What changed in this filing

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Item 1. Business

2024-02-23 compared with 2023-02-13 · 58 added, 72 removed, 190 unchanged (41% of the section changed)

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We make available, free of charge, on our website our annual report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC.

We also make available on that website, and in print, if any stockholder or other person so requests, our “Code of Ethics” applicable to all employees and Directors, our “Corporate Governance Guidelines,” and the charters for all committees of our Board of Directors, including Audit, Human Resources and Corporate Governance and Nominating.

Any changes to our Code of Ethics or waiver of our Code of Ethics for senior financial officers, executive officers or Directors will be posted on that website.

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On January 1, 1984, we were spun-off from ATTC pursuant to an anti-trust consent decree, becoming an independent publicly traded telecommunications services provider.

Following our formation, we expanded our communications footprint and operations and invested in entertainment businesses, most significantly:

Following our formation, we expanded our communications footprint and operations, most significantly:

• Our subsidiaries merged with incumbent local exchange carriers (ILEC) Pacific Telesis Group in 1997 and Ameritech Corporation in 1999.

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• In 2015, we acquired wireless properties in Mexico and acquired DIRECTV, a leading provider of digital television entertainment services in both the United States (included in our Video business) and Latin America (referred to as Vrio).

• From 2018 through April 2022, we acquired and held various investments in entertainment businesses, namely Time Warner Inc., which comprised a substantial portion of our WarnerMedia segment.

• From 2018 through April 2022, we acquired and held various investments in entertainment businesses, namely Time Warner Inc., which comprised a substantial portion of our previous WarnerMedia segment.

• In July 2021, we closed our transaction with TPG Capital (TPG) to form a new company named DIRECTV Entertainment Holdings, LLC (DIRECTV).

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and businesses globally.

Our business strategies reflect bundled product offerings that cut across product lines and utilize shared assets.

Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets.

This segment contains the following business units:

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• Business Wireline provides advanced ethernet-based fiber services, IP Voice and managed professional services, as well as traditional voice and data services and related equipment to business customers.

• Consumer Wireline provides broadband services, including fiber connections that provide our multi-gig services to residential customers in select locations.

• Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services to residential customers in select locations and our fixed wireless access product that provides home internet services delivered over our 5G wireless network where available.

Consumer Wireline also provides legacy telephony voice communication services.

The Latin America segment provides wireless services and equipment in Mexico.

Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes.

Corporate includes:

• DTV-related retained costs , which are costs previously allocated to the Video business that were retained after the transaction, net of reimbursements from DIRECTV under transition service agreements.

• Parent administration support , which includes costs borne by AT&T where the business units do not influence decision making.

• Securitization fees associated with our sales of receivables (see Note 17).

• Value portfolio , which are businesses no longer integral to our operations or which we no longer actively market.

Other items consist of :

• Video, which includes our former U.S.

video operations that were contributed to DIRECTV on July 31, 2021, and our share of DIRECTV’s earnings as equity in net income of affiliates (see Note 19).

• Held-for-sale and other reclassifications, which includes our former Crunchyroll, Government Solutions and wireless and wireline operations in Puerto Rico and the U.S.

Virgin Islands.

• Reclassification of prior service credits, which includes the reclassification of prior service credit amortization, where we present the impact of benefit plan amendments in our business unit results.

Prior service credit amortization is presented in “Other income (expense) - net” in the consolidated statements of income and therefore has no impact on consolidated operating income or EBITDA (EBITDA is defined as operating income excluding depreciation and amortization).

• Certain significant items , which includes items associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets, employee separation charges associated with voluntary and/or strategic offers, asset impairments and abandonments and restructuring, and other items for which the segments are not being evaluated.

• Eliminations and consolidations , which removes transactions involving dealings between Mobility and our Video business, prior to the July 31, 2021 separation of Video.

Corporate support costs, including administrative support costs borne by AT&T where business units do not influence decision making, divested businesses and results from business no longer integral to our operations are reported as Corporate and Other , which reconciles our segment results to consolidated operating income and income before income taxes.

Areas of Focus

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Fiber underpins the connectivity we deliver, both wired and wireless.

Building on that fiber foundation is our solid spectrum portfolio, strengthened through recent years’ Federal Communications Commission (FCC) auction acquisitions and 5G deployment.

We believe our hybrid fixed wireline and mobile approach will differentiate our services and provide us with additional growth opportunities in the future as bandwidth demands continue to grow.

Building on that fiber foundation is our solid spectrum portfolio, strengthened through Federal Communications Commission (FCC) auction acquisitions and 5G deployment.

We believe our fixed wireline and mobile approach will differentiate our services and provide us with additional convergence growth opportunities in the future as bandwidth demands continue to grow.

We will continue to demonstrate our commitment to ensure management attention is sharply focused on growth areas and operational efficiencies.

Communications

Our integrated telecommunications network utilizes different technological platforms to provide instant connectivity at the higher speeds made possible by our fiber network expansion and wireless network enhancements.

Streaming, augmented reality, “smart” technologies and user generated content are expected to continue to drive greater demand for broadband and capitalize on our fiber and 5G deployments.

During 2023, we will continue to develop and provide high-value, integrated mobile and broadband solutions.

During 2024, we plan to continue to develop and provide high-value, integrated mobile and broadband solutions.

In December 2023, we announced plans to collaborate with Ericsson to lead the U.S.

in commercial scale open radio access network (Open RAN) deployment 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.

We plan for about 70% of our wireless network traffic to flow across open-capable platforms by late 2026, and to have fully-integrated Open RAN sites operating starting in 2024.

Beginning in 2025, we expect to scale this Open RAN environment throughout our wireless network in coordination with multiple suppliers.

We believe the move to an open, agile, programmable wireless network positions us to quickly capitalize on the next generation of wireless technology and spectrum when it becomes available.

These innovative technologies are expected to enable lower-power, sustainable networks with higher performance to deliver enhanced user experiences.

Wireless Service We continue to experience rapid growth in data usage as consumers are demanding seamless access across their wireless and wired devices, and businesses and municipalities are connecting more and more equipment and facilities to the internet.

The deployment of 5G, which allows for faster connectivity, lower latency and greater bandwidth, requires modifications of existing cell sites to add equipment supporting new frequencies, like the C-Band and the 3.45 GHz band.

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5G service went nationwide in July 2020, and with that availability, the introduction of 5G handsets and devices has contributed to a renewed interest in equipment upgrades.

The increased speeds and network operating efficiency expected with 5G technology should enable massive deployment of devices connected to the internet as well as faster delivery of data services.

In January 2022, we began to deploy our C-band spectrum, subject to certain voluntary limitations.

In North America, our network covers over 441 million people with 4G LTE and over 285 million with 5G technology.

In the United States, our network covers all major metropolitan areas and more than 337 million people with our LTE technology and more than 285 million people with our 5G technology.

As the wireless industry has matured, future wireless growth will increasingly depend on our ability to offer innovative data services on a wireless network that has sufficient spectrum and capacity to support these innovations.

As the wireless industry has matured, with nearly full penetration of smartphones in the U.S.

population, future wireless growth will depend on our ability to offer innovative services, plans and devices that bundle product offerings and take advantage of our 5G wireless network.

To support higher mobile data usage, our priority is to best utilize a wireless network that has sufficient spectrum and capacity to support these innovations on as broad a geogra phic basis as possible.

We expect to continue to invest significant capital in expanding our network capacity, as well as obtaining additional spectrum that meets our long-term needs.

We participate in FCC spectrum auctions and have been redeploying spectrum previously used for more basic services to support more advanced mobile internet services.

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In North America, our network covers over 438 million people with 4G LTE and over 302 million with 5G technology.

In the United States, our network covers all major metropolitan areas and more than 334 million people with our LTE technology and more than 302 million people with our 5G technology.

Broadband Technology In 2020, we identified fiber as a core priority for our business and enhanced our focus to expand our fiber footprint and grow customers.

At December 31, 2022, we had more than 7 million fiber consumer wireline broadband customers, adding more than 1.2 million during the year.

At December 31, 2023, we had more than 8.3 million fiber consumer wireline broadband customers, adding 1.1 million during the year.

The expansion builds on our recent investments to convert to a software-based network, managing the migration of wireline customers to services using our fiber infrastructure to provide broadband technology.

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Our virtualized network supports next-generation applications like 5G and broadband-based services quickly and efficiently.

Latin America

We believe that the wireless model in the U.S., with accelerating demand for mobile internet service and the associated economic benefits, will be repeated around the world as companies invest in high-speed mobile networks.

We acquired Mexican wireless operations in 2015 to establish a seamless, cross-border North American wireless network which now covers an area with over 441 million people and businesses in the United States and Mexico.

With the increased capacity from our LTE network, we also expect additional wholesale revenue in the coming years.

Our 4G LTE network in Mexico now covers approximately 104 million people and businesses.

BUSINESS OPERATIONS

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and businesses globally.

Our Communications services and products are marketed under the AT&T, Cricket, AT&T PREPAID SM and AT&T Fiber brand names.

Our Communications services and products are marketed under the AT&T, AT&T Business, Cricket, AT&T PREPAID SM and AT&T Fiber brand names.

The Communications segment provided approximately 97% of 2023 segment operating revenues and accounted for all of our 2023 total segment income.

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Through FirstNet ® services, we also provide a nationwide wireless broadband network dedicated to public safety.

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Consumers continue to require increasing availability of data-centric services and a network to connect and control those devices.

An increasing number of our subscribers are using more advanced integrated and data-centric devices, including embedded computing systems and/or software, commonly called the Internet of Things (IoT).

We offer plans that include unlimited features allowing for the sharing of voice, text and data across multiple devices, which attracts subscribers from other providers and helps minimize subscriber churn.

An increasing number of our subscribers are using more advanced devices, including embedded computing systems and/or software, commonly called the Internet of Things (IoT).

We offer unlimited plans that include features allowing for the sharing of voice, text and data across multiple devices, which attracts subscribers from other providers and helps minimize subscriber churn.

Customers in our “connected device” category (e.g., users of monitoring devices and automobile systems) generally purchase those devices from third-party suppliers that buy data access supported by our network.

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We sell a wide variety of handsets, wireless data cards and wireless computing devices manufactured by various suppliers for use with our voice and data services.

We also sell accessories, such as carrying cases and hands-free devices.

We also sell accessories, such as carrying cases/protective covers and wireless chargers.

We sell through our own company-owned stores, agents and third-party retail stores.

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Subscribers that bring their own devices or retain handsets for longer periods impact upgrade activity.

Like other wireless service providers, we also provide a limited number of postpaid contract subscribers substantial equipment subsidies to initiate, renew or upgrade service.

Like other wireless service providers, we also provide postpaid contract subscribers promotional equipment offers to initiate, renew or upgrade service.

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Business Wireline – Our Business Wireline business unit provides services to business customers, including multinational corporations, small and mid-sized businesses, governmental and wholesale customers.

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We provide collaboration services that utilize our IP infrastructure and allow our customers to utilize the most advanced technology to improve their productivity.

We also provide state-of-the-art security solutions like threat management and intrusion detection.

We continue to reconfigure our wireline network to take advantage of the latest technologies and services, and rely on our SDN and NFV to enhance business customers’ digital agility in a rapidly evolving environment.

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Consumer Wireline – Our Consumer Wireline business unit provides broadband services, including fiber connections, and legacy telephony voice communication services to customers in the United States by utilizing our IP-based and copper wired network.

Additionally, this business unit offers AT&T Internet Air, which is a fixed wireless access product that provides home internet services delivered over our 5G wireless network where available.

Our Consumer Wireline business unit revenue includes the following categories:

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We provide broadband and internet services to approximately 15 million customer locations, with 8 million fiber broadband connections at December 31, 2023.

With changes in video viewing preferences and the recent work and learn from home trends, we are experiencing increasing demand for high-speed broadband services.

Our investment in expanding our industry-leading fiber network positions us to be a leader in wired connectivity.

With changes in video viewing preferences and the impacts of remote work and learning trends, we are experiencing increasing demand for high-speed broadband services.

We believe our investment in expanding our industry-leading fiber network positions us to be a leader in wired connectivity.

With our focus on fiber that brings efficiencies and owner economics, we continue to evaluate opportunities where we can turn down existing copper infrastructure.

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Other Services and Equipment

Other service revenues include AT&T U-verse voice services (which use VoIP technology), customer fees and equipment.

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Other service revenues include VoIP services, customer fees and equipment.

Additional information on our Communications segment is contained in the “Overview” section of Item 7.

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Additional information on our Latin America segment is contained in the “Overview” section of Item 7.

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MAJOR CLASSES OF SERVICE

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The Communications Act of 1934 and other related laws give the FCC broad authority to regulate the U.S.

operations of our satellite and 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

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services, provided such state regulation is consistent with federal law.

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.

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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.

For a discussion of significant regulatory issues directly affecting our operations, please see the information contained under the headings “Operating Environment Overview” and “Regulatory Developments” of Item 7, which information is incorporated herein by reference.

For a discussion of significant regulatory issues directly affecting our operations, please see the information contained under the headings “Operating Environment Overview” and “Regulatory Landscape” of Item 7, which information is incorporated herein by reference.

IMPORTANCE, DURATION AND EFFECT OF LICENSES

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Many of our subsidiaries also hold government-issued licenses or franchises to provide wireline or wireless services.

Additional information relating to regulation affecting those rights is contained under the heading “Operating Environment Overview,” of Item 7.

Additional information relating to regulations affecting those rights is contained under the heading

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“Operating Environment Overview,” 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 agreements that permit other companies, in exchange for fees and rights, and subject to appropriate safeguards and restrictions, to utilize certain of our patents, trademarks and service marks.

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 receive offers from third parties to obtain licenses for patents and other intellectual rights in exchange for royalties or other payments.

We also receive notices from third parties asserting that our products or services sold to customers or software-based network functions infringe on their patents and other intellectual property rights.

These claims, whether against us directly, such as network functions, or against third-party suppliers of products or services that we, in turn, sell to our customers, such as wireless handsets, could require us to pay damages, pay royalties, stop offering the relevant products or services and/or cease network functions or other activities.

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.

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Our competitors include two national wireless providers;

a larger number of regional providers and resellers of those services;

a larger number of regional providers and resellers of each of those providers’ services;

and certain cable companies.

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We compete for customers based principally on service/device offerings, price, network quality, coverage area and customer service.

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Broadband The desire for high-speed data on demand, including video, is continuing to lead customers to terminate their traditional wired or linear services and use our fiber services or competitors’ wireless, satellite and internet-based services.

markets, we compete for customers with large cable companies for high-speed internet and voice services, wireless broadband providers, and other smaller telecommunications companies for both long-distance and local services.

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 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 (such as advertising-based).

markets, we compete for customers with large cable companies and other smaller telecommunications companies for both long-distance and local services.

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.

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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 cyber security, network operations support systems and data analytics.

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.

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Number of Employees As of January 31, 2024, we employed approximately 149,900 persons.

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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 award-winning internal training organization, AT&T University.

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 42% 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 the collective bargaining agreements, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached.

The main contracts included the following:

A contract covering approximately 7,000 Mobility employees in nine states, for which we reached tentative agreement in February 2023.

A contract covering approximately 400 employees supporting internet-based products is set to expire in July 2023.

A contract covering approximately 200 employees in Illinois is set to expire in May 2023.

The main contracts set to expire in 2024 include the following:

a contract covering approximately 5,000 Mobility employees in Arkansas, Kansas, Missouri, Oklahoma and Texas is set to expire in February;

a wireline contract covering approximately 8,500 employees in California and Nevada is set to expire in April;

and three wireline contracts covering approximately 15,000 employees in the southeastern United States are set to expire in August.

Compensation and Benefits In addition to salaries, we provide a variety of benefit programs to help meet the needs of our employees.

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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 Safety 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, providing personal protective equipment, flexible scheduling or time-off options and implementing technologies to enhance the remote-work environment.

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, providing flexible scheduling or time-off options and implementing technologies to enhance the remote work environment.

Diversity, Equity and Inclusion We believe that championing diversity and fostering inclusion does more than just make us a better company, it contributes to a world where people are empowered to be their very best.

That is why we are committed to equality and why our company purpose is to connect people to greater possibilities.

That is why we are committed to equality and one of the reasons why our company purpose is to connect people to greater possibilities.

This focus on diversity emanates from our diverse and inclusive workforce, which is a product of our unwavering commitment to ensure that employees from any and every segment of society are treated with fairness and provided equal opportunities to advance in the company.

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To have a diverse and inclusive workforce, we have put an emphasis on attracting and hiring talented people who represent a mix of backgrounds, identities and experiences.

Across the AT&T family of companies, we have employee groups that reflect our diverse workforce.

These groups are not only organized around women, people of color, LGBTQ+ individuals, people with disabilities and veterans, but also around professionals who are experienced or interested in cybersecurity, engineering, innovation and project management.

When everyone’s unique story is celebrated, we are able to connect, create and innovate in real and meaningful ways.

These groups are not only organized around women, people of color, faith, LGBTQ+ individuals, people with disabilities and veterans, but also around professionals who are experienced or interested in cybersecurity, engineering, innovation and project management.

We believe that when everyone’s unique story is celebrated, we are able to connect, create and innovate in real and meaningful ways.

It is important that our employees feel valued, have a sense of belonging and are fully engaged in our success.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business