integral part of the consolidated financial statements.
| | | | | | | | |
| AT&T Inc. |
| Dollars in millions except per share amounts |
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| Consolidated Statements of Cash Flows | | | | | |
| 2024 | | 2023 | | 2022 |
| Operating Activities | | | | | |
| Income (loss) from continuing operations | $ | | | | $ | | | | $ | () | |
| Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations: | | | | | |
| Depreciation and amortization | | | | | | | | |
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| Provision for uncollectible accounts | | | | | | | | |
| Deferred income tax expense | | | | | | | | |
| Net (gain) loss on investments, net of impairments | | | | | | | | |
| Pension and postretirement benefit expense (credit) | () | | | () | | | () | |
Actuarial and settlement (gain) loss on pension and postretirement benefits – net | | | | | | | () | |
| Asset impairments and abandonments and restructuring | | | | | | | | |
| Changes in operating assets and liabilities: | | | | | |
| Receivables | | | | | | | | |
| Inventories, prepaid and other current assets | () | | | () | | | () | |
| Accounts payable and other accrued liabilities | () | | | () | | | () | |
| Equipment installment receivables and related sales | () | | | () | | | | |
| Deferred customer contract acquisition and fulfillment costs | | | | | | | () | |
| Postretirement claims and contributions | () | | | () | | | () | |
| Other – net | | | | | | | () | |
| Total adjustments | | | | | | | | |
| Net Cash Provided by Operating Activities from Continuing Operations | | | | | | | | |
| Investing Activities | | | | | |
| Capital expenditures | () | | | () | | | () | |
| Acquisitions, net of cash acquired | () | | | () | | | () | |
| Dispositions | | | | | | | | |
| Distributions from DIRECTV in excess of cumulative equity in earnings | | | | | | | | |
(Purchases), sales and settlements of securities and investments – net | | | | () | | | | |
| Other – net | () | | | () | | | () | |
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| Net Cash Used in Investing Activities from Continuing Operations | () | | | () | | | () | |
| Financing Activities | | | | | |
| Net change in short-term borrowings with original maturities of three months or less | | | | () | | | () | |
| Issuance of other short-term borrowings | | | | | | | | |
| Repayment of other short-term borrowings | () | | | () | | | () | |
| Issuance of long-term debt | | | | | | | | |
| Repayment of long-term debt | () | | | () | | | () | |
Note payable to DIRECTV, net of payments | | | | () | | | () | |
| Payment of vendor financing | () | | | () | | | () | |
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| Purchase of treasury stock | () | | | () | | | () | |
| Issuance of treasury stock | | | | | | | | |
Issuance of preferred interests in subsidiary | | | | | | | | |
Redemption of preferred interests in subsidiary | | | | () | | | () | |
| Dividends paid | () | | | () | | | () | |
| Other – net | () | | | () | | | () | |
Net Cash Used in Financing Activities from Continuing Operations | () | | | () | | | () | |
| Net increase (decrease) in cash and cash equivalents and restricted cash from continuing operations | () | | | | | | () | |
| Cash flows from Discontinued Operations: | | | | | |
Cash used in operating activities | | | | | | | () | |
Cash provided by investing activities | | | | | | | | |
Cash provided by financing activities | | | | | | | | |
Net increase in cash and cash equivalents and restricted cash from discontinued operations | | | | | | | | |
Net increase (decrease) in cash and cash equivalents and restricted cash | () | | | | | | () | |
| Cash and cash equivalents and restricted cash beginning of year | | | | | | | | |
| Cash and Cash Equivalents and Restricted Cash End of Year | $ | | | | $ | | | | $ | | |
The accompanying notes are an integral part of the consolidated financial statements.
| | | | | | | | |
| AT&T Inc. |
| Dollars and shares in millions except per share amounts |
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| Consolidated Statements of Changes in Stockholders’ Equity |
| 2024 | | 2023 | | 2022 |
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount |
| Preferred Stock – Series A | | | | | | | | | | | |
| Balance at beginning of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
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| Balance at end of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
| Preferred Stock – Series B | | | | | | | | | | | |
| Balance at beginning of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
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| Balance at end of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
| Preferred Stock – Series C | | | | | | | | | | | |
| Balance at beginning of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
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| Balance at end of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
| Common Stock | | | | | | | | | | | |
| Balance at beginning of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
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| Balance at end of year | | | | $ | | | | | | | $ | | | | | | | $ | | |
| Additional Paid-In Capital | | | | | | | | | | | |
| Balance at beginning of year | | | $ | | | | | | $ | | | | | | $ | | |
| Distribution of WarnerMedia | | | | | | | | | | | | | () | |
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Preferred stock dividends | | | () | | | | | () | | | | | | |
Common stock dividends ($, $ and $ per share in 2024, 2023 and 2022) | | | () | | | | | () | | | | | | |
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| Issuance of treasury stock | | | () | | | | | () | | | | | () | |
| Share-based payments | | | () | | | | | () | | | | | () | |
Redemption or reclassification of interests held by noncontrolling owners | | | () | | | | | () | | | | | | |
| Balance at end of year | | | $ | | | | | | $ | | | | | | $ | | |
Retained Earnings (Deficit) | | | | | | | | | | | |
| Balance at beginning of year | | | $ | () | | | | | $ | () | | | | | $ | | |
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| Net income (loss) attributable to AT&T | | | | | | | | | | | | | () | |
| Distribution of WarnerMedia | | | | | | | | | | | | | () | |
| Preferred stock dividends | | | () | | | | | | | | | | () | |
Common stock dividends ($, $ and $ per share in 2024, 2023 and 2022) | | | () | | | | | | | | | | () | |
| Balance at end of year | | | $ | | | | | | $ | () | | | | | $ | () | |
The accompanying notes are an integral part of the consolidated financial statements.
| | | | | | | | |
| AT&T Inc. |
| Dollars and shares in millions except per share amounts |
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Consolidated Statements of Changes in Stockholders’ Equity – continued |
| 2024 | | 2023 | | 2022 |
| Shares | | Amount | | Shares | | Amount | | Shares | | Amount |
| Treasury Stock | | | | | | | | | | | |
| Balance at beginning of year | () | | | $ | () | | | () | | | $ | () | | | () | | | $ | () | |
Repurchase and acquisition of common stock | () | | | () | | | () | | | () | | | () | | | () | |
| Issuance of treasury stock | | | | | | | | | | | | | | | | | |
| Balance at end of year | () | | | $ | () | | | () | | | $ | () | | | () | | | $ | () | |
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax | | | | | | | | | | |
| Balance at beginning of year | | | $ | | | | | | $ | | | | | | $ | | |
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Other comprehensive income (loss) attributable to AT&T | | | () | | | | | () | | | | | () | |
| Balance at end of year | | | $ | | | | | | $ | | | | | | $ | | |
Noncontrolling Interest1 | | | | | | | | | | | |
| Balance at beginning of year | | | $ | | | | | | $ | | | | | | $ | | |
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Net income attributable to noncontrolling interest | | | | | | | | | | | | | | |
Issuance and acquisition (disposition) of noncontrolling owners | | | () | | | | | | | | | | () | |
| Redemption of noncontrolling interest | | | () | | | | | () | | | | | () | |
Reclassification of noncontrolling interest | | | | | | | | | | | | | () | |
| Distributions | | | () | | | | | () | | | | | () | |
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| Balance at end of year | | | $ | | | | | | $ | | | | | | $ | | |
Total Stockholders’ Equity at beginning of year | | | $ | | | | | | $ | | | | | | $ | | |
Total Stockholders’ Equity at end of year | | | $ | | | | | | $ | | | | | | $ | | |
1 Excludes redeemable noncontrolling interest.
The accompanying notes are an integral part of the consolidated financial statements.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
Notes to Consolidated Financial Statements
Adopted and New Accounting Standards
, which requires that a public entity disclose, on an interim and annual basis, significant segment expense categories and amounts that are regularly provided to its chief operating decision maker (CODM) and included in each reported measure of segment profit or loss. An entity must also disclose, by reportable segment, the amount and composition of other expenses. The standard requires an entity disclose the title and position of its CODM and explain how the CODM uses these reported measures in assessing segment performance and determining how to allocate resources.
. ASU 2020-06 requires that instruments which may be settled in cash or stock are presumed settled in stock in calculating diluted earnings per share. Prior to the April 2023 repurchase, settlement of our Series A Cumulative Perpetual Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) could have resulted in additional dilutive impact, the magnitude of which was influenced by the fair value of the Mobility preferred interests and the average AT&T common stock price during the reporting period, which varied from period-to-period (see Note 16).
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| AT&T Inc. |
| Dollars in millions except per share amounts |
Accounting Policies
in cash and $ in money market funds and other cash equivalents. Of our total cash and cash equivalents, $ resided in foreign jurisdictions, some of which is subject to restrictions on repatriation.
.
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| AT&T Inc. |
| Dollars in millions except per share amounts |
), renewals of domestic wireless licenses have occurred routinely and at nominal cost. We have determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our FCC wireless licenses. Cash paid, including spectrum deposits (net of refunds), capitalized interest, and any payments for incentive and relocation costs are included in “Acquisitions, net of cash acquired” in our consolidated statements of cash flows. Interest is capitalized until the spectrum is ready for its intended use.
We amortize our wireless licenses in Mexico over their average remaining economic life of years.
We acquired the rights to the AT&T and other trade names in previous acquisitions, classifying certain of those trade names as indefinite-lived. We have the effective ability to retain these exclusive rights permanently at a nominal cost.
Goodwill, FCC wireless licenses and other indefinite-lived intangible assets are not amortized but are tested at least annually for impairment (see Note 9). The testing is performed on the value as of October 1 each year and compares the book values of the assets to their fair values. Goodwill is tested by comparing the carrying amount of each reporting unit, deemed to be our principal operating segments or one level below them, to the fair value using both discounted cash flow as well as market multiple approaches. FCC wireless licenses are tested on an aggregate basis, consistent with our use of the licenses on a national scope, using a discounted cash flow approach. Trade names are tested by comparing their book values to their fair values calculated using a discounted cash flow approach on a presumed royalty rate derived from the revenues related to each brand name.
Intangible assets that have finite useful lives are amortized over their estimated economic lives (see Note 9). Customer lists and relationships are amortized using primarily the sum-of-the-months-digits method of amortization over the period in which those relationships are expected to contribute to our future cash flows. Finite-lived trademarks and trade names are amortized using the straight-line method over the estimated useful life of the assets. The remaining finite-lived intangible assets are generally amortized using the straight-line method. These assets, along with other long-lived assets, are reviewed for recoverability whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable.
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