What changed in this filing

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Item 1. Financial Statements

2024-07-25 compared with 2024-05-02 · 392 added, 205 removed, 830 unchanged (42% of the section changed)

2 unchanged sentences

Dollars in millions except per share amounts

Three months ended

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Operating Revenues

7 unchanged sentences

amortization shown separately below)

6,627 6,771 13,438 13,444

Selling, general and administrative 7,043 7,009 14,064 14,184

7 unchanged sentences

Other income (expense) — net

682 987 1,133 1,922

Total other income (expense) ( 669 ) ( 241 ) ( 1,647 ) ( 476 )

10 unchanged sentences

Outstanding — Basic (in millions)

7,196 7,180 7,194 7,174

Weighted Average Number of Common Shares

Outstanding — with Dilution (in millions)

7,198 7,180 7,195 7,327

See Notes to Consolidated Financial Statements.

1 unchanged sentence

Dollars in millions

Three months ended

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Net income $ 3,949 $ 4,762 $ 7,700 $ 9,215

1 unchanged sentence

Foreign currency:

Translation adjustment, net of taxes of $ 8 and $ 52

Net unrealized gains (losses), net of taxes of $( 2 ) and $ 8

Reclassification adjustment included in net income, net of taxes of $ 2 and $ 1

Translation adjustment, net of taxes of $( 69 ), $ 88 , $( 61 )

( 221 ) 264 ( 192 ) 457

Reclassification adjustment included in net income, net of

taxes of $( 14 ), $ 0 , $( 14 ) and $ 0

Net unrealized gains (losses), net of taxes of $ 1 , $( 4 ), $( 1 )

( 7 ) ( 11 ) ( 17 ) 12

Reclassification adjustment included in net income, net of

taxes of $ 1 , $ 1 , $ 3 and $ 2

Derivative instruments:

Net unrealized gains (losses), net of taxes of $ 49 and $( 43 )

Reclassification adjustment included in net income, net of taxes of $ 3 and $ 3

Defined benefit postretirement plans:

Amortization of net prior service credit included in net income, net of taxes of

Net unrealized gains (losses), net of taxes of $( 65 ), $ 45 ,

$( 16 ) and $ 2

( 260 ) 176 ( 49 ) 24

Reclassification adjustment included in net income, net of

taxes of $ 4 , $ 3 , $ 7 and $ 6

Defined benefit postretirement plans:

Amortization of net prior service credit included in net

income, net of taxes of $( 123 ), $( 161 ),$( 246 ) and $( 321 )

( 380 ) ( 491 ) ( 761 ) ( 982 )

Other comprehensive income (loss) ( 727 ) ( 49 ) ( 860 ) ( 461 )

Total comprehensive income 3,222 4,713 6,840 8,754

Total comprehensive income attributable to noncontrolling interest

Total comprehensive income attributable to

noncontrolling interest

( 352 ) ( 273 ) ( 658 ) ( 498 )

3 unchanged sentences

Dollars in millions except per share amounts

March 31, December 31,

June 30, December 31,

Assets (Unaudited)

31 unchanged sentences

Stockholders’ Equity

Preferred stock ($ 1 par value, 10,000,000 authorized at March 31, 2024 and December 31, 2023):

Series A ( 48,000 issued and outstanding at March 31, 2024 and December 31, 2023)

Series B ( 20,000 issued and outstanding at March 31, 2024 and December 31, 2023)

Series C ( 70,000 issued and outstanding at March 31, 2024 and December 31, 2023)

Common stock ($ 1 par value, 14,000,000,000 authorized at March 31, 2024 and

Preferred stock ($ 1 par value, 10,000,000 authorized at June 30, 2024 and December 31, 2023):

Series A ( 48,000 issued and outstanding at June 30, 2024 and December 31, 2023)

Series B ( 20,000 issued and outstanding at June 30, 2024 and December 31, 2023)

Series C ( 70,000 issued and outstanding at June 30, 2024 and December 31, 2023)

Common stock ($ 1 par value, 14,000,000,000 authorized at June 30, 2024 and

December 31, 2023:

issued 7,620,748,598 at March 31, 2024 and December 31, 2023)

issued 7,620,748,598 at June 30, 2024 and December 31, 2023)

Additional paid-in capital 111,515 114,519

Retained (deficit) earnings ( 1,570 ) ( 5,015 )

Treasury stock ( 450,713,156 at March 31, 2024 and 470,685,237 at December 31, 2023, at cost)

Retained earnings (deficit) 2 ( 5,015 )

Treasury stock ( 450,513,074 at June 30, 2024 and 470,685,237 at December 31, 2023, at cost)

( 15,268 ) ( 16,128 )

6 unchanged sentences

Dollars in millions

Three months ended

Six months ended

Operating Activities

6 unchanged sentences

Pension and postretirement benefit expense (credit) ( 941 ) ( 1,341 )

Actuarial and settlement (gain) loss on pension and postretirement benefits - net — ( 74 )

Asset impairments and abandonments and restructuring 639 —

27 unchanged sentences

Issuance of treasury stock — 3

Issuance of preferred interests in subsidiary — 7,151

Redemption of preferred interests in subsidiary — ( 5,333 )

Dividends paid ( 4,133 ) ( 4,097 )

7 unchanged sentences

Dollars and shares in millions except per share amounts

Three months ended

March 31, 2024 March 31, 2023

Shares Amount Shares Amount

Three months ended Six months ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Shares Amount Shares Amount Shares Amount Shares Amount

Preferred Stock - Series A

12 unchanged sentences

Preferred stock dividends — ( 36 ) ( 98 ) ( 134 )

Common stock dividends ($ 0.2775 and $ 0.2775 per share)

Common stock dividends

($ 0.2775 , $ 0.2775 , $ 0.5550 and $ 0.5550 per share)

( 12 ) ( 1,999 ) ( 2,015 ) ( 4,001 )

1 unchanged sentence

Share-based payments 83 97 ( 183 ) ( 274 )

Redemption or reclassification of interest held by noncontrolling owners

Redemption or reclassification of

interest held by noncontrolling owners

( 152 ) — ( 292 ) —

Balance at end of period $ 111,515 $ 118,833 $ 111,515 $ 118,833

Retained (Deficit) Earnings

Retained Earnings (Deficit)

Balance at beginning of period $ ( 1,570 ) $ ( 15,187 ) $ ( 5,015 ) $ ( 19,415 )

Net income attributable to AT&T 3,597 4,489 7,042 8,717

Preferred stock dividends ( 36 ) — ( 36 ) —

Common stock dividends

($ 0.2775 , $ 0.0000 , $ 0.2775 and $ 0.0000 per share)

( 1,989 ) — ( 1,989 ) —

Balance at end of period $ 2 $ ( 10,698 ) $ 2 $ ( 10,698 )

2 unchanged sentences

Dollars and shares in millions except per share amounts

Three months ended

March 31, 2024 March 31, 2023

Shares Amount Shares Amount

Three months ended Six months ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Shares Amount Shares Amount Shares Amount Shares Amount

Treasury Stock

Balance at beginning of period ( 451 ) $ ( 15,277 ) ( 472 ) $ ( 16,166 ) ( 471 ) $ ( 16,128 ) ( 493 ) $ ( 17,082 )

Repurchase and acquisition of common stock ( 9 ) ( 157 ) ( 10 ) ( 188 )

Repurchase and acquisition of

— ( 2 ) — ( 1 ) ( 9 ) ( 159 ) ( 10 ) ( 189 )

Reissuance of treasury stock — 11 1 9 29 1,019 32 1,113

3 unchanged sentences

Balance at beginning of period $ 2,167 $ 2,354 $ 2,300 $ 2,766

Other comprehensive income (loss) attributable to AT&T ( 133 ) ( 412 )

Other comprehensive income

(loss) attributable to AT&T

( 727 ) ( 49 ) ( 860 ) ( 461 )

Balance at end of period $ 1,440 $ 2,305 $ 1,440 $ 2,305

1 unchanged sentence

Balance at beginning of period $ 14,080 $ 8,950 $ 14,145 $ 8,957

Net income attributable to noncontrolling interest 270 225

Redemption of noncontrolling interest ( 17 ) —

Net income attributable to

noncontrolling interest

317 267 587 492

Issuance and acquisition by

noncontrolling owners

— 5,181 — 5,181

Redemption of noncontrolling

( 41 ) — ( 58 ) —

Distributions ( 319 ) ( 226 ) ( 637 ) ( 458 )

Balance at end of period $ 14,037 $ 14,172 $ 14,037 $ 14,172

Total Stockholders' Equity at beginning of period $ 117,442 $ 106,457

Total Stockholders' Equity at end of period $ 118,620 $ 108,346

Total Stockholders' Equity at

beginning of period

$ 118,620 $ 108,346 $ 117,442 $ 106,457

Total Stockholders' Equity at

end of period

$ 119,347 $ 116,075 $ 119,347 $ 116,075

1 Excludes redeemable noncontrolling interest

See Notes to Consolidated Financial Statements.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

15 unchanged sentences

EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months ended March 31, 2024 and 2023, is shown in the table below:

Three months ended

A reconciliation of the numerators and denominators of basic and diluted earnings per share is shown in the table below:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Numerator for basic earnings per share:

15 unchanged sentences

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (ASU 2020-06), the ability to settle the Mobility preferred interests in stock was reflected in our diluted earnings per share calculation.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

2 unchanged sentences

Changes in the balances of each component included in accumulated OCI are presented below.

All amounts are net of tax and exclude noncontrolling interest.

All amounts are net of tax.

Foreign Currency Translation Adjustment Net Unrealized Gains (Losses) on Securities Net Unrealized Gains (Losses) on Derivative Instruments Defined Benefit Postretirement Plans Accumulated Other Comprehensive Income (Loss)

9 unchanged sentences

( 65 ) ( 7 ) ( 27 ) ( 761 ) ( 860 )

Balance as of March 31, 2024 $ ( 1,308 ) $ ( 61 ) $ ( 806 ) $ 4,342 $ 2,167

Balance as of June 30, 2024 $ ( 1,402 ) $ ( 64 ) $ ( 1,056 ) $ 3,962 $ 1,440

9 unchanged sentences

457 17 47 ( 982 ) ( 461 )

Balance as of March 31, 2023 $ ( 1,607 ) $ ( 64 ) $ ( 2,138 ) $ 6,163 $ 2,354

Balance as of June 30, 2023 $ ( 1,343 ) $ ( 73 ) $ ( 1,951 ) $ 5,672 $ 2,305

1 (Gains) losses are included in “Other income (expense) - net” in the consolidated statements of income.

9 unchanged sentences

EBITDA margin is EBITDA divided by total revenue.

MARCH 31, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S.

4 unchanged sentences

• 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.

In the first quarter of 2024, we began offering our fixed wireless access product that provides internet services delivered over our 5G wireless network where available.

In the first quarter of 2024, we began

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

offering our fixed wireless access product that provides internet services delivered over our 5G wireless network where available.

• 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.

7 unchanged sentences

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

Other items consists of :

Other items consist of :

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

“Interest expense” and “Other income (expense) – net” are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

MARCH 31, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended March 31, 2024

For the three months ended June 30, 2024

Revenues Operations

13 unchanged sentences

Securitization fees

29 150 ( 121 ) — ( 121 )

Value portfolio 83 25 58 5 53

3 unchanged sentences

$ 29,797 $ 18,965 $ 10,832 $ 5,072 $ 5,760

For the three months ended March 31, 2023

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended June 30, 2023

Revenues Operations and Support Expenses EBITDA Depreciation and Amortization Operating Income (Loss)

10 unchanged sentences

Securitization fees

17 154 ( 137 ) — ( 137 )

Value portfolio 91 24 67 6 61

3 unchanged sentences

$ 29,917 $ 18,836 $ 11,081 $ 4,675 $ 6,406

MARCH 31, 2024

For the six months ended June 30, 2024

Revenues Operations

Expenses EBITDA Depreciation

Amortization Operating

Income (Loss)

Communications

Mobility $ 41,074 $ 22,924 $ 18,150 $ 4,963 $ 13,187

Business Wireline 9,668 6,754 2,914 2,748 166

Consumer Wireline 6,697 4,505 2,192 1,795 397

Total Communications 57,439 34,183 23,256 9,506 13,750

Latin America - Mexico 2,166 1,808 358 349 9

Segment Total 59,605 35,991 23,614 9,855 13,759

Corporate and Other

DTV-related retained costs — 250 ( 250 ) 222 ( 472 )

Parent administration support — 835 ( 835 ) 3 ( 838 )

Securitization fees 55 315 ( 260 ) — ( 260 )

Value portfolio 165 51 114 9 105

Total Corporate 220 1,451 ( 1,231 ) 234 ( 1,465 )

Certain significant items — 657 ( 657 ) 30 ( 687 )

Total Corporate and Other 220 2,108 ( 1,888 ) 264 ( 2,152 )

$ 59,825 $ 38,099 $ 21,726 $ 10,119 $ 11,607

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the six months ended June 30, 2023

Revenues Operations and Support Expenses EBITDA Depreciation and Amortization Operating Income (Loss)

Communications

Mobility $ 40,897 $ 23,792 $ 17,105 $ 4,221 $ 12,884

Business Wireline 10,610 7,173 3,437 2,663 774

Consumer Wireline 6,490 4,510 1,980 1,718 262

Total Communications 57,997 35,475 22,522 8,602 13,920

Latin America - Mexico 1,850 1,559 291 360 ( 69 )

Segment Total 59,847 37,034 22,813 8,962 13,851

Corporate and Other

DTV-related retained costs — 347 ( 347 ) 296 ( 643 )

Parent administration support ( 12 ) 706 ( 718 ) 3 ( 721 )

Securitization fees 36 275 ( 239 ) — ( 239 )

Value portfolio 185 52 133 11 122

Total Corporate 209 1,380 ( 1,171 ) 310 ( 1,481 )

Certain significant items — ( 72 ) 72 34 38

Total Corporate and Other 209 1,308 ( 1,099 ) 344 ( 1,443 )

$ 60,056 $ 38,342 $ 21,714 $ 9,306 $ 12,408

The following table is a reconciliation of Segment Operating Income to “Income Before Income Taxes” reported in our consolidated statements of income:

Three months ended

June 30, Six months ended

2024 2023 2024 2023

Communications $ 7,005 $ 7,177 $ 13,750 $ 13,920

11 unchanged sentences

Other income (expense) — net

682 987 1,133 1,922

Income Before Income Taxes $ 5,091 $ 6,165 $ 9,960 $ 11,932

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

REVENUE RECOGNITION

1 unchanged sentence

The following tables set forth reported revenue by category and by business unit:

For the three months ended March 31, 2024

For the three months ended June 30, 2024

Communications

8 unchanged sentences

Total $ 20,480 $ 4,755 $ 3,347 $ 1,103 $ 112 $ 29,797

MARCH 31, 2024

For the three months ended June 30, 2023

Communications

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total

Wireless service $ 15,745 $ — $ — $ 635 $ — $ 16,380

Business service — 5,114 — — — 5,114

Broadband — — 2,561 — — 2,561

Legacy voice and data — — 383 — 80 463

Other — — 307 — 25 332

Total Service 15,745 5,114 3,251 635 105 24,850

Equipment 4,570 165 — 332 — 5,067

Total $ 20,315 $ 5,279 $ 3,251 $ 967 $ 105 $ 29,917

For the six months ended June 30, 2024

Communications

Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total

Wireless service $ 32,271 $ — $ — $ 1,389 $ — $ 33,660

Business service — 9,271 — — — 9,271

Broadband — — 5,463 — — 5,463

Legacy voice and data — — 665 — 124 789

Other — — 569 — 96 665

Total Service 32,271 9,271 6,697 1,389 220 49,848

Equipment 8,803 397 — 777 — 9,977

Total $ 41,074 $ 9,668 $ 6,697 $ 2,166 $ 220 $ 59,825

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended March 31, 2023

For the six months ended June 30, 2023

Communications

11 unchanged sentences

The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets:

March 31, December 31,

June 30, December 31,

Consolidated Balance Sheets 2024 2023

7 unchanged sentences

Total deferred customer contract fulfillment costs $ 5,746 $ 6,183

The following table presents deferred customer contract acquisition and fulfillment cost amortization, which are primarily included in “Selling, general and administrative” and “Other cost of revenues,” respectively, for the three months ended:

March 31, March 31,

June 30, June 30,

Consolidated Statements of Income 2024 2023

7 unchanged sentences

Promotional equipment sales where we offer handset credits, which are allocated between equipment and service in proportion to their standalone selling prices, when customers commit to a

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

5 unchanged sentences

The following table presents contract assets and liabilities on our consolidated balance sheets:

March 31, December 31,

June 30, December 31,

Consolidated Balance Sheets 2024 2023

9 unchanged sentences

Performance obligations associated with wireless contracts are estimated using a portfolio approach in which we review all relevant promotional activities, calculating the remaining performance obligation using the average service component for the portfolio and the average device price.

As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 38,866 , of which we expect to recognize approximately 80 % by the end of 2025, with the balance recognized thereafter.

As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 38,744 , of which we expect to recognize approximately 72 % by the end of 2025, with the balance recognized thereafter.

PENSION AND POSTRETIREMENT BENEFITS

4 unchanged sentences

We recognize actuarial gains and losses on pension and postretirement plan assets in our consolidated results as a component of “Other income (expense) – net” at our annual measurement date of December 31, unless earlier remeasurements are required.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

2 unchanged sentences

The service cost component of net periodic pension (credit) cost is recorded in operating expenses in the consolidated statements of income while the remaining components are recorded in “Other income (expense) – net.”

Three months ended

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Pension cost:

3 unchanged sentences

Amortization of prior service credit ( 22 ) ( 34 ) ( 44 ) ( 67 )

Net pension (credit) cost before remeasurement ( 56 ) ( 111 ) ( 113 ) ( 221 )

Actuarial (gain) loss — 289 — 289

Settlement (gain) loss — ( 363 ) — ( 363 )

Net pension (credit) cost $ ( 56 ) $ ( 185 ) $ ( 113 ) $ ( 295 )

1 unchanged sentence

Service cost – benefits earned during the period $ 6 $ 6 $ 11 $ 12

Interest cost on accumulated postretirement benefit obligation

Interest cost on accumulated postretirement benefit

78 85 155 170

Expected return on assets ( 16 ) ( 33 ) ( 30 ) ( 66 )

3 unchanged sentences

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans.

Net supplemental pension benefits costs not included in the table above were $ 17 and $ 19 in the first quarter ended 2024 and 2023, respectively.

Net supplemental pension benefits costs not included in the table above were $ 16 and $ 18 in the second quarter and $ 33 and $ 37 for the first six months of 2024 and 2023, respectively.

FAIR VALUE MEASUREMENTS AND DISCLOSURE

8 unchanged sentences

There have been no changes in the methodologies used since December 31, 2023.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

2 unchanged sentences

The carrying amounts and estimated fair values of our long-term debt, including current maturities, and other financial instruments are summarized as follows:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Carrying Fair Carrying Fair

9 unchanged sentences

The fair value measurements used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets.

Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of March 31, 2024 and December 31, 2023.

Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of June 30, 2024 and December 31, 2023.

Derivatives designated as hedging instruments are reflected as “Prepaid and other current assets,” “Other Assets,” “Accounts payable and accrued liabilities,” and “Other noncurrent liabilities” on our consolidated balance sheets.

March 31, 2024

June 30, 2024

Level 1 Level 2 Level 3 Total

21 unchanged sentences

Cross-currency swaps — ( 3,601 ) — ( 3,601 )

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

6 unchanged sentences

The components comprising total gains and losses in the period on equity securities are as follows:

Three months ended

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Total gains (losses) recognized on equity securities $ 29 $ 82 $ 126 $ 165

1 unchanged sentence

Unrealized gains (losses) recognized on equity securities held at end of period $ 34 $ 85 $ 134 $ 164

At March 31, 2024, available-for-sale debt securities totaling $ 1,188 have maturities as follows - less than one year:

At June 30, 2024, available-for-sale debt securities totaling $ 1,169 have maturities as follows - less than one year:

one to three years:

20 unchanged sentences

Except for excluded components, changes in the fair value of derivative instruments designated as fair value hedges are offset against the change in fair value of the hedged assets or liabilities through earnings.

In the three months ended March 31, 2024 and 2023, no ineffectiveness was measured on fair value hedges.

MARCH 31, 2024

In the six months ended June 30, 2024 and 2023, no ineffectiveness was measured on fair value hedges.

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

12 unchanged sentences

Collateral and Credit-Risk Contingency We have entered into agreements with our derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements.

At March 31, 2024, we had posted collateral of $ 524 (a deposit asset) and held collateral of $ 0 (a receipt liability).

Under the agreements, if AT&T’s credit rating had been downgraded two ratings levels by Fitch Ratings, one level by S&P and one level by Moody’s before the final collateral exchange in March, we would have been required to post additional collateral of $ 52 .

At June 30, 2024, we had posted collateral of $ 680 (a deposit asset) and held collateral of $ 0 (a receipt liability).

Under the agreements, if AT&T’s credit rating had been downgraded two ratings levels by Fitch Ratings, one level by S&P and one level by Moody’s before the final collateral exchange in June, we would have been required to post additional collateral of $ 50 .

If AT&T’s credit rating had been downgraded three ratings levels by Fitch Ratings, two levels by S&P, and two levels by Moody’s, we would have been required to post additional collateral of $ 3,594 .

2 unchanged sentences

Following are the notional amounts of our outstanding derivative positions:

March 31, December 31,

June 30, December 31,

Interest rate swaps $ 1,750 $ 1,750

1 unchanged sentence

Total $ 37,101 $ 39,756

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

2 unchanged sentences

Effect of Derivatives on the Consolidated Statements of Income

Three months ended

Three months ended Six months ended

June 30, June 30,

Fair Value Hedging Relationships 2024 2023 2024 2023

12 unchanged sentences

The following table presents information for our cash flow hedging relationships:

Three months ended

Three months ended Six months ended

June 30, June 30,

Cash Flow Hedging Relationships 2024 2023 2024 2023

9 unchanged sentences

Under the terms of our agreements for these programs, we continue to service the transferred receivables on behalf of the financial institutions.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables during the three months ended March 31, 2024 and 2023:

Three months ended

Net cash received from equipment installment receivables program 1

Net cash received from revolving receivables program

The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Net cash received (paid) from equipment installment

receivables program 1

$ ( 674 ) $ ( 36 ) $ ( 553 ) $ ( 60 )

Net cash received (paid) from revolving receivables program

( 29 ) 1,000 247 1,000

Net cash received (paid) from other programs

— ( 142 ) — ( 256 )

Total net cash impact to cash flows from operating activities 2

$ ( 703 ) $ 822 $ ( 306 ) $ 684

1 Cash from initial sales of $ 2,874 and $ 2,529 for the three months ended March 31, 2024 and 2023, respectively.

1 Cash from initial sales of $ 2,532 and $ 2,656 for the three months and $ 5,406 and $ 5,185 for the six months ended June 30, 2024 and 2023, respectively.

2 Net of facility fees.

4 unchanged sentences

The following table sets forth a summary of the receivables and accounts being serviced:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Equipment Equipment

18 unchanged sentences

Accordingly, we record a guarantee obligation for this estimated amount at the time the receivables are transferred.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The following table sets forth a summary of equipment installment receivables sold under this program during the three months ended March 31, 2024 and 2023:

Three months ended

The following table sets forth a summary of equipment installment receivables sold under this program:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Gross receivables sold 1

1 unchanged sentence

Net receivables sold 2

2,438 2,554 5,195 4,992

Cash proceeds received 2,532 2,656 5,406 5,185

6 unchanged sentences

The fair value measurements used for the beneficial interests and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 7).

The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated beneficial interests during the three months ended March 31, 2024 and 2023:

Three months ended

The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated beneficial interests:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Fair value of repurchased receivables $ 724 $ 765 $ 1,442 $ 1,306

3 unchanged sentences

1 These gains (losses) are included in “Selling, general and administrative” expense in the consolidated statements of income.

At March 31, 2024 and December 31, 2023, our beneficial interests were $ 2,483 and $ 2,270 , respectively, of which $ 1,449 and $ 1,296 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at March 31, 2024 and December 31, 2023 was $ 335 and $ 385 , respectively, of which $ 120 and $ 111 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder in “Other noncurrent liabilities.” Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our beneficial interests and guarantee obligation.

At June 30, 2024 and December 31, 2023, our beneficial interests were $ 2,764 and $ 2,270 , respectively, of which $ 1,639 and $ 1,296 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at June 30, 2024 and December 31, 2023 was $ 299 and $ 385 , respectively, of which $ 106 and $ 111 are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets, with the remainder in “Other noncurrent liabilities.” Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our beneficial interests and guarantee obligation.

Revolving Receivables Program

During the first quarter of 2024, we expanded our revolving agreement to transfer up to $ 1,800 of certain receivables through our bankruptcy-remote subsidiary to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred.

During the first quarter of 2024, we expanded our revolving agreement to transfer up to $ 1,800 of certain receivables through our bankruptcy-remote subsidiaries to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred.

This agreement is subject to renewal on an annual basis and the transfer limit may be expanded or reduced from time to time.

As customers pay their balances, we transfer additional receivables into the program, resulting in our gross receivables sold exceeding net cash flow impacts (e.g., collect and reinvest).

The transferred receivables are fully guaranteed by our bankruptcy-remote subsidiary, which holds additional receivables in the amount of $ 698 that are pledged as collateral under this agreement.

The transferred receivables are fully guaranteed by our bankruptcy-remote subsidiaries, which hold additional receivables in the amount of $ 1,260 that are pledged as collateral under this agreement.

The transfers are recorded at fair value of the proceeds received and obligations assumed less derecognized receivables.

Our maximum exposure to loss related to these receivables transferred is limited to the derecognized amount outstanding.

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The following table sets forth a summary of the revolving receivables sold during the three months ended March 31, 2024 and 2023:

Three months ended

The following table sets forth a summary of the revolving receivables sold:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

Gross receivables sold/cash proceeds received 1

$ 4,672 $ 1,000 $ 8,846 $ 1,000

Total collections under revolving agreement

4,672 — 8,546 —

Net cash proceeds received

$ — $ 1,000 $ 300 $ 1,000

Net receivables sold 2

1 Includes initial sales of receivables of $ 300 and $ 0 for the three months ended March 31, 2024 and 2023, respectively.

$ 4,549 $ 982 $ 8,612 $ 982

1 Includes initial sales of receivables of $ 0 and $ 1,000 for the three months and $ 300 and $ 1,000 for the six months ended June 30, 2024 and 2023, respectively.

2 Receivables net of allowance and other reserves.

1 unchanged sentence

We account for our investment in DIRECTV under the equity method and record our share of DIRECTV earnings as equity in net income of affiliates, with DIRECTV considered a related party.

At March 31, 2024, our investment in DIRECTV was $ 685 .

The following table sets forth our share of DIRECTV’s earnings included in equity in net income of affiliates and cash distributions received from DIRECTV as of March 31:

DIRECTV’s earnings included in equity in net income of affiliates

At June 30, 2024, our investment in DIRECTV was $ 293 .

The following table sets forth our share of DIRECTV’s earnings included in “Equity in net income of affiliates” and cash distributions received from DIRECTV:

Three months ended Six months ended

June 30, June 30,

2024 2023 2024 2023

DIRECTV’s earnings included in Equity in net income

of affiliates

$ 350 $ 377 $ 674 $ 911

Distributions classified as operating activities

$ 350 $ 377 $ 674 $ 911

Distributions classified as investing activities

392 200 586 974

Cash distributions received from DIRECTV

$ 742 $ 577 $ 1,260 $ 1,885

For the three months ended March 31, 2024 and 2023, we billed DIRECTV approximately $ 145 and $ 240 under commercial arrangements and transition service agreements, which were recorded as a reduction to the operations and support expenses incurred.

At March 31, 2024 , we had accounts receivable from DIRECTV of $ 255 and accounts payable to DIRECTV of $ 41 .

For the three and six months ended June 30, 2024, we billed DIRECTV approximately $ 134 and $ 279 under commercial arrangements and transition service agreements, which were recorded as a reduction to the operations and support expenses incurred.

At June 30, 2024 , we had accounts receivable from DIRECTV of $ 247 and accounts payable to DIRECTV of $ 50 .

We are not committed, implicitly or explicitly, to provide financial or other support, other than as noted above, as our involvement with DIRECTV is limited to the carrying amount of the assets and liabilities recognized on our consolidated balance sheet.

3 unchanged sentences

Our supplier financing program does not result in changes to our normal, contracted payment cycles or cash from operations.

At the supplier’s election, they can receive payment of AT&T obligations prior to the scheduled due dates, at a discounted price from the third-party financial institution.

The discounted price paid by participating suppliers is based on a variable rate that is

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

indexed to the overnight borrowing rate.

At the supplier’s election, they can receive payment of AT&T obligations prior to the scheduled due dates, at a discounted price from the third-party financial institution.

The discounted price paid by participating suppliers is based on a variable rate that is indexed to the overnight borrowing rate.

We agree to pay the financial institution the stated amount generally within 90 days of receipt of the invoice.

We do not have pledged assets or other guarantees under our supplier financing program.

Suppliers had elected to sell to the third-party financial institutions $ 3,203 and $ 2,844 of our outstanding payment obligations as of March 31, 2024 and December 31, 2023, respectively.

Suppliers had elected to sell to the third-party financial institutions $ 3,059 and $ 2,844 of our outstanding payment obligations as of June 30, 2024 and December 31, 2023, respectively.

These amounts are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets.

2 unchanged sentences

We also have arrangements with suppliers of handset inventory that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (variable rate extension fee).

We had $ 3,917 of direct supplier financing outstanding at March 31, 2024 and $ 5,442 as of December 31, 2023, which are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets.

We had $ 3,432 of direct supplier financing outstanding at June 30, 2024 and $ 5,442 as of December 31, 2023, which are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets.

Our direct supplier financing is reported as operating activities in our statements of cash flows when paid.

1 unchanged sentence

In connection with capital improvements and the acquisition of other productive assets, we negotiate favorable payment terms of 120 days or more (referred to as vendor financing), which are reported as financing activities in our statements of cash flows when paid.

For the three months ended March 31, 2024 and 2023, we recorded vendor financing commitments related to capital investments of $ 99 and $ 1,021 , respectively.

We had $ 2,021 vendor financing payables at March 31, 2024, with $ 1,215 included in “Accounts payable and accrued liabilities” and $ 2,833 vendor financing payables at December 31, 2023, with $ 1,975 included in “Accounts payable and accrued liabilities.”

For the six months ended June 30, 2024 and 2023, we recorded vendor financing commitments related to capital investments of $ 523 and $ 1,341 , respectively.

We had $ 1,827 of vendor financing payables at June 30, 2024, with $ 883 included in “Accounts payable and accrued liabilities” and $ 2,833 of vendor financing payables at December 31, 2023, with $ 1,975 included in “Accounts payable and accrued liabilities.”

ADDITIONAL FINANCIAL INFORMATION

2 unchanged sentences

The following table summarizes cash and cash equivalents and restricted cash balances contained on our consolidated balance sheets:

March 31, December 31,

June 30, December 31,

2024 2023 2023 2022

4 unchanged sentences

Cash and Cash Equivalents and Restricted Cash $ 3,203 $ 9,622 $ 6,833 $ 3,793

MARCH 31, 2024

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

1 unchanged sentence

The following table summarizes cash paid during the periods for interest and income taxes:

Three months ended

Six months ended

Cash paid (received) during the period for:

2 unchanged sentences

The following table summarizes capital expenditures:

Three months ended

Six months ended

Purchase of property and equipment $ 8,042 $ 8,515

2 unchanged sentences

The following table summarizes acquisitions, net of cash acquired:

Three months ended

Six months ended

Business acquisitions $ — $ —

2 unchanged sentences

Total Acquisitions $ 270 $ 515

1 Total capitalized interest was $ 103 and $ 272 for the three months ended March 31, 2024 and 2023, respectively.

MARCH 31, 2024

1 Total capitalized interest was $ 199 and $ 537 for the six months ended June 30, 2024 and 2023, respectively.

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations

9 unchanged sentences

Percentage increases and decreases that are not considered meaningful are denoted with a dash.

First Quarter

2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Operating Revenues

20 unchanged sentences

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

MARCH 31, 2024

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

3 unchanged sentences

Additional analysis is discussed in our “Segment Results” section.

First Quarter

2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Operating Revenues

14 unchanged sentences

Net Income Attributable to AT&T 3,597 4,489 (19.9) 7,042 8,717 (19.2)

Net Income Attributable to Common Stock $ 3,395 $ 4,176 (18.7) %

Operating revenues decreased in the first quarter of 2024, reflecting declines in Mobility equipment revenue and Business Wireline service revenues, partially offset by Mobility service, Consumer Wireline and Mexico revenues .

Operations and support expenses decreased in the first quarter of 2024, reflecting lower Mobility equipment costs resulting from lower wireless sales volumes.

Also contributing to expense declines are our continued transformation efforts that were offset by higher restructuring charges associated with our deployment of Open RAN, our collaboration with Ericsson for commercial scale open radio access network deployment.

Depreciation and amortization expense increased in the first quarter of 2024, primarily due to higher depreciation expense related to ongoing capital spending for strategic initiatives such as fiber and network upgrades.

Also contributing to higher depreciation expense was the impact of shortening of estimated economic lives of wireless network equipment that will be replaced earlier than originally anticipated with our deployment of Open RAN.

Operating income decreased in the first quarter of 2024.

Our operating income margin in the first quarter decreased from 19.9% in 2023 to 19.5% in 2024.

Interest expense increased in the first quarter of 2024, primarily due to lower capitalized interest associated with spectrum acquisitions, partially offset by lower debt balances.

Interest expense in 2023 also included distributions on Mobility preferred interests, which were repurchased on April 5, 2023.

Equity in net income of affiliates decreased in the first quarter of 2024, 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 the first quarter of 2023 (see Note 9).

MARCH 31, 2024

Net Income Attributable to

Common Stock $ 3,546 $ 4,437 (20.1) % $ 6,941 $ 8,613 (19.4) %

Operating revenues decreased in the second quarter and for the first six months of 2024, reflecting declines in Business Wireline service and Mobility equipment revenues, partially offset by Mobility service, Consumer Wireline and Mexico revenues .

Operations and support expenses increased in the second quarter and decreased for the first six months of 2024.

The increase in the second quarter reflects $480 of restructuring charges primarily related to termination fees of a RAN vendor whose equipment is being phased out of our network as part of our network modernization programs.

This increase is largely offset by lower Mobility equipment costs resulting from lower wireless sales volumes and expense declines from our continued transformation efforts.

Expense decreases for the first six months reflect lower Mobility equipment costs and our transformation efforts that were partially offset by higher restructuring charges associated with our deployment of Open RAN.

Depreciation and amortization expense increased in the second quarter and for the first six months of 2024, primarily due to the shortening of estimated economic lives of wireless network equipment that will be replaced earlier than originally anticipated with our deployment of Open RAN.

Also contributing to higher depreciation expense was the impact of ongoing capital spending for strategic initiatives such as fiber and network upgrades.

Operating income decreased in the second quarter and for the first six months of 2024.

Our operating income margin in the second quarter decreased from 21.4% in 2023 to 19.3% in 2024 and for the first six months decreased from 20.7% in 2023 to 19.4% in 2024.

Interest expense increased in the second quarter and for the first six months of 2024, primarily due to lower capitalized interest associated with spectrum acquisitions, partially offset by lower debt balances.

Interest expense for the first six months of 2023 also included distributions on Mobility preferred interests, which were repurchased on April 5, 2023.

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Other income (expense) – net decreased in the first quarter of 2024.

The decrease was primarily driven by lower pension and postretirement benefit credits in 2024 (see Note 6), and noncash impairments recognized on a held-for-sale business and an equity investment in a Latin America satellite business.

Income tax expense decreased in the first quarter of 2024.

The decrease was primarily driven by lower income before income tax.

Our effective tax rate was 23.0% in the first quarter of 2024, versus 22.8% in the comparable period in the prior year.

COMMUNICATIONS SEGMENT First Quarter

2024 2023 Change

Equity in net income of affiliates decreased in the second quarter and for the first six months of 2024, 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 the first quarter of 2023 (see Note 9).

Other income (expense) – net decreased in the second quarter and for the first six months of 2024.

The decreases were primarily driven by lower pension and postretirement benefit credits in 2024 and net actuarial and settlement gains in 2023 with no corresponding remeasurement in 2024 (see Note 6).

Also contributing to the decrease for the first six months were first-quarter 2024 noncash impairments recognized on a held-for-sale business and an equity investment in a Latin America satellite business.

Income tax expense decreased in the second quarter and for the first six months of 2024, primarily due to lower income before income tax.

Our effective tax rate was 22.4% in the second quarter of 2024 and 22.7% for the first six months of 2024, versus 22.8% and 22.8% in the comparable periods in the prior year.

COMMUNICATIONS SEGMENT Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Segment Operating Revenues

10 unchanged sentences

Mobility Subscribers 1

115,474 111,854

Total domestic broadband connections 15,352 15,304

1 unchanged sentence

VoIP connections

Operating revenues decreased in the first quarter of 2024, driven by decreases in our Mobility equipment revenue and Business Wireline business unit, which continues to reflect lower demand for legacy services and product simplification.

1 Effective with our first-quarter 2024 reporting, we have removed connected devices from our total Mobility subscribers, consistent with industry standards and our key performance metrics.

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

Operating revenues decreased in the second quarter and for the first six months of 2024, primarily driven by declines in our Business Wireline business unit, which reflects lower demand for legacy services and product simplification, as well as the absence of revenues from our cybersecurity business that was contributed to a new cybersecurity joint venture LevelBlue in the second quarter of 2024.

Revenue declines were also driven by lower Mobility equipment revenue.

These decreases were partially offset by increases in our Mobility and Consumer Wireline business units, driven by gains in wireless and broadband services.

Operating income remains consistent in the first quarter of 2024.

Our Communications segment operating income margin in the first quarter increased from 23.1% in 2023 to 23.4% in 2024.

MARCH 31, 2024

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Operating income decreased in the second quarter and for the first six months of 2024.

Our Communications segment operating income margin in the second quarter decreased from 24.9% in 2023 to 24.5% in 2024 and for the first six months decreased from 24.0% in 2023 to 23.9% in 2024.

Communications Business Unit Discussion

Mobility Results

First Quarter

2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Operating revenues

8 unchanged sentences

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

March 31, Percent

June 30, Percent

(in 000s) 2024 2023 Change

7 unchanged sentences

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

MARCH 31, 2024

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

1 unchanged sentence

Mobility Net Additions

First Quarter

(in 000s) 2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

(in 000s) 2024 2023 Change 2024 2023 Change

Postpaid Phone Net Additions 419 326 28.5 % 768 750 2.4 %

6 unchanged sentences

Postpaid Churn 3

0.89 % 0.99 % (10) BP

0.85 % 0.95 % (10) BP 0.87 % 0.97 % (10) BP

Postpaid Phone-Only Churn 3

0.72 % 0.81 % (9) BP

0.70 % 0.79 % (9) BP 0.71 % 0.80 % (9) BP

1 Excludes migrations between wireless subscriber categories, including connected devices, and acquisition-related activity during the period.

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

Tablet net adds (losses) were (12) and (18) for the quarters ended March 31, 2024 and 2023.

Wearables and other net adds were 52 and 136 for the quarters ended March 31, 2024 and 2023.

Tablet net adds (losses) were 64 and (31) for the quarters ended June 30, 2024 and 2023 and 52 and (49) for the first six months ended June 30, 2024 and 2023.

Wearables and other net adds were 110 and 169 for the quarters ended June 30, 2024 and 2023 and 162 and 305 for the first six months ended June 30, 2024 and 2023.

3 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month by the total number of wireless subscribers at the beginning of that month.

The churn rate for the period is equal to the average of the churn rate for each month of that period.

Service revenue increased in the first quarter of 2024.

Service revenue increased in the second quarter and for the first six months of 2024.

The increases are largely due to growth from subscriber gains and postpaid phone average revenue per subscriber (ARPU) growth.

ARPU increased in the first quarter of 2024, reflecting pricing actions taken in the third quarter of 2023.

ARPU increased in the second quarter and for the first six months of 2024, reflecting pricing actions.

The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins.

Postpaid churn and postpaid phone-only churn were lower in the first quarter of 2024.

Equipment revenue decreased in the first quarter of 2024, primarily driven by a lower wireless sales volumes.

Operations and support expenses decreased in the first quarter of 2024 largely due to lower equipment costs.

Depreciation expense increased in the first quarter of 2024, primarily due to shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our Open RAN deployment and network transformation, and ongoing capital spending for network upgrades and expansion, which we expect to continue through the remainder of 2024.

Operating income increased in the first quarter of 2024.

Our Mobility operating income margin in the first quarter increased from 30.5% in 2023 to 31.4% in 2024.

Our Mobility EBITDA margin in the first quarter increased from 40.7% in 2023 to 43.5% in 2024.

Postpaid churn and postpaid phone-only churn were lower in the second quarter and for the first six months of 2024.

Equipment revenue decreased in the second quarter and for the first six months of 2024, primarily driven by lower wireless sales volumes.

Operations and support expenses decreased in the second quarter and for the first six months of 2024, primarily due to lower equipment costs driven by lower device sales.

Depreciation expense increased in the second quarter and for the first six months of 2024, primarily due to shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our Open RAN deployment and network transformation, and ongoing capital spending for network upgrades and expansion, which we expect to continue through the remainder of 2024.

Operating income increased in the second quarter and for the first six months of 2024.

Our Mobility operating income margin in the second quarter increased from 32.6% in 2023 to 32.8% in 2024 and for the first six months increased from 31.5% in 2023 to 32.1% in 2024.

Our Mobility EBITDA margin in the second quarter increased from 43.0% in 2023 to 44.9% in 2024 and for the first six months increased from 41.8% in 2023 to 44.2% in 2024.

EBITDA is defined as operating income excluding depreciation and amortization.

MARCH 31, 2024

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

1 unchanged sentence

Business Wireline Results

First Quarter

2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Operating revenues

7 unchanged sentences

Operating Income $ 102 $ 396 (74.2) % $ 166 $ 774 (78.6) %

Service revenues decreased in the first quarter of 2024, driven by lower demand for legacy voice, data and network services along with product simplification, partially offset by growth in connectivity services.

Service revenues decreased in the second quarter and for the first six months of 2024, 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.

Equipment revenues increased in the first quarter of 2024, driven by higher customer premises equipment sales, which are nonrecurring in nature.

Operations and support expenses decreased in the first quarter of 2024, primarily driven by lower personnel costs associated with ongoing transformation initiatives, lower marketing and customer support expenses, partially offset by higher equipment costs.

Revenue declines also reflect the absence of revenues from our cybersecurity business that was contributed to LevelBlue.

Equipment revenues increased in the second quarter and for the first six months of 2024, driven by higher customer premises equipment sales, which are nonrecurring in nature.

Operations and support expenses decreased in the second quarter and for the first six months of 2024, primarily driven by lower personnel costs associated with ongoing transformation initiatives, and lower network access and customer support expenses.

Partially offsetting the decreases were higher vendor credits in the second quarter of 2023 and higher equipment costs for the six-month period.

Expense declines also reflect the contribution of our cybersecurity business.

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

Depreciation expense increased in the first quarter of 2024, primarily due to ongoing capital investment for strategic initiatives such as fiber, which we expect to continue through the remainder of 2024.

Operating income decreased in the first quarter of 2024.

Our Business Wireline operating income margin in the first quarter decreased from 7.1% in 2023 to 1.3% in 2024.

Our Business Wireline EBITDA margin in the first quarter decreased from 32.0% in 2023 to 29.0% in 2024.

Depreciation expense increased in the second quarter and for the first six months of 2024, primarily due to ongoing capital investment for strategic initiatives such as fiber, which we expect to continue through the remainder of 2024.

Operating income decreased in the second quarter and for the first six months of 2024.

Our Business Wireline operating income margin in the second quarter decreased from 7.5% in 2023 to 2.1% in 2024 and for the first six months decreased from 7.3% in 2023 to 1.7% in 2024.

Our Business Wireline EBITDA margin in the second quarter decreased from 32.8% in 2023 to 31.3% in 2024 and for the first six months decreased from 32.4% in 2023 to 30.1% in 2024.

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Consumer Wireline Results

First Quarter

2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

2024 2023 Change 2024 2023 Change

Operating revenues

8 unchanged sentences

Operating Income $ 184 $ 168 9.5 % $ 397 $ 262 51.5 %

MARCH 31, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

The following tables highlight other key measures of performance for Consumer Wireline:

March 31, Percent

June 30, Percent

(in 000s) 2024 2023 Change

10 unchanged sentences

Broadband Net Additions

First Quarter

(in 000s) 2024 2023 Change

Second Quarter Six-Month Period

Percent Percent

(in 000s) 2024 2023 Change 2024 2023 Change

Total Broadband and DSL Net Additions 32 (54) — % 72 (96) — %

Broadband Net Additions 1

52 (35) — 107 (58) —

Fiber Broadband Net Additions 239 251 (4.8) % 491 523 (6.1) %

1 Includes AT&T Internet Air.

Broadband revenues increased in the first quarter of 2024, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU due to prior-year promotional pricing, partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in the first quarter of 2024, reflecting the continued decline in demand for these services in favor of other technologies, such as wireless and fiber services.

Other service and equipment revenues decreased in the first quarter of 2024, reflecting the continued decline in the number of VoIP customers.

Operations and support expenses decreased in the first quarter of 2024.

Expense decreases were primarily due to lower customer support costs, partially offset by higher network-related costs as our fiber build scales.

Depreciation expense increased in the first quarter of 2024, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, which we expect to continue through the remainder of 2024.

Operating income increased in the first quarter of 2024.

Our Consumer Wireline operating income margin in the first quarter increased from 2.9% in 2023 to 6.4% in 2024.

Our Consumer Wireline EBITDA margin in the first quarter increased from 29.5% in 2023 to 32.7% in 2024.

MARCH 31, 2024

Broadband revenues increased in the second quarter and for the first six months of 2024, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU due to prior-year promotional pricing, partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in the second quarter and for the first six months of 2024, reflecting the continued decline in demand for these services in favor of other technologies, such as wireless and fiber services.

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

LATIN AMERICA SEGMENT First Quarter

2024 2023 Percent Change

Other service and equipment revenues decreased in the second quarter and for the first six months of 2024, reflecting the continued decline in the number of VoIP customers.

Operations and support expenses increased in the second quarter and decreased for the first six months of 2024.

Expense increases in the second quarter were primarily due to higher network-related costs as our fiber build scales, largely offset by lower customer support costs.

Expense decreases for the first six months were driven by lower customer support costs and operating taxes that were offset by higher network-related costs.

Depreciation expense increased in the second quarter and for the first six months of 2024, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, which we expect to continue through the remainder of 2024.

Operating income increased in the second quarter and for the first six months of 2024.

Our Consumer Wireline operating income margin in the second quarter increased from 5.2% in 2023 to 5.5% in 2024 and for the first six months increased from 4.0% in 2023 to 5.9% in 2024.

Our Consumer Wireline EBITDA margin in the second quarter increased from 31.5% in 2023 to 32.8% in 2024 and for the first six months increased from 30.5% in 2023 to 32.7% in 2024.

LATIN AMERICA SEGMENT Second Quarter

Six-Month Period

2024 2023 Percent Change 2024 2023 Percent Change

Segment Operating Revenues

8 unchanged sentences

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

March 31, Percent

June 30, Percent

(in 000s) 2024 2023 Change

4 unchanged sentences

Total Mexico Wireless Subscribers 22,636 21,689 4.4 %

JUNE 30, 2024

Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Mexico Wireless Net Additions

First Quarter

(in 000s) 2024 2023 Change

Second Quarter

Six-Month Period

Percent Percent

(in 000s) 2024 2023 Change 2024 2023 Change

Mexico Wireless Net Additions

3 unchanged sentences

Total Mexico Wireless Net Additions 177 76 — % 320 86 — %

Service revenues increased in the first quarter of 2024 reflecting favorable foreign exchange impacts and growth in subscribers.

Equipment revenues increased in the first quarter of 2024 driven by higher equipment sales and favorable foreign exchange impacts.

Operations and support expenses increased in the first quarter of 2024 driven by unfavorable impact of foreign exchange and increased equipment costs resulting from higher sales.

Service revenues increased in the second quarter and for the first six months of 2024.

The increase in the second quarter was primarily due to growth in subscribers and ARPU, as well as favorable foreign exchange impacts.

The increase for the first six months reflects favorable exchange rates primarily from the first quarter of 2024, with subscriber and ARPU growth also contributing to higher revenues.

Equipment revenues increased in the second quarter and for the first six months of 2024, primarily driven by higher equipment sales and favorable foreign exchange impacts.

Operations and support expenses increased in the second quarter and for the first six months of 2024, primarily due to increased equipment and selling costs resulting from higher sales and unfavorable impact of foreign exchange.

Approximately 4% of Mexico expenses are U.S.

dollar based, with the remainder in the local currency.

Depreciation and amortization expense increased in the first quarter of 2024 driven by unfavorable impact of foreign exchange partially offset by lower in-service assets.

MARCH 31, 2024

Depreciation and amortization expense decreased in the second quarter and for the first six months of 2024, primarily driven by lower in-service assets, partially offset by unfavorable impact of foreign exchange.

Operating income improved in the second quarter and for the first six months of 2024.

Our Mexico operating income margin in the second quarter increased from (4.0)% in 2023 to 0.5% in 2024 and for the first six months increased from (3.7)% in 2023 to 0.4% in 2024.

Our Mexico EBITDA margin in the second quarter increased from 15.1% in 2023 to 16.1% in 2024 and for the first six months increased from 15.7% in 2023 to 16.5% in 2024.

COMPETITIVE AND REGULATORY 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, since then, the FCC and some state regulatory commissions have maintained, re-imposed or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies.

Recently, the FCC’s regulatory approach has depended on control of the executive branch, eliminating a variety of antiquated and unnecessary regulations in a number of areas, while imposing or re-imposing regulations in other areas.

We continue to support regulatory and legislative measures and efforts, at both the state and federal levels, to reduce inappropriate regulatory burdens that inhibit our ability to compete effectively and offer needed services to our customers, including initiatives to transition services from traditional networks to all IP-based networks.

At the same time, we also seek to ensure that legacy regulations are not further extended to broadband or wireless services, which are subject to vigorous competition.

Until 2015, the FCC classified fixed and mobile consumer broadband internet access services as information services subject to minimal regulation.

In 2015, the FCC reclassified such services as telecommunications services subject to broader regulation by the FCC and imposed “net neutrality rules.” Since then, the FCC has twice reversed course, most recently again reclassifying such services as telecommunications services subject to broader regulation by the FCC in an order adopted on April 25, 2024, and scheduled to take effect on July 22, 2024.

Multiple trade associations and other parties have challenged the FCC’s

JUNE 30, 2024

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-Q

Item 1. Financial Statements