What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2024-02-23 compared with 2023-02-13 · 231 added, 318 removed, 446 unchanged (55% of the section changed)

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Dollars in millions except per share amounts

On April 8, 2022, we closed our transaction to combine substantially all of our WarnerMedia segment (WarnerMedia) with a subsidiary of Discovery, Inc (Discovery).

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 have determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic.

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.

These businesses are reflected in the accompanying financial statements as discontinued operations, including for periods prior to the consummation of the WarnerMedia/Discovery transaction.

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Percent Change

2022 2021 2020 2022 vs.

Operating Revenues

Operating Revenues 2023 2022 2021 2023 vs.

Communications $ 118,038 $ 117,067 $ 114,730 0.8 % 2.0 %

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Held-for-sale and other reclassifications — — 143 — —

Reclassification of prior service credits (2,691) (2,680) (2,442) (0.4) (9.7)

Certain significant items (1,238) (28,107) (296) 95.6 —

AT&T Operating Income (Loss) $ 23,461 $ (4,587) $ 25,897 — % — %

The Communications segment accounted for approximately 97% of our 2022 total segment operating revenues compared to 98% in 2021 and accounted for all segment operating income in 2022 and 2021.

The Communications segment accounted for approximately 97% of our 2023 and 2022 total segment operating revenues and accounted for all segment operating income in 2023 and 2022.

This segment provides services to businesses and consumers located in the U.S.

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 accounted for approximately 3% of our 2022 total segment operating revenues compared to 2% in 2021.

The Latin America segment accounted for approximately 3% of our 2023 and 2022 total segment operating revenues.

This segment provides wireless services and equipment in Mexico.

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We also discuss our expected revenue and expense trends for 2024 in the “Operating Environment and Trends of the Business” section.

Certain prior-period amounts have been reclassified to conform to the current period’s presentation.

Percent Change

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Income (Loss) from Continuing Operations $ 15,623 $ (6,874) $ 23,776 — % — %

Operating revenues decreased in 2022 and 2021.

The 2022 decline reflects the July 31, 2021 separation of the U.S.

video business, other business divestitures that were not included in discontinued operations and lower Business Wireline revenues driven by lower demand for legacy services and product simplification.

Partially offsetting declines were higher Mobility service and equipment revenues and, to a lesser extent, gains in broadband service in our Communications segment and growth in Mexico wireless operations.

The 2021 decline reflects the 2021 separation of the U.S.

video business and the October 2020 sale of wireless and wireline operations in Puerto Rico and the U.S.

Virgin Islands.

Also contributing to revenue declines was lower Business Wireline revenues due in part to higher demand for pandemic-related connectivity in the prior year.

Partially offsetting declines were higher Mobility equipment and service revenues and gains in broadband service, and growth in Mexico wireless operations including favorable foreign exchange impacts.

Operations and support expenses decreased in 2022 and 2021.

The 2022 decline reflects the separation of U.S.

video and lower personnel costs associated with ongoing transformation initiatives, partially offset by higher bad debt expense, the elimination of Connect America Fund Phase II (CAF II) government credits and increased wholesale network access charges.

Wireless equipment costs were up slightly, with higher sales volumes and the sale of higher-priced smartphones largely offset by lower 3G shutdown costs in 2022.

In the first quarter of 2022, we updated the expected economic lives of customer relationships, which extended the amortization period of deferred acquisition and fulfillment costs and reduced expenses approximately $395, with $150 recorded to Mobility, $115 to Business Wireline and $130 to Consumer Wireline.

The 2021 decline reflects our 2021 business divestitures, lower bad debt expense and lower personnel costs associated with our transformation initiatives.

Declines were mostly offset by increased domestic wireless equipment expense from higher volumes.

Asset impairments and abandonments and restructuring increased in 2022 and decreased in 2021.

The increase in 2022 was primarily due to $24,812 of noncash goodwill impairments associated with our Business Wireline, Consumer Wireline and Mexico reporting units and were driven by higher interest rates consistent with the macroeconomic environment, with secular

Operating revenues increased in 2023.

The increase reflects growth in Mobility and Consumer Wireline revenues, partially offset by continued declines in Business Wireline revenues.

Revenue increases also reflect higher revenues in our Mexico business unit, including favorable impacts from foreign exchange.

Operations and support expenses decreased in 2023, reflecting benefits of our continued transformation efforts, including lower personnel costs, partially offset by inflationary increases.

The decrease also reflects lower Mobility equipment and associated selling costs, driven by lower device sales in 2023 and 3G network shutdown costs in the first quarter of 2022, higher returns on benefit-related assets and lower customer support costs.

Partially offsetting the decreases were higher amortization of deferred customer acquisition costs and unfavorable impact of foreign exchange.

Asset impairments and abandonments and restructuring decreased in 2023, with higher impairments in 2022.

Noncash charges in 2023 primarily relate to severance and restructuring charges, as well as the abandonment of non-deployed wireless equipment associated with our recently announced plans to collaborate with Ericsson to deploy commercial scale open radio access network (Open RAN), which will further the telecommunications industry efforts and align with the federal government’s goal to build a more robust ecosystem of network infrastructure providers and suppliers.

This network transformation is expected to result in additional cash charges in 2024.

Noncash charges in 2022 were primarily due to the impairment of $24,812 of goodwill associated with our Business Wireline, Consumer Wireline and Mexico reporting units, and were driven by higher interest rates consistent with the macroeconomic environment, with secular declines also impacting Business Wireline growth rates (see Note 9).

The charges in 2022 also included $1,413 of wireline conduit asset abandonments and $1,273 of restructuring and other impairment charges due to updated network build plans stemming from spectrum acquired in recent auctions, severance charges associated with transformation initiatives and impairment of personal protective equipment inventory.

Dollars in millions except per share amounts

declines also impacting Business Wireline growth rates (see Note 9).

The increase in 2022 also included $1,413 of wireline conduit asset abandonments (see Note 7) and $1,273 of restructuring and other impairment charges due to updated network build plans stemming from spectrum acquired in recent auctions, severance charges associated with transformation initiatives and impairment of personal protective equipment inventory.

Impairment charges in 2021 were lower than 2020, reflecting a fourth-quarter 2020 impairment charge of $15,508 resulting from our assessment of the recoverability of the long-lived assets and goodwill associated with our U.S.

video business.

Depreciation and amortization expense increased in 2022 and decreased in 2021.

Depreciation expense increased $218, or 1.2%, in 2022.

The increase was primarily due to ongoing capital investment for strategic initiatives such as fiber and network upgrades and expansion, partially offset by higher estimated lives of our fiber assets (see Note 7).

Depreciation expense decreased $1,394, or 7.3%, in 2021, primarily due to ceasing depreciation on U.S.

video held-for-sale assets.

Amortization expense decreased $49, or 22.5%, in 2022 and $3,277, or 93.8%, in 2021.

Lower amortization reflects our accelerated method of amortization of intangible assets from previous acquisitions and ceasing amortization on U.S.

video held-for-sale assets in 2021.

Operating income decreased in 2022 and increased in 2021.

Our operating margin was (3.8)% in 2022, compared to 19.3% in 2021 and 5.9% in 2020.

Interest expense decreased in 2022 primarily due to lower debt balances and higher capitalized interest associated with spectrum acquisitions, partially offset by higher interest rates.

Interest expense decreased in 2021 primarily due to lower interest rates and higher capitalized interest associated with spectrum acquisitions, partially offset by higher debt balances.

Equity in net income of affiliates increased in 2022 and 2021, primarily due to the close of our transaction with TPG related to the U.S.

video business, which resulted in our accounting for our investment in DIRECTV under the equity method of accounting beginning August 1, 2021 (see Notes 6, 10 and 19).

Other income (expense) – net decreased in 2022 and increased in 2021.

The decrease in 2022 was primarily due to lower actuarial gains ($1,999 in 2022 compared to $4,140 in 2021), lower pension and postretirement benefit credits and lower returns on other benefit-related investments.

Pension and postretirement benefit credits decreased as a result of higher assumed discount rates and lower returns on benefit plan assets.

Our 2022 benefit expense also includes approximately $280 favorable impact from a retirement benefit plan change, with $230 resulting from prior service credits (approximately $100 for Business Wireline, $80 for Consumer Wireline and $40 for Mobility) (see Note 14).

The increase in 2021 was primarily due to the recognition of $4,140 in actuarial gains, compared to losses of $4,169 in 2020, and the recognition of $1,405 of debt redemption costs in 2020.

Also contributing to increased income in 2021 were higher net pension and postretirement benefit credits from higher prior service credit amortization (see Note 14).

Income tax expense decreased in 2022 and increased in 2021.

The 2022 decrease was primarily driven by lower income before income tax offset by impairments of goodwill (see Note 9), which are not deductible for tax purposes.

The increase in 2021 was primarily due to increased income before income taxes, offset primarily by the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) benefit of U.S.

federal Net Operating Loss (NOL) carryback and benefits of divestitures in 2021.

Depreciation and amortization expense increased in 2023, primarily due to higher depreciation expense related to ongoing capital spending for strategic initiatives such as fiber and network upgrades.

We expect depreciation expense to increase due to continued fiber and 5G investment and approximately $850 in 2024 due to the expected shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our deployment of Open RAN.

Operating income increased in 2023 and decreased in 2022.

Our operating margin was 19.2% in 2023, compared to (3.8)% in 2022, which included noncash impairment charges, and 19.3% in 2021.

Interest expense increased in 2023, primarily due to lower capitalized interest associated with spectrum acquisitions and higher interest rates.

Interest expense in 2023 also includes the reclassification of Mobility preferred interests distributions, which were repurchased on April 5, 2023 (see Note 16).

Mobility preferred interest distributions were recorded as noncontrolling interest in 2022.

Late in the third quarter of 2023, C-band incumbents completed their transition out of the spectrum band, allowing us to use all C-band licenses awarded to us in the Federal Communications Commission (FCC) auction in 2021, and we have ceased capitalization of interest for licenses that have been placed into service.

We expect interest expense to increase approximately $400 in 2024 as a result.

Equity in net income of affiliates decreased in 2023.

The decrease was primarily due to the performance of our investment in DIRECTV, which included our share of a gain on a sale-leaseback transaction by DIRECTV of approximately $100 in 2023 (see Notes 6, 10 and 19).

Other income (expense) – net decreased in 2023.

The decrease was primarily driven by actuarial remeasurement of pension plan assets and obligations, with net actuarial and settlement losses of $1,594 in 2023, compared to gains of $1,999 in 2022 (see Note 14).

Also contributing to the decrease was a $450 impairment of an equity investment in a Latin America satellite business and lower net pension and postretirement benefit credits in 2023 (see Note 14).

Partially offsetting the decrease were higher returns on other benefit-related investments.

Income tax expense increased in 2023, primarily driven by higher income before income tax in 2023, partially offset by deferred tax benefits related to updated estimates.

Our effective tax rate was 21.3% in 2023, (122.2)% in 2022, and 18.5% in 2021.

The effective tax rate was impacted by our goodwill impairments associated with our Business Wireline, Consumer Wireline and Mexico reporting units in 2022, and Video goodwill impairment in 2020, which are not deductible for tax purposes.

The effective tax rate in 2022 was lower primarily due to our goodwill impairments associated with our Business Wireline, Consumer Wireline and Mexico reporting units, which are not deductible for tax purposes.

Dollars in millions except per share amounts

Segment Results Our segments are strategic business units that offer different products and services over various technology platforms and/or in different geographies that are managed accordingly.

We also evaluate segment performance based on EBITDA and/or EBITDA margin, which is defined as operating income excluding depreciation and amortization.

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, which is defined as operating income excluding depreciation and amortization.

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.

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EBITDA margin is EBITDA divided by total revenues.

In the first quarter of 2022, we reclassified into “Corporate” certain administrative costs borne by AT&T where the business units do not influence decision making to conform with the current period presentation.

This recast increased Corporate operations and support expenses by approximately $270 and $1,310 for full-year 2021 and 2020, respectively.

Correspondingly, this recast lowered administrative expenses for the Communications segment, with no change on a consolidated basis.

Effective for the first quarter of 2023, we stopped recording prior service credits to our individual business units or the corresponding charge to Corporate and Other, and segment operating expenses were recast to remove prior service credits from our historical reporting.

Prior service credits are, and will continue to be, recorded as other income in our consolidated income statement in accordance with U.S.

generally accepted accounting principles (see Note 14).

This recast increased Communications segment operations and support expenses by approximately $2,400 in 2022 and $2,100 in 2021.

Correspondingly, this recast lowered administrative expenses within Corporate and Other, with no change on a consolidated basis.

COMMUNICATIONS SEGMENT

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Selected Subscribers and Connections

(000s) 2022 2021 2020

2023 2022 2021

Mobility subscribers 241,532 217,397 201,791

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Network access lines in service 4,185 5,213 6,177

U-verse VoIP connections 2,930 3,333 3,816

VoIP connections

2,558 2,930 3,333

Operating revenues increased in 2023, driven by increases in our Mobility and Consumer Wireline business units, partially offset by a decrease in our Business Wireline business unit.

The increases are primarily driven by wireless service and equipment revenue growth and gains in broadband service.

The increases are primarily driven by gains in wireless service and broadband service.

Business Wireline continues to reflect lower demand for legacy services and product simplification.

Operating income increased in 2022 and decreased in 2021.

Operating income increased in 2023 and 2022.

The 2023 operating income reflects an increase in operating income from our Mobility and Consumer Wireline business units, partially offset by declines in our Business Wireline business unit.

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1 Includes data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems.

2 Wireless subscribers at December 31, 2022 excludes the impact of 10,176 subscriber and connected device disconnections resulting from our 3G network shutdown in February 2022.

2 Wireless subscribers at December 31, 2023 includes an increase of 295 subscribers and connections (206 postpaid, including 74 phone, and 89 connected devices) resulting from our 3G network shutdown in February 2022.

Wireless subscribers at December 31, 2022 excludes the impact of 10,176 subscriber and connected device disconnections resulting from our 3G network shutdown.

Postpaid disconnections were 897, including 437 phone, 234 prepaid, 749 reseller subscribers, and 8,296 connected devices.

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0.81 % 0.81 % 0.76 % — BP 5 BP

1 Excludes migrations and acquisition-related additions during the period.

1 Excludes migrations and acquisition-related activity during the period.

2 In addition to postpaid phones, includes tablets and wearables and other.

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Dollars in millions except per share amounts

Service revenue increased during 2022, largely due to growth from subscriber gains and postpaid average revenue per subscriber (ARPU) growth.

Service revenue increased during 2023, largely due to growth from subscriber gains and higher postpaid average revenue per subscriber (ARPU).

ARPU increased in 2023 and reflects pricing actions, improved international roaming and customers shifting to higher-priced unlimited plans, partially offset by the impact of higher promotional discount amortization (see Note 5).

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 higher in 2022 due to a return to pre-pandemic customer behavior, as well as pricing actions and the resulting increase in both voluntary and involuntary disconnects.

Equipment revenue increased in 2022, primarily driven by a higher volume of devices sold and a mix of higher-priced postpaid smartphones.

Operations and support expenses increased in 2022, largely driven by growth in equipment sales and associated expenses, bad debt expense, higher network costs, the elimination of CAF II government credits, and higher HBO Max licensing fees and FirstNet costs.

In the first quarter of 2022, we updated our analysis of economic lives of customer relationships and extended the amortization period of Mobility deferred customer contract costs, which decreased expense approximately $150.

Depreciation expense increased in 2022, primarily due to ongoing capital spending for network upgrades and expansion, partially offset by ceasing use of 3G network assets.

Postpaid churn and postpaid phone-only churn were consistent with 2022.

Equipment revenue decreased in 2023, primarily driven by a lower volume of devices sold.

Operations and support expenses decreased in 2023, largely due to lower equipment costs, driven by lower device sales and associated selling costs, and 3G network shutdown costs in the first quarter of 2022.

These decreases were offset by increased network expenses and higher amortization of deferred customer acquisition costs.

Depreciation expense increased in 2023, primarily due to ongoing capital spending for network upgrades and expansion.

We expect increased depreciation expense in 2024 due to the expected shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our Open RAN deployment and our network transformation and continued 5G investment.

Operating income increased in 2023 and 2022.

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Our Mobility EBITDA margin was 40.9% in 2023, 39.1% in 2022 and 39.4% in 2021.

Subscriber Relationships

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.

We believe 5G opens up vast possibilities of connecting sensors, devices, and autonomous things, commonly referred to as the Internet of Things (IoT).

More and more, these devices are performing use cases that require high bandwidth, ultra-reliability and low latency that only 5G and edge computing can bring.

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

Business Wireline Results

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Operating Income $ 1,289 $ 2,290 $ 3,092 (43.7) % (25.9) %

Service revenues decreased in 2022, driven by lower demand for legacy voice and data services and product simplification.

Also contributing to the decline was lower revenues from the government sector.

Service revenues decreased in 2023, driven by lower demand for legacy voice, data and network services along with product simplification, partially offset by growth in connectivity services.

We expect these trends to continue.

Partially offsetting revenue declines was growth in connectivity services and revenues of approximately $200 from intellectual property sales in 2022.

Equipment revenues decreased in 2023, driven by declines in legacy and non-core services, which we expect to continue.

Dollars in millions except per share amounts

Operations and support expenses decreased in 2022, primarily due to our continued efforts to drive efficiencies in our network operations through automation, reductions in customer support expenses through digitization and proactive rationalization of low profit margin products, and lower personnel costs associated with ongoing transformation initiatives.

Expense declines were also driven by credits from a third-quarter 2022 retirement benefit plan change and lower amortization of deferred fulfillment costs, including our first-quarter 2022 updates to the estimated economic lives of subscribers, which decreased expense approximately $115 in 2022.

The declines were partially offset by higher wholesale access network costs.

As part of our transformation activities, we expect continued operations and support expense improvements into 2023 as we further size our operations in alignment with the strategic direction of the business.

Depreciation expense increased in 2022, primarily due to ongoing capital investment for strategic initiatives such as fiber and network upgrades and expansion, partially offset by updates to extend the estimated lives of our fiber assets (see Note 7).

Operations and support expenses decreased in 2023, primarily due to our continued efforts to drive efficiencies in our network operations through automation, reductions in customer support expenses through digitization and proactive rationalization of low profit margin products.

Expense declines were also driven by lower personnel costs, lower network access, customer support and marketing costs.

The decrease in network access costs also included approximately $75 of benefit related to settlement of a dispute in the second quarter of 2023.

As part of our transformation activities, we expect operations and support expense improvements through 2024, as we further right size our operations in alignment with the strategic direction of the business.

Depreciation expense increased in 2023, primarily due to ongoing capital investment for strategic initiatives such as fiber, which we expect to further increase in 2024.

Operating income decreased in 2023 and 2022.

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Our Business Wireline EBITDA margin was 31.9% in 2023, 33.7% in 2022 and 34.6% in 2021.

Dollars in millions except per share amounts

Consumer Wireline Results

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Total Broadband and DSL Connections 13,890 13,991 14,160 (0.7) % (1.2) %

Broadband 13,753 13,845 13,693 (0.7) 1.1

13,729 13,753 13,845 (0.2) (0.7)

Fiber Broadband Connections 8,307 7,215 5,992 15.1 20.4

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Retail Consumer Switched Access Lines 1,651 2,028 2,423 (18.6) (16.3)

U-verse Consumer VoIP Connections 2,311 2,736 3,231 (15.5) (15.3)

Consumer VoIP Connections

1,953 2,311 2,736 (15.5) (15.5)

Total Retail Consumer Voice Connections 3,604 4,339 5,159 (16.9) % (15.9) %

Dollars in millions except per share amounts

1 Includes AT&T Internet Air.

Broadband Net Additions

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Broadband Net Additions 1

(24) (92) 152 73.9 —

Fiber Broadband Net Additions 1,092 1,223 1,041 (10.7) % 17.5 %

Broadband revenues increased in 2022, driven by an increase in fiber customers, which we expect to continue for the foreseeable future as we invest further in building our fiber footprint, partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in 2022, reflecting the continued decline in the number of customers, which we expect to continue.

Other service and equipment revenues decreased in 2022, reflecting the continued decline in the number of VoIP customers, which we expect to continue.

Operations and support expenses decreased in 2022, primarily driven by lower network and customer support costs, credits from a third-quarter 2022 retirement benefit plan change and lower HBO Max licensing fees.

Also contributing to the decline was lower amortization of deferred fulfillment costs, including our first-quarter 2022 updates to the estimated economic lives of broadband/fiber subscribers, which decreased expenses approximately $130 in 2022.

These declines were partially offset by the elimination of CAF II government credits, higher bad debt expense and advertising costs.

Depreciation expense increased in 2022, primarily due to ongoing capital investment for strategic initiatives such as fiber and network upgrades and expansion, partially offset by updates to the estimated lives of our fiber assets (see Note 7).

Operating income increased in 2022 and decreased in 2021.

1 Includes AT&T Internet Air.

Broadband revenues increased in 2023, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU due to prior-year promotional pricing, partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in 2023, reflecting the continued decline in the number of customers.

Other service and equipment revenues decreased in 2023, reflecting the continued decline in the number of VoIP customers.

Operations and support expenses increased in 2023, primarily due to higher network-related costs as our fiber build scales, partially offset by lower customer support costs, lower Max licensing fees in the first half of 2023, and approximately $35 of benefit from a vendor dispute resolution in the second quarter of 2023.

Dollars in millions except per share amounts

Depreciation expense increased in 2023, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, which we expect to further increase in 2024.

Operating income increased in 2023 and 2022.

Our Consumer Wireline operating income margin was 4.9% in 2023, 5.0% in 2022 and 4.2% in 2021.

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2023 2022 2021 2023 vs.

Operating revenues

Segment Operating revenues

Service $ 2,569 $ 2,162 $ 1,834 18.8 % 17.9 %

Equipment 1,363 982 913 38.8 7.6

Total Operating Revenues 3,144 2,747 2,562 14.5 7.2

Operating expenses

Total Segment Operating Revenues

3,932 3,144 2,747 25.1 14.5

Segment Operating expenses

Operations and support 3,349 2,812 2,652 19.1 6.0

Depreciation and amortization 724 658 605 10.0 8.8

Total Operating Expenses 3,470 3,257 3,149 6.5 3.4

Total Segment Operating Expenses

4,073 3,470 3,257 17.4 6.5

Operating Income (Loss) $ (141) $ (326) $ (510) 56.7 % 36.1 %

Dollars in millions except per share amounts

The following tables highlight other key measures of performance for Mexico:

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Mexico Wireless Net Additions 713 1,241 1,419 (42.5) % (12.5) %

Service revenues increased in 2022, reflecting growth in wholesale services, subscribers and ARPU.

Equipment revenues increased in 2022, due to higher equipment sales.

Operations and support expenses increased in 2022, due to higher acquisition costs, bad debt and network expenses.

Service revenues increased in 2023, reflecting favorable foreign exchange impacts, growth in subscribers and higher wholesale revenues.

Equipment revenues increased in 2023, driven by higher equipment sales and favorable foreign exchange impacts.

Operations and support expenses increased in 2023, driven by unfavorable impact of foreign exchange and increased equipment costs resulting from higher sales.

Approximately 5% of Mexico expenses are U.S.

dollar-based, with the remainder in the local currency.

Depreciation expense increased in 2022, reflecting higher in-service assets.

Depreciation expense increased in 2023, driven by unfavorable impact of foreign exchange partially offset by lower in-service assets.

Operating income improved in 2023 and 2022.

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Our Mexico EBITDA margin was 14.8% in 2023, 10.6% in 2022 and 3.5% in 2021.

Dollars in millions except per share amounts

OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS

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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 converged product offers to strengthen our overall market position.

We plan to use our strong fiber and wireless assets, broad distribution and integrated product offers 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.

2023 Expense Trends We expect the spending required to support growth initiatives, primarily our continued deployment of fiber and 5G to pressure expense trends in 2023.

To the extent customers further upgrade their handsets in 2023, the expenses associated with those device sales are expected to contribute to higher costs.

During 2023, we will also continue to prioritize efficiency, led by our cost transformation initiative.

2024 Expense Trends During 2024, 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, including our deployment of Open RAN, and associated accelerated depreciation, to pressure expense trends in 2024.

These investments will help prepare us to meet increased customer demand for enhanced wireless and broadband services, including video streaming, augmented reality and “smart” technologies.

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 2024, 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, sunsetting 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.

Cost savings and asset sales align with our focus on debt reduction.

Dollars in millions except per share amounts

Market Conditions The U.S.

stock market experienced volatility and contraction in 2022.

Several factors, including the continued impact from the global pandemic, have resulted in changes in demand in business communication services.

The global pandemic has caused, and could again cause, delays in the development, manufacturing (including the sourcing of key components) and shipment of products, as well as continued tight labor market and actual or perceived inflation.

We also expect cost savings through AI-driven efficiencies in our network design, software development and customer support services.

Market Conditions During 2023, uncertainty surrounding global growth rates, inflation, and an increasing interest rate environment continued to produce volatility in the credit, currency and equity markets.

Additionally, several factors, including changes in workplace behavior that have continued since the COVID-19 pandemic, have resulted in changes in demand in business communication services.

The global pandemic caused, and future public health emergencies could again cause, delays in the development, manufacturing (including the sourcing of key components) and shipment of products, as well as continued tight labor market and inflationary impacts.

Most of our products and services are not directly affected by the imposition of tariffs on Chinese goods.

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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 2024 (see “Critical Accounting Policies and Estimates”).

OPERATING ENVIRONMENT OVERVIEW

AT&T subsidiaries operating within the United States are subject to federal and state regulatory authorities.

AT&T subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulatory authorities in the markets where service is provided.

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, over the ensuing two decades, the Federal Communications Commission (FCC) and some state regulatory commissions have maintained or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies.

More recently, the FCC has pursued a more deregulatory agenda, eliminating a variety of antiquated and unnecessary regulations and streamlining its processes in a number of 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.

Internet The FCC currently classifies fixed and mobile consumer broadband services as information services, subject to light-touch regulation.

However, some states have adopted legislation or issued executive orders that would reimpose net neutrality rules repealed by the FCC.

Suits were filed concerning such laws in California and Vermont.

The California suit was dismissed without prejudice on May 4, 2022, and the California statute is now in effect.

The litigation challenging the Vermont statute has been stayed pending the Second Circuit’s disposition of an appeal by the State of New York of an order enjoining enforcement of a New York statute regulating broadband rates on the ground that such statute is preempted by federal law.

We expect additional states may seek to impose net neutrality requirements in the future.

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.

NTIA established initial requirements for this program in May 2022 and is expected to announce state grant allocations in 2023.

The IIJA also appropriated $14,200 for establishment of the Affordable Connectivity Program (ACP), an FCC-administered monthly, low-income broadband benefit program, replacing the Emergency Broadband Benefit program (established in December 2020 by the Consolidated Appropriations Act, 2021).

Qualifying customers can receive up to thirty dollars per month (or seventy-five dollars per month for those on Tribal lands) to assist with their internet bill.

AT&T is a participating provider in the ACP program and will consider participating in the deployment program where appropriate.

The IIJA includes various provisions that have resulted in FCC proceedings regarding ACP program administration and consumer protection, reform of the existing universal support program, and broadband labeling and equal access.

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.

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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.

During 2020-2021, we have also deployed 5G nationwide on “low band” spectrum on macro towers.

Executing on the recent spectrum purchase, we announced ongoing construction and continuing deployment of 5G on C-band spectrum in 2022 and beyond.

EXPECTED GROWTH AREAS

Over the next few years, we expect our growth to come from wireless and IP-based fiber broadband services.

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 an integrated telecommunications network utilizing different technological platforms.

on a converged telecommunications network utilizing different technological platforms.

In 2024, our key initiatives include:

• Continuing our wireless subscriber momentum and 5G deployment, with expansion of 5G service, including to underpenetrated markets.

• Improving fiber penetration, accelerating subscriber growth and increasing broadband revenues.

• Continuing our fiber deployment, improving fiber penetration, 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.

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Wireless We expect to continue to deliver revenue growth in the coming years.

We are in a period of rapid growth in wireless video usage and believe that there are substantial opportunities available for next-generation converged services that combine technologies and services.

As of December 31, 2022, we served 239 million wireless subscribers in North America, with more than 217 million in the United States.

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, 2023, we served 264 million wireless subscribers in North America, with 242 million in the United States.

Our LTE technology covers over 438 million people in North America, and in the United States, we cover all major metropolitan areas and over 334 million people.

We also provide 4G coverage using another technology (HSPA+), and when combined with our upgraded backhaul network, we provide enhanced network capabilities and superior mobile broadband speeds for data and video services.

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.

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At December 31, 2023, we provided LTE coverage to over 104 million people in Mexico.

Integration of Data and Broadband Services As the communications industry has evolved into internet-based technologies capable of blending wireline and wireless services, we plan to focus on expanding our wireless network capabilities and provide 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 with symmetrical 2 gig and 5 gig tiers.

We will continue to develop and provide unique integrated mobile and broadband/fiber solutions.

REGULATORY DEVELOPMENTS

Set forth below is a summary of the most significant regulatory proceedings that directly affected our operations during 2022.

Industry-wide regulatory developments are discussed above in Operating Environment Overview.

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 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.

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The General Data Protection Regulation went into effect in Europe in May of 2018.

AT&T processes and handles personal data of its customers and subscribers, employees of its enterprise customers and its employees.

This regulation created a range of new compliance obligations and significantly increased financial penalties for noncompliance.

Federal Regulation We have organized our following discussion by service impacted.

AT&T processes and handles personal data of its customers and subscribers, employees of its enterprise customers and its employees.

Federal Regulation

Nonetheless, over the ensuing two decades, the FCC and some state regulatory commissions have maintained or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies.

More recently, the FCC has pursued a more deregulatory agenda, eliminating a variety of antiquated and unnecessary regulations and streamlining its processes in a number of areas.

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 The FCC currently classifies fixed and mobile consumer broadband services as information services, subject to light-touch regulation.

Circuit upheld the FCC’s current classification, although it remanded three discrete issues to the FCC for further consideration.

These issues related to the effect of the FCC’s decision to classify broadband services as

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information services on public safety, the regulation of pole attachments, and universal service support for low-income consumers through the Lifeline program.

Because no party sought Supreme Court review of the D.C.

In response to a challenge to the FCC’s classification, in 2019, the D.C.

Circuit upheld the FCC’s current classification, although it remanded three discrete issues related to the effect of the classification on public safety, the regulation of pole attachments, and universal service support for low-income consumers through the Lifeline program to the FCC for further consideration.

Since no party sought Supreme Court review of the D.C.

Circuit’s decision to uphold the FCC’s classification of broadband as an information service, that decision is final.

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An appeal of the FCC’s remand decision is pending.

Some states have adopted legislation or issued executive orders that would reimpose net neutrality rules repealed by the FCC.

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On September 28, 2023, the FCC released a draft Notice of Proposed Rulemaking (NPRM) that was adopted at the FCC’s open meeting on October 19, 2023.

The NPRM proposes to again reclassify broadband internet access service as a telecommunications service under Title II of the Communications Act of 1934 and reestablish conduct rules for internet service providers.

In the interim, some states have adopted legislation or issued executive orders that would reimpose net neutrality rules repealed by the FCC.

Suits were filed concerning such laws in California and Vermont.

The California suit was dismissed without prejudice on May 4, 2022, and the California statute is now in effect.

The California statute is now in effect.

We expect additional states may seek to impose net neutrality requirements in the future.

On November 15, 2021, President Biden signed the IIJA into law.

The legislation appropriates funds to support broadband deployment and adoption.

The NTIA is responsible for distributing the majority of these funds primarily through state grants for broadband deployment projects in unserved and underserved areas, and to a lesser extent for middle mile broadband infrastructure, and digital equity programs.

On May 13, 2022, NTIA issued three Notices of Funding Opportunity for these initiatives – the Broadband Equity, Access, and Deployment Program, the Enabling Middle Mile Broadband Infrastructure Program, and the State Digital Equity Program.

NTIA will continue to administer and implement these programs.

The IIJA also appropriated funds for establishment of the ACP, an FCC-administered monthly, low-income broadband benefit program, replacing the Emergency Broadband Benefit program.

Qualifying customers can receive reimbursements to assist with their internet bill.

AT&T is a participating provider in the ACP program and will consider participating in the deployment program where appropriate.

On November 15, 2023, the FCC adopted rules to “facilitate” equal access to broadband and prevent digital discrimination in broadband access.

The rules, which will become 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.

Privacy-related legislation continues to be adopted or considered in a number of jurisdictions.

Wireless and Broadband In June and November 2020, the FCC issued a Declaratory Ruling clarifying the limits on state and local authority to deny applications to modify existing structures to accommodate wireless facilities.

Appeals of the November 2020 order remain pending in the Ninth Circuit Court of Appeals, following multiple requests by the FCC to hold the appeal in abeyance until the Senate confirms a fifth FCC Commissioner.

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.

Qualifying customers can receive up to thirty dollars per month (or seventy-five dollars per month for those on Tribal lands) to assist with their internet bill.

AT&T is a participating provider in the ACP program and will consider participating in the deployment program where appropriate.

Absent additional funding, on January 11, 2024 the FCC announced that it currently projects April 2024 to be the last month providers will be fully reimbursed for the ACP benefit provided to enrolled households and established February 7, 2024 as the last date for new enrollments into the program.

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.

During 2020-2021, we deployed 5G nationwide on “low band” spectrum on macro towers.

Executing on the recent spectrum purchase, we announced ongoing construction and continuing deployment of 5G on C-band spectrum in 2022 and beyond.

Additional spectrum will be needed industrywide for 5G and future services.

In 2023, the federal government released a national spectrum strategy that focused on spectrum sharing and did not include 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 remains uncertain.

In June and November 2020, the FCC issued a Declaratory Ruling clarifying the limits on state and local authority to deny applications to modify existing structures to accommodate wireless facilities.

Appeals of the November 2020 order remain pending in the Ninth Circuit Court of Appeals.

If sustained on appeal, these FCC decisions will remove state and local regulatory barriers and reduce the costs of the infrastructure needed for 5G and FirstNet deployments, which will enhance our ability to place small cell facilities on utility poles, expand existing facilities to accommodate public safety services, and replace legacy facilities and services with advanced broadband infrastructure and services.

During 2022, we have also deployed 5G nationwide on “low band” spectrum on macro towers.

Executing on the recent spectrum purchase, we continued deploying 5G nationwide on “low band” spectrum.

In 2022, we began deploying 5G nationwide on “low band” spectrum on macro towers.

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In March 2020, the FCC released its order setting rules for certain spectrum bands (C-band) for 5G operations.

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In reliance on that order, AT&T bid a total of $23,406 and was awarded 1,621 C-band licenses, including 40 MHz available for deployment in December 2021, with the remainder available for deployment no later than December 2023.

In late 2021, the Federal Aviation Administration (FAA) questioned whether the C-band launch could impact radio altimeter equipment on airplanes, which operate on spectrum bands over 400 MHz away from the spectrum AT&T launched in 2022 and 220 MHz away from spectrum AT&T plans to launch in 2023.

In response, to allow the FAA more time to evaluate, AT&T and Verizon delayed their planned December 2021 5G C-band launch by six weeks and voluntarily committed to a series of temporary, precautionary measures, in addition to deferring turning on a limited number of towers around certain airports.

These measures have been subsequently modified from time to time.

We continue to work with the FAA to reduce the temporary measures with C-band deployments as aircraft equipment is upgraded.

In 2023, we and all other C-band licensees entered into a voluntarily commitment to extend precautionary measures near certain airports through January 1, 2028, which may have limited impacts to deployments and services.

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 (see “Other Business Matters”).

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, the FCC recently completed Auction 110, in which AT&T won 40 MHz of 3.45 GHz spectrum nationwide at a cost of $9,079.

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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.

ACCOUNTING POLICIES AND STANDARDS

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dollars, and generally not callable, convertible or index linked.

For the year ended December 31, 2022, when compared to the year ended December 31, 2021, we increased our pension discount rate by 2.20%, resulting in a decrease in our pension plan benefit obligation of $11,738, and increased our postretirement discount rate by 2.40%, resulting in a decrease in our postretirement benefit obligation of $2,102.

For the year ended December 31, 2023, when compared to the year ended December 31, 2022, we decreased our pension and postretirement discount rates each by 0.20%, resulting in an increase in our pension plan benefit obligation of $916 and an increase in our postretirement benefit obligation of $110.

Our expected long-term rate of return was 7.50% on pension plan assets and 6.50% on postretirement plan assets for 2023.

We have increased our expected return on plan assets to 7.50% on pension plan assets and 6.50% on postretirement plan assets for 2023, reflecting higher long-term capital market expectations for equities and higher yields for bonds.

For 2024, we have increased our expected return on pension plan assets to 7.75%, reflecting higher yields for bonds and changes in the asset mix, and decreased our expected return on postretirement plan assets to 4.00%, reflecting reallocation of assets to cash for benefit payment.

Our expected return on plan assets is calculated using the actual fair value of plan assets.

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See Note 14 for additional discussions regarding our assumptions.

Depreciation Our depreciation of assets, including use of composite group depreciation for certain subsidiaries and estimates of useful lives, is described in Notes 1 and 7.

If all other factors were to remain unchanged, we expect that a one-year increase in the useful lives of our plant in service would have resulted in a decrease of approximately $2,653 in our 2022 depreciation expense and that a one-year decrease would have resulted in an increase of approximately $3,778 in our 2022 depreciation expense.

See Notes 7 and 8 for depreciation and amortization expense applicable to property, plant and equipment, including our finance lease right-of-use assets.

Asset Valuations and Impairments

Goodwill and other indefinite-lived intangible assets are not amortized but tested at least annually on October 1 for impairment.

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.

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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 a market multiple approach.

We estimate fair values using an income approach (also

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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.

As of October 1, 2022, the calculated fair value of the Mobility reporting unit exceeded its book value and no additional testing was necessary.

If either the projected rate of long-term growth of Mobility cash flows or revenues declined by 0.5%, or if the weighted average cost of capital increased by 0.5%, the fair value would still be higher than the book value of the goodwill.

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the event of a 10% drop in the fair value of the Mobility reporting unit, the fair value still would have exceeded the book value of the reporting unit.

Our 2022 annual goodwill impairment analysis resulted in noncash impairment charges related to our Business Wireline, Consumer Wireline and Mexico reporting units.

The decline in fair values was primarily due to changes in the macroeconomic environment, namely increased weighted-average cost of capital.

As of October 1, 2023, the calculated fair values of the reporting units exceeded their book values in all circumstances.

However, the Consumer Wireline fair value exceeded its book value by less than 10%, with interest rates negatively impacting fair value offset by higher long-term cash flow projections driven by our fiber investment.

For our Mobility and Business Wireline reporting units where fair values were in excess of 10%, if either the projected long-term growth rates declined by 0.5%, if the projected long-term 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.

In the event of a 10% drop in the fair value of these reporting units, the fair value still would have exceeded the book value of the reporting units.

For the Consumer Wireline reporting unit, as of October 1, 2023, if the projected rate of long-term growth declined by 0.75%, if the projected long-term EBITDA margin declined by 4.0%, or if the weighted average cost of capital increased by 0.25%, it would result in impairment of the goodwill.

The fair values of our reporting units continue to be impacted by changes in the macroeconomic environment, namely increased weighted-average cost of capital.

Also, inflation pressure and lower projected cash flows driven by secular declines, predominantly at Business Wireline, impacted the fair values.

Future sustained declines in macroeconomic or business conditions, or higher discount rates or declines in the value of AT&T stock could result in goodwill impairment charges in future periods.

A summary of business unit goodwill impairment by segment and sensitivity analysis is as follows:

Communications Latin America

Business Consumer

Wireline Wireline Mexico

Goodwill as of October 1, 2022:

$ 17,903 $ 30,155 $ 826

Impairment charge (13,478) (10,508) (826)

Remaining Goodwill at December 31, 2022 $ 4,425 $ 19,647 $ —

Sensitivity analysis, approximate hypothetical impairment charge:

Weighted-average cost of capital increase of 25 BP $ 1,200 $ 2,200 $ —

Projected terminal growth rate decline of 25 BP 700 1,400 —

Projected long-term EBITDA margin decline of 100 BP 1,500 1,300 —

Wireless Licenses

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We used a discount rate of 10%, 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 of the licenses.

The fair value of these wireless licenses exceeded their book values by more than 10%.

Other Finite-Lived Intangibles

Customer relationships, licenses in Mexico and other finite-lived intangible assets are reviewed for impairment whenever events or circumstances indicate that the book value may not be recoverable over their remaining life.

For this analysis, we compare the expected undiscounted future cash flows attributable to the asset to its book value.

When the asset’s book value exceeds undiscounted future cash flows, an impairment is recorded to reduce the book value of the asset to its estimated fair value (see Notes 7 and 9).

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.

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See Note 1 for discussion of recently issued or adopted accounting standards.

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OTHER BUSINESS MATTERS

Spectrum Auctions On January 14, 2022, the FCC announced that we were the winning bidder for 1,624 3.45 GHz licenses in Auction 110.

We provided the FCC an upfront deposit of $123 in the third quarter of 2021 and paid the remaining $8,956 in the first quarter of 2022, for a total of $9,079.

We received the licenses in May 2022, and classified the auction deposits and related capitalized interest as “Licenses – Net” on our December 31, 2022 consolidated balance sheet.

On February 24, 2021, the FCC announced that AT&T was the winning bidder for 1,621 C-Band licenses, comprised of a total of 80 MHz nationwide, including 40 MHz in Phase I.

We provided to the FCC an upfront deposit of $550 in 2020 and cash payments totaling $22,856 in the first quarter of 2021, for a total of $23,406.

We received the licenses in July 2021 and classified the auction deposits, related capitalized interest and billed relocation costs as “Licenses – Net” on our December 31, 2021 consolidated balance sheet.

In December 2021, we paid $955 of Incentive Payments for the clearing of Phase I spectrum and estimate that we will be responsible for an additional $2,112 upon clearing of Phase II spectrum, expected by the end of 2023.

Additionally, we are responsible for approximately $1,100 of compensable relocation costs over the next several years as the spectrum is being cleared by satellite operators, of which we paid $650 in the fourth quarter of 2021 and $98 in the third quarter of 2022.

WarnerMedia On April 8, 2022, we completed the separation and distribution of our WarnerMedia business, and merger of Magallanes, Inc.

(Spinco), an AT&T subsidiary formed to hold the WarnerMedia business, with a subsidiary of Discovery, Inc., which was renamed Warner Bros.

Discovery, Inc.

Each AT&T shareholder was entitled to receive 0.241917 shares of WBD common stock for each share of AT&T common stock held as of the record date, which represented approximately 71% of WBD.

In connection with and in accordance with the terms of the Separation and Distribution Agreement (SDA), prior to the distribution and merger, AT&T received approximately $40,400, which includes $38,800 of Spinco cash and $1,600 of debt retained by WarnerMedia.

During the second quarter of 2022, assets of approximately $121,100 and liabilities of $70,600 were removed from our balance sheet as well as $45,041 of retained earnings and $5,632 of additional paid-in capital associated with the transaction.

Additionally, in August 2022, we and WBD finalized the post-closing adjustment, pursuant to Section 1.3 of the SDA, which resulted in a $1,200 payment to WBD in the third quarter of 2022 and was reflected in the December 31, 2022 balance sheet as an adjustment to additional paid-in capital.

The payment is accounted for as cash used in financing activities in our statement of cash flows in third quarter of 2022.

AT&T, Spinco and Discovery entered into a Tax Matters Agreement, which governs the parties’ rights, responsibilities and obligations with respect to tax liabilities and benefits, the preservation of the expected tax-free status of the transactions contemplated by the SDA, and other matters regarding taxes.

Additionally, we entered into an adjusted HBO Max agreement with WBD that provides us with expanded distribution rights and additional flexibility to market and sell the service in a cost-efficient manner.

Under the terms of the agreement, beginning June 1, 2022, we are permitted to include HBO Max in our customer offerings in exchange for a licensing fee.

Furthermore, AT&T has the right, but not the obligation, to market and distribute HBO Max to its customers in plans, bundles, and promotional offers.

Xandr On June 6, 2022, we completed the sale of the marketplace component of Xandr to Microsoft Corporation.

Xandr was reflected in our historical financial statements as discontinued operations.

Gigapower, LLC On December 22, 2022, we agreed to form Gigapower, LLC (Gigapower), a joint venture with BlackRock Alternatives, to provide a fiber network to Internet service providers and other businesses across the U.S.

that serve customers outside of our traditional 21-state wireline footprint.

The transaction is subject to customary closing conditions, including regulatory approvals.

Upon closing the joint venture, we expect to deconsolidate Gigapower’s operations.

Gigapower, LLC On May 11, 2023, we closed the transaction with BlackRock, through a fund managed by its Diversified Infrastructure business, related to Gigapower, LLC (Gigapower).

The joint venture will provide a fiber network to internet service providers and other businesses across the U.S.

that serve customers outside of our wireline service area.

We have agreed to contribute incremental funding of up to approximately $700, which will be funded as the network is constructed.

We deconsolidated Gigapower’s operations in the second quarter of 2023.

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Labor Contracts As of January 31, 2024, we employed approximately 149,900 persons.

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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 Mobility 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.

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

Inflation Reduction Act The Inflation Reduction Act of 2022 (Inflation Reduction Act) was enacted on August 16, 2022.

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Subject to future regulatory guidance, we currently do not believe the CAMT will have a material impact on our 2024 tax liability.

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OECD On October 8, 2021, the Organization for Economic Co-operation and Development (OECD) announced the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting which agreed to a two-pillar solution to address tax challenges arising from digitalization of the economy.

On December 20, 2021, the OECD released Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of large corporations at a minimum rate of 15%.

The OECD continues to release additional guidance on the two-pillar framework with widespread implementation anticipated by 2024.

The OECD has continued to release additional guidance on the two-pillar framework throughout 2022 and 2023.

Several jurisdictions, including the European Union, have enacted Pillar Two legislation with varying dates into force, including January 1, 2024 for certain components.

There can be no assurance that these new rules will not increase our taxes in these countries and have an adverse impact on our provision for income taxes, when enacted or enforced by participating countries in which we do business.

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137,331 135,890

We had $3,701 in cash and cash equivalents available at December 31, 2022, decreasing $15,522 since December 31, 2021 and returning to historical levels with the close of the WarnerMedia/Discovery transaction.

We had $6,722 in cash and cash equivalents available at December 31, 2023, increasing $3,021 since December 31, 2022.

Cash and cash equivalents included cash of $1,368 and money market funds and other cash equivalents of $5,354.

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and may be subject to restrictions on repatriation.

In 2022, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, cash received in connection with the separation and distribution of the WarnerMedia business, issuance of commercial paper and long-term debt and distributions from DIRECTV.

These inflows were exceeded by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, spectrum acquisitions, funding capital expenditures and vendor financing payments, repayment of short-term borrowings and long-term debt, and dividend payments to stockholders.

In 2023, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, issuance of commercial paper, long-term debt and cumulative preferred interests in subsidiaries and distributions from DIRECTV.

These inflows exceeded cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, funding capital expenditures and vendor financing payments, repayment of short-term borrowings and long-term debt, dividend payments to stockholders, and repurchase of the Series A Cumulative Perpetual Preferred Membership Interests in AT&T Mobility II LLC (Mobility preferred interests).

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.

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Cash Provided by Operating Activities from Continuing Operations

During 2022, cash provided by operating activities was $35,812 compared to $37,170 in 2021, reflecting the separation of DIRECTV and working capital impacts, including higher payments for wireless devices tied to accelerated subscriber growth.

During 2023, cash provided by operating activities was $38,314 compared to $35,812 in 2022, reflecting operational growth and a focus to lower working capital programs, which resulted in lower device payments partially offset by lower receivable sales, net of remittances (see Note 17), and higher cash income tax payments.

Cash from operating activities in 2022 also included higher voluntary benefit plan contributions.

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.

In addition, for payments to a key supplier, 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 supplier financing).

The net impact of supplier financing was to improve cash from operating activities $851 in 2022 and $25 in 2021.

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 decrease cash from operating activities $299 in 2023 and improve cash from operating activities $851 in 2022.

All supplier financing payments are due within one year.

Cash Used in or Provided by Investing Activities from Continuing Operations

During 2022, cash used in investing activities totaled $26,899, consisting primarily of $19,626 (including interest during construction) for capital expenditures, and $10,200 for acquisitions of licenses won in Auction 110 and associated capitalized

Dollars in millions except per share amounts

(See Note 22)

Cash Used in Investing Activities from Continuing Operations

During 2023, cash used in investing activities totaled $19,660, consisting primarily of $17,853 (including interest during construction) for capital expenditures.

In 2023, we received a return of investment of $2,049 from DIRECTV representing distributions in excess of cumulative equity in earnings from DIRECTV (see Note 10).

We paid $2,221 of spectrum relocation and clearing costs in 2023, which we report as “Acquisitions, net of cash acquired” on our consolidated statements of cash flows.

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 $5,742 in 2023, compared to $4,697 in 2022.

Capital expenditures in 2022 were $19,626, and when including $4,697 cash paid for vendor financing, capital investment was $24,323 ($4,182 higher than the prior year).

Capital expenditures in 2023 were $17,853, and when including $5,742 cash paid for vendor financing, capital investment was $23,595 ($728 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 2022, we placed $5,817 of equipment in service under vendor financing arrangements (compared to $5,282 in 2021) and approximately $320 of assets related to the FirstNet build (compared to $750 in 2021).

Total reimbursements from the government for FirstNet were approximately $260 for 2022 and $865 for 2021.

The amount of our capital expenditures is influenced by demand for services and products, capacity needs and network enhancements.

Our capital expenditures and vendor financing payments were elevated in 2022, reflecting strategic investments.

In 2023, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be consistent with 2022 levels.

Cash Used in or Provided by Financing Activities from Continuing Operations

In 2022, cash used in financing activities totaled $59,564 and was comprised of debt issuances and repayments, payments of dividends, and vendor financing payments.

We also paid approximately $1,211 in cash on the note payable to DIRECTV, with $130 due as of December 31, 2022 (see Note 19).

In 2023, we placed $2,651 of equipment in service under vendor financing arrangements (compared to $5,817 in 2022).

The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements.

Our capital expenditures and vendor financing payments were slightly elevated in 2023, reflecting strategic investments.

In 2024, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be in the $21,000 to $22,000 range.

Cash Provided by or Used in Financing Activities from Continuing Operations

In 2023, cash used in financing activities totaled $15,614 and was comprised of debt issuances and repayments, payments of dividends, issuances and repurchase of preferred interests in subsidiaries and vendor financing payments.

Dollars in millions except per share amounts

A tabular summary of our debt activity during 2023 is as follows:

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Issuance of notes and debentures:

Private Financing $ — $ — $ 750 $ — $ 750

2025 Term Loan — — — 2,500 2,500

$ 1,747 $ 2,730 $ — $ — $ 4,477

1,319 3,537 — — 4,856

Other 1,050 — — 371 1,421

Debt issuances

2021 Syndicated Term Loan $ — $ (7,350) $ — $ — $ (7,350)

BAML Bilateral Term Loan - Tranche A — (1,000) — — (1,000)

$ 4,116 $ 6,267 $ — $ 371 $ 10,754

Private financing $ — $ (750) $ — $ — $ (750)

Repayments of other short-term borrowings $ — $ (750) $ — $ — $ (750)

USD notes 1, 2, 3

$ (376) $ (750) $ — $ — $ (1,126)

Euro notes — (3,343) — — (3,343)

BAML Bilateral Term Loan - Tranche B — (1,000) — — (1,000)

(1,626) (473) (3,503) — (5,602)

— — (450) — (450)

2025 Term Loan

(2,500) — — — (2,500)

Other (1,443) (441) (327) (155) (2,366)

Repayments of long-term debt $ (5,945) $ (1,664) $ (4,280) $ (155) $ (12,044)

1 On April 11, 2022, we issued notices for the redemption in full of all of the outstanding approximately $9,042 aggregate principal amount of various global notes due 2022 to 2026 with coupon rates ranging from 2.625% to 4.450% (Make-Whole Notes).

The Make-Whole Notes were redeemed on the redemption dates set forth in the notices of redemption, at “make whole” redemption prices calculated as set forth in the respective redemption notices in the second quarter.

2 Includes $7,954 of cash paid toward the $8,822 aggregate principal amount of various notes that were tendered for cash in May 2022.

The notes had interest rates ranging between 3.100% and 8.750% and original maturities ranging from 2026 to 2061.

3 Includes $287 of principal repayment on a $592 zero coupon note that matured in November 2022.

The other $305 was applied to operating cash flows related to interest expense that accreted to the note over its life.

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, 2023 and 4.1% as of December 31, 2022.

We had $133,207 of total notes and debentures outstanding at December 31, 2022, which included Euro, British pound sterling, Canadian dollar, Mexican peso, Australian dollar, and Swiss franc denominated debt that totaled approximately $35,525.

Dollars in millions except per share amounts

We had $133,402 of total notes and debentures outstanding at December 31, 2023.

This also included Euro, British pound sterling, Canadian dollar, Swiss franc, and Australian dollar denominated debt that totaled approximately $35,192.

At December 31, 2023, we had $9,477 of debt maturing within one year, consisting of $2,091 of commercial paper borrowings and $7,386 of long-term debt issuances.

The weighted average interest rate on our outstanding short-term borrowings was approximately 6.0% as of December 31, 2023 and 4.8% as of December 31, 2022.

During 2023, we paid $5,742 of cash under our vendor financing program, compared to $4,697 in 2022.

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At December 31, 2023, we had approximately 144 million shares remaining from our share repurchase authorizations approved by the Board of Directors in 2014.

During 2022, we repurchased approximately 34 million shares under the March 2014 authorization.

We paid dividends on common shares and preferred shares of $8,136 in 2023, compared with $9,859 in 2022.

Dividends on common stock declared by our Board of Directors, on a quarterly basis, totaled $1.11 per share in 2022 and $2.08 per share in 2021.

Dividends on common stock declared by our Board of Directors totaled $1.11 per share in 2023 and in 2022.

Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities.

On February 1, 2022, we announced that our Board of Directors approved an expected annual dividend level of $1.11 per common share, or approximately $8,000 per year, following the close of the WarnerMedia/Discovery transaction.

In the fourth quarter of 2022, all outstanding AT&T Mobility II LLC (Mobility preferred interests) were put to us (approximately $8,000), with approximately one-third redeemed in the fourth quarter;

approximately 107 million interests are expected to be redeemed primarily in October 2023 and 107 million redeemed in October 2024, per the terms of the agreement, unless the interests are called or the puts are accepted by AT&T prior to those dates.

With the certainty of redemption, the remaining Mobility preferred interests were reclassified from equity to a liability at fair value, with approximately $2,670 recorded in current as “Accounts payable and accrued liabilities” and $2,670 recorded in “Other noncurrent liabilities.” In the fourth quarter of 2022, we paid approximately $2,600 cash to redeem the Mobility preferred interests put to us on October 24, 2022.

In April 2023, we expanded our September 2020 sale of Telco LLC cumulative preferred interests and issued an additional $5,250 of nonconvertible cumulative preferred interests (April preferreds).

The April preferreds pay an initial preferred distribution of 6.85% annually, subject to declaration, and subject to reset on November 1, 2027, and every seven years thereafter.

(See Note 16)

In April 2023, we also accepted the December 2022 put option notice from the AT&T pension trust and repurchased the remaining 213 million Mobility preferred interests for a purchase price, including accrued and unpaid distributions, of $5,414.

The Mobility preferred interests had a redemption value of $5,320, with approximately $2,650 removed from “Accounts payable and accrued liabilities” and $2,670 removed from “Other noncurrent liabilities.” The repurchase was primarily funded with proceeds from the April 2023 issuances of Telco LLC preferred interests.

(See Note 16)

In June 2023, we issued $2,000 of Series B Cumulative Perpetual Preferred Membership Interests in Mobility II LLC (Mobility noncontrolling interests), which pay cash distributions of 6.8% per annum, subject to declaration.

The Mobility noncontrolling interests are included in “Redeemable Noncontrolling Interest” on the consolidated balance sheets.

(See Note 16)

Dollars in millions except per share amounts

Our 2024 financing activities will focus on managing our debt level and paying dividends, subject to approval by our Board of Directors.

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We use credit facilities as a tool in managing our liquidity status.

In November 2022, we terminated one of our revolving credit agreements and amended and restated the other.

We currently have one $12,000 revolving credit agreement that terminates on November 18, 2028 (Revolving Credit Agreement).

No amounts were outstanding as of December 31, 2022.

On January 29, 2021, we entered into a $14,700 Term Loan Credit Agreement (2021 Syndicated Term Loan), with Bank of America, N.A., as agent.

On March 23, 2021, we borrowed $7,350 under the 2021 Syndicated Term Loan and the remaining $7,350 of lenders’ commitments were terminated.

In the first quarter of 2022, the maturity date of the 2021 Syndicated Term Loan was extended to December 31, 2022.

On April 13, 2022, the 2021 Syndicated Term Loan was paid off and terminated.

In March 2021, we entered into and drew on a $2,000 term loan credit agreement (BAML Bilateral Term Loan) consisting of (i) a $1,000 facility originally due December 31, 2021 (BAML Tranche A Facility) and subsequently extended to December 31, 2022 in the fourth quarter of 2021, and (ii) a $1,000 facility due December 31, 2022 (BAML Tranche B Facility), with Bank of America, N.A., as agent.

On April 13, 2022, the BAML Bilateral Term Loan was paid off and terminated.

No amount was outstanding under the Revolving Credit Agreement as of December 31, 2023.

In November 2022, we entered into and drew on a $2,500 term loan agreement due February 16, 2025 (2025 Term Loan), with Mizuho Bank, Ltd., as agent.

As of December 31, 2022, $2,500 was outstanding under this agreement.

On March 30, 2023, the 2025 Term Loan was paid off and terminated.

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.

Each of our credit and loan agreements contains covenants that are customary for an issuer with an investment grade senior debt credit rating.

Our Revolving Credit Agreement and 2025 Term Loan include 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.

Other loan agreements include a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter

Dollars in millions except per share amounts

through June 30, 2023 a ratio of not more than 4.0-to-1, and a ratio of not more than 3.5-to-1 for any fiscal quarter thereafter.

Our Revolving Credit Agreement contains covenants that are customary for an issuer with 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, 2023, we were in compliance with the covenants for our credit facilities.

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Under these arrangements, which cover the majority of our approximately $39,800 derivative portfolio, counterparties are still required to post collateral.

During 2022, we posted approximately $760 of cash collateral, on a net basis.

During 2023, we received approximately $220 of cash collateral, on a net basis.

Cash postings under these arrangements vary with changes in credit ratings and netting agreements.

(See Note 12)

Our total capital consists of debt (long-term debt and debt maturing within one year) and stockholders’ equity.

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.

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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 and auction deposits was approximately $10,200 in 2022, $25,400 in 2021 and $2,800 in 2020.

• Total domestic spectrum acquired primarily through FCC auctions, including cash, exchanged spectrum, auction deposits and spectrum relocation and clearing costs was approximately $2,940 in 2023, $10,200 in 2022 and $25,400 in 2021.

• Total health and welfare benefits provided to certain active and retired employees and their dependents totaled approximately $2,990 in 2023 and $3,200 in 2022, with $624 paid from plan assets in 2023 compared to $788 in 2022.

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We paid $4,863 of pension benefits out of plan assets in 2023 compared to $5,854 in 2022.

Dollars in millions except per share amounts

Contractual Obligations

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17,010 561 1,316 3,224 11,909

Unrecognized tax benefits 6

Unrecognized tax benefits (UTB) 6

9,238 392 — — 8,846

1 unchanged sentence

11,733 2,692 2,374 1,763 4,904

Mobility preferred interests 8

5,340 2,670 2,670 — —

Total Contractual Obligations $ 337,473 $ 29,367 $ 50,979 $ 41,236 $ 215,891

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3 We expect to fund the purchase obligations with cash provided by operations or through incremental borrowings.

Consists of commitments primarily related to spectrum acquisitions and other commercial commitments.

The minimum commitment for certain obligations is based on termination penalties that could be paid to exit the contracts.

6 unchanged sentences

6 The 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).

7 Represents future minimum payments under the Crown Castle and other arrangements (see Note 18), payables subject to extended payment terms (see Note 22), finance lease payments (see Note 8) and note payable to DIRECTV (see Note 19).

8 See Note 16.

Dollars in millions except per share amounts

7 Represents 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.

4 unchanged sentences

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 7. Management’s Discussion and Analysis