What changed in this filing

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Item 1. Financial Statements

2024-10-29 compared with 2024-07-25 · 278 added, 209 removed, 1013 unchanged (32% of the section changed)

2 unchanged sentences

Dollars in millions except per share amounts

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

11 unchanged sentences

Asset impairments and abandonments and restructuring

4,422 604 5,061 604

Depreciation and amortization 5,087 4,705 15,206 14,011

11 unchanged sentences

Net Income Attributable to Noncontrolling Interest ( 319 ) ( 331 ) ( 977 ) ( 829 )

Net Income Attributable to AT&T $ 3,597 $ 4,489 $ 7,042 $ 8,717

Net Income (Loss) Attributable to AT&T

$ ( 174 ) $ 3,495 $ 6,868 $ 12,212

Preferred Stock Dividends ( 52 ) ( 51 ) ( 153 ) ( 155 )

Net Income Attributable to Common Stock $ 3,546 $ 4,437 $ 6,941 $ 8,613

Basic Earnings Per Share Attributable to Common Stock $ 0.49 $ 0.61 $ 0.96 $ 1.19

Diluted Earnings Per Share Attributable to Common Stock $ 0.49 $ 0.61 $ 0.96 $ 1.19

Net Income (Loss) Attributable to Common Stock

$ ( 226 ) $ 3,444 $ 6,715 $ 12,057

Basic Earnings (Loss) Per Share Attributable to

$ ( 0.03 ) $ 0.48 $ 0.93 $ 1.67

Diluted Earnings (Loss) Per Share Attributable to

$ ( 0.03 ) $ 0.48 $ 0.93 $ 1.67

Weighted Average Number of Common Shares

7 unchanged sentences

Dollars in millions

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

21 unchanged sentences

Other comprehensive income (loss) ( 792 ) 240 ( 1,652 ) ( 221 )

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

Total comprehensive income (loss)

( 647 ) 4,066 6,193 12,820

Total comprehensive income attributable to

1 unchanged sentence

( 319 ) ( 331 ) ( 977 ) ( 829 )

Total Comprehensive Income Attributable to AT&T $ 2,870 $ 4,440 $ 6,182 $ 8,256

Total Comprehensive Income (Loss) Attributable to AT&T

$ ( 966 ) $ 3,735 $ 5,216 $ 11,991

See Notes to Consolidated Financial Statements.

1 unchanged sentence

Dollars in millions except per share amounts

June 30, December 31,

September 30, December 31,

Assets (Unaudited)

31 unchanged sentences

Stockholders’ Equity

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

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

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

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

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

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

December 31, 2023:

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

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

Additional paid-in capital 109,354 114,519

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)

Retained (deficit) earnings ( 185 ) ( 5,015 )

Treasury stock ( 446,348,901 at September 30, 2024 and 470,685,237 at December 31, 2023, at cost)

( 15,087 ) ( 16,128 )

6 unchanged sentences

Dollars in millions

Six months ended

Nine months ended

September 30,

Operating Activities

10 unchanged sentences

Receivables 574 1,173

Other current assets 1,149 1,106

Inventories, prepaid and other current assets

Accounts payable and other accrued liabilities ( 4,503 ) ( 5,062 )

34 unchanged sentences

Dollars and shares in millions except per share amounts

Three months ended Six months ended

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

Three months ended Nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Shares Amount Shares Amount Shares Amount Shares Amount

22 unchanged sentences

Balance at end of period $ 109,354 $ 116,890 $ 109,354 $ 116,890

Retained Earnings (Deficit)

Retained (Deficit) Earnings

Balance at beginning of period $ 2 $ ( 10,698 ) $ ( 5,015 ) $ ( 19,415 )

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

Net income (loss) attributable to AT&T

( 174 ) 3,495 6,868 12,212

Preferred stock dividends — — ( 36 ) —

6 unchanged sentences

Dollars and shares in millions except per share amounts

Three months ended Six months ended

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

Three months ended Nine months ended

September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023

Shares Amount Shares Amount Shares Amount Shares Amount

21 unchanged sentences

Redemption of noncontrolling

( 41 ) — ( 58 ) —

Distributions ( 389 ) ( 314 ) ( 1,026 ) ( 772 )

8 unchanged sentences

See Notes to Consolidated Financial Statements.

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

14 unchanged sentences

Actual results could differ from those estimates.

Goodwill Impairment During the third quarter of 2024, we updated the long-term strategic plan of our Business Wireline reporting unit.

The updated plans reflected lower long-term projected future cash flows associated with the industry-wide secular decline, including a faster-than-previously anticipated decline of legacy services.

We identified this as an impairment indicator and performed an interim quantitative goodwill impairment test of our Business Wireline reporting unit.

The interim impairment test methodology was consistent with our approach for annual impairment testing, using similar models updated with our current view of key inputs and assumptions.

We concluded that the calculated fair value of the Business Wireline reporting unit was lower than the book value, resulting in a goodwill impairment.

As a result, in the third quarter of 2024, we recorded a noncash goodwill impairment charge of $ 4,422 in our consolidated statements of income, which represented the entirety of Business Wireline reporting unit goodwill.

“Goodwill – Net” included on our consolidated balance sheet at September 30, 2024 totaled $ 63,432 , which is attributable to our Mobility and Consumer Wireline reporting units in the Communications segment.

No indicators of impairment were identified for our Mobility and Consumer Wireline reporting units.

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

EARNINGS PER SHARE

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,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

Numerator for basic earnings per share:

Net Income Attributable to Common Stock $ 3,546 $ 4,437 $ 6,941 $ 8,613

Net Income (Loss) Attributable to Common Stock $ ( 226 ) $ 3,444 $ 6,715 $ 12,057

Dilutive potential common shares:

9 unchanged sentences

Denominator for diluted earnings per share 7,208 7,185 7,200 7,280

1 For the three months ended September 30, 2024, dilutive potential common shares are not included in the computation of diluted earnings per share because their effect is antidilutive as a result of the net loss attributable to common stock.

On April 5, 2023, we repurchased all our Series A Cumulative Perpetual Preferred Membership Interests in AT&T Mobility II LLC (Mobility preferred interests).

2 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.

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

14 unchanged sentences

( 202 ) 23 ( 331 ) ( 1,142 ) ( 1,652 )

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

Balance as of September 30, 2024 $ ( 1,539 ) $ ( 34 ) $ ( 1,360 ) $ 3,581 $ 648

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

367 ( 18 ) 902 ( 1,472 ) ( 221 )

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

Balance as of September 30, 2023 $ ( 1,433 ) $ ( 108 ) $ ( 1,096 ) $ 5,182 $ 2,545

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

16 unchanged sentences

In the first quarter of 2024, we began

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

12 unchanged sentences

• 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.

For the three months ended June 30, 2024

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

For the three months ended September 30, 2024

Revenues Operations

19 unchanged sentences

$ 30,213 $ 23,010 $ 7,203 $ 5,087 $ 2,116

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended June 30, 2023

For the three months ended September 30, 2023

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

16 unchanged sentences

$ 30,350 $ 19,863 $ 10,487 $ 4,705 $ 5,782

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Revenues Operations

18 unchanged sentences

$ 90,038 $ 61,109 $ 28,929 $ 15,206 $ 13,723

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

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

17 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

14 unchanged sentences

Income Before Income Taxes $ 1,430 $ 4,980 $ 11,390 $ 16,912

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

3 unchanged sentences

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

For the three months ended June 30, 2024

For the three months ended September 30, 2024

Communications

8 unchanged sentences

Total $ 21,052 $ 4,606 $ 3,416 $ 1,022 $ 117 $ 30,213

For the three months ended June 30, 2023

For the three months ended September 30, 2023

Communications

8 unchanged sentences

Total $ 20,692 $ 5,221 $ 3,331 $ 992 $ 114 $ 30,350

For the six months ended June 30, 2024

For the nine months ended September 30, 2024

Communications

8 unchanged sentences

Total $ 62,126 $ 14,274 $ 10,113 $ 3,188 $ 337 $ 90,038

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the six months ended June 30, 2023

For the nine months ended September 30, 2023

Communications

11 unchanged sentences

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

June 30, December 31,

September 30, December 31,

Consolidated Balance Sheets 2024 2023

7 unchanged sentences

Total deferred customer contract fulfillment costs $ 5,554 $ 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 six months ended:

June 30, June 30,

September 30, September 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

JUNE 30, 2024

SEPTEMBER 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:

June 30, December 31,

September 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 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.

As of September 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 38,581 , of which we expect to recognize approximately 63 % 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.

JUNE 30, 2024

SEPTEMBER 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 Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

17 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 $ 16 and $ 18 in the second quarter and $ 33 and $ 37 for the first six months of 2024 and 2023, respectively.

Net supplemental pension benefits costs not included in the table above were $ 17 and $ 19 in the third quarter and $ 50 and $ 56 for the first nine 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.

JUNE 30, 2024

SEPTEMBER 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:

June 30, 2024 December 31, 2023

September 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 June 30, 2024 and December 31, 2023.

Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of September 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.

June 30, 2024

September 30, 2024

Level 1 Level 2 Level 3 Total

7 unchanged sentences

Liability Derivatives

Interest rate swaps — ( 1 ) — ( 1 )

Cross-currency swaps — ( 3,099 ) — ( 3,099 )

11 unchanged sentences

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

JUNE 30, 2024

SEPTEMBER 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 Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

2 unchanged sentences

Unrealized gains (losses) recognized on equity securities held at end of period $ 80 $ ( 56 ) $ 214 $ 108

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

At September 30, 2024, available-for-sale debt securities totaling $ 1,198 have maturities as follows - less than one year:

one to three years:

1 unchanged sentence

five or more years:

Our cash equivalents (money market securities), short-term investments (certificate and time deposits) and nonrefundable customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values.

Short-term investments and nonrefundable customer deposits are recorded in “Prepaid and other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Our cash equivalents (money market securities) and short-term investments (certificate and time deposits) are recorded at amortized cost, and the respective carrying amounts approximate fair values.

Short-term investments are recorded in “Prepaid and other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Derivative Financial Instruments

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

JUNE 30, 2024

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

SEPTEMBER 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 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 .

At September 30, 2024, we had posted collateral of $ 670 (a deposit asset) and held collateral of $ 2 (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 September, we would have been required to post additional collateral of $ 52 .

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 $ 2,661 .

2 unchanged sentences

Following are the notional amounts of our outstanding derivative positions:

June 30, December 31,

September 30, December 31,

Interest rate swaps $ — $ 1,750

1 unchanged sentence

Total $ 35,351 $ 39,756

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

2 unchanged sentences

Effect of Derivatives on the Consolidated Statements of Income

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 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 Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

Cash Flow Hedging Relationships 2024 2023 2024 2023

5 unchanged sentences

( 15 ) ( 15 ) ( 44 ) ( 44 )

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, impairment indicators may subject goodwill to nonrecurring fair value measurements.

The implied fair value of the Business Wireline reporting unit was estimated using the discounted cash flow approach, which is considered Level 3.

Goodwill related to the Business Wireline reporting unit was fully impaired at September 30, 2024 (see Note 1).

SALES OF RECEIVABLES

2 unchanged sentences

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

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

1 unchanged sentence

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,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

8 unchanged sentences

$ 370 $ 396 $ 64 $ 1,080

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.

1 Cash from initial sales of $ 2,442 and $ 2,937 for the three months and $ 7,848 and $ 8,122 for the nine months ended September 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:

June 30, 2024 December 31, 2023

September 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.

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

1 unchanged sentence

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,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

12 unchanged sentences

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,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

4 unchanged sentences

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

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.

At September 30, 2024 and December 31, 2023, our beneficial interests were $ 2,875 and $ 2,270 , respectively, of which $ 1,681 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 September 30, 2024 and December 31, 2023 was $ 236 and $ 385 , respectively, of which $ 121 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 subsidiaries to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred.

During 2024, we expanded our revolving agreement to transfer up to $ 2,770 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.

3 unchanged sentences

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

JUNE 30, 2024

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

1 unchanged sentence

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

Three months ended Six months ended

June 30, June 30,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

7 unchanged sentences

$ 5,463 $ 3,958 $ 14,075 $ 4,940

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.

1 Includes initial sales of receivables of $ 970 and $ 500 for the three months and $ 1,270 and $ 1,500 for the nine months ended September 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 June 30, 2024, our investment in DIRECTV was $ 293 .

On September 29, 2024, we agreed to sell our interest in DIRECTV to TPG Capital for approximately $ 7,600 in cash payments through 2029, inclusive of third-quarter 2024 distributions of $ 623 .

In addition to quarterly distributions through 2025, including payout of common catch-up units, this consideration includes notes payable to AT&T of approximately $ 2,550 and a dividend of $ 1,150 .

The transaction is expected to close in mid-2025, pending customary closing conditions.

We expect a gain on sale, whose amount will be dependent on the timing of close.

At September 30, 2024, our investment in DIRECTV was reduced to zero on our consolidated balance sheet, resulting from aggregate cash receipts exceeding our initial investment balance plus our cumulative equity in DIRECTV earnings.

As we are not committed, implicitly or explicitly, to provide financial or other support to DIRECTV, we will record future cash distributions received in excess of our share of DIRECTV’s earnings in “Equity in net income from affiliates” in the consolidated statements of income and as cash provided by operations in the consolidated statements of cash flows.

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,

Three months ended Nine months ended

September 30, September 30,

2024 2023 2024 2023

8 unchanged sentences

$ 623 $ 896 $ 1,883 $ 2,781

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.

For the three and nine months ended September 30, 2024, we billed DIRECTV approximately $ 129 and $ 408 under commercial arrangements and transition service agreements, which were recorded as a reduction to the operations and support expenses incurred.

At September 30, 2024 , we had accounts receivable from DIRECTV of $ 268 and accounts payable to DIRECTV of $ 52 .

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

SUPPLIER AND VENDOR FINANCING PROGRAMS

2 unchanged sentences

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

JUNE 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

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.

2 unchanged sentences

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 $ 3,059 and $ 2,844 of our outstanding payment obligations as of June 30, 2024 and December 31, 2023, respectively.

Suppliers had elected to sell to the third-party financial institutions $ 3,229 and $ 2,844 of our outstanding payment obligations as of September 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 $ 3,432 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.

We had $ 1,942 of direct supplier financing outstanding at September 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 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.”

For the nine months ended September 30, 2024 and 2023, we recorded vendor financing commitments related to capital investments of $ 581 and $ 2,128 , respectively.

We had $ 1,660 of vendor financing payables at September 30, 2024, with $ 843 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:

June 30, December 31,

September 30, December 31,

2024 2023 2023 2022

4 unchanged sentences

Cash and Cash Equivalents and Restricted Cash $ 2,726 $ 7,659 $ 6,833 $ 3,793

JUNE 30, 2024

SEPTEMBER 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:

Six months ended

Nine months ended

September 30,

Cash paid (received) during the period for:

2 unchanged sentences

The following table summarizes capital expenditures:

Six months ended

Nine months ended

September 30,

Purchase of property and equipment $ 13,301 $ 13,116

2 unchanged sentences

The following table summarizes acquisitions, net of cash acquired:

Six months ended

Nine months ended

September 30,

Business acquisitions $ — $ —

2 unchanged sentences

Total Acquisitions $ 322 $ 923

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

JUNE 30, 2024

1 Total capitalized interest was $ 288 and $ 750 for the nine months ended September 30, 2024 and 2023, respectively.

Preferred Interests Issued by Subsidiaries

Tower Holdings Preferred Interests

In 2019, we issued $ 6,000 nonconvertible cumulative preferred interest in a wireless subsidiary (Tower Holdings) that holds interests in various tower assets and has the right to receive approximately $ 6,000 if the purchase options from the tower companies are exercised.

The membership interests in Tower Holdings consist of (1) common interests, which are held by a consolidated subsidiary of AT&T, and (2) two series of preferred interests (collectively the “2019 Tower preferred interests”).

The September series (Tower Class A-1) of the preferred interests totals $ 1,500 and pays an initial preferred distribution of 5.0 %, and the December series (Tower Class A-2) totals $ 4,500 and pays an initial preferred distribution of 4.75 %.

Distributions are paid quarterly, subject to declaration and reset every five years .

In August 2024, we amended the 2019 Tower preferred interests, effective November 2024, to reset the rate and restructure the membership interests whereby all of the 2019 Tower preferred interests shall be designated Fixed Rate Class A Limited Membership Interests (Tower Fixed Rate Interests).

A portion of the Tower Fixed Rate Interests will move to Floating Rate Class A Limited Membership Interests (Tower Floating Rate Interests) each year over a five-year period.

The Tower Fixed Rate Interests pay a preferred distribution of 5.90 %, and the Tower Floating Rate Interests pay a preferred distribution equal to the Secured Overnight Financing Rate (SOFR) plus 250 basis points, as defined in the agreement.

Any failure to declare or pay distributions on the Tower Fixed Rate Interests or Tower Floating Rate Interests (collectively, the “Tower preferred interests”) would not impose any limitation on cash movement between affiliates, or our ability to declare a dividend on or repurchase AT&T shares.

We can call the Tower Fixed Rate Interests at the issue price beginning in November 2029, and we can call the Tower Floating Rate Interests at any time.

The Tower preferred interests are included in “Noncontrolling interest” on the consolidated balance sheets.

SEPTEMBER 30, 2024

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The holders of the Tower preferred interests have the option to require redemption upon the occurrence of certain contingent events, such as the failure of AT&T to pay the preferred distribution for two or more periods or to meet certain other requirements, including a minimum credit rating.

If notice is given upon such an event, all other holders of equal or more subordinate classes of membership interests in Tower Holdings are entitled to receive the same form of consideration payable to the holders of the Tower preferred interests, resulting in a deemed liquidation for accounting purposes.

Telco LLC Preferred Interests

At September 30, 2024, and as of the date of this report, we had $ 7,250 outstanding cumulative preferred interests in a limited liability company (Telco LLC) that was formed to hold telecommunication-related assets.

The cumulative preferred interests in Telco LLC are comprised of Telco Class A-1, A-2 and A-3 interests (collectively the “Telco preferred interests”) and are included in “Noncontrolling interest” on the consolidated balance sheets (see Note 16 to AT&T’s 2023 Annual Report on Form 10-K).

The Telco preferred interests can be called at issue price beginning September 29, 2027.

The holders of the Telco preferred interests have the option to require redemption upon the occurrence of certain contingent events, such as the failure of Telco LLC to pay the preferred distribution for two or more periods or to meet certain other requirements, including a minimum credit rating.

If notice is given, all other holders of equal or more subordinate classes of members’ equity are entitled to receive the same form of consideration payable to the holders of the Telco preferred interests, resulting in a deemed liquidation for accounting purposes.

In October 2024, we entered into an agreement to issue in the first quarter of 2025, an additional $ 2,250 of nonconvertible cumulative preferred interests in Telco LLC (Telco Class A-4).

The Telco Class A-4 interests will pay an initial preferred distribution of 5.94 % annually, subject to declaration, and subject to reset on November 1, 2028, and every four years thereafter.

The Telco Class A-4 interests can be called at issue price beginning November 1, 2028, and are subject to the same redemption and liquidation rights as the Telco Class A-1, A-2 and A-3 interests.

Upon the expected issuance in the first quarter of 2025, we intend to use the Telco Class A-4 proceeds to fund the redemption of preferred equity securities.

SEPTEMBER 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.

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

22 unchanged sentences

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

JUNE 30, 2024

SEPTEMBER 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.

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

15 unchanged sentences

Net Income 145 3,826 (96.2) 7,845 13,041 (39.8)

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

Net Income Attributable to

Common Stock $ 3,546 $ 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.

Net Income (Loss) Attributable

(174) 3,495 — 6,868 12,212 (43.8)

Net Income (Loss) Attributable to

$ (226) $ 3,444 — % $ 6,715 $ 12,057 (44.3) %

Operating revenues decreased in the third quarter and for the first nine 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 third quarter and for the first nine months of 2024, primarily due to a $4,422 noncash goodwill impairment.

We performed an interim goodwill impairment test of the Business Wireline reporting unit and concluded that the calculated fair value was lower than the book value, which was driven by a faster-than-previously anticipated industry-wide secular decline of legacy services (see Note 1).

The increases were partially offset by lower Mobility equipment costs resulting from lower wireless sales volumes and expense declines from our continued transformation efforts.

Depreciation and amortization expense increased in the third quarter and for the first nine 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 Open RAN network modernization efforts.

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

Operating income decreased in 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

Operating income decreased in the third quarter and for the first nine months of 2024.

Our operating income margin in the third quarter decreased from 19.1% in 2023 to 7.0% in 2024 and for the first nine months decreased from 20.1% in 2023 to 15.2% in 2024.

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

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

SEPTEMBER 30, 2024

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

Dollars in millions except per share amounts

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

Equity in net income of affiliates decreased in the third quarter and for the first nine 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 increased in the third quarter and decreased for the first nine months of 2024.

The increase in the third quarter was primarily the result of a prior-year write-down of our SKY Mexico equity investment and higher returns on other benefit-related investments.

These increases were partially offset by lower pension and postretirement benefit credits and an actuarial gain on our pension plan in 2023 with no corresponding remeasurement in 2024.

The decrease for the first nine months was 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) and an impairment recognized on a held-for-sale business, partially offset by the prior-year write-down of our SKY Mexico equity investment and higher returns on other benefit-related investments.

Income tax expense increased in the third quarter and decreased for the first nine months of 2024.

The increase in the third quarter was primarily due to a higher effective tax rate driven by a goodwill impairment (see Note 1), which is not deductible for tax purposes.

The decrease for the first nine months was primarily due to lower income before income tax.

Our effective tax rate was 89.9% in the third quarter of 2024 and 31.1% for the first nine months of 2024, versus 23.2% and 22.9% in the comparable periods in the prior year.

The increase in our effective tax rates were primarily due to the goodwill impairment, which is not deductible for tax purposes.

COMMUNICATIONS SEGMENT Third Quarter Nine-Month Period

Percent Percent

5 unchanged sentences

Total Segment Operating Revenues $ 29,074 $ 29,244 (0.6) % $ 86,513 $ 87,241 (0.8) %

Segment Operating Income

Segment Operating Income (Loss)

Mobility $ 7,003 $ 6,763 3.5 % $ 20,190 $ 19,647 2.8 %

3 unchanged sentences

Selected Subscribers and Connections

September 30,

Mobility Subscribers 1

1 unchanged sentence

Total domestic broadband connections 2

15,344 15,296

Network access lines in service 3,486 4,421

2 unchanged sentences

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.

JUNE 30, 2024

2 Excludes AT&T Internet Air for Business.

SEPTEMBER 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.

Operating revenues decreased in the third quarter and for the first nine 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 decreased in the third quarter and for the first nine months of 2024.

Our Communications segment operating income margin in the third quarter decreased from 24.9% in 2023 to 24.6% in 2024 and for the first nine months decreased from 24.3% in 2023 to 24.2% in 2024.

Communications Business Unit Discussion

Mobility Results

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

10 unchanged sentences

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

June 30, Percent

September 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.

JUNE 30, 2024

SEPTEMBER 30, 2024

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

1 unchanged sentence

Mobility Net Additions

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

13 unchanged sentences

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

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.

Tablet net adds (losses) were (21) and (36) for the quarters ended September 30, 2024 and 2023 and 31 and (85) for the first nine months ended September 30, 2024 and 2023.

Wearables and other net adds were 47 and 118 for the quarters ended September 30, 2024 and 2023 and 209 and 423 for the first nine months ended September 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 second quarter and for the first six months of 2024.

Service revenue increased in the third quarter and for the first nine 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 second quarter and for the first six months of 2024, reflecting pricing actions.

As part of our transformation activities and our focus on simplification, we aligned the timing of certain administrative fees and recorded approximately $90 of one-time revenues in the third quarter of 2024.

ARPU increased in the third quarter and for the first nine 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 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.

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

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

Operations and support expenses decreased in the third quarter and for the first nine months of 2024, primarily due to lower equipment costs driven by lower wireless sales volumes.

Depreciation expense increased in the third quarter and for the first nine 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 third quarter and for the first nine months of 2024.

Our Mobility operating income margin in the third quarter increased from 32.7% in 2023 to 33.3% in 2024 and for the first nine months increased from 31.9% in 2023 to 32.5% in 2024.

Our Mobility EBITDA margin in the third quarter increased from 43.0% in 2023 to 45.1% in 2024 and for the first nine months increased from 42.2% in 2023 to 44.5% in 2024.

EBITDA is defined as operating income excluding depreciation and amortization.

JUNE 30, 2024

SEPTEMBER 30, 2024

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

1 unchanged sentence

Business Wireline Results

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

8 unchanged sentences

Total Operating Expenses 4,649 4,871 (4.6) 14,151 14,707 (3.8)

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

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.

Operating Income (Loss)

$ (43) $ 350 — % $ 123 $ 1,124 (89.1) %

Service revenues decreased in the third quarter and for the first nine 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.

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.

Revenue declines also were impacted by prior-year intellectual property sales of approximately $100 and the absence of revenues from our cybersecurity business that was contributed to LevelBlue.

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

Operations and support expenses decreased in the third quarter and for the first nine months of 2024, primarily driven by lower personnel costs associated with ongoing transformation initiatives, lower network access and customer support expenses and the contribution of our cybersecurity business.

Partially offsetting the decreases for the first nine months were higher vendor credits in 2023 and higher equipment costs in 2024.

As part of our transformation activities, we expect operations and support expense improvements 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 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

Depreciation expense increased in the third quarter and for the first nine 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 third quarter and for the first nine months of 2024.

Our Business Wireline operating income margin in the third quarter decreased from 6.7% in 2023 to (0.9)% in 2024 and for the first nine months decreased from 7.1% in 2023 to 0.9% in 2024.

Our Business Wireline EBITDA margin in the third quarter decreased from 32.5% in 2023 to 29.4% in 2024 and for the first nine months decreased from 32.4% in 2023 to 29.9% in 2024.

SEPTEMBER 30, 2024

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

1 unchanged sentence

Consumer Wireline Results

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

11 unchanged sentences

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

June 30, Percent

September 30, Percent

(in 000s) 2024 2023 Change

10 unchanged sentences

Broadband Net Additions

Second Quarter Six-Month Period

Third Quarter Nine-Month Period

Percent Percent

5 unchanged sentences

1 Includes AT&T Internet Air.

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

Broadband revenues increased in the third quarter and for the first nine 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, partially offset by declines in copper-based broadband services.

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

SEPTEMBER 30, 2024

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

Dollars in millions except per share amounts

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

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

Operations and support expenses decreased in the third quarter and for the first nine months of 2024.

The expense decrease in the third quarter was primarily driven by lower customer support costs and network-related costs, partially offset by higher marketing expense.

The expense decrease for the first nine months was driven by lower customer support costs and operating taxes that were offset by higher network-related costs as our fiber build scales.

Depreciation expense increased in the third quarter and for the first nine 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 third quarter and for the first nine months of 2024.

Our Consumer Wireline operating income margin in the third quarter increased from 4.8% in 2023 to 5.7% in 2024 and for the first nine months increased from 4.3% in 2023 to 5.9% in 2024.

Our Consumer Wireline EBITDA margin in the third quarter increased from 31.0% in 2023 to 32.8% in 2024 and for the first nine months increased from 30.7% in 2023 to 32.7% in 2024.

LATIN AMERICA SEGMENT Third Quarter

Nine-Month Period

2024 2023 Percent Change 2024 2023 Percent Change

9 unchanged sentences

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

June 30, Percent

September 30, Percent

(in 000s) 2024 2023 Change

4 unchanged sentences

Total Mexico Wireless Subscribers 22,911 21,754 5.3 %

JUNE 30, 2024

SEPTEMBER 30, 2024

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

1 unchanged sentence

Mexico Wireless Net Additions

Second Quarter

Six-Month Period

Third Quarter

Nine-Month Period

Percent Percent

5 unchanged sentences

Total Mexico Wireless Net Additions 275 65 — % 595 151 — %

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.

Service revenues decreased in the third quarter and increased for the first nine months of 2024.

The decrease in the third quarter was primarily due to unfavorable foreign exchange impacts, partially offset by growth in subscribers and ARPU.

The increase for the first nine months reflects growth in subscribers and favorable exchange rates primarily from the first quarter of 2024.

Equipment revenues increased in the third quarter and for the first nine months of 2024.

The increase in the third quarter was primarily driven by higher equipment sales, partially offset by unfavorable foreign exchange impacts.

The increase for the first nine months was primarily driven by higher equipment sales and favorable exchange rates primarily from the first quarter of 2024.

Operations and support expenses increased in the third quarter and for the first nine months of 2024, primarily due to increased equipment and selling costs resulting from higher sales.

Foreign exchange impacts were favorable in the third quarter and unfavorable for the first nine months.

Approximately 4% of Mexico expenses are U.S.

dollar based, with the remainder in the local currency.

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.

Depreciation and amortization expense decreased in the third quarter and for the first nine months of 2024, primarily driven by lower in-service assets.

Foreign exchange impacts were favorable in the third quarter and unfavorable for the first nine months.

Operating income improved in the third quarter and for the first nine months of 2024.

Our Mexico operating income margin in the third quarter increased from (2.9)% in 2023 to 1.0% in 2024 and for the first nine months increased from (3.4)% in 2023 to 0.6% in 2024.

Our Mexico EBITDA margin in the third quarter increased from 15.6% in 2023 to 16.4% in 2024 and for the first nine months increased from 15.7% in 2023 to 16.5% in 2024.

COMPETITIVE AND REGULATORY ENVIRONMENT

7 unchanged sentences

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

In 2015, the FCC reclassified such services as telecommunications services subject to broader regulation by

SEPTEMBER 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