AT&T INC. 10-Q

Item 1. Financial Statements AT&T INC. CONSOLIDATED STATEMENTS OF INCOME Dollars in millions except per share amounts (Unaudited) Three months ended March 31, 2026 2025 Operating Revenues Service $ 25,478 $ 25,138 Equipment 6,028 5,488 Total operating revenues 31,506 30,626 Operating Expenses Cost of revenues Equipment 6,305 5,694 Other cost of revenues (exclusive of depreciation and amortization shown separately below) 6,261 6,339 Selling, general and administrative 7,316 7,145 Asset impairments and abandonments and restructuring — 504 Depreciation and amortization 4,966 5,190 Total operating expenses 24,848 24,872 Operating Income 6,658 5,754 Other Income (Expense) Interest expense ( 1,813 ) ( 1,658 ) Equity in net income (loss) of affiliates ( 41 ) 1,440 Other income (expense) — net 594 455 Total other income (expense) ( 1,260 ) 237 Income from Continuing Operations Before Income Taxes 5,398 5,991 Income tax expense on continuing operations 1,179 1,299 Income from Continuing Operations 4,219 4,692 Loss from discontinued operations, net of tax ( 38 ) — Net Income 4,181 4,692 Net Income Attributable to Noncontrolling Interest ( 352 ) ( 341 ) Net Income Attributable to AT&T $ 3,829 $ 4,351 Preferred Stock Dividends and Redemption Gain ( 36 ) 44 Net Income Attributable to Common Stock $ 3,793 $ 4,395 Basic Earnings Per Share from continuing operations $ 0.54 $ 0.61 Basic Loss Per Share from discontinued operations $ — $ — Basic Earnings Per Share Attributable to Common Stock $ 0.54 $ 0.61 Diluted Earnings Per Share from continuing operations $ 0.54 $ 0.61 Diluted Loss Per Share from discontinued operations $ — $ — Diluted Earnings Per Share Attributable to Common Stock $ 0.54 $ 0.61 Weighted Average Number of Common Shares Outstanding — Basic (in millions) 7,017 7,213 Weighted Average Number of Common Shares Outstanding — with Dilution (in millions) 7,027 7,223 See Notes to Consolidated Financial Statements. 3 AT&T INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Dollars in millions (Unaudited) Three months ended March 31, 2026 2025 Net income $ 4,181 $ 4,692 Other comprehensive income (loss), net of tax: Foreign currency: Translation adjustment, net of taxes of $ 10 and $ 10 34 21 Securities: Net unrealized gains (losses), net of taxes of $ 0 and $ 3 ( 1 ) 10 Reclassification adjustment included in net income, net of taxes of $ 0 and $ 0 — 1 Derivative instruments: Net unrealized gains (losses), net of taxes of $( 93 ) and $( 203 ) ( 270 ) ( 624 ) Reclassification adjustment included in net income, net of taxes of $ 4 and $ 4 11 11 Defined benefit postretirement plans: Amortization of net prior service credit included in net income, net of taxes of $( 98 ) and $( 115 ) ( 306 ) ( 356 ) Other comprehensive income (loss) ( 532 ) ( 937 ) Total comprehensive income 3,649 3,755 Less: Total comprehensive income attributable to noncontrolling interest ( 352 ) ( 341 ) Total Comprehensive Income Attributable to AT&T $ 3,297 $ 3,414 See Notes to Consolidated Financial Statements. 4 AT&T INC. CONSOLIDATED BALANCE SHEETS Dollars in millions except per share amounts March 31, December 31, 2026 2025 Assets (Unaudited) Current Assets Cash and cash equivalents $ 11,964 $ 18,234 Accounts receivable – net of related allowances for credit loss of $ 363 and $ 429 8,335 8,843 Inventories 2,451 2,420 Prepaid and other current assets 23,532 19,235 Total current assets 46,282 48,732 Property, plant and equipment 349,454 347,570 Less: accumulated depreciation and amortization ( 216,330 ) ( 216,011 ) Property, Plant and Equipment – Net 133,124 131,559 Goodwill – Net 63,838 63,425 Licenses – Net 129,144 128,148 Other Intangible Assets – Net 6,135 5,254 Investments in and Advances to Equity Affiliates 1,108 1,106 Operating Lease Right-Of-Use Assets 22,756 22,642 Other Assets 18,801 19,332 Total Assets $ 421,188 $ 420,198 Liabilities and Stockholders’ Equity Current Liabilities Debt maturing within one year $ 6,818 $ 9,011 Accounts payable and accrued liabilities 37,304 38,514 Advanced billings and customer deposits 4,330 4,266 Dividends payable 1,969 1,989 Total current liabilities 50,421 53,780 Long-Term Debt 131,589 127,089 Deferred Credits and Other Noncurrent Liabilities Noncurrent deferred tax liabilities 59,113 58,312 Postemployment benefit obligation 8,427 8,478 Operating lease liabilities 18,907 18,943 Other noncurrent liabilities 25,109 25,104 Total deferred credits and other noncurrent liabilities 111,556 110,837 Redeemable Noncontrolling Interest 2,003 2,001 Stockholders’ Equity Preferred stock ($ 1 par value, 10,000,000 authorized at March 31, 2026 and December 31, 2025): Series A ( 48,000 issued and outstanding at March 31, 2026 and December 31, 2025) — — Series B ( 20,000 issued and 0 outstanding at March 31, 2026 and December 31, 2025) — — Series C ( 70,000 issued and outstanding at March 31, 2026 and December 31, 2025) — — Common stock ($ 1 par value, 14,000,000,000 authorized at March 31, 2026 and December 31, 2025: issued 7,620,748,598 at March 31, 2026 and December 31, 2025) 7,621 7,621 Additional paid-in capital 106,084 106,533 Retained earnings 17,620 15,768 Treasury stock ( 655,850,883 at March 31, 2026 and 583,246,242 at December 31, 2025, at cost) ( 20,273 ) ( 18,529 ) Accumulated other comprehensive income (loss) ( 1,392 ) ( 860 ) Noncontrolling interest 15,959 15,958 Total stockholders’ equity 125,619 126,491 Total Liabilities and Stockholders’ Equity $ 421,188 $ 420,198 See Notes to Consolidated Financial Statements. 5 AT&T INC. CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in millions (Unaudited) Three months ended March 31, 2026 2025 Operating Activities Income from continuing operations $ 4,219 $ 4,692 Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations: Depreciation and amortization 4,966 5,190 Provision for uncollectible accounts 560 516 Asset impairments and abandonments and restructuring — 504 Pension and postretirement benefit expense (credit) ( 396 ) ( 397 ) Net (gain) loss on investments 28 81 Changes in operating assets and liabilities: Receivables ( 119 ) 15 Equipment installment receivables and related sales 255 1,212 Contract asset and cost deferral ( 327 ) ( 147 ) Inventories, prepaid and other current assets ( 173 ) ( 661 ) Accounts payable and other accrued liabilities ( 2,770 ) ( 3,297 ) Changes in income taxes 1,147 1,285 Postretirement claims and contributions ( 72 ) ( 68 ) Other - net 277 124 Total adjustments 3,376 4,357 Net Cash Provided by Operating Activities from Continuing Operations 7,595 9,049 Investing Activities Capital expenditures ( 4,877 ) ( 4,277 ) Acquisitions, net of cash acquired ( 2,674 ) ( 20 ) Dispositions 628 11 (Purchases), sales and settlements of securities - net ( 14 ) 45 Other - net ( 547 ) ( 717 ) Net Cash Used in Investing Activities from Continuing Operations ( 7,484 ) ( 4,958 ) Financing Activities Issuance of long-term debt 8,098 2,956 Repayment of long-term debt ( 5,247 ) ( 1,526 ) Payment of vendor financing ( 212 ) ( 203 ) Redemption of preferred stock — ( 2,075 ) Purchase of treasury stock ( 2,475 ) ( 218 ) Issuance of treasury stock 1 17 Issuance of preferred interests in subsidiary — 2,221 Dividends paid ( 1,997 ) ( 2,091 ) Other - net ( 265 ) 366 Net Cash Used in Financing Activities from Continuing Operations ( 2,097 ) ( 553 ) Net increase (decrease) in cash and cash equivalents and restricted cash from continuing operations ( 1,986 ) 3,538 Cash Flows from Discontinued Operations: Cash used in operating activities ( 38 ) — Cash used in investing activities ( 4,171 ) — Cash used in financing activities — — Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations ( 4,209 ) — Net increase (decrease) in cash and cash equivalents and restricted cash $ ( 6,195 ) $ 3,538 Cash and cash equivalents and restricted cash beginning of year 18,527 3,406 Cash and Cash Equivalents and Restricted Cash End of Period $ 12,332 $ 6,944 See Notes to Consolidated Financial Statements. 6 AT&T INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY Dollars and shares in millions except per share amounts (Unaudited) Three months ended March 31, 2026 March 31, 2025 Shares Amount Shares Amount Preferred Stock - Series A Balance at beginning of period — $ — — $ — Balance at end of period — $ — — $ — Preferred Stock - Series B Balance at beginning of period — $ — — $ — Balance at end of period — $ — — $ — Preferred Stock - Series C Balance at beginning of period — $ — — $ — Balance at end of period — $ — — $ — Common Stock Balance at beginning of period 7,621 $ 7,621 7,621 $ 7,621 Balance at end of period 7,621 $ 7,621 7,621 $ 7,621 Additional Paid-In Capital Balance at beginning of period $ 106,533 $ 109,108 Redemption of preferred stock — ( 2,165 ) Issuance of treasury stock ( 287 ) ( 452 ) Share-based compensation ( 162 ) ( 189 ) Balance at end of period $ 106,084 $ 106,302 Retained Earnings Balance at beginning of period $ 15,768 $ 1,871 Net income attributable to AT&T 3,829 4,351 Preferred stock redemption gain — 90 Preferred stock dividends ( 35 ) ( 86 ) Common stock dividends ($ 0.2775 and $ 0.2775 per share) ( 1,942 ) ( 2,011 ) Balance at end of period $ 17,620 $ 4,215 See Notes to Consolidated Financial Statements. 7 AT&T INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY - continued Dollars and shares in millions except per share amounts (Unaudited) Three months ended March 31, 2026 March 31, 2025 Shares Amount Shares Amount Treasury Stock Balance at beginning of period ( 583 ) $ ( 18,529 ) ( 445 ) $ ( 15,023 ) Repurchase and acquisition of common stock ( 95 ) ( 2,495 ) ( 9 ) ( 218 ) Reissuance of treasury stock 22 751 29 989 Balance at end of period ( 656 ) $ ( 20,273 ) ( 425 ) $ ( 14,252 ) Accumulated Other Comprehensive Income (Loss) Attributable to AT&T, net of tax Balance at beginning of period $ ( 860 ) $ 795 Other comprehensive income (loss) attributable to AT&T ( 532 ) ( 937 ) Balance at end of period $ ( 1,392 ) $ ( 142 ) Noncontrolling Interest 1 Balance at beginning of period $ 15,958 $ 13,873 Net income attributable to noncontrolling interest 316 305 Issuance and acquisition by noncontrolling owners — 2,221 Distributions ( 315 ) ( 285 ) Balance at end of period $ 15,959 $ 16,114 Total Stockholders’ Equity at beginning of period $ 126,491 $ 118,245 Total Stockholders’ Equity at end of period $ 125,619 $ 119,858 1 Excludes redeemable noncontrolling interest See Notes to Consolidated Financial Statements. 8 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Dollars in millions except per share amounts NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS Basis of Presentation Throughout this document, AT&T Inc. is referred to as “we,” “AT&T” or the “Company.” The consolidated financial statements include the accounts of the Company and subsidiaries and affiliates which we control. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technology industries. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2025. The results for the interim periods are not necessarily indicative of those for the full year. These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items. On February 2, 2026, we closed our transaction with Lumen Technologies, Inc. (Lumen) and acquired substantially all of Lumen’s Mass Markets fiber business for $ 5,756 cash, including purchase price adjustments. The acquisition included customer relationships, which we include with our advanced home internet services, and fiber network assets that were placed in a wholly owned subsidiary, Forged Fiber 37 Services, LLC (Forged Fiber). We plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations in the accompanying financial statements. (See Notes 8 and 12) The consolidated financial statements include our controlled subsidiaries, as well as variable interest entities (VIE) where we are deemed to be the primary beneficiary. All significant intercompany transactions are eliminated in consolidation. Investments in entities that we do not control but have significant influence are accounted for under the equity method. The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions, including estimates of fair value, probable losses and expenses, that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Unless otherwise noted, the information in Notes 1 through 11 refer only to our continued operations and do not include discussion of balances or activity of our discontinued operations. Effective with our first-quarter 2026 reporting, we realigned our internal management and reporting structure to reflect the evolution of our business model to focus on delivering converged advanced connectivity services across 5G and fiber to consumer and business customers. This new segment reporting structure also provides better visibility into the progress of exiting our copper-based Legacy operations. (See Notes 4 and 5) As a result of our change to this new segment reporting structure, we were required to reassess the assignment of goodwill and perform impairment testing of the previous and updated reporting units as of January 1, 2026; no impairment was recorded. The assignment of goodwill was based on the relative fair value of the reporting unit, which is deemed to be our principal operating segments or one level below. The goodwill from our previous Consumer Wireline and Mobility reporting units within the Communications segment was fully assigned to the reporting units comprising the Advanced Connectivity segment. No goodwill was assigned to the reporting unit comprising the Legacy segment as we expect sustained declines in Legacy service revenues driven by progress on our copper-based network decommissioning. Stock Repurchase Program In December 2024, the Board of Directors authorized the repurchase of up to $ 10,000 of AT&T common stock. We began buying back stock under this program in the second quarter of 2025. On January 27, 2026, the Board approved an authorization to repurchase an additional $ 10,000 of common stock. For the three months ended March 31, 2026, we repurchased approximately 88 million shares totaling $ 2,279 under the December 2024 authorization, excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022. To implement repurchase authorizations, we use open market repurchase programs, relying on Rule 10b5-1 of the Securities Exchange Act of 1934 where feasible. 9 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts NOTE 2. 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 March 31, 2026 2025 Numerators Numerator for basic earnings per share: Income from Continuing Operations $ 4,219 $ 4,692 Net Income Attributable to Noncontrolling Interest ( 352 ) ( 341 ) Preferred Stock Dividends and Redemption Gain ( 36 ) 44 Income from continuing operations attributable to common stock 3,831 4,395 Loss from discontinued operations, net of tax ( 38 ) — Net Income Attributable to Common Stock $ 3,793 $ 4,395 Dilutive impact of share-based compensation 3 4 Numerator for diluted earnings per share $ 3,796 $ 4,399 Denominators (000,000) Denominator for basic earnings per share: Weighted average number of common shares outstanding 7,017 7,213 Dilutive impact of share-based compensation (in shares) 10 10 Denominator for diluted earnings per share 7,027 7,223 NOTE 3. OTHER COMPREHENSIVE INCOME Changes in the balances of each component included in accumulated other comprehensive income (OCI) are presented below. All amounts are net of tax. Foreign Currency Translation Adjustment Net Unrealized Gains (Losses) on Securities Net Unrealized Gains (Losses) on Derivative Instruments Defined Benefit Postretirement Plans Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2025 $ ( 1,401 ) $ ( 28 ) $ ( 1,209 ) $ 1,778 $ ( 860 ) Other comprehensive income (loss) before reclassifications 34 ( 1 ) ( 270 ) — ( 237 ) Amounts reclassified from accumulated OCI — 1 — 1 11 2 ( 306 ) 3 ( 295 ) Net other comprehensive income (loss) 34 ( 1 ) ( 259 ) ( 306 ) ( 532 ) Balance as of March 31, 2026 $ ( 1,367 ) $ ( 29 ) $ ( 1,468 ) $ 1,472 $ ( 1,392 ) 10 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts 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) Balance as of December 31, 2024 $ ( 1,755 ) $ ( 46 ) $ ( 604 ) $ 3,200 $ 795 Other comprehensive income (loss) before reclassifications 21 10 ( 624 ) — ( 593 ) Amounts reclassified from accumulated OCI — 1 1 1 11 2 ( 356 ) 3 ( 344 ) Net other comprehensive income (loss) 21 11 ( 613 ) ( 356 ) ( 937 ) Balance as of March 31, 2025 $ ( 1,734 ) $ ( 35 ) $ ( 1,217 ) $ 2,844 $ ( 142 ) 1 (Gains) losses are included in “Other income (expense) - net” in the consolidated statements of income. 2 (Gains) losses are primarily included in “Interest expense” in the consolidated statements of income (see Note 7). 3 The amortization of prior service credit associated with postretirement benefits are included in “Other income (expense) - net” in the consolidated statements of income (see Note 6). NOTE 4. SEGMENT INFORMATION Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We have three reportable segments: Advanced Connectivity, Legacy and Latin America. Our chief operating decision maker (CODM) is our Chairman of the Board, Chief Executive Officer and President. Our CODM uses operating income to evaluate performance and allocate resources, including capital allocations, when managing the business. Our CODM manages operations through the review of actual and forecasted “Operations and Support Expenses” information, which are primarily comprised of costs for wireless devices, network access, rents, leases, sales support, customer provisioning and commissions. Operating costs and depreciation of our shared network, including copper-based assets prior to decommissioning, are managed in our Advanced Connectivity segment. Our Legacy and Latin America segments are primarily evaluated on a direct cost basis. Our CODM does not review disaggregated assets on a segment basis, therefore, that information is not presented. The Advanced Connectivity segment provides domestic 5G and fiber-based wireless, internet and other advanced connectivity services to consumer and business customers. The Legacy segment provides domestic legacy voice and data services to consumer and business customers over our copper-based network. Legacy segment results include revenues derived from copper-based services and direct operating costs. The Latin America segment provides wireless service and equipment in Mexico. Corporate and Other reconciles our segment results to consolidated operating income and income from continuing operations before income taxes and includes parent support costs, securitization fees, operations from business no longer integral to operations and significant items for which the segments are not being evaluated. Significant items typically include costs associated with the merger and integration of acquired or divested businesses, including amortization of intangible assets, legal and other items that cover historical periods, novel theories of liability and are separate and distinct from normal recurring costs, benefit-related gains and losses, employee separation charges associated with voluntary and/or strategic offers, asset impairments and abandonments and restructuring. “Total other income (expense)” consists of “Interest expense,” “Other income (expense) – net” and “Equity in net income (loss) of affiliates” and is managed only on a total company basis and are, accordingly, reflected only in consolidated results. 11 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts For the three months ended March 31, 2026 Advanced Connectivity Legacy Latin America Total Segment Corporate & Other AT&T Inc. Operating Revenues Wireless service $ 16,941 $ — $ 753 $ 17,694 $ — $ 17,694 Consumer 14,584 Business 2,357 Advanced home internet 2,799 — — 2,799 — 2,799 Business fiber and advanced connectivity 1,882 — — 1,882 — 1,882 Business transitional and other 1,083 — — 1,083 — 1,083 Other service 158 1,768 — 1,926 94 2,020 Total Service 22,863 1,768 753 25,384 94 25,478 Equipment 5,608 — 420 6,028 — 6,028 Operating Revenues 28,471 1,768 1,173 31,412 94 31,506 Operating Expenses Operations and support expenses 16,913 1,156 953 19,022 714 19,736 Asset impairment and abandonment and restructuring — — — — — — Transaction, legal and other costs — — — — 146 146 Depreciation and amortization 4,705 — 200 4,905 61 4,966 Operating Expenses 21,618 1,156 1,153 23,927 921 24,848 Operating Income (Loss) $ 6,853 $ 612 $ 20 $ 7,485 $ ( 827 ) $ 6,658 Total other income (expense) ( 1,260 ) Income from continuing operations before income tax $ 5,398 For the three months ended March 31, 2025 Advanced Connectivity Legacy Latin America Total Segment Corporate & Other AT&T Inc. Operating Revenues Wireless service $ 16,651 $ — $ 615 $ 17,266 $ — $ 17,266 Consumer 14,370 Business 2,281 Advanced home internet 2,198 — — 2,198 — 2,198 Business fiber and advanced connectivity 1,755 — — 1,755 — 1,755 Business transitional and other 1,294 — — 1,294 — 1,294 Other service 162 2,368 — 2,530 95 2,625 Total Service 22,060 2,368 615 25,043 95 25,138 Equipment 5,132 — 356 5,488 — 5,488 Operating Revenues 27,192 2,368 971 30,531 95 30,626 Operating Expenses Operations and support expenses 16,247 1,349 778 18,374 725 19,099 Asset impairment and abandonment and restructuring — — — — 504 504 Transaction, legal and other costs — — — — 79 79 Depreciation and amortization 4,973 — 150 5,123 67 5,190 Operating Expenses 21,220 1,349 928 23,497 1,375 24,872 Operating Income (Loss) $ 5,972 $ 1,019 $ 43 $ 7,034 $ ( 1,280 ) $ 5,754 Total other income (expense) 237 Income from continuing operations before income tax $ 5,991 12 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts NOTE 5. REVENUE RECOGNITION We report our revenues net of sales taxes and record certain regulatory fees, primarily Universal Service Fund (USF) fees, on a net basis. Revenue is disaggregated by services provided by segment, with additional details provided for our Advanced Connectivity consumer and business relationships (see Note 4). Deferred Customer Contract Acquisition and Fulfillment Costs Costs to acquire and fulfill customer contracts, including commissions on service activations are deferred and amortized over the contract period or expected customer relationship life, which typically ranges from three years to seven years . The following table presents the deferred customer contract acquisition and fulfillment costs included on our consolidated balance sheets: March 31, December 31, Consolidated Balance Sheets 2026 2025 Deferred Acquisition Costs Prepaid and other current assets $ 3,511 $ 3,550 Other Assets 4,986 4,778 Total deferred customer contract acquisition costs $ 8,497 $ 8,328 Deferred Fulfillment Costs Prepaid and other current assets $ 1,696 $ 1,862 Other Assets 2,896 2,864 Total deferred customer contract fulfillment costs $ 4,592 $ 4,726 The following table presents deferred customer contract acquisition and fulfillment cost amortization, which are primarily included in “Selling, general and administrative” and “Other cost of revenues,” respectively, for the three months ended: March 31, March 31, Consolidated Statements of Income 2026 2025 Deferred acquisition cost amortization $ 1,006 $ 906 Deferred fulfillment cost amortization 480 595 Contract Assets and Liabilities A contract asset is recorded when revenue is recognized in advance of our right to bill and receive consideration. The contract asset will decrease as services are provided and billed. For example, when installment sales include promotional discounts (e.g., trade-in device credits) the difference between revenue recognized and consideration received is recorded as a contract asset to be amortized over the contract term. Our contract assets primarily relate to our wireless businesses. 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 specified service period result in additional contract assets recognized. These contract assets will amortize over the service contract period, resulting in lower future service revenue. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Reductions in the contract liability will be recorded as we satisfy the performance obligations. The following table presents contract assets and liabilities on our consolidated balance sheets: March 31, December 31, Consolidated Balance Sheets 2026 2025 Contract asset $ 8,108 $ 7,816 Current portion in “Prepaid and other current assets” 4,320 4,131 Contract liability 4,472 4,409 Current portion in “Advanced billings and customer deposits” 4,194 4,136 13 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts Our beginning of period contract liability recorded as customer contract revenue during 2026 was $ 3,287 . Remaining Performance Obligations Remaining performance obligations represent services we are required to provide to customers under bundled or discounted arrangements, which are satisfied as services are provided over the contract term. In determining the transaction price allocated, we do not include non-recurring charges and estimates for usage, nor do we consider arrangements with an original expected duration of less than one year, which are primarily prepaid wireless and residential internet agreements. Remaining performance obligations associated with business contracts reflect recurring charges billed, adjusted to reflect estimates for sales incentives and revenue adjustments. Performance obligations associated with wireless contracts are estimated using a portfolio approach in which we review all relevant promotional activities, calculating the remaining performance obligation using the average service component for the portfolio and the average device price. As of March 31, 2026, the aggregate amount of the transaction price allocated to remaining performance obligations was $ 44,392 , of which we expect to recognize approximately 82 % by the end of 2027, with the balance recognized thereafter. NOTE 6. PENSION AND POSTRETIREMENT BENEFITS Many of our employees are covered by one of our noncontributory pension plans. We also provide certain medical, dental, life insurance and death benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to provide benefits described in the plans to employees upon their retirement. We do not have significant funding requirements in 2026. We plan to voluntarily contribute $ 350 to our pension plans during 2026. 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. The following table details qualified pension and postretirement benefit costs included in the accompanying consolidated statements of income. 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 March 31, 2026 2025 Pension cost: Service cost – benefits earned during the period $ 101 $ 107 Interest cost on projected benefit obligation 361 400 Expected return on assets ( 525 ) ( 507 ) Amortization of prior service credit ( 11 ) ( 12 ) Net pension (credit) cost $ ( 74 ) $ ( 12 ) Postretirement cost: Service cost – benefits earned during the period $ 4 $ 4 Interest cost on accumulated postretirement benefit obligation 73 80 Expected return on assets ( 6 ) ( 10 ) Amortization of prior service credit ( 393 ) ( 459 ) Net postretirement (credit) cost $ ( 322 ) $ ( 385 ) Combined net pension and postretirement (credit) cost $ ( 396 ) $ ( 397 ) 14 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts NOTE 7. FAIR VALUE MEASUREMENTS AND DISCLOSURE The Fair Value Measurement and Disclosure framework in ASC 820, “Fair Value Measurement,” provides a three-tiered fair value hierarchy based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs. The level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. We believe our valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used since December 31, 2025. Long-Term Debt and Other Financial Instruments The carrying amounts and estimated fair values of our long-term debt, including current maturities, and other financial instruments are summarized as follows: March 31, 2026 December 31, 2025 Carrying Fair Carrying Fair Amount Value Amount Value Notes and debentures 1 $ 137,017 $ 127,709 $ 134,718 $ 127,852 Investment securities 2 1,595 1,595 1,609 1,609 1 Includes credit agreement borrowings. 2 Excludes investments accounted for under the equity method. The carrying amount of debt with an original maturity of less than one year approximates fair value. The fair value measurements used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets. Following is the fair value leveling for investment securities that are measured at fair value and derivatives as of March 31, 2026 and December 31, 2025. Derivatives designated as hedging instruments are reflected as “Prepaid and other current assets,” “Other Assets,” “Accounts payable and accrued liabilities,” and “Other noncurrent liabilities” on our consolidated balance sheets. March 31, 2026 Level 1 Level 2 Level 3 Total Equity Securities Domestic equities $ 541 $ — $ — $ 541 International equities 8 — — 8 Fixed income equities 217 — — 217 Available-for-Sale Debt Securities — 583 — 583 Asset Derivatives Cross-currency swaps — 458 — 458 Liability Derivatives Cross-currency swaps — ( 2,626 ) — ( 2,626 ) 15 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts December 31, 2025 Level 1 Level 2 Level 3 Total Equity Securities Domestic equities $ 566 $ — $ — $ 566 International equities 8 — — 8 Fixed income equities 217 — — 217 Available-for-Sale Debt Securities — 587 — 587 Asset Derivatives Cross-currency swaps — 876 — 876 Liability Derivatives Cross-currency swaps — ( 2,050 ) — ( 2,050 ) Investment Securities Our investment securities include both equity and debt securities that are measured at fair value, as well as equity securities without readily determinable fair values. A substantial portion of the fair values of our investment securities is estimated based on quoted market prices. Investments in equity securities not traded on a national securities exchange are valued at cost, less any impairment, and adjusted for changes resulting from observable, orderly transactions for identical or similar securities. Investments in debt securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. The components comprising total gains and losses in the period on equity securities are as follows: Three months ended March 31, 2026 2025 Total gains (losses) recognized on equity securities $ ( 32 ) $ ( 27 ) Gains (losses) recognized on equity securities sold — — Unrealized gains (losses) recognized on equity securities held at end of period $ ( 32 ) $ ( 27 ) At March 31, 2026, available-for-sale debt securities totaling $ 583 have maturities as follows - less than one year: $ 55 ; one to three years: $ 151 ; three to five years: $ 118 ; five or more years: $ 259 . 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 We enter into derivative transactions to manage certain market risks, primarily interest rate risk and foreign currency exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest rate foreign exchange contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We record derivatives on our consolidated balance sheets at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2). Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the item being hedged. Fair Value Hedging Periodically, we enter into and designate fixed-to-floating interest rate swaps as fair value hedges. The purpose of these swaps is to manage interest rate risk by managing our mix of fixed-rate and floating-rate debt. These swaps involve the receipt of fixed-rate amounts for floating interest rate payments over the life of the swaps without exchange of the underlying principal amount. We also designate most of our cross-currency swaps and foreign exchange contracts as fair value hedges. The purpose of these contracts is to hedge foreign currency risk associated with changes in spot rates on foreign denominated debt. For cross-currency hedges, we have elected to exclude the change in fair value of the swap related to both time value and cross-currency 16 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts basis spread from the assessment of hedge effectiveness. For foreign exchange contracts, we have elected to exclude the change in fair value of forward points from the assessment of hedge effectiveness. Unrealized and realized gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged, including the earnings impact of excluded components. In instances where we have elected to exclude components from the assessment of hedge effectiveness related to fair value hedges, unrealized gains or losses on such excluded components are recorded as a component of accumulated OCI and recognized into earnings over the life of the hedging instrument. Unrealized gains on derivatives designated as fair value hedges are recorded at fair value as assets, and unrealized losses are recorded at fair market value as liabilities. Except for excluded components, changes in the fair value of derivative instruments designated as fair value hedges are offset against the change in fair value of the hedged assets or liabilities through earnings. In the three months ended March 31, 2026 and 2025, no ineffectiveness was measured on fair value hedges. Cash Flow Hedging We designate some of our cross-currency swaps as cash flow hedges to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency risk and interest rate risk generated from our foreign-denominated debt. These agreements include initial and final exchanges of principal from fixed foreign denominated amounts to fixed U.S. dollar denominated amounts, to be exchanged at a specified rate that is usually determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed or floating foreign denominated interest rate to a fixed U.S. dollar denominated interest rate. Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets and unrealized losses are recorded at fair value as liabilities. For derivative instruments designated as cash flow hedges, changes in fair value are reported as a component of accumulated OCI and are reclassified into the consolidated statements of income in the same period the hedged transaction affects earnings. Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt. Over the next 12 months, we expect to reclassify $ 59 from accumulated OCI to “Interest expense” due to the amortization of net losses on historical interest rate locks. Collateral and Credit-Risk Contingency We have entered into agreements with our derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. At March 31, 2026, we had posted collateral of $ 28 (a deposit asset) and held collateral of $ 183 (a receipt liability). Under the agreements, if AT&T’s credit rating had been downgraded two ratings levels by Fitch Ratings, one level by S&P and one level by Moody’s before the final collateral exchange in March, we would have been required to post additional collateral of $ 60 . 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 $ 2,219 . At December 31, 2025, we had posted collateral of $ 513 (a deposit asset) and held collateral of $ 314 (a receipt liability). We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable) exists, against the fair value of the derivative instruments. Following are the notional amounts of our outstanding derivative positions: March 31, December 31, 2026 2025 Cross-currency swaps $ 36,069 $ 35,741 Total $ 36,069 $ 35,741 17 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts Following are the related hedged items affecting our financial position and performance: Effect of Derivatives on the Consolidated Statements of Income Three months ended March 31, Fair Value Hedging Relationships 2026 2025 Interest rate swaps (“Interest expense”): Gain (loss) on interest rate swaps $ ( 1 ) $ ( 1 ) Gain (loss) on long-term debt 1 1 Cross-currency swaps: Gain (loss) on cross-currency swaps ( 587 ) 1,124 Gain (loss) on long-term debt 587 ( 1,124 ) Gain (loss) recognized in accumulated OCI ( 375 ) ( 831 ) In addition, the net swap settlements that accrued and settled in the periods above were offset against “Interest expense.” The following table presents information for our cash flow hedging relationships: Three months ended March 31, Cash Flow Hedging Relationships 2026 2025 Cross-currency swaps: Gain (loss) recognized in accumulated OCI $ 12 $ 4 Interest rate locks: Interest income (expense) reclassified from accumulated OCI into income ( 15 ) ( 15 ) NOTE 8. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS Fiber On February 2, 2026, we acquired substantially all of Lumen’s Mass Markets fiber business for $ 5,756 , including purchase price adjustments. The preliminary values of assets acquired were approximately $ 900 in customer relationships, $ 3,400 in property, plant and equipment, and $ 800 of goodwill. The customer relationships are managed in our Advanced Connectivity segment and will be amortized using the sum-of-the-months method over six years. Property, plant and equipment primarily represent the acquired fiber network, which we placed in Forged Fiber, a wholly owned subsidiary. In connection with this transaction, we plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations. These discontinued operations include the fiber network assets, which support the acquired customer relationships through intercompany transactions. The discontinued operations were also assigned a proportionate share of goodwill and acquisition costs and related cash flows. (See Note 12) NOTE 9. SALES OF RECEIVABLES We have agreements with various third-party financial institutions pertaining to the sales of certain types of our accounts receivable. The most significant of these programs are discussed in detail below and generally consist of (1) receivables arising from equipment installment plans, which are sold for cash and beneficial interests, such as deferred purchase price, when applicable, and (2) revolving trade receivables, which are sold for cash. Under the terms of our agreements for these programs, we continue to service the transferred receivables on behalf of the financial institutions. 18 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts The following table sets forth a summary of cash proceeds received, net of remittances paid, from sales of receivables: Three months ended March 31, 2026 2025 Net cash received (paid) from equipment installment receivables program 1 $ 268 $ 859 Net cash received (paid) from revolving receivables program ( 34 ) 133 Total net cash impact to cash flows from operating activities 2 $ 234 $ 992 1 Cash from initial sales of $ 3,483 and $ 3,798 for the three months ended March 31, 2026 and 2025, respectively. 2 Net of facility fees. The sales of receivables did not have a material impact on our consolidated statements of income or to “Total Assets” reported on our consolidated balance sheets. We reflect cash receipts on sold receivables as cash flows from operations in our consolidated statements of cash flows. In the event cash is received on the beneficial interests, those receipts are classified as cash flows from investing activities, when applicable. Our equipment installment and revolving receivables programs are discussed in detail below. The following table sets forth a summary of the receivables and accounts being serviced: March 31, 2026 December 31, 2025 Equipment Equipment Installment Revolving Installment Revolving Gross receivables: $ 2,961 $ 377 $ 3,725 $ 425 Balance sheet classification Accounts receivable Notes receivable 1,532 — 1,886 — Trade receivables 282 377 304 425 Other Assets Noncurrent notes and trade receivables 1,147 — 1,535 — Outstanding portfolio of receivables derecognized from our consolidated balance sheets $ 12,585 $ 2,940 $ 11,987 $ 2,940 Cash proceeds received, net of remittances 1 9,838 2,940 9,617 2,940 1 Represents amounts to which financial institutions remain entitled, excluding the beneficial interests. Equipment Installment Receivables Program We offer our customers the option to purchase certain wireless devices in installments over a specified period of time and, in many cases, once certain conditions are met, they may be eligible to trade in the original equipment for a new device and have the remaining unpaid balance paid or settled. We maintain a program under which we transfer a portion of these receivables through our bankruptcy-remote subsidiary in exchange for cash and beneficial interests. In the event a customer trades in a device prior to the end of the installment contract period, we agree to make a payment to the financial institutions equal to any outstanding remaining installment receivable balance. Accordingly, we record a guarantee obligation for this estimated amount at the time the receivables are transferred. 19 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts The following table sets forth a summary of equipment installment receivables sold under this program: Three months ended March 31, 2026 2025 Gross receivables sold 1 $ 3,516 $ 3,835 Net receivables sold 2 3,355 3,688 Cash proceeds received 3,483 3,798 Guarantee obligation recorded 279 280 1 Receivables net of promotion credits. 2 Receivables net of allowance and other reserves. Beneficial interests, when applicable, and guarantee obligations are initially recorded at estimated fair value and subsequently adjusted for changes in present value of expected cash flows. The estimation of their fair values is based on remaining installment payments expected to be collected and the expected timing and value of device trade-ins. The estimated value of the device trade-ins considers prices offered to us by independent third parties and contemplates changes in value after the launch of a device model. The fair value measurements used for the beneficial interests and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 7). The following table presents the previously transferred equipment installment receivables, which we repurchased in exchange for the associated beneficial interests: Three months ended March 31, 2026 2025 Fair value of repurchased receivables $ 725 $ 1,937 Carrying value of beneficial interests 726 1,933 Gain (loss) on repurchases 1 $ ( 1 ) $ 4 1 These gains (losses) are included in “Selling, general and administrative” expense in the consolidated statements of income. At March 31, 2026 and December 31, 2025, our beneficial interests were $ 2,463 and $ 2,067 , respectively, of which $ 1,737 and $ 1,338 are included in “Prepaid and other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.” The guarantee obligation at March 31, 2026 and December 31, 2025 was $ 447 and $ 410 , respectively, of which $ 227 and $ 216 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 2025, we expanded our revolving agreement to transfer up to $ 2,940 of certain receivables through our bankruptcy-remote subsidiaries to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred. This agreement is subject to renewal on an annual basis and the transfer limit may be expanded or reduced from time to time. As customers pay their balances, we transfer additional receivables into the program, resulting in our gross receivables sold exceeding net cash flow impacts (e.g., collect and reinvest). The transferred receivables are fully guaranteed by our bankruptcy-remote subsidiaries, which hold additional receivables in the amount of $ 377 that are pledged as collateral under this agreement. The transfers are recorded at fair value of the proceeds received and obligations assumed less derecognized receivables. Our maximum exposure to loss related to these receivables transferred is limited to the derecognized amount outstanding. 20 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts The following table sets forth a summary of the revolving receivables sold: Three months ended March 31, 2026 2025 Gross receivables sold/cash proceeds received 1 $ 7,501 $ 7,343 Total collections under revolving agreement 7,501 7,173 Net cash proceeds received $ — $ 170 Net receivables sold 2 $ 7,294 $ 7,142 1 Includes initial sales of receivables of $ 0 and $ 170 for the three months ended March 31, 2026 and 2025, respectively. 2 Receivables net of allowance and other reserves. NOTE 10. SUPPLIER AND VENDOR FINANCING PROGRAMS Supplier Financing Program We actively manage the timing of our supplier payments for operating items to optimize the use of our cash and seek to make payments on 90-day or greater terms, while providing suppliers with access to bank facilities that permit earlier payment at their cost. Our supplier financing program does not result in changes to our normal, contracted payment cycles or cash from operations. At the supplier’s election, they can receive payment of AT&T obligations prior to the scheduled due dates, at a discounted price from the third-party financial institution. The discounted price paid to participating suppliers is based on a variable rate that is indexed to the overnight borrowing rate. We agree to pay the financial institution the stated amount generally within 90 days of receipt of the invoice. We do not have pledged assets or other guarantees under our supplier financing program. Suppliers had elected to sell to the third-party financial institutions $ 4,082 and $ 3,090 of our outstanding payment obligations as of March 31, 2026 and December 31, 2025, respectively. These amounts are included in “Accounts payable and accrued liabilities” on our consolidated balance sheets. Our supplier financing programs are reported as operating or investing (when capitalizable) activities in our consolidated statements of cash flows when paid. Direct Supplier Financing We also have arrangements with suppliers of handset inventory that allow us to extend the stated payment terms by up to approximately 120 days, with an average of 85 days outstanding, at an additional cost to us (variable rate extension fee). We had $ 5,820 of direct supplier financing outstanding as of March 31, 2026 and $ 6,901 as of December 31, 2025, 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. Vendor Financing We enter into multi-year software licensing arrangements, which, consistent with industry standards, are paid over the license terms of two to five years. Additionally, in connection with capital improvements and the acquisition of other productive assets, we negotiate favorable payment terms of 120 days or more. We refer to these arrangements as vendor financing, with the balances and activities including equipment and software arrangements. Vendor financing payments are reported as financing activities in our statements of cash flows when paid. For the three months ended March 31, 2026 and 2025, we recorded vendor financing commitments of $ 732 and $ 378 , respectively. We had $ 2,437 of vendor financing payables at March 31, 2026, with $ 1,474 included in “Accounts payable and accrued liabilities” and $ 1,892 of vendor financing payables at December 31, 2025, with $ 956 included in “Accounts payable and accrued liabilities.” 21 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts N OTE 11. ADDITIONAL FINANCIAL INFORMATION Cash and Cash Flows We typically maintain our restricted cash balances for purchases and sales of certain investment securities and funding of certain deferred compensation benefit payments. The following table summarizes cash and cash equivalents and restricted cash balances contained on our consolidated balance sheets: March 31, December 31, 2026 2025 2025 2024 Cash and cash equivalents $ 11,964 $ 6,885 $ 18,234 $ 3,298 Restricted cash in Prepaid and other current assets 282 1 157 1 Restricted cash in Other Assets 86 58 136 107 Cash and Cash Equivalents and Restricted Cash $ 12,332 $ 6,944 $ 18,527 $ 3,406 The following table summarizes cash paid during the periods for interest and income taxes: Three months ended March 31, Cash paid (received) during the period for: 2026 2025 Interest $ 1,936 $ 1,804 Income taxes, net of refunds 1 11 The following table summarizes capital expenditures: Three months ended March 31, 2026 2025 Purchase of property and equipment $ 4,835 $ 4,240 Interest during construction - capital expenditures 2 42 37 Total Capital Expenditures $ 4,877 $ 4,277 The following table summarizes acquisitions, net of cash acquired: Three months ended March 31, 2026 2025 Business acquisitions 1 $ 1,656 $ — Spectrum acquisitions 1,018 1 Interest during construction - spectrum 2 — 19 Total Acquisitions 1 $ 2,674 $ 20 1 Approximately $ 4,100 of cash paid for acquisitions was reported as investing activities from discontinued operations. 2 Total capitalized interest was $ 42 and $ 56 for the three months ended March 31, 2026 and 2025, respectively. 22 AT&T INC. MARCH 31, 2026 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued Dollars in millions except per share amounts NOTE 12. DISCONTINUED OPERATIONS As discussed in Notes 1 and 8, on February 2, 2026, we acquired substantially all of Lumen’s Mass Markets fiber business, including fiber network assets that are held in a new, wholly owned subsidiary, Forged Fiber, which is reflected as discontinued operations. Forged Fiber will continue to support the accompanying acquired fiber customers retained by our Advanced Connectivity segment. To reflect ongoing commercial arrangements following the disposal, results have been presented on a gross basis, with approximately $ 95 of operating expenses reported in continuing operations and the corresponding revenues reported in discontinued operations. Discontinued operations were also allocated a proportionate share of goodwill, acquisition-related costs and related cash flows. The following is a summary of operating results included in income (loss) from discontinued operations for the three months ended March 31: 2026 Revenues $ 99 Operating Expenses Cost of revenues 51 Selling, general and administrative 1 81 Total operating expenses 132 Other income (expense) – net ( 17 ) Net income (loss) before income taxes ( 50 ) Income tax (benefit) expense ( 12 ) Loss from discontinued operations, net of tax $ ( 38 ) 1 Includes proportionate transaction costs. The following are the preliminary values for the major classes of assets and liabilities associated with our discontinued operations and classified as held-for-sale on our consolidated balance sheet at March 31: 2026 Assets: Current Assets $ 132 Property, Plant and Equipment 1 3,544 Goodwill 392 Other Assets 204 Total Assets, discontinued operations 2 $ 4,272 Liabilities: Current liabilities $ 185 Other liabilities 1 Total Liabilities, discontinued operations 2 $ 186 1 Includes $ 71 of capital additions after acquisition. 2 Held-for-sale assets are reported in “Other current assets” and held-for-sale liabilities are reported in “Accounts payable and accrued liabilities.” 23 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts RESULTS OF OPERATIONS AT&T Inc. is referred to as “we,” “AT&T” or the “Company” throughout this document. AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc., and the names of the particular subsidiaries and affiliates providing the services generally have been omitted. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technology industries. You should read this discussion in conjunction with the consolidated financial statements and accompanying notes (Notes). Percentage increases and decreases that are not considered meaningful are denoted with a dash. On February 2, 2026, we closed our transaction with Lumen Technologies, Inc. (Lumen) and acquired substantially all of Lumen’s Mass Markets fiber business. The acquisition included customer relationships, which we include with our advanced home internet services and fiber network assets that were placed in a wholly owned subsidiary, Forged Fiber 37 Services, LLC (Forged Fiber). We plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations in the accompanying financial statements and are not included in our discussion of continuing operations. (See Notes 8 and 12) Consolidated Results Our financial results from continuing operations are summarized in the discussions that follow. Additional analysis is discussed in our “Segment Results” section. First Quarter Percent 2026 2025 Change Operating Revenues Service $ 25,478 $ 25,138 1.4 % Equipment 6,028 5,488 9.8 Total Operating Revenues 31,506 30,626 2.9 Operating Expenses Operations and support 19,882 19,682 1.0 Depreciation and amortization 4,966 5,190 (4.3) Total Operating Expenses 24,848 24,872 (0.1) Operating Income 6,658 5,754 15.7 Interest expense 1,813 1,658 9.3 Equity in net income (loss) of affiliates (41) 1,440 — Other income (expense) — net 594 455 30.5 Income from Continuing Operations Before Income Taxes 5,398 5,991 (9.9) Income from Continuing Operations 4,219 4,692 (10.1) % Operating revenues increased in the first quarter of 2026, reflecting higher Advanced Connectivity wireless and fiber revenues, including revenues from customers of our acquired mass markets fiber business. Operating revenues in Mexico were also higher due to favorable foreign exchange impacts during the first quarter of 2026 . Offsetting the increases were lower Legacy revenues as we continue to work towards the decommissioning of our copper-based legacy network. Operations and support expenses increased in the first quarter of 2026, primarily due to higher wireless sales volumes, which drove higher equipment, selling and bad debt expenses. T he increase was also due to higher network costs that included vendor credits in the prior year, and incremental customer costs related to our acquired mass markets fiber business . The increase was partially offset by higher restructuring charges in the prior year, cost reductions from transformation initiatives and lower content licensing fees. Depreciation and amortization expense decreased in the first quarter of 2026, primarily due to lower depreciation from fully depreciated legacy assets, partially offset by ongoing capital spending for strategic initiatives such as fiber and network upgrades. 24 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts Operating income increased in the first quarter of 2026. Our operating income margin in the first quarter increased from 18.8% in 2025 to 21.1% in 2026. Interest expense increased in the first quarter of 2026, primarily due to higher debt balances and interest rates on long-term borrowings. Equity in net income (loss) of affiliates decreased in the first quarter of 2026, primarily due to the sale of our interest in DIRECTV Entertainment Holdings, LLC to TPG Capital on July 2, 2025. Other income (expense) – net increased in the first quarter of 2026, primarily due to higher interest income from higher average cash balances and noncash losses on sales of nonstrategic assets in the prior year. These increases were partially offset by lower returns on benefit-related investments. Income tax expense decreased in the first quarter of 2026. The decrease was primarily due to lower income from continuing operations before income tax. Our effective tax rate was 21.8% in the first quarter of 2026, versus 21.7% in the comparable period in the prior year, reflecting larger discrete state tax benefits in 2025. 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. Effective with our first-quarter 2026 reporting, we realigned our internal management and reporting structure to reflect the evolution of our business model to focus on delivering converged advanced connectivity services across 5G and fiber to consumer and business customers. This new segment reporting structure also provides better visibility into the progress of exiting our copper-based legacy operations. Our segment results presented in Note 4 and discussed below follow our internal management reporting. We evaluate segment performance based on operating income as well as EBITDA and/or EBITDA margin. 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 (GAAP). We have three reportable segments: Advanced Connectivity, Legacy and Latin America. The Advanced Connectivity segment provides domestic 5G and fiber-based wireless, internet and other advanced connectivity services to consumer and business customers. We also provide supplemental information on our advanced consumer and business customer relationships as the product lifecycles in these customer categories influence the growth trajectories of Advanced Connectivity segment results. The Legacy segment provides domestic legacy voice and data services to consumer and business customers over our copper-based network. Legacy segment results include revenues derived from copper-based services and direct operating costs. The Latin America segment provides wireless service and equipment in Mexico. 25 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts ADVANCED CONNECTIVITY SEGMENT First Quarter 2026 2025 Percent Change Segment Operating Revenues Wireless service $ 16,941 $ 16,651 1.7 % Advanced home internet 2,799 2,198 27.3 Business fiber and advanced connectivity 1,882 1,755 7.2 Business transitional and other 1,083 1,294 (16.3) Other service 158 162 (2.5) Total Service Revenues 22,863 22,060 3.6 Equipment 5,608 5,132 9.3 Total Segment Operating Revenues 28,471 27,192 4.7 Segment Operating Expenses Operations and support 16,913 16,247 4.1 Depreciation and amortization 4,705 4,973 (5.4) Total Segment Operating Expenses 21,618 21,220 1.9 Operating Income $ 6,853 $ 5,972 14.8 % The following tables highlight other key measures of performance for Advanced Connectivity: Wireless March 31, (in 000s) 2026 2025 Percent Change Retail Wireless Subscribers 1 109,292 108,418 0.8 % Phone 91,057 90,193 1.0 Postpaid phone 74,503 73,031 2.0 Prepaid phone 16,554 17,162 (3.5) Other 18,235 18,225 0.1 First Quarter 2026 2025 Percent Change Retail Wireless Net Adds 1, 2 158 256 (38.3) Phone 222 304 (27.0) Postpaid phone 294 324 (9.3) Prepaid phone (72) (20) — Other (64) (48) (33.3) % Phone churn 3 1.20 % 1.16 % 4 BP Postpaid phone churn 3 0.89 % 0.83 % 6 BP Prepaid phone churn 3 2.62 % 2.55 % 7 BP 1 Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines. 2 Excludes migrations between wireless subscriber categories, including connected devices, and acquisition-related activity. 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. 26 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts Internet March 31, (in 000s) 2026 2025 Percent Change Internet Connections 14,833 11,443 29.6 % Fiber 12,501 10,211 22.4 AT&T Fiber 11,800 9,592 23.0 AT&T Business Fiber 1 701 619 13.2 Fixed Wireless 2,332 1,232 89.3 AT&T Internet Air (AIA) 1,736 803 — Business Fixed Wireless 2 596 429 38.9 First Quarter 2026 2025 Percent Change Internet Net Adds 3 584 516 13.2 Fiber 292 283 3.2 AT&T Fiber 273 261 4.6 AT&T Business Fiber 1 19 22 (13.6) Fixed Wireless 292 233 25.3 AT&T Internet Air (AIA) 239 181 32.0 Business Fixed Wireless 2 53 52 1.9 % 1 Includes fiber broadband internet for businesses and excludes dedicated and ethernet fiber. 2 Includes AT&T Internet Air for Business and historical fixed wireless services. Excludes integrated gateway wireless connections used for secondary or back-up connectivity. 3 Excludes acquisition-related activity and the impact of customer disconnections resulting from the termination of AIA services in areas with unfavorable regulatory requirements in the first quarter of 2025. Wireless service revenue increased in the first quarter of 2026 driven by growth in retail wireless subscribers in underpenetrated categories and converged accounts, partially offset by promotional activity. The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Phone churn was slightly higher in the first quarter of 2026, driven by the competitive dynamics of the industry. Advanced home internet revenue increased in the first quarter of 2026 driven by an increase in fiber and AIA revenues. Fiber revenues increased 21.2% in the first quarter of 2026, due to growth in fiber customers, including customers of our acquired mass markets fiber business . We expect revenue growth to continue as we invest further in building our fiber footprint. AIA revenue increases exceeded 100% as we continue to make these services available in additional markets. Business fiber and advanced connectivity revenues increased in the first quarter of 2026 driven by higher fiber and fixed wireless revenues. Business transitional and other revenues decreased in the first quarter of 2026 driven by lower demand for Virtual Private Network (VPN) and wholesale services, both of which we expect to continue. Other service revenues decreased in the first quarter of 2026, reflecting the continued decline in the number of consumer VoIP customers. Equipment revenue increased in the first quarter of 2026, primarily due to higher wireless device sales volumes. Operations and support expenses increased in the first quarter of 2026, primarily due to higher wireless sales volumes, which drove higher equipment, selling and bad debt expenses. The increase was also due to higher network costs that included vendor credits in the prior year, and incremental customer costs related to our acquired mass markets fiber business. These increases were partially offset by cost reductions from transformation initiatives and lower content licensing fees. 27 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts Depreciation expense decreased in the first quarter of 2026, primarily due to lower depreciation from fully depreciated legacy assets, partially offset by ongoing capital spending for strategic initiatives such as fiber and network upgrades. Depreciation of our shared network, including copper-based assets prior to decommissioning, is managed in our Advanced Connectivity segment, consistent with our composite group depreciation methodology. Operating income increased in the first quarter of 2026. Our Advanced Connectivity operating income margin in the first quarter increased from 22.0% in 2025 to 24.1% in 2026. Our Advanced Connectivity EBITDA margin in the first quarter increased from 40.3% in 2025 to 40.6% in 2026. LEGACY SEGMENT First Quarter 2026 2025 Percent Change Segment Operating Revenues $ 1,768 $ 2,368 (25.3) % Segment Operating Expenses Operations and support 1,156 1,349 (14.3) Depreciation and amortization — — — Total Segment Operating Expenses 1,156 1,349 (14.3) Operating Income $ 612 $ 1,019 (39.9) % Operating revenues decreased in the first quarter of 2026, driven by lower demand for legacy services, which we expect to continue as we decommission our copper-based legacy network. Operations and support represent direct operating costs and decreased in the first quarter of 2026. Expense declines were primarily driven by lower personnel and other costs resulting from the decommissioning of our legacy network and lower fulfillment cost amortization, which we expect to continue. These decreases were partially offset by vendor credits in the prior year. Operating income decreased in the first quarter of 2026. Our Legacy operating income and EBITDA margins in the first quarter decreased from 43.0% in 2025 to 34.6% in 2026. LATIN AMERICA SEGMENT First Quarter 2026 2025 Percent Change Segment Operating Revenues Service $ 753 $ 615 22.4 % Equipment 420 356 18.0 Total Segment Operating Revenues 1,173 971 20.8 Segment Operating Expenses Operations and support 953 778 22.5 Depreciation and amortization 200 150 33.3 Total Segment Operating Expenses 1,153 928 24.2 Operating Income $ 20 $ 43 (53.5) % 28 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts The following tables highlight other key measures of performance for Mexico: Subscribers March 31, (in 000s) 2026 2025 Percent Change Postpaid 7,088 5,997 18.2 % Prepaid 16,835 17,376 (3.1) Reseller 180 235 (23.4) Total Mexico Wireless Subscribers 24,103 23,608 2.1 % Mexico Wireless Net Additions First Quarter (in 000s) 2026 2025 Percent Change Postpaid 337 160 — % Prepaid (895) (110) — Reseller (19) (18) (5.6) Total Mexico Wireless Net Additions (577) 32 — % Service revenues increased in the first quarter of 2026, primarily due to favorable foreign exchange impacts and growth in subscribers. Equipment revenues increased in the first quarter of 2026, primarily due to favorable foreign exchange impacts and higher equipment sales. Operations and support expenses increased in the first quarter of 2026, driven by unfavorable foreign exchange rates and increased sales volume, resulting in higher equipment costs and bad debt expenses. Depreciation and amortization expense increased in the first quarter of 2026, driven by unfavorable foreign exchange rates, accelerated depreciation on certain assets and higher in-service assets. Operating income decreased in the first quarter of 2026. Our Mexico operating income margin in the first quarter decreased from 4.4% in 2025 to 1.7% in 2026. Our Mexico EBITDA margin in the first quarter decreased from 19.9% in 2025 to 18.8% in 2026. 29 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Dollars in millions except per share amounts SUPPLEMENTAL INFORMATION The following tables present supplemental information on the consumer and business relationships within our Advanced Connectivity segment. Advanced Connectivity Consumer First Quarter 2026 2025 Percent Change Operating revenues Wireless service $ 14,584 $ 14,370 1.5 % Advanced home internet 2,799 2,198 27.3 Other service 158 162 (2.5) Total Service Revenues 17,541 16,730 4.8 Equipment 4,611 4,246 8.6 Total Operating Revenues 22,152 20,976 5.6 Operating expenses Operations and support 12,589 11,801 6.7 Depreciation and amortization 3,022 3,011 0.4 Total Operating Expenses 15,611 14,812 5.4 Operating Income $ 6,541 $ 6,164 6.1 % Advanced Connectivity Business First Quarter 2026 2025 Percent Change Operating revenues Wireless service $ 2,357 $ 2,281 3.3 % Fiber and advanced connectivity 1,882 1,755 7.2 Transitional and other service 1,083 1,294 (16.3) Total Service Revenues 5,322 5,330 (0.2) Equipment 997 886 12.5 Total Operating Revenues 6,319 6,216 1.7 Operating expenses Operations and support 4,324 4,446 (2.7) Depreciation and amortization 1,683 1,962 (14.2) Total Operating Expenses 6,007 6,408 (6.3) Operating Income (Loss) $ 312 $ (192) — % 30 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued Dollars in millions except per share amounts COMPETITIVE AND REGULATORY ENVIRONMENT Overview AT&T subsidiaries operating within the United States are subject to federal and state regulations. AT&T subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulations in the markets where service is provided. Complying with these regulations may affect our results of operations and cash flow, and compliance may be very costly. For a discussion of these regulations, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Regulatory Landscape” in our Annual Report on Form 10-K for the year-ended December 31, 2025. LIQUIDITY AND CAPITAL RESOURCES Continuing operations for three months ended March 31, 2026 2025 Cash provided by operating activities $ 7,595 $ 9,049 Cash used in investing activities (7,484) (4,958) Cash used in financing activities (2,097) (553) March 31, December 31, 2026 2025 Cash and cash equivalents $ 11,964 $ 18,234 Total debt 138,407 136,100 We had $11,964 in cash and cash equivalents available at March 31, 2026, decreasing $6,270 since December 31, 2025. Cash and cash equivalents included cash of $3,490 and money market funds and other cash equivalents of $8,474. Approximately $1,077 of our cash and cash equivalents were held in accounts outside of the U.S. and may be subject to restrictions on repatriation. For the first three months of 2026, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties. These inflows were exceeded by 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 repay long-term debt, fund capital improvements and business acquisitions, repurchase common stock, and make dividend payments to stockholders. We maintain availability under our credit facilities and our commercial paper program to meet our short-term liquidity requirements. Cash Provided by Operating Activities from Continuing Operations During the first three months of 2026, cash provided by operating activities was $7,595, compared to $9,049 for the first three months of 2025, with prior-year operating cash flows including $1,423 of distributions from DIRECTV. 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). 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 approximately 120 days, with an average of 85 days outstanding, at an additional cost to us (referred to as direct supplier financing). The net impact of direct supplier financing, including principal and interest payments, was to decrease cash from operating activities approximately $1,136 and $2,042 for the three months ended March 31, 2026 and 2025, respectively. All supplier financing payments are due within one year. (See Note 10) Cash Used in Investing Activities from Continuing Operations For the first three months of 2026, cash used in investing activities totaled $7,484 and consisted primarily of $4,877 (including interest during construction) for capital expenditures. During the first three months of 2026, investing activities also included $413 of FirstNet sustainability payments, net of reinvestment, and $574 related to the note receivable payment from DIRECTV. In addition, we paid $1,018 in connection with our January 2026 acquisition of select spectrum licenses from United States Cellular Corporation (UScellular) and $5,756 in connection with our February 2026 acquisition of Lumen’s Mass Markets fiber 31 AT&T INC. MARCH 31, 2026 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued Dollars in millions except per share amounts business, of which $1,656 was included in investing activities from continuing operations and $4,100 was included as investing activities from discontinued operations (see Notes 1, 8 and 12). 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. For the first three months of 2026, vendor financing payments were $212, compared to $203 for the first three months of 2025. Capital expenditures for the first three months of 2026 were $4,877, and when including $212 cash paid for vendor financing, capital investment was $5,089 ($609 higher than the prior-year comparable period). The vast majority of our capital expenditures are spent on our networks, including product development and related support systems. During the first three months of 2026, we placed $732 of productive assets in service under vendor financing arrangements (compared to $378 in the prior-year comparable period). The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements. On August 25, 2025, we agreed to purchase Federal Communications Commission (FCC) licenses in the 600 MHz and 3.45 GHz bands from EchoStar Corporation for approximately $23,000, subject to certain adjustments. The transaction 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. population. Cash Provided by or Used in Financing Activities from Continuing Operations For the first three months of 2026, cash used in financing activities totaled $2,097 and was comprised of debt repayments, common stock repurchases, dividend payments, and vendor financing payments, partially offset by issuances of long-term debt. A tabular summary of our debt activities for the three months ended March 31, 2026 is as follows: Three months ended March 31, 2026 Issuance of Notes and Debentures: USD notes $ 6,465 CAD notes 1,633 Debt Issuances $ 8,098 Repayments USD notes $ (3,741) EUR notes (1,103) AUD notes (216) Other (187) Repayments of long-term debt $ (5,247) The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.3% as of March 31, 2026 and 4.2% as of December 31, 2025. We had $137,017 of total notes and debentures outstanding at March 31, 2026. This also included Euro, British pound sterling, Canadian dollar, Australian dollar, and Swiss franc denominated debt that totaled approximately $34,994. At March 31, 2026, we had $6,818 of long-term debt maturing within one year. We had no outstanding commercial paper or other short-term borrowings on March 31, 2026. For the first three months of 2026, we paid $212 of cash under our vendor financing program, compared to $203 in the prior-year comparable period. Total vendor financing payables included in our March 31, 2026 consolidated balance sheet were $2,437, with $1,474 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”). 32 AT&T INC. MARCH 31, 2026