What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-09 compared with 2025-02-12 · 199 added, 183 removed, 442 unchanged (46% of the section changed)

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Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10 ‑ K for the fiscal year ended December 31, 2024.

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

Upon the separation and distribution of WarnerMedia, the WarnerMedia business met the criteria for discontinued operations.

For discontinued operations, we also evaluated transactions that were components of AT&T’s single plan of a strategic shift, including dispositions that did not individually meet the criteria due to materiality, and determined discontinued operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd.

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

(See Notes 6 and 24)

Dollars in millions except per share amounts

We have two reportable segments:

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AT&T Operating Revenues $ 125,648 $ 122,336 $ 122,428 2.7 % (0.1) %

Operating Income

Operating Income (Loss)

Communications $ 27,927 $ 27,095 $ 27,801 3.1 % (2.5) %

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Certain significant items (1,351) (5,184) (1,238) 73.9 —

AT&T Operating Income (Loss) $ 19,049 $ 23,461 $ (4,587) (18.8) % — %

AT&T Operating Income

$ 24,162 $ 19,049 $ 23,461 26.8 % (18.8) %

The Communications segment accounted for approximately 97% of our 2025 and 2024 total segment operating revenues and accounted for substantially all segment operating income in 2025 and 2024.

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

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

• Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services, and AT&T Internet Air (AIA) services, to residential customers in select locations.

Consumer Wireline also provides legacy telephony voice communication services.

The Latin America segment accounted for approximately 3% of our 2024 and 2023 total segment operating revenues and less than 1% of segment operating income in 2024.

The Latin America segment accounted for approximately 3% of our 2025 and 2024 total segment operating revenues and less than 1% of segment operating income in 2025 and 2024.

This segment provides wireless service and equipment in Mexico.

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RESULTS OF OPERATIONS

Consolidated Results Our financial results from continuing operations are summarized in the following table.

We then discuss factors affecting our overall results from continuing operations.

Consolidated Results Our financial results are summarized in the following table.

We then discuss factors affecting our overall results.

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

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Total Operating Expenses 101,486 103,287 98,967 (1.7) 4.4

Operating Income (Loss) 19,049 23,461 (4,587) (18.8) —

Operating Income

24,162 19,049 23,461 26.8 (18.8)

Interest expense 6,804 6,759 6,704 0.7 0.8

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Other income (expense) – net 7,754 2,419 1,416 — 70.8

Income (Loss) from Continuing Operations Before Income Taxes 16,698 19,848 (3,094) (15.9) —

Income (Loss) from Continuing Operations $ 12,253 $ 15,623 $ (6,874) (21.6) % — %

Operating revenues decreased in 2024, reflecting declines in Business Wireline service, primarily due to continued declines in legacy services, and Mobility equipment revenues, offset by higher Mobility service, Consumer Wireline and Mexico revenues .

Operations and support expenses decreased in 2024, reflecting lower Mobility equipment costs resulting from lower wireless sales volumes and expense declines from our continued transformation efforts, including lower personnel charges.

Asset impairments and abandonments and restructuring increased in 2024.

The increase in 2024 was primarily due to a third-quarter noncash goodwill impairment charge of $4,422 associated with our Business Wireline reporting unit.

We performed an interim goodwill impairment test of the Business Wireline reporting unit and concluded that the calculated fair value was lower than the book value, which was driven by a faster-than-previously anticipated industry-wide secular decline of legacy services (see Note 9).

Noncash charges in 2024 also included restructuring charges, including termination fees associated with our network modernization program to deploy commercial scale open radio access network (Open RAN).

Noncash charges in 2023 primarily relate to severance and restructuring charges, as well as the abandonment of non-deployed wireless equipment associated with our Open RAN network modernization program.

Depreciation and amortization expense increased in 2024, primarily due to the shortening of estimated economic lives of wireless network equipment that will be replaced earlier than originally anticipated with our Open RAN network modernization efforts.

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

Operating income decreased in 2024 and increased in 2023.

Our operating margin was 15.6% in 2024, compared to 19.2% in 2023, and (3.8)% in 2022, which included noncash goodwill impairment charges of $24,812.

Interest expense increased in 2024, primarily due to lower capitalized interest associated with spectrum acquisitions, mostly offset by lower debt balances.

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

Income Before Income Taxes

27,007 16,698 19,848 61.7 (15.9)

23,386 12,253 15,623 90.9 (21.6)

Net Income Attributable to AT&T

21,953 10,948 14,400 — (24.0)

Net Income Attributable to Common Stock

$ 21,889 $ 10,746 $ 14,192 — % (24.3) %

Operating revenues increased in 2025, reflecting higher Mobility and Consumer Wireline revenues, partially offset by declines in Business Wireline.

Operating revenues in Mexico were also higher, overcoming unfavorable foreign exchange impacts during the first half of 2025.

Operations and support expenses increased in 2025, reflecting higher sales volumes in our Mobility business unit, which drove higher equipment, advertising, selling and bad debt expenses.

Also contributing to higher costs were approximately $440 of apportioned legal settlements during 2025, higher network-related expenses and advertising costs due to the launch of a new campaign in 2025.

Increases were partially offset by declines from our continued transformation efforts and lower content licensing fees.

Asset impairments and abandonments and restructuring decreased in 2025, with higher impairments in 2024.

Noncash charges in 2024 primarily related to a goodwill impairment charge of $4,422 associated with our Business Wireline reporting unit as well as restructuring charges, including termination fees associated with our network modernization program to deploy commercial scale open radio access network (Open RAN).

Expenses in 2025 primarily relate to restructuring severance charges.

Depreciation and amortization expense increased in 2025, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades, partially offset by lower depreciation from fully depreciated legacy assets and impacts from our Open RAN network modernization efforts.

Operating income increased in 2025 and decreased in 2024.

Our operating margin was 19.2% in 2025, compared to 15.6% in 2024, and 19.2% in 2023.

Interest expense increased in 2025, primarily due to lower capitalized interest associated with spectrum acquisitions.

The increase was partially offset by lower average commercial paper balances.

Dollars in millions except per share amounts

Equity in net income of affiliates increased in 2024.

The increase reflects cash distributions received by AT&T in excess of the carrying amount of our investment in DIRECTV, partially offset by the performance of our investment in DIRECTV (see Notes 10 and 19).

Equity in net income of affiliates decreased in 2025, reflecting our sale of DIRECTV in July 2025.

The decrease was partially offset by cash distributions received by AT&T in excess of the carrying amount of our investment in DIRECTV prior to disposition (see Notes 10 and 19).

Other income (expense) – net increased in 2025.

The increase was primarily driven by actuarial remeasurement of benefit plan assets and obligations, with an actuarial loss of $56 in 2024, compared to net actuarial and settlement losses of $1,594 in 2023 (see Note 14).

Also contributing to the increase was the prior-year write-down of our SKY Mexico equity investment.

These increases were partially offset by lower pension and postretirement benefit credits and lower returns on other benefit-related investments.

Income tax expense increased in 2024.

While our income before income taxes decreased in 2024, it includes a goodwill impairment associated with our Business Wireline reporting unit, which is not deductible for tax purposes and results in a higher effective tax rate.

Our effective tax rate was 26.6% in 2024, 21.3% in 2023, and (122.2)% in 2022.

The effective tax rate in 2022 was also impacted by goodwill impairments, which are not deductible for tax purposes.

The increase was primarily due to a gain of approximately $5,600 recognized on the sale of our interest in DIRECTV (see Note 10).

The increase was also driven by a gain on a prior disposition and noncash impairment charges for a held-for-sale business and our SKY Mexico equity investment.

Partially offsetting the increases were lower pension and postretirement benefit credits and lower returns on other benefit-related investments.

Income tax expense decreased in 2025, primarily due to a lower effective tax rate driven by a tax-free gain on sale of DIRECTV in 2025 and a goodwill impairment in 2024, which is not deductible for tax purposes.

Our effective tax rate was 13.4% in 2025, 26.6% in 2024, and 21.3% in 2023, reflecting the nonrecognition of income taxes on the DIRECTV gain and larger discrete tax benefits in 2025, and the goodwill impairment in 2024, which was not deductible for tax purposes.

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

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See “Discussion and Reconciliation of Non-GAAP Measures” for a reconciliation of EBITDA and EBITDA margin to the most comparable financial measures calculated and presented in accordance with U.S.

generally accepted accounting principles.

generally accepted accounting principles (GAAP).

COMMUNICATIONS SEGMENT

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Total Segment Operating Income $ 27,927 $ 27,095 $ 27,801 3.1 % (2.5) %

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

Revenue declines were also driven by lower Mobility equipment revenue.

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

Operating income decreased in 2024 and increased in 2023.

The 2024 operating income reflects a decrease in operating income from our Business Wireline business unit, partially offset by increases in our Mobility and Consumer Wireline business units.

Operating revenues increased in 2025, driven by increases in Mobility service revenue and our Consumer Wireline business unit, driven by gains in wireless and broadband services.

Partially offsetting these increases were declines in our Business Wireline business unit, which reflects lower demand for legacy services.

Operating income increased in 2025 and decreased in 2024.

The 2025 operating income reflects an increase in operating income from our Mobility and Consumer Wireline business units, partially offset by a decrease in our Business Wireline business unit.

Our Communications segment operating income margin was 23.1% in 2025, 23.0% in 2024 and 23.6% in 2023.

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120,105 117,851 113,808 1.9 % 3.6 %

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.

1 Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines.

Mobility Net Additions

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1.05 % 0.92 % 0.98 % 13 BP (6) BP

Postpaid Phone-Only Churn 4

Postpaid Phone Churn 4

0.90 % 0.76 % 0.81 % 14 BP (5) BP

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

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

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Wearables and other net adds were 44, 430 and 639 for the years ended December 31, 2025, 2024 and 2023, respectively.

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

3 Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines.

4 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, excluding the impact of disconnections resulting from our 3G network shutdown in February 2022.

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

Dollars in millions except per share amounts

Service revenue increased during 2024, largely due to growth from subscriber gains and higher postpaid average revenue per subscriber (ARPU).

ARPU increased in 2024 and reflects pricing actions.

Service revenue increased during 2025, largely due to growth from subscriber gains, partially offset by promotional activity.

Postpaid ARPU increased in 2025 reflecting pricing actions that were largely offset by increased promotional activity, growth in our converged customer relationships, and our success in attracting customers in underpenetrated segments with lower ARPUs but attractive lifetime values, such as age 55-plus in our “value customers.”

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

Postpaid churn and postpaid phone-only churn were lower in 2024.

Equipment revenue decreased in 2024, primarily driven by lower wireless device sales volumes.

The decrease was partially offset by sales of higher-priced phones in 2024.

Operations and support expenses decreased in 2024, largely due to lower equipment and selling costs driven by lower wireless sales volumes, partially offset by higher network costs.

Depreciation expense increased in 2024, primarily due to shortening of estimated economic lives of wireless equipment that will be replaced earlier than originally anticipated with our Open RAN deployment and network transformation, and ongoing capital spending for network upgrades and expansion, which we expect to continue through 2025.

Postpaid churn and postpaid phone churn were higher in 2025, partially driven by an increase in our customer base that reached the end of device financing periods, which normalized in the second half of 2025.

Equipment revenue increased in 2025, primarily driven by higher wireless device sales volumes.

Operations and support expenses increased in 2025, primarily due to higher sales volumes, which drove higher equipment, advertising, selling and bad debt expenses.

The increase also reflected higher advertising due to the launch of a new campaign, and higher network costs that were partially offset by lower content licensing fees and expense declines from transformation efforts.

Depreciation expense increased in 2025, primarily due to ongoing capital spending for network upgrades and expansion, partially offset by lower depreciation impacts from our network modernization efforts.

Operating income increased in 2025 and 2024.

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Operating revenues

Service $ 18,064 $ 20,274 $ 21,891 (10.9) % (7.4) %

Legacy and other transitional services $ 9,170 $ 11,095 $ 13,680 (17.4) % (18.9) %

Fiber and advanced connectivity

7,333 6,969 6,594 5.2 5.7

Equipment 728 755 609 (3.6) 24.0

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$ (816) $ (88) $ 1,289 — % — %

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

We expect these trends to continue.

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

Equipment revenues increased in 2024, driven by higher customer premises equipment sales, which can vary from year to year based on the nature of services purchased.

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

Partially offsetting the decreases were higher vendor credits in 2023 and higher equipment costs in 2024.

As part of our transformation activities, we expect operations and support expense improvements to continue in 2025 as we further right size our operations in alignment with the strategic direction of the business.

Depreciation expense increased in 2024, primarily due to ongoing capital investment for strategic initiatives such as fiber, which we expect to further increase in 2025.

Legacy and other transitional services revenues decreased in 2025, driven by lower demand for legacy and VPN services, which we expect to continue as we decommission our copper-based legacy network.

These revenue declines were partially offset by targeted pricing actions in the first quarter of 2025.

Fiber and advanced connectivity services revenues increased in 2025, driven by higher fiber and fixed wireless revenues.

Equipment revenues decreased in 2025, driven by lower customer premises equipment sales, which can vary from year to year based on the nature of services purchased.

Operations and support expenses decreased in 2025, primarily driven by lower personnel and customer support costs associated with ongoing transformation initiatives.

Expense declines also include lower network and advertising costs.

Depreciation expense increased in 2025, primarily due to ongoing capital investment for strategic initiatives such as fiber, partially offset by fully depreciated legacy assets.

Dollars in millions except per share amounts

Operating income decreased in 2025 and 2024.

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Our Business Wireline EBITDA margin was 29.1% in 2025, 29.1% in 2024 and 31.9% in 2023.

Dollars in millions except per share amounts

Consumer Wireline Results

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

Broadband Connections

Percent Change

(in 000s) 2025 2024 2023 2025 vs.

Broadband Connections

Total Broadband and DSL Connections 14,079 13,890 13,991 1.4 % (0.7) %

14,704 13,987 13,729 5.1 % 1.9 %

Fiber Broadband Connections 10,406 9,331 8,307 11.5 % 12.3 %

Voice Connections

Retail Consumer Switched Access Lines 1,310 1,651 2,028 (20.7) (18.6)

Consumer VoIP Connections

1,653 1,953 2,311 (15.4) (15.5)

Total Retail Consumer Voice Connections 2,963 3,604 4,339 (17.8) % (16.9) %

1 Includes AIA.

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(in 000s) 2025 2024 2023 2025 vs.

Total Broadband and DSL Net Additions 189 (101) (169) — % 40.2 %

Broadband Net Additions 1,2

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1 Includes AIA.

Broadband revenues increased in 2024, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU, partially offset by declines in copper-based broadband services.

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

2 Excludes the impact of customer disconnections resulting from the termination of AIA services in areas with unfavorable regulatory requirements in the first quarter of 2025.

Broadband revenues increased in 2025, driven by an increase in fiber revenues of 17.0%.

Higher fiber revenues reflect an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU.

This increase also includes growth in AIA revenues and was partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in 2025, 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 2025, reflecting the continued decline in the number of VoIP customers.

Operations and support expenses decreased in 2024, driven by lower customer support costs, lower marketing expense and savings from cost initiatives, offset by higher network-related costs as our fiber build scales.

Dollars in millions except per share amounts

Depreciation expense increased in 2024, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, which we expect to further increase in 2025.

Operations and support expenses decreased in 2025, driven by lower customer support costs and content licensing fees, offset by higher network-related expenses and marketing costs.

Depreciation expense increased in 2025, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, partially offset by fully depreciated legacy assets.

Operating income increased in 2025 and 2024.

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Our Consumer Wireline EBITDA margin was 37.0% in 2025, 33.4% in 2024 and 31.3% in 2023.

Dollars in millions except per share amounts

LATIN AMERICA SEGMENT

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Equipment revenues increased in 2025, driven by higher equipment sales, partially offset by unfavorable foreign exchange impacts.

Operations and support expenses increased in 2024, driven by increased equipment and selling costs resulting from higher sales, partially offset by favorable impact of foreign exchange.

Depreciation expense decreased in 2024, driven by lower in-service assets and favorable impact of foreign exchange.

Operations and support expenses increased in 2025, driven by increased sales volume, resulting in higher equipment, selling and bad debt expense, partially offset by favorable impact of foreign exchange.

Depreciation expense increased in 2025, primarily due to accelerated depreciation on certain network assets and higher in-service assets, partially offset by favorable impact of foreign exchange.

Operating income improved in 2025 and 2024.

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Our Mexico EBITDA margin was 18.6% in 2025, 16.5% in 2024 and 14.8% in 2023.

Dollars in millions except per share amounts

OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS

2026 Revenue Trends We expect revenue growth in our wireless and broadband businesses as customers demand instant connectivity and higher speeds made possible by wireless network enhancements through 5G deployment and our fiber network expansion.

We believe that our simplified go-to-market strategy for 5G in underpenetrated markets will continue to contribute to wireless subscriber and service revenue growth and that expansion of our fiber footprint and our multi-gig offerings will drive greater demand for broadband services on our fast-growing fiber network, as well as increasing our converged customers that have both wireless and fiber.

We believe that our simplified go-to-market strategy for 5G in underpenetrated markets will continue to contribute

Dollars in millions except per share amounts

to wireless subscriber and service revenue growth and that expansion of our fiber and AIA serviceable locations will drive greater demand for broadband services.

We expect that an increasing portion of our revenues will come from converged customers with seamless connectivity through an innovative product portfolio and strong customer relationships.

As we expand our fiber reach, we will be orienting our business portfolio to leverage this opportunity to offset continuing declines in legacy Business Wireline products by growing connectivity with small to mid-sized businesses.

We plan to use our strong fiber and wireless assets, broad distribution and integrated product offerings to strengthen our overall market position.

We will continue to rationalize our product portfolio with a longer-term shift of the business to fiber and mobile connectivity, and growth in value-added services.

As customers are demanding faster and more reliable services, we are decommissioning our legacy copper network and enhancing our offerings to include services that provide better experiences over new technologies, such as AT&T Internet Air.

We will continue to rationalize our product portfolio with a longer-term shift of the business to fiber and wireless connectivity, and growth in value-added services.

2026 Expense Trends During 2026, we expect expense trends consistent with the prior year, and that we will continue to focus on efficiency, led by our cost transformation initiative.

We expect the spending required to support growth and efficiency initiatives, primarily our continued deployment of fiber and 5G, to pressure expense trends in 2026.

These investments will help prepare us to meet increased customer demand for enhanced wireless and broadband services, including video streaming, augmented reality, “smart” technologies, user generated content and artificial intelligence (AI).

The software benefits of our 5G wireless technology should result in a more efficient use of capital and lower network-related expenses in the coming years.

Furthermore, to the extent customers upgrade their handsets in 2025, the expenses associated with those device sales are expected to contribute to higher costs.

These investments will help prepare us to meet the continued increase in customer demand for enhanced wireless and broadband services, including on-the-go video streaming, augmented reality, “smart” technologies, user generated content and AI.

Our network modernization efforts should result in a more efficient use of capital and lower network-related expenses in the coming years.

Furthermore, access to our network and newer technology may drive customers to upgrade devices and equipment, the expenses associated with those equipment sales are expected to contribute to higher costs.

We continue to transform our operations to be more efficient and effective.

We are restructuring businesses, working with regulators and customers to sunset legacy networks, improving customer service and ordering functions through digital transformation, sizing our support costs and staffing with current activity levels, and reassessing overall benefit costs.

We also expect cost savings through AI-driven efficiencies in our network design and operations, software development, sales, marketing, customer support services and general and administrative costs.

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

We also expect cost savings through AI-driven efficiencies in network design and operations, software development, sales, marketing, customer support services and general and administrative costs.

Market Conditions In recent years, uncertainty surrounding global growth rates, tariffs, inflation and a higher interest rate environment continued to produce volatility in the credit, currency and equity markets.

We expect ongoing pressure on pricing during 2026 as we respond to the geopolitical and macroeconomic environment and our competitive marketplace, especially in wireless services.

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Our pension plans are subject to funding requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA).

We expect only minimal ERISA contribution requirements to our pension plans for 2025.

We plan to voluntarily contribute approximately $350 to our pension plans in 2026 and expect only minimal ERISA contribution requirements.

Investment returns on these assets depend largely on trends in the economy, and a weakness in the equity, fixed income and real asset markets could require us to make future contributions to the pension plans.

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

We provide integrated services to diverse groups of customers in the U.S.

We provide integrated services to diverse groups of customers in the United States.

on a converged telecommunications network utilizing different technological platforms.

In 2026, our key initiatives include:

• Continuing our wireless subscriber momentum and 5G deployment, with expansion of wireless subscribers in underpenetrated markets and converged customers.

• Continuing our fiber deployment, improving fiber penetration, growing AT&T Internet Air services, accelerating subscriber growth and increasing broadband revenues.

• Deploying Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, fostering lower network costs, improved operational efficiencies and allowing for continued investment in our fast-growing broadband network.

• Continuing to drive efficiencies and a competitive advantage through cost transformation initiatives and product simplification.

Dollars in millions except per share amounts

• Continuing our wireless subscriber momentum and 5G deployment, with expansion of wireless subscribers in underpenetrated markets and converged connectivity.

• Continuing our fiber deployment, improving fiber penetration, growing AT&T Internet Air services, accelerating connectivity growth and increasing broadband revenues, inclusive of impact of integrating recent acquisitions of spectrum and fiber assets.

• Continuing our deployment of Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, fostering lower network costs, improved operational efficiencies and allowing for continued investment in our fast-growing broadband network.

• Continuing to drive efficiencies and a competitive advantage through cost transformation initiatives, including modernization of our IT infrastructure and product simplification.

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

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

We are in a period of rapid growth in wireless video and data usage and believe that there are substantial opportunities available for next-generation integrated services that

Dollars in millions except per share amounts

combine technologies and services.

As of December 31, 2025, we served 145 million wireless subscribers in North America, with 120 million in the United States.

Our LTE technology covers over 441 million people in North America, and in the United States, we cover all major metropolitan areas and over 337 million people.

When combined with our upgraded backhaul network, we provide enhanced network capabilities and superior mobile broadband speeds for data and video services.

In December 2018, we introduced the nation’s first commercial mobile 5G service and expanded that deployment nationwide in July 2020.

At December 31, 2025, our network covers more than 322 million people with 5G technology in the United States and North America.

Our networks covering both the U.S.

and Mexico have enabled our customers to use wireless services without roaming on other companies’ networks.

We believe this seamless access will prove attractive to customers and provide a significant growth opportunity.

When combined with our upgraded backhaul network, we provide enhanced network capabilities and superior mobile broadband speeds for data and video services.

Our networks covering both the United States and Mexico have enabled our customers to use wireless services without roaming on other companies’ networks.

At December 31, 2025, we provided LTE coverage to over 104 million people in Mexico.

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As the owner and operator of scaled wireless and fiber networks, we plan to continue to focus on expanding our wireless network capabilities and providing broadband offerings that allow customers to integrate their home or business fixed services with their mobile service.

In January 2022, we launched our multi-gig rollout, which brings the fastest internet to AT&T Fiber customers in select locations with symmetrical 2 gig and 5 gig tiers.

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

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On January 2, 2025, the Sixth Circuit issued an order granting the petition for review and setting aside the FCC net neutrality order, holding that broadband internet access service is an information service.

Dollars in millions except per share amounts

At least one state has adopted legislation regulating the rates of fixed broadband service.

In 2021, New York enacted the Affordable Broadband Act (ABA), requiring ISPs offering “fixed” mass-market broadband service, including fixed wireless, to offer discounted plans to low-income customers.

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In April 2024, the Second Circuit overruled and vacated the district court order.

In August 2024, trade associations asked the Supreme Court to review the Second Circuit’s decision.

On December 16, the Supreme Court issued an order denying the request.

Those associations have since requested rehearing of that Supreme Court decision.

Under an agreement with the New York Attorney General, the law began to be enforced on January 15, 2025.

In response, AT&T announced that it would no longer offer its AT&T Internet Air fixed wireless service in New York.

Other states could consider similar legislation.

Since 2018, some states have adopted legislation or issued executive orders that established state net neutrality rules, including California and Vermont.

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

The Supreme Court subsequently denied the trade association’s request for review.

Under an agreement

Dollars in millions except per share amounts

with the New York Attorney General, the law began to be enforced on January 15, 2025.

A number of state legislatures have since considered legislation regulating the rates of fixed broadband service, with Connecticut adopting a law requiring wireline ISPs that are state contractors to stand up a discounted broadband offering to low-income customers.

Since 2018, some states have adopted legislation or issued executive orders that established state net neutrality rules, including California, Maine, Minnesota, Vermont and Washington.

Additional states may seek to impose net neutrality requirements in the future.

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

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We may be required to answer complaints alleging that the company has violated the FCC rules, and those complaints may seek relief, including changes to our business practices or civil forfeitures that could result in significant costs or reputational harm.

It is currently uncertain how the FCC will implement and enforce these new rules.

It is currently uncertain how the FCC will enforce these new rules.

Several business associations have filed appeals challenging the rules and several of those appeals have been consolidated in the Eighth Circuit, which held oral argument on September 25, 2024.

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

In 2023, the FCC’s statutory authority to conduct spectrum auctions lapsed and it is uncertain when Congress will reauthorize it.

Also in 2023, the federal government released a national spectrum strategy that focused on spectrum sharing but did not include terms of future spectrum sharing model(s) or specific timelines to make additional spectrum bands available for 5G and future generations of service.

As a result, the federal government’s ability and intent to make sufficient spectrum available to the industry in needed timeframes and on terms suitable for mobile broadband network deployments remains uncertain.

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

In September 2024, the Ninth Circuit Court of Appeals resolved challenges to those Declaratory Rulings, largely sustaining the FCC’s rulings.

The decision ensures that the FCC retains the ability to remove state and local regulations that could delay or impede spectrum and technology upgrades on existing cell site facilities.

In recent years, the FCC took several actions to make spectrum available for 5G services, including the auction of 280 MHz of mid-band spectrum previously used for satellite service (the “C-Band” auction) and 39 GHz band spectrum.

AT&T obtained spectrum in these auctions.

The FCC also made 150 MHz of mid-band CBRS spectrum available, to be shared with Federal incumbents, which enjoy priority.

In addition, in 2022, the FCC completed Auction 110, in which AT&T won 40 MHz of 3.45 GHz spectrum nationwide at a cost of $9,079.

Dollars in millions except per share amounts

On July 4, 2025, as part of the omnibus reconciliation package (One Big Beautiful Bill (OBBB)), the President signed into law a provision that reauthorized, for 10 years, FCC statutory authority to conduct spectrum auctions and further required auction of 800 MHz of spectrum within eight years.

The FCC’s implementation of this legislation will have a direct impact on whether the wireless industry has sufficient spectrum to support future wireless services.

As a first step, in November 2025, the FCC opened a rulemaking to consider the auctioning of spectrum in the upper C-Band, as required by OBBB.

ACCOUNTING POLICIES AND STANDARDS

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

For the year ended December 31, 2024, when compared to the year ended December 31, 2023, we increased our pension discount rate by 0.70%, resulting in a decrease in our pension plan benefit obligation of $1,994, and increased our postretirement discount rate by 0.60%, resulting in a decrease in our postretirement benefit obligation of $317.

For the year ended December 31, 2025, when compared to the year ended December 31, 2024, we decreased our pension discount rate by 0.20%, resulting in an increase in our pension plan benefit obligation of $680, and decreased our postretirement discount rate by 0.30%, resulting in an increase in our postretirement benefit obligation of $167.

Dollars in millions except per share amounts

Our expected long-term rate of return is 7.75% on pension plan assets and 4.00% on postretirement plan assets for 2025 and 2026.

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The market multiple approach uses the multiples of publicly traded companies whose services are comparable to those offered by the reporting units.

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

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

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

The interim impairment test methodology was consistent with our approach for annual impairment testing (see Note 1), using similar models updated with our current view of key inputs and assumptions.

We concluded that the calculated fair value of the Business Wireline reporting unit was lower than the book value, resulting in a noncash goodwill impairment charge of $4,422 for the entirety of our Business Wireline reporting unit goodwill.

As of October 1, 2025, the calculated fair values of the reporting units with remaining goodwill exceeded their book values in all circumstances in excess of 10%.

If either the projected long-term growth rates declined by 0.5%, if the projected long-term

Dollars in millions except per share amounts

EBITDA margin declined by 0.5%, or if the weighted average cost of capital increased by 0.5%, the fair values would still be higher than the book value of the reporting units.

If either the projected long-term growth rates declined by 0.5%, if the projected long-term EBITDA margin declined by 0.5%, or if the weighted average cost of capital increased by 0.5%, the fair values would still be higher than the book value of the reporting units.

The fair values of our remaining reporting units could be negatively impacted by future sustained declines in macroeconomic or business conditions, higher discount rates or declines in the value of AT&T stock and could result in goodwill impairment charges in future periods.

Wireless Licenses

The fair value of U.S.

wireless licenses is assessed using a discounted cash flow model (the Greenfield Approach) and a qualitative corroborative market approach based on auction prices, depending upon auction activity.

We have the option to first perform a qualitative assessment to determine whether it is more likely than not that the book value of our wireless licenses exceeds the fair value.

On a periodic basis, or if the qualitative assessment indicates potential impairment, we will perform a quantitative impairment test.

Our quantitative assessment involves assessing the fair value of U.S.

wireless licenses using a discounted cash flow model (the Greenfield Approach) and a qualitative corroborative market approach based on auction prices, depending upon auction activity.

The Greenfield Approach assumes a company initially owns only the wireless licenses and makes investments required to build an operation comparable to current use.

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We assume churn rates will initially exceed our current experience but decline to rates that are in line with industry-leading churn.

We used a discount rate of 8.75%, based on the optimal long-term capital structure of a market participant and its associated cost of debt and equity for the licenses, to calculate the present value of the projected cash flows.

If either the projected rate of long-term growth of cash flows or revenues declined by 0.5%, or if the discount rate increased by 0.5%, the fair values of these wireless licenses would still be higher than the book value.

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

During 2025, we performed a qualitative impairment assessment that considered several factors, including macroeconomic conditions, industry and regulatory considerations, recent and projected performance of the reporting unit and the prior quantitative impairment testing results.

The qualitative assessment indicated it is more likely than not that the fair value of our wireless licenses exceeded the book value;

thus, a quantitative assessment was not performed.

For our most recent quantitative assessment, which was performed in 2024, we used a discount rate of 8.75%, based on the optimal long-term capital structure of a market participant and its associated cost of debt and equity for the licenses, to calculate the present value of the projected cash flows.

The quantitative impairment assessment indicated the fair value of our wireless licenses exceeded their book value by more than 10%.

If either the projected rate of long-term growth of cash flows or revenues

Dollars in millions except per share amounts

declined by 0.5%, or if the discount rate increased by 0.5%, the fair values of these wireless licenses would still be higher than the book value.

Income Taxes Our estimates of income taxes and the significant items giving rise to the deferred assets and liabilities are shown in Note 13 and reflect our assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these estimates.

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LIQUIDITY AND CAPITAL RESOURCES

Continuing operations for the years ended December 31,

For the years ended December 31,

2025 2024 2023

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136,100 123,532

We had $3,298 in cash and cash equivalents available at December 31, 2024, decreasing $3,424 since December 31, 2023.

We had $18,234 in cash and cash equivalents available at December 31, 2025, increasing $14,936 since December 31, 2024.

Cash and cash equivalents included cash of $3,521 and money market funds and other cash equivalents of $14,713.

Approximately $1,268 of our cash and cash equivalents were held in accounts outside of the U.S.

and may be subject to restrictions on repatriation.

Dollars in millions except per share amounts

In 2024, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, distributions from DIRECTV and sales of idle Rabbi Trust assets and other investments.

These inflows were exceeded by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses.

The cash generated from operating activities was used to fund capital expenditures and vendor financing payments, repay short-term borrowings and long-term debt, and dividend payments to stockholders.

Approximately $1,330 of our cash and cash equivalents were held in accounts outside of the United States and may be subject to restrictions on repatriation.

Our cash and cash equivalents at December 31, 2025 was elevated in anticipation of the consummation of announced transactions.

In 2025, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, and the disposition of our investment in DIRECTV.

These inflows exceeded cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, including higher device payments from higher sales volumes.

The cash generated from operating activities was primarily used to fund capital improvements, make dividend payments to stockholders, repurchase preferred and common stock, and repay long-term debt.

We maintain availability under our credit facilities and our commercial paper program to meet our short-term liquidity requirements.

Refer to “Contractual Obligations” discussion below for additional information regarding our cash requirements.

Cash Provided by Operating Activities from Continuing Operations

During 2024, cash provided by operating activities was $38,771, compared to $38,314 in 2023, reflecting the timing of working capital associated with device payments, as well as the expansion of committed, cost-efficient receivable sales programs, and operational growth, partially offset by higher cash tax payments.

Cash Provided by Operating Activities

During 2025, cash provided by operating activities was $40,284, compared to $38,771 in 2024, driven by operational growth and lower cash tax payments.

Partially offsetting this increase and lowering cash from operations during 2025 were voluntarily pension contributions of approximately $1,150 and advanced cash payments of about $900 to Frontier Communications, a subsidiary of Verizon Communications Inc.

We actively manage the timing of our supplier payments for operating items to optimize the use of our cash.

Among other things, we seek to make payments on 90-day or greater terms, while providing the suppliers with access to bank facilities that permit earlier payments at their cost (referred to as supplier financing program).

Among other things, we seek to make payments on 90-day or greater terms, while providing the suppliers with access to bank facilities that

Dollars in millions except per share amounts

permit earlier payments at their cost (referred to as supplier financing program).

In addition, for payments to suppliers of handset inventory, as part of our working capital initiatives, we have arrangements that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (referred to as direct supplier financing).

The net impact of direct supplier financing, including principal and interest payments, was to improve cash from operating activities $661 in 2024 and decrease cash from operating activities $299 in 2023.

The net impact of direct supplier financing, including principal and interest payments, was to improve cash from operating activities $443 in 2025 and $661 in 2024.

All supplier financing payments are due within one year.

(See Note 22)

Cash Used in Investing Activities from Continuing Operations

Cash Used in Investing Activities

During 2025, cash used in investing activities totaled $18,777, consisting primarily of $20,842 (including interest during construction) for capital expenditures.

During 2024, net FirstNet sustainability payments were $237.

In 2024, we received a return of investment of $928 from DIRECTV representing distributions in excess of cumulative equity in earnings from DIRECTV (see Note 10) and sold Rabbi Trust and other investments totaling $2,575.

For capital improvements, we have negotiated favorable vendor payment terms of 120 days or more (referred to as vendor financing) with some of our vendors, which are excluded from capital expenditures and reported as financing activities.

During 2025, investing activities also included $148 of FirstNet sustainability receipts net of investment and $620 for our investment in a new strategic partner, DriveNets, related to wireline network transformation accounted for under the equity method of accounting.

On July 2, 2025, we completed the sale of our interest in DIRECTV to TPG and recorded a current note receivable of approximately $3,600, of which we had received $3,100 by the end of 2025, and a long-term note receivable of $500.

(See Note 10)

We enter into multi-year software licensing arrangements, which are typically paid over the license terms of two to five years and referred to as vendor financing.

Additionally, for capital improvements, we have negotiated favorable vendor payment terms of 120 days or more with some of our vendors, which are also referred to as vendor financing.

Vendor financing is excluded from capital expenditures and reported as financing activities.

Vendor financing payments were $1,181 in 2025, compared to $1,792 in 2024.

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The vast majority of our capital expenditures are spent on our networks, including product development and related support systems.

In 2024, we placed $700 of productive assets (primarily software) in service under vendor financing arrangements (compared to $2,651 in 2023).

In 2025, we placed $1,594 of productive assets in service under vendor financing arrangements (compared to $700 in 2024).

In November 2024, we agreed to purchase select spectrum licenses from United States Cellular Corporation (UScellular) for approximately $1,000, subject to closing conditions, including the consummation of UScellular’s sale of its wireless operations and select spectrum assets to T-Mobile US, Inc.

We completed our acquisition of these licenses on January 13, 2026, with a cash payment of $1,018.

On May 21, 2025, we agreed to acquire substantially all of Lumen’s Mass Markets fiber business for $5,750 in cash, subject to purchase price adjustments.

At the time of signing, the pending acquisition covered approximately one million fiber customers, and also included fiber network assets that reached more than four million fiber locations.

On February 2, 2026, we completed the transaction and expect to manage the customer relationships in our Consumer Wireline business and place the fiber network assets in a new, wholly owned subsidiary.

We plan to sell a controlling interest in the subsidiary to an equity partner that will co-invest in the ongoing business, and, as such, it is expected to meet the criteria for discontinued operations.

On August 25, 2025, we agreed to purchase FCC licenses in the 600 MHz and 3.45 GHz bands from EchoStar for approximately $23,000, subject to certain adjustments.

The transaction is expected to close in early 2026 and is subject to regulatory approval and other closing conditions.

The FCC licenses will be used to expand our 5G network, meet future capacity demands and support future wireless communications services.

We signed a short-term spectrum manager lease on the 3.45 GHz spectrum, which was deployed in cell sites covering nearly two-thirds of the U.S.

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

In 2025, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be in the $22,000 range.

Cash Provided by or Used in Financing Activities from Continuing Operations

In 2024, cash used in financing activities totaled $24,708 and was comprised of debt repayments, payments of dividends and vendor financing payments.

In 2026, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be in the $23,000 to $24,000 range.

Dollars in millions except per share amounts

Cash Provided by or Used in Financing Activities

In 2025, cash used in financing activities totaled $6,386 and was comprised of dividend payments, common and preferred stock repurchases, debt repayments and vendor financing payments, partially offset by issuances of long-term debt and issuances of preferred interests in a subsidiary.

A tabular summary of our debt activity during 2025 is as follows:

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Quarter Full Year 2025

Net commercial paper borrowings $ 428 $ 262 $ (2,686) $ — $ (1,996)

Issuance of notes and debentures:

$ — $ 3,473 $ 4,959 $ — $ 8,432

2,956 — 2,639 — 5,595

CAD notes — (442) — — (442)

Debt issuances

$ 2,956 $ 3,473 $ 7,598 $ — $ 14,027

$ — $ — $ — $ (145) $ (145)

(1,321) (32) — (2,441) (3,794)

CAD notes — — — (960) (960)

Other (205) (62) (229) (133) (629)

Repayments of long-term debt $ (1,526) $ (94) $ (229) $ (3,679) $ (5,528)

Dollars in millions except per share amounts

The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2% as of December 31, 2024 and as of December 31, 2023.

The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2% as of December 31, 2025 and 2024.

We had $134,718 of total notes and debentures outstanding at December 31, 2025.

This also included Euro, British pound sterling, Canadian dollar, Swiss franc and Australian dollar denominated debt that totaled approximately $30,685.

This also included Euro, British pound sterling, Canadian dollar, Australian dollar and Swiss franc denominated debt that totaled approximately $35,307.

At December 31, 2025, we had $9,011 of long-term debt maturing within one year.

We had no outstanding commercial paper borrowings or other short-term borrowings on December 31, 2025.

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

During 2025, we paid $1,181 of cash under our vendor financing program, compared to $1,792 in 2024.

Total vendor financing payables included in our December 31, 2025 consolidated balance sheet were $1,892, with $956 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

In December 2024, our Board of Directors approved a $10,000 share repurchase authorization and terminated the March 2014 authorization, under which approximately 144 million shares were available for repurchase.

At December 31, 2024, we had $10,000 remaining from our common stock repurchase authorization approved by the Board of Directors in December 2024.

During 2025, we repurchased approximately 159 million shares totaling $4,269 under our $10,000 common stock repurchase authorization approved by the Board of Directors in December 2024, excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022.

At December 31, 2025, we had approximately $5,731 remaining under this 2024 repurchase authorization.

On January 27, 2026, the Board approved an authorization to repurchase an additional $10,000 of common stock.

We paid dividends on common and preferred shares of $8,180 in 2025, compared with $8,208 in 2024.

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

Our 2025 financing activities will focus on managing our debt level and paying dividends, subject to approval by our Board of Directors, and repurchasing common stock when deemed appropriate.

We plan to fund our financing uses of cash through a combination of cash from operations, issuance of debt and asset sales.

Financing activities in 2025 also included the issuance of $2,250 of nonconvertible cumulative preferred interests in Telco LLC, with the funds used to redeem all outstanding Series B preferred stock for $2,075 (see Note 16).

We also received approximately $850 in upfront cash proceeds from a structured sale-leaseback of real estate.

On February 5, 2026, we issued $6,500 principal amount of global notes due 2031 to 2056 with a weighted average coupon of 5.2%.

We intend to use the net proceeds from this issuance for general corporate purposes, which may include debt repayments and pending acquisitions.

Our 2026 financing activities will focus on managing our debt level, funding pending acquisitions, paying dividends, subject to approval by our Board of Directors, and repurchasing common stock when deemed appropriate.

We plan to fund our financing

Dollars in millions except per share amounts

uses of cash through a combination of cash from operations, issuance of debt and asset sales.

The timing and mix of any debt issuance and/or refinancing will be guided by credit market conditions and interest rate trends.

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

We currently have a $12,000 revolving credit agreement that terminates on November 18, 2029 (Revolving Credit Agreement).

No amount was outstanding under the Revolving Credit Agreement as of December 31, 2024.

On November 3, 2025, we entered into (i) a $12,000 Second Amended and Restated Credit Agreement (Revolving Credit Agreement), with Citibank, N.A., as agent, amending and restating our existing $12,000 Amended and Restated Credit Agreement, dated as of November 18, 2022, and (ii) a $17,500 Delayed Draw Term Loan Credit Agreement (Term Loan), with Bank of America, N.A., as agent.

No amount was outstanding under the Revolving Credit Agreement or the Term Loan as of December 31, 2025.

(See Note 11)

We also utilize other external financing sources, which include various credit arrangements supported by government agencies to support network equipment purchases as well as a commercial paper program.

Our Revolving Credit Agreement contains covenants that are customary for an issuer with an investment grade senior debt credit rating as well as a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1.

The Revolving Credit Agreement and the Term Loan contain covenants that are customary for an issuer with investment grade senior debt credit ratings, including a net debt-to-EBITDA financial ratio covenant requiring us to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1.

As of December 31, 2025, we were in compliance with the covenants for our credit facilities.

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Under these arrangements, which cover the majority of our $35,741 derivative portfolio, counterparties are still required to post collateral.

During 2024, we received $477 of cash collateral, on a net basis.

During 2025, we posted $11 of cash collateral, on a net basis.

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

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The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances, repayments and reclassifications related to redemption of noncontrolling interests.

Dollars in millions except per share amounts

A significant amount of our cash outflows for continuing operations is related to tax items, acquisition of spectrum through FCC auctions and benefits paid for current and former employees:

A significant amount of our cash outflows is related to tax items, acquisition of spectrum and benefits paid for current and former employees:

• Total taxes incurred, collected and remitted by AT&T during 2025 and 2024 were $16,326 and $16,968.

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We paid $2,957 of pension benefits out of plan assets in 2025, compared to $2,447 in 2024.

Dollars in millions except per share amounts

Contractual Obligations

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Total Contractual Obligations 8

$ 329,168 $ 31,004 $ 51,898 $ 36,384 $ 209,882

1 Represents principal or payoff amounts of notes, debentures and credit agreement borrowings at maturity (see Note 11).

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2 Includes credit agreement borrowings.

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

3 We expect to fund the purchase obligations with cash on hand, which may include cash provided by operations or through incremental borrowings.

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

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

8 Excludes debt transactions, pending acquisitions and other investment funding completed after December 31, 2025 (see Note 6).

Certain items were excluded from this table because the year of payment is unknown and could not be reliably estimated, we believe the obligations are immaterial, or the settlement of the obligation will not require the use of cash.

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$ 27,927 $ 27,095 $ 27,801

Depreciation and amortization expense

Depreciation and amortization

19,959 19,433 17,363

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Operating income $ 27,196 $ 26,314 $ 25,861

Depreciation and amortization expense 10,217 8,517 8,198

Depreciation and amortization

10,422 10,217 8,517

EBITDA $ 37,618 $ 36,531 $ 34,378

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Business Wireline

Operating income $ (88) $ 1,289 $ 2,290

Depreciation and amortization expense 5,555 5,377 5,314

Operating income (loss)

$ (816) $ (88) $ 1,289

Depreciation and amortization

5,834 5,555 5,377

EBITDA $ 5,018 $ 5,467 $ 6,666

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Operating income $ 1,547 $ 869 $ 651

Depreciation and amortization expense 3,661 3,469 3,169

Depreciation and amortization

3,703 3,661 3,469

EBITDA $ 5,250 $ 4,530 $ 4,120

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Latin America Segment

Operating income $ 40 $ (141) $ (326)

Depreciation and amortization expense 657 724 658

Operating income (loss)

$ 145 $ 40 $ (141)

Depreciation and amortization

EBITDA $ 816 $ 697 $ 583

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

What changed 10-K

Item 7. Management’s Discussion and Analysis