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RNS Number : 8748M AT & T Inc. 13 June 2025
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 001-8610
AT&T INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1301883
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
208 S. Akard St.
Dallas, Texas 75202
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: 210-821-4105
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class Trading Symbol(s) on which registered
Common Shares (Par Value $1.00 Per Share) T New York Stock Exchange
Depositary Shares, each representing a 1/1000th interest in a share of T PRA New York Stock Exchange
5.000% Perpetual Preferred Stock, Series A
Depositary Shares, each representing a 1/1000th interest in a share of T PRC New York Stock Exchange
4.750% Perpetual Preferred Stock, Series C
AT&T Inc. Floating Rate Global Notes due March 6, 2025 T 25A New York Stock Exchange
AT&T Inc. 3.550% Global Notes due November 18, 2025 T 25B New York Stock Exchange
AT&T Inc. 3.500% Global Notes due December 17, 2025 T 25 New York Stock Exchange
AT&T Inc. 0.250% Global Notes due March 4, 2026 T 26E New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 5, 2026 T 26D New York Stock Exchange
AT&T Inc. 2.900% Global Notes due December 4, 2026 T 26A New York Stock Exchange
AT&T Inc. 1.600% Global Notes due May 19, 2028 T 28C New York Stock Exchange
AT&T Inc. 2.350% Global Notes due September 5, 2029 T 29D New York Stock Exchange
AT&T Inc. 4.375% Global Notes due September 14, 2029 T 29B New York Stock Exchange
AT&T Inc. 2.600% Global Notes due December 17, 2029 T 29A New York Stock Exchange
AT&T Inc. 0.800% Global Notes due March 4, 2030 T 30B New York Stock Exchange
AT&T Inc. 3.950% Global Notes due April 30, 2031 T 31F New York Stock Exchange
AT&T Inc. 2.050% Global Notes due May 19, 2032 T 32A New York Stock Exchange
AT&T Inc. 3.550% Global Notes due December 17, 2032 T 32 New York Stock Exchange
AT&T Inc. 5.200% Global Notes due November 18, 2033 T 33 New York Stock Exchange
Securities registered pursuant to Section 12(b) of the Act (continued): Name of each exchange
Title of each class Trading Symbol(s) on which registered
AT&T Inc. 3.375% Global Notes due March 15, 2034 T 34 New York Stock Exchange
AT&T Inc. 4.300% Global Notes due November 18, 2034 T 34C New York Stock Exchange
AT&T Inc. 2.450% Global Notes due March 15, 2035 T 35 New York Stock Exchange
AT&T Inc. 3.150% Global Notes due September 4, 2036 T 36A New York Stock Exchange
AT&T Inc. 2.600% Global Notes due May 19, 2038 T 38C New York Stock Exchange
AT&T Inc. 1.800% Global Notes due September 14, 2039 T 39B New York Stock Exchange
AT&T Inc. 7.000% Global Notes due April 30, 2040 T 40 New York Stock Exchange
AT&T Inc. 4.250% Global Notes due June 1, 2043 T 43 New York Stock Exchange
AT&T Inc. 4.875% Global Notes due June 1, 2044 T 44 New York Stock Exchange
AT&T Inc. 4.000% Global Notes due June 1, 2049 T 49A New York Stock Exchange
AT&T Inc. 4.250% Global Notes due March 1, 2050 T 50 New York Stock Exchange
AT&T Inc. 3.750% Global Notes due September 1, 2050 T50A New York Stock Exchange
AT&T Inc. 5.350% Global Notes due November 1, 2066 TBB New York Stock Exchange
AT&T Inc. 5.625% Global Notes due August 1, 2067 TBC New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.
Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act.
Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or
for such shorter period that the registrant was required to submit such
files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a smaller reporting company or an
emerging growth company. See the definitions of "large accelerated filer,"
"accelerated filer," "smaller reporting company" and "emerging growth company"
in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐
Non-accelerated filer ☐ Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has
elected not to use the extended transition period for complying with any new
or revised financial accounting standards provided pursuant to Section 13(a)
of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and
attestation to its management's assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting
firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by
check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial
statements. ☐
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by
any of the registrant's executive officers during the relevant recovery period
pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Act).
Yes ☐ No ☒
Based on the closing price of $19.11 per share on June 30, 2024, the aggregate
market value of our voting and non-voting common stock held by non-affiliates
was $137 billion.
At January 31, 2025, common shares outstanding were 7,178,183,000.
DOCUMENTS INCORPORATED BY REFERENCE
(1)Portions of AT&T Inc.'s Notice of 2025 Annual Meeting and Proxy
Statement dated on or about April 4, 2025, to be filed within the period
permitted under General Instruction G(3) (Part III).
TABLE OF CONTENTS
Item Page
PART I
1. Business 1
1A. Risk Factors 7
1B. Unresolved Staff Comments 15
1C. Cybersecurity 15
2. Properties 16
3. Legal Proceedings 16
4. Mine Safety Disclosures 16
Information about our Executive Officers 17
PART II
5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer 18
Purchases of Equity
Securities
6. Reserved 19
7. Management's Discussion and Analysis of Financial Condition and Results of 19
Operations
7A. Quantitative and Qualitative Disclosures about Market Risk 36
8. Financial Statements and Supplementary Data 41
9. Changes in and Disagreements with Accountants on Accounting and Financial 92
Disclosure
9A. Controls and Procedures 92
9B. Other Information 92
9 (#BKMK_31) C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 92
PART III
10. Directors, Executive Officers and Corporate Governance 93
11. Executive Compensation 93
12. Security Ownership of Certain Beneficial Owners and Management and Related 93
Stockholder Matters
13. Certain Relationships and Related Transactions, and Director Independence 94
14. Principal Accountant Fees and Services 94
PART IV
15. Exhibits and Financial Statement Schedules 94
16. Form 10-K Summary 97
AT&T Inc.
Dollars in millions except per share amounts
PART I
ITEM 1. BUSINESS
GENERAL
AT&T Inc. ("AT&T," "we" or the "Company") is a holding company
incorporated under the laws of the State of Delaware in 1983 and has its
principal executive offices at 208 S. Akard St., Dallas, Texas, 75202
(telephone number 210-821-4105). We maintain an internet website at
www.att.com. (This website address is for information only and is not intended
to be an active link or to incorporate any website information into this
document.) We file electronically with the Securities and Exchange Commission
(SEC) required reports on Form 8-K, Form 10-Q and Form 10-K; proxy materials;
registration statements on Forms S-3 and S-8, as necessary; and other forms or
reports as required. The SEC maintains a website (www.sec.gov) that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC. We make available, free of
charge, on our website our annual report on Form 10-K, our quarterly reports
on Form 10-Q, current reports on Form 8-K and all amendments to those reports
as soon as reasonably practicable after such reports are electronically filed
with, or furnished to, the SEC. We also make available on that website, and in
print, if any stockholder or other person so requests, our "Code of Ethics"
applicable to all employees and Directors, our "Corporate Governance
Guidelines," and the charters for all committees of our Board of Directors,
including Audit, Human Resources and Governance and Policy committees. Any
changes to our Code of Ethics or waiver of our Code of Ethics for senior
financial officers, executive officers or Directors will be posted on that
website.
A reference to a "Note" refers to the Notes to Consolidated Financial
Statements in Item 8.
History
AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one
of several regional holding companies created to hold AT&T Corp.'s (ATTC)
local telephone companies. On January 1, 1984, we were spun-off from ATTC
pursuant to an anti-trust consent decree, becoming an independent publicly
traded telecommunications services provider.
Following our formation, we expanded our communications footprint and
operations, most significantly:
•Our subsidiaries merged with incumbent local exchange carriers (ILEC)
Pacific Telesis Group in 1997 and Ameritech Corporation in 1999.
•In 2005, we merged one of our subsidiaries with ATTC, creating one of the
world's leading telecommunications providers. In connection with the merger,
we changed the name of our company from "SBC Communications Inc." to "AT&T
Inc."
•In 2006, we acquired ILEC BellSouth Corporation (BellSouth), which included
BellSouth's 40% economic interest in AT&T Mobility LLC (AT&T
Mobility), formerly Cingular Wireless LLC, resulting in 100% ownership of
AT&T Mobility.
•In 2014, we completed the acquisition of wireless provider Leap Wireless
International, Inc.
•In 2015, we acquired wireless properties in Mexico and acquired DIRECTV, a
leading provider of digital television entertainment services in both the
United States (included in our Video business) and Latin America (referred to
as Vrio).
•From 2018 through April 2022, we acquired and held various investments in
entertainment businesses, namely Time Warner Inc., which comprised a
substantial portion of our previous WarnerMedia segment.
•In July 2021, we closed our transaction with TPG Capital (TPG) to form a
new company named DIRECTV Entertainment Holdings, LLC (DIRECTV). With the
close of the transaction (DIRECTV Transaction), we separated our Video
business, comprised of our U.S. video operations, and began accounting for our
investment in DIRECTV under the equity method. In September 2024, we agreed to
sell our remaining interest in DIRECTV to TPG, which we expect to close in
mid-2025.
•In April 2022, we completed the separation of our WarnerMedia business in a
Reverse Morris Trust transaction (WarnerMedia/Discovery Transaction). Upon its
separation and distribution, the WarnerMedia business met the criteria for
discontinued operations, as did other dispositions that were part of a single
plan, including Vrio, Xandr and Playdemic Ltd. (Playdemic). These businesses
are reflected in our historical financial statements as discontinued
operations, including for periods prior to the consummation of the WarnerMedia
separation.
1
AT&T Inc.
Dollars in millions except per share amounts
General
We are a leading provider of telecommunications and technology services
globally. The services and products that we offer vary by market and utilize
various technology platforms in a range of geographies. Our reportable
segments are organized as follows:
The Communications segment provides wireless and wireline telecom and
broadband services to consumers located in the United States and businesses
globally. Our business strategies reflect integrated product offerings that
cut across product lines and utilize shared assets. This segment contains the
following business units:
•Mobility provides nationwide wireless service and equipment.
•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 our fixed wireless access product
(AT&T Internet Air or "AIA") that provides internet services delivered
over our 5G wireless network, to residential customers in select locations.
Consumer Wireline also provides legacy telephony voice communication services.
The Latin America segment provides wireless service and equipment in Mexico.
Corporate support costs, including administrative support costs borne by
AT&T where business units do not influence decision making and results
from business no longer integral to our operations are reported as Corporate
and Other, which reconciles our segment results to consolidated operating
income and income before income taxes.
Areas of Focus
We are a leader in providing connectivity services through our market focus
areas of 5G and fiber. Fiber underpins the connectivity we deliver, both wired
and wireless. Building on that fiber foundation is our solid spectrum
portfolio, strengthened through Federal Communications Commission (FCC)
auction acquisitions and 5G deployment. We believe our fixed wireline and
mobile approach will differentiate our services and provide us with additional
convergence growth opportunities in the future as bandwidth demands continue
to grow. We will continue to demonstrate our commitment to ensure management
attention is sharply focused on growth areas and operational efficiencies.
Our integrated telecommunications network utilizes different technological
platforms to provide instant connectivity at the higher speeds made possible
by our fiber network expansion and wireless network enhancements. Streaming,
augmented reality, "smart" technologies, user generated content and artificial
intelligence (AI) are expected to continue to drive greater demand for
broadband, which we believe will allow us to capitalize on our fiber and 5G
deployments. During 2025, we are focused on the core capabilities of our
products, our infrastructure and our network. Our concentration is to
aggregate the most traffic on the largest, lowest marginal cost, converged
network through efficient spectrum deployment and construction of the largest
high-capacity broadband solutions in the United States, while also working
with regulators and customers to decommission high-cost legacy technologies
over the next several years.
During 2024, we collaborated with Ericsson to lead the U.S. in commercial
scale open radio access network (Open RAN) deployment 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. We plan for about 70% of our
wireless network traffic to flow across open-capable platforms by late 2026.
Beginning in 2025, we expect to scale this Open RAN environment throughout our
wireless network in coordination with multiple suppliers. We believe the move
to an open, agile, programmable wireless network positions us to quickly
capitalize on the next generation of wireless technology and spectrum when it
becomes available. These innovative technologies are expected to enable
lower-power, sustainable networks with higher performance to deliver enhanced
user experiences.
Wireless Service We continue to experience rapid growth in data usage as
consumers are demanding seamless access across their wireless and wired
devices, and businesses and municipalities are connecting more and more
equipment and facilities to the internet. The deployment of 5G, which allows
for faster connectivity, lower latency and greater bandwidth, requires
modifications of existing cell sites to add equipment supporting new
frequencies, like the C-Band and the 3.45 GHz band. The increased speeds and
network operating efficiency expected with 5G technology should enable massive
deployment of devices connected to the internet as well as faster delivery of
data services. As the wireless industry has matured, with nearly full
penetration of smartphones in the U.S. population, future wireless growth will
depend on our ability to offer innovative services, plans and devices that
bundle product offerings and take advantage of our 5G wireless network.
To support higher mobile data usage, our priority is to best utilize a
wireless network that has sufficient spectrum and capacity to support these
innovations on as broad a geographic basis as possible. We expect to continue
to invest significant capital in expanding our network capacity, as well as
obtaining additional spectrum, when available, that meets our long-term needs.
We participate in FCC spectrum auctions and have been redeploying spectrum
previously used for more basic services to support
2
AT&T Inc.
Dollars in millions except per share amounts
more advanced mobile internet services. Additionally, 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 proposed sale of its
wireless operations and select spectrum assets to T-Mobile US, Inc.
In North America, our network covers over 440 million people with 4G LTE and
over 314 million with 5G technology. In the United States, our network covers
all major metropolitan areas and more than 336 million people with our LTE
technology and more than 314 million people with our 5G technology.
Broadband Technology In 2020, we identified fiber as a core priority for our
business and enhanced our focus to expand our fiber footprint and grow
customers. At December 31, 2024, we had more than 9.3 million fiber consumer
wireline broadband customers, adding 1.0 million during the year. The
expansion builds on our recent investments to convert to a software-based
network, managing the migration of wireline customers to services using our
fiber infrastructure to provide broadband technology. Software-based
technologies align with our global leadership in software defined network
(SDN) and network function virtualization (NFV). This network approach
delivers a demonstrable cost advantage in the deployment of next-generation
technology over the traditional, hardware-intensive network approach. Our
virtualized network supports next-generation applications like 5G and
broadband-based services quickly and efficiently. At December 31, 2024, we had
15.3 million broadband connections, compared to 15.1 million broadband
connections in the prior year.
Copper Decommissioning While building the network of the future, we are
actively working to exit our legacy copper network operations across the large
majority of our wireline footprint. Our exit strategy includes migrating
customers to fiber and wireless alternatives, and working with policy-makers
to decommission our inefficient and less reliable copper network. At December
31, 2024, we had 3.3 million network access lines in service and 127,000 DSL
subscribers compared, to 4.2 million network access lines in service and
210,000 DSL subscribers in the prior year.
BUSINESS OPERATIONS
OPERATING SEGMENTS
Our segments are strategic business units that offer different products and
services over various technology platforms and/or in different geographies
that are managed accordingly. We have two reportable segments: Communications
and Latin America.
Additional information about our segments, including financial information, is
included under the heading "Segment Results" in Item 7 and in Note 4 of Item
8.
COMMUNICATIONS
Our Communications segment provides wireless and wireline telecom and
broadband services to consumers located in the U.S. and businesses globally.
Our Communications services and products are marketed under the AT&T,
AT&T Business, Cricket, AT&T PREPAIDSM, AT&T Fiber and AT&T
Internet Air brand names. The Communications segment provided approximately
97% of 2024 segment operating revenues and accounted for substantially all of
our 2024 total segment operating income. This segment contains the Mobility,
Business Wireline and Consumer Wireline business units.
Mobility - Our Mobility business unit provides nationwide wireless service to
consumers and wholesale and resale wireless subscribers located in the United
States by utilizing our network to provide voice and data services, including
high-speed internet over wireless devices. We classify our subscribers as
either postpaid, prepaid or reseller. As of December 31, 2024, we served 118
million Mobility subscribers, including 89 million postpaid (73 million
phone), 19 million prepaid and 10 million through resellers. Our Mobility
business unit revenue includes the following categories: service and
equipment.
Service
We offer a comprehensive range of high-quality nationwide wireless voice and
data communications services in a variety of pricing plans to meet the
communications needs of targeted customer categories. Through FirstNet®
services, we also provide a nationwide wireless broadband network dedicated to
public safety.
Consumers continue to require increasing availability of data-centric services
and a network to connect and control those devices. An increasing number of
our subscribers are using more advanced devices, including embedded computing
systems and/or software, commonly called the Internet of Things (IoT). We
offer unlimited plans that include features allowing for the sharing of voice,
text and data across multiple devices, which attracts subscribers from other
providers and helps minimize subscriber churn. We continue to upgrade our
network and coordinate with equipment manufacturers and application developers
to further capitalize on the continued growing demand for wireless data
services.
We also offer nationwide wireless voice and data communications to certain
customers who prefer to pay in advance. These services are offered under the
Cricket and AT&T PREPAID brands and are typically monthly prepaid
services.
3
AT&T Inc.
Dollars in millions except per share amounts
Equipment
We sell a wide variety of handsets, wireless data cards and wireless computing
devices manufactured by various suppliers for use with our voice and data
services. We also sell accessories, such as carrying cases/protective covers
and wireless chargers. We sell online and through our own company-owned
stores, agents and third-party retail stores. We provide our customers the
ability to purchase handsets on an installment basis and the opportunity to
bring their own device. Subscribers that bring their own devices or retain
handsets for longer periods impact upgrade activity. Like other wireless
service providers, we also provide postpaid contract subscribers promotional
equipment offers to initiate, renew or upgrade service.
Business Wireline - Our Business Wireline business unit provides services to
business customers, including multinational corporations, small and mid-sized
businesses, and governmental and wholesale customers. Our Business Wireline
business unit revenue includes the following categories: service and
equipment.
Service
We offer fiber and other advanced connectivity services, such as AT&T
Dedicated Internet, fiber ethernet and broadband, fixed wireless, and hosted
and managed professional services, as well as legacy voice and other
transitional services comprised of copper-based voice and data, Virtual
Private Networks (VPN), wholesale, outsourcing and IP sales. Historically, a
majority of our Business Wireline service revenues came from legacy
copper-based voice and data and traditional products; however, over recent
years those services have been declining due to secular pressures.
We continue to reconfigure our wireline network to take advantage of the
latest technologies and services, and rely on our SDN and NFV to enhance
business customers' digital agility in a rapidly evolving environment. Some of
the services we have offered historically are in secular decline and, going
forward, we will focus on our owned and operated connectivity services powered
by 5G and fiber as well as evaluating opportunities where we can turn down
existing copper infrastructure.
Equipment
Equipment revenues include customer premises equipment.
Consumer Wireline - Our Consumer Wireline business unit provides broadband
services, including fiber connections, AIA and legacy telephony voice
communication services, to customers in the United States by utilizing our
IP-based and copper wired network. Our Consumer Wireline business unit revenue
includes the following categories: broadband, legacy voice and data services
and other service and equipment.
Broadband Service
We provide broadband and internet services to approximately 14.1 million
customers, including 9.3 million fiber broadband subscribers at December 31,
2024. With changes in video viewing preferences and the impacts of remote
learning trends, we are experiencing increasing demand for high-speed
broadband services. We believe our investment in expanding our
industry-leading fiber network positions us to be a leader in wired
connectivity. Our focus on fiber brings owners economics and expected
efficiencies while we continue to evaluate opportunities where we can turn
down existing copper infrastructure.
We believe that our flexible platform, with a broadband and wireless
connection, is the most efficient way to transport direct-to-consumer video
and data experiences both at home and on mobile devices. Through this
integrated approach, we can optimize the use of storage in the home as well as
in the cloud, while also providing a seamless service for consumers across
screens and locations.
Legacy Voice and Data Services
Revenues from our traditional voice services continue to decline as customers
switch to wireless or VoIP services provided by us, cable companies or other
internet-based providers.
Other Service and Equipment
Other service revenues include VoIP services, customer fees and equipment.
Additional information on our Communications segment is contained in the
"Overview" section of Item 7.
LATIN AMERICA
Our Latin America segment provides wireless service in Mexico. We utilize our
regional and national wireless networks in Mexico to provide consumer and
business customers with wireless data and voice communication services. The
Latin America segment provided approximately 3% of 2024 segment operating
revenues and less than 1% of our 2024 total segment operating income. We
divide our revenue into the following categories: service and equipment.
4
AT&T Inc.
Dollars in millions except per share amounts
Service
We provide postpaid and prepaid wireless services in Mexico to approximately
24 million subscribers under the AT&T and Unefon brands. Postpaid service
allows for (1) no annual service contract for subscribers who bring their own
device or purchase a device on installment and (2) service contracts for
periods up to 36 months for subscribers who purchase their equipment under the
traditional device subsidy model. We also offer prepaid plans.
Equipment
We sell a wide variety of handsets, including smartphones manufactured by
various suppliers for use with our voice and data services. We sell through
our own company-owned stores, agents and third-party retail stores.
Additional information on our Latin America segment is contained in the
"Overview" section of Item 7.
MAJOR CLASSES OF SERVICE
The following table sets forth the percentage of total consolidated reported
operating revenues by any class of service that accounted for 10% or more of
our consolidated total operating revenues in any of the last three fiscal
years:
Percentage of Total
Consolidated Operating Revenues
2024 2023 2022
Communications Segment
Wireless service 53 % 52 % 50 %
Business service 15 17 18
Equipment 17 17 18
Latin America Segment
Wireless service 2 2 2
Equipment 1 1 1
Additional information on our geographical distribution of revenues is
contained in Note 4 of Item 8.
GOVERNMENT REGULATION
Facilities-based wireless communications providers in the United States, like
AT&T, must be licensed by the FCC to provide communications services at
specified spectrum frequencies within defined geographic areas and must comply
with FCC rules and policies governing the use of the spectrum. The FCC's rules
have a direct impact on whether the wireless industry has sufficient spectrum
available to support the high-quality, innovative services our customers
demand. Wireless licenses are issued for a fixed time period, typically 10 to
15 years, and we must seek renewal of these licenses. While the FCC has
generally renewed licenses, the FCC has authority to both revoke a license for
cause and to deny a license renewal if a renewal is not in the public
interest. Additionally, while wireless communications providers' prices and
service offerings have historically not been subject to prescriptive
regulation, the federal government and various states periodically consider
new regulations and legislation relating to various aspects of wireless
services.
The Communications Act of 1934 and other related laws give the FCC broad
authority to regulate the U.S. operations of our interstate telecommunications
services. In addition, our ILEC subsidiaries are subject to regulation by
state governments, which have the power to regulate intrastate rates and
services, including local, long-distance and network access services, provided
such state regulation is consistent with federal law. Some states have
eliminated or reduced regulations on our retail offerings. These subsidiaries
are also subject to the jurisdiction of the FCC with respect to intercarrier
compensation, interconnection, and interstate and international rates and
services, including interstate access charges. Access charges are a form of
intercarrier compensation designed to reimburse our wireline subsidiaries for
the use of their networks by other carriers.
We continue to support regulatory and legislative measures and efforts at both
the federal and state levels to minimize and/or moderate regulatory burdens
that are no longer appropriate in a competitive communications market and that
inhibit our ability to compete more effectively and offer services wanted and
needed by our customers, including initiatives to transition services from
traditional networks to all IP-based networks. At the same time, we also seek
to ensure that legacy regulations are not further extended to broadband or
wireless services, which are subject to vigorous competition.
Our subsidiaries operating outside the United States are subject to the
jurisdiction of national and supranational regulatory authorities in the
market where service is provided.
5
AT&T Inc.
Dollars in millions except per share amounts
For a discussion of significant regulatory issues directly affecting our
operations, please see the information contained under the headings "Operating
Environment and Trends of the Business" and "Regulatory Landscape" of Item 7,
which information is incorporated herein by reference.
IMPORTANCE, DURATION AND EFFECT OF LICENSES
Certain of our subsidiaries own or have licenses to various patents,
copyrights, trademarks and other intellectual property necessary to conduct
business. Many of our subsidiaries also hold government-issued licenses or
franchises to provide wireline or wireless services. Additional information
relating to regulations affecting those rights is contained under the heading
"Operating Environment and Trends of the Business" of Item 7. We actively
pursue patents, trademarks and service marks to protect our intellectual
property within the United States and abroad. We maintain a significant global
portfolio of patents, trademarks and service mark registrations. We have also
entered into licenses that permit other companies to utilize certain of our
patents, trademarks, service marks, and technologies, in exchange for payments
and subject to appropriate safeguards and restrictions. As we transition our
network from a switch-based network to an IP, software-based network, we have
increasingly entered into licensing agreements with software developers.
We periodically license third-party patents and other intellectual rights in
exchange for payments. We also receive claims from third parties asserting
that our products, services or technologies infringe on their patents or other
intellectual property rights. These claims could require us to pay damages or
acquire license rights, stop offering the relevant products or services,
and/or cease network functions or other activities. While the outcome of any
litigation is uncertain, we do not believe that the resolution of any of these
infringement claims or the expiration or non-renewal of any of our
intellectual property rights would have a material adverse effect on our
results of operations.
MAJOR CUSTOMERS
No customer accounted for 10% or more of our consolidated revenues in 2024,
2023 or 2022.
COMPETITION
Competition continues to increase for communications and digital services from
traditional and nontraditional competitors. Technological advances have
expanded the types and uses of services and products available. In addition,
lack of or a reduced level of regulation of comparable legacy services has
lowered costs for alternative communications service providers. As a result,
we face continuing competition as well as some new opportunities in
significant portions of our business.
Wireless We face substantial competition in our wireless businesses. Under
current FCC rules, multiple licensees, who provide wireless services on the
cellular, PCS, Advanced Wireless Services, 700 MHz and other spectrum bands,
may operate in each of our U.S. service areas. Our competitors include two
national wireless providers; a larger number of regional providers and
resellers of each of those providers' services; and certain cable companies.
In addition, we face competition from providers who offer voice, text
messaging and other services as applications on data networks. We are one of
three facilities-based providers in Mexico (retail and wholesale), with the
most significant market share controlled by América Móvil. We may experience
significant competition from companies that provide similar services using
other communications technologies and services. While some of these
technologies and services are now operational, others are being developed or
may be developed. We compete for customers based principally on service/device
offerings, price, network quality, coverage area and customer service.
Broadband The desire for high-speed data on demand, including video, is
continuing to lead customers to terminate their traditional wired or
copper-based services and use our fiber or fixed wireless services or
competitors' wireless, satellite and internet-based services. In most U.S.
markets, we compete for customers with large cable companies and wireless
broadband providers for high-speed internet and voice services.
Legacy Voice and Data We continue to lose legacy voice and data subscribers
due to industry-wide secular declines and competitors (e.g., wireless, cable
and VoIP providers) who can provide comparable services at lower prices
because they are not subject to traditional telephone industry regulation (or
the extent of regulation they are subject to is in dispute), utilize different
technologies or promote a different business model. In most U.S. markets, we
compete for customers with large cable companies and other smaller
telecommunications companies.
Additionally, we provide local and interstate telephone and switched services
to other service providers, primarily large internet service providers using
the largest class of nationwide internet networks (internet backbone),
wireless carriers, other telephone companies, cable companies and systems
integrators. These services are subject to additional competitive pressures
from the development of new technologies, the introduction of innovative
offerings and increasing satellite, wireless, fiber-optic and cable
transmission capacity for services.
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RESEARCH AND DEVELOPMENT
AT&T scientists and engineers conduct research in a variety of areas,
including IP networking, advanced network design and architecture, network and
cybersecurity, network operations support systems and data analytics. The
majority of the development activities are performed to create new services
and to invent tools and systems to manage secure and reliable networks for us
and our customers. Research and development expenses were $955 in 2024, $954
in 2023, and $1,236 in 2022.
HUMAN CAPITAL
Number of Employees As of December 31, 2024, we employed approximately
140,990 persons.
Employee Development We believe our success depends on our employees' success
and that all employees must have the skills they need to thrive. We offer
training and elective courses that give employees the opportunity to enhance
their skills. We also intend to help cultivate the next generation of talent
that will lead our company into the future by providing employees with
educational opportunities through our internal training organization.
Labor Contracts Approximately 43% of our employees are represented by the
Communications Workers of America (CWA), the International Brotherhood of
Electrical Workers (IBEW) or other unions. After expiration of collective
bargaining agreements, work stoppages or labor disruptions may occur in the
absence of new contracts or other agreements being reached. The main contract
set to expire in 2025 covers approximately 9,000 employees in Arkansas,
Kansas, Missouri, Oklahoma and Texas and is set to expire in April.
Compensation and Benefits In addition to salaries, we provide a variety of
benefit programs to help meet the needs of our employees. These programs cover
active and former employees and may vary by subsidiary and region. These
programs include 401(k) plans, pension benefits, and health and welfare
benefits, among many others. In addition to our active employee base, at
December 31, 2024, we had approximately 496,000 retirees and dependents who
were eligible to receive retiree benefits.
We review our benefit plans to maintain competitive packages that reflect the
needs of our workforce. We also adapt our compensation model to provide fair
and inclusive pay practices across our business. We are committed to pay
equity for employees who hold the same jobs, work in the same geographic area,
and have the same levels of experience and performance.
Employee Wellness We provide our employees access to flexible and convenient
health and welfare programs and workplace accommodations. We have prioritized
self-care and emphasized a focus on wellness and providing flexible scheduling
or time-off options.
Inclusion We believe that championing inclusion does more than just make us a
better company, it contributes to a world where people are empowered to be
their very best and it leads to a workforce that is representative of, and
responsive to, the broad customer base that we serve. That is why we are
committed to inclusion and one of the reasons why our company purpose is "to
connect people to greater possibilities." This emanates from our unwavering
pledge to ensure that employees feel included when they join AT&T, and are
provided with opportunities for advancement, training and development to
realize their full potential while working for the company.
We believe in attracting and hiring talented people who represent a mix of
backgrounds and experiences. At AT&T, we have employee groups that reflect
our large and varied workforce. These affinity groups provide opportunities
for professional enrichment, leadership, community engagement, market
development and networking. It is important that our employees feel they are
included, valued, and are fully engaged in our success.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this document, including the
matters contained under the heading "Cautionary Language Concerning
Forward-Looking Statements," you should carefully read the matters described
below. We believe that each of these matters could materially affect our
business. Most, if not all, of these factors are beyond our ability to
control.
Macro-Economic Factors:
Adverse changes in the U.S. securities markets, increasing interest rates,
rising inflation and medical costs could materially increase our benefit plan
costs and future funding requirements.
Our costs to provide current benefits and funding for future benefits are
subject to increases, primarily due to continuing increases in medical and
prescription drug costs, in part due to inflation, and can be affected by
lower returns on assets held by our pension and other benefit plans, which are
reflected in our financial statements for that year. In calculating the
recognized benefit costs, we have made certain assumptions regarding future
investment returns, interest rates and medical costs. These
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assumptions could change significantly over time and could be materially
different than originally projected. Lower than assumed investment returns, an
increase in our benefit obligations, and higher than assumed medical and
prescription drug costs will increase expenses.
The Financial Accounting Standards Board (FASB) requires companies to
recognize the funded status of defined benefit pension and postretirement
plans as an asset or liability in their statement of financial position and to
recognize changes in that funded status in the year in which the changes
occur. We have elected to reflect the annual adjustments to the funded status
in our consolidated statement of income. Therefore, an increase in our costs
or adverse market conditions will have a negative effect on our operating
results.
Significant adverse changes in capital markets could result in the
deterioration of our defined benefit plans' funded status.
Inflationary pressures on costs, such as inputs for devices we sell and
network components, labor and distribution costs, may impact our network
construction, our financial condition or results of operations.
As a provider of telecommunications and technology services, we sell handsets,
wireless data cards, wireless computing devices and customer premises
equipment manufactured by various suppliers for use with our voice and data
services and depend on suppliers to provide us, directly or through other
suppliers, with items such as network equipment, customer premises equipment,
and wireless-related equipment such as mobile hotspots, handsets, wirelessly
enabled computers, wireless data cards and other connected devices for our
customers. In recent years, the costs of these inputs and the costs of labor
necessary to develop, deploy and maintain our networks and our products and
services have increased. In addition, many of these inputs are subject to
price fluctuations from a number of factors, including, but not limited to,
market conditions, demand for raw materials used in the production of these
devices and network components, severe weather, energy costs, currency
fluctuations, supplier capacities, governmental actions, import and export
requirements (including tariffs), and other factors beyond our control.
Inflationary and supply pressures may continue into the future and could have
an adverse impact on our ability to source materials.
Our attempts to offset these cost pressures, such as through increases in the
selling prices of some of our products and services, may not be successful.
Higher product or service prices may result in reductions in sales volume or
increases in subscriber churn. Consumers may be less willing to pay a price
differential for our products and services and may increasingly purchase
lower-priced offerings, or may forego some purchases altogether, during a
period of inflationary pressure or an economic downturn. To the extent that
price increases are not sufficient to offset these increased costs adequately
or in a timely manner, and/or if they result in significant decreases in sales
volume, our business, financial condition or operating results may be
adversely affected. Furthermore, we may not be able to offset any cost
increases through productivity and cost-saving initiatives.
Adverse changes in global financial markets could limit our ability and our
larger customers' and suppliers' ability to access capital or increase the
cost of capital needed to fund business operations.
In recent years, uncertainty surrounding global growth rates, inflation and
the interest rate environment produced volatility in the credit, currency and
equity markets. Volatility may affect companies' access to the credit markets,
leading to higher borrowing costs, or, in some cases, the inability to fund
ongoing operations. In addition, we contract with large financial institutions
to support our own treasury operations, including contracts to hedge our
exposure to interest rates and foreign exchange and the funding of credit
lines and other short-term debt obligations, including commercial paper. These
financial institutions face stricter capital-related and other regulations in
the United States and Europe, as well as ongoing legal and financial issues
concerning their loan portfolios, which may hamper their ability to provide
credit or raise the cost of providing such credit.
A company's cost of borrowing is affected by evaluations given by various
credit rating agencies, and these agencies have been applying tighter credit
standards when evaluating debt levels and future growth prospects. While we
have been successful in continuing to access the credit and fixed income
markets when needed, adverse changes in the financial markets could render us
either unable to access these markets or able to access these markets only at
higher interest costs and with restrictive financial or other conditions,
severely affecting our business operations. Additionally, downgrades of our
credit rating by the major credit rating agencies could increase our cost of
borrowing and also impact the collateral we would be required to post under
certain agreements we have entered into with our derivative counterparties,
which could negatively impact our liquidity. Further, valuation changes in our
derivative portfolio due to interest rates and foreign exchange rates could
require us to post collateral and thus may negatively impact our liquidity.
Our international operations increase our exposure to political instability,
to changes in the international economy and to regulation on our business, and
these risks could offset our expected growth opportunities.
We have international operations, particularly in Mexico, and other countries
worldwide where we need to comply with a wide variety of complex local laws,
regulations and treaties, and are subject to evolving political environments.
In addition, we are
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exposed to, among other factors, fluctuations in currency values, changes in
relationships between U.S. and foreign governments, war or other hostilities,
and other regulations that may materially affect our earnings. Involvement
with foreign firms also exposes us to the risk of being unable to control the
actions of those firms and therefore exposes us to risks associated with our
obligation to comply with the Foreign Corrupt Practices Act (FCPA). Violations
of the FCPA could have a material adverse effect on our operating results.
Industry-Wide Factors:
Changes to federal, state and foreign government regulations and decisions in
regulatory proceedings, as well as private litigation, could further increase
our operating costs and/or alter customer perceptions of our operations, which
could materially adversely affect us.
Our subsidiaries providing wired services are subject to significant federal
and state regulation, while many of our competitors are not. In addition, our
subsidiaries and affiliates operating outside the United States are also
subject to the jurisdiction of national and supranational regulatory
authorities in the markets where service is provided. Our wireless
subsidiaries are regulated to varying degrees by the FCC and in some
instances, by state and local agencies. Adverse regulations and rulings by the
courts, the FCC or states relating to broadband and wireless deployment,,
could impede our ability to manage our networks and recover costs and lessen
incentives to invest in our networks. The continuing growth of IP-based
services, especially when accessed by wireless devices, has created or
potentially could create conflicting regulation between the FCC and various
state and local authorities, which may involve lengthy litigation to resolve
and may result in outcomes unfavorable to us. In addition, in response to the
Federal Aviation Administration (FAA) questioning whether cell sites
transmitting C-Band spectrum could impact radio altimeter equipment on
airplanes, we voluntarily committed to temporary, precautionary measures near
certain airports through January 1, 2028, which may have limited impacts to
deployments and services. In addition, increased public focus on a variety of
issues related to our operations, such as privacy issues, government requests
or orders for customer data, and concerns about global climate change, have
led to proposals or new legislation at state, federal and foreign government
levels to change or increase regulation on our operations, which could result
in additional costs of compliance or litigation. Enactment of new privacy laws
and regulations could, among other things, adversely affect our ability to
collect data and offer targeted advertisements or result in additional costs
of compliance or litigation. Should customers decide that our competitors
offer a more customer-friendly environment, our competitive position, results
of operations or financial condition could be materially adversely affected.
Extreme weather events and other potential effects of climate change may
impose risk of damage to our infrastructure, our ability to provide services,
and may cause changes in federal, state and foreign government regulation, all
of which may result in potential adverse impact to our financial results.
The potential physical effects of extreme weather events and other potential
effects of climate change, such as increased frequency and severity of storms,
floods, fires, freezing conditions, sea-level rise and other climate-related
events, could damage our networks and cause disruptions in our services, which
could adversely affect our operations, infrastructure and financial results.
Operational impacts resulting from the potential physical effects of climate
change, such as damage to our network infrastructure, could result in
increased costs and loss of revenue. While we currently do not believe the
potential losses or costs associated with the physical effects of climate
change will be material, it is difficult to accurately and precisely calculate
the future impacts of the physical effects of climate change given the dynamic
nature of climate change's impacts on the environment.
Continuing growth in and the converging nature of wireless and broadband
services will require us to deploy significant amounts of capital and require
ongoing access to spectrum in order to provide attractive services to
customers.
Wireless and broadband services are undergoing rapid and significant
technological changes and a dramatic increase in usage, including, in
particular, the demand for faster and seamless usage of data across mobile and
fixed devices. The COVID-19 pandemic accelerated these changes and also
resulted in higher network utilization, as more customers consumed bandwidth
from changes in work and learn from home trends. Streaming, augmented reality,
"smart" technologies, user generated content and artificial intelligence (AI)
are expected to continue to drive greater demand for broadband. We must
continually invest in our networks in order to improve our wireless and
broadband services to meet this increasing demand and changes in customer
expectations while remaining competitive. Improvements in these services
depend on many factors, including continued access to and deployment of
adequate spectrum and the capital needed to expand our wireline network to
support transport of these services. In order to stem broadband subscriber
losses to cable competitors in our non-fiber wireline areas, we have been
expanding our all-fiber wireline network. We must maintain and expand our
network capacity and coverage for transport of data, including video, and
voice between cell and fixed landline sites. To this end, we participate in
spectrum auctions and continue to deploy software and other technology
advancements in order to efficiently invest in our network.
We have spent, and plan to continue spending, significant capital and other
resources on the ongoing development and deployment of our 5G and fiber
networks. This deployment and other network service enhancements and product
launches may
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not occur as scheduled or at the cost expected due to many factors, including
unexpected inflation, delays in determining equipment and wireless handset
operating standards, supplier delays, software issues, increases in network
and handset component costs, regulatory permitting delays for tower sites or
enhancements, or labor-related delays. Deployment of new technology also may
adversely affect the performance of the network for existing services. If we
cannot acquire needed spectrum, if our 5G and fiber offerings fail to gain
acceptance in the marketplace or if we otherwise fail to deploy the services
customers desire on a timely basis with acceptable quality and at reasonable
costs, then our ability to attract and retain customers, and, therefore,
maintain and improve our operating margins, could be materially adversely
affected. In 2023, the FCC's statutory authority to conduct spectrum auctions
lapsed and it is uncertain when Congress will act to 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.
Increasing competition could materially adversely affect our operating
results.
We have multiple wireless competitors in each of our service areas and compete
for customers based principally on service/device offerings, price, network
quality, reliability, speed, coverage area and customer service. In addition,
we are facing growing competition from providers offering services using
advanced wireless technologies and IP-based networks, among others. We expect
market saturation to continue, which may cause the wireless industry's
customer growth rate to moderate in comparison with historical growth rates,
leading to increased competition for customers, including from strategic
alliances in converged connectivity. Our share of industry sales could be
reduced due to aggressive pricing or promotional strategies pursued by
competitors. We also expect that our customers' growing demand for high-speed
video and data services will place constraints on our network capacity. These
competition and capacity constraints will continue to put pressure on pricing
and margins as companies compete for potential customers. Additionally, we may
not be able to accurately predict future consumer demands or the success of
new services in markets. Our ability to address these issues will depend,
among other things, on continued improvement in network quality and customer
service and our ability to price our products and services competitively as
well as effective marketing of attractive products and services. These efforts
will involve significant expenses and require strategic management decisions
on, and timely implementation of, equipment choices, network deployment and
service offerings. In addition, a sustained decline in a reporting unit's
revenues and earnings has resulted in the past, and may again result in the
future, in a significant negative impact on its fair value, requiring us to
record an impairment charge, which could have an adverse impact on our results
of operations.
Intellectual property rights may be inadequate to take advantage of business
opportunities, which may materially adversely affect our operations.
We may need to spend significant amounts of money to protect our intellectual
property rights. Any impairment of our intellectual property rights, including
due to changes in U.S. or foreign intellectual property laws or the absence of
effective legal protections or enforcement measures, could materially
adversely impact our operations.
Incidents or public assertions leading to damage to our reputation or
questions about our business conduct, and any resulting lawsuits, claims or
other legal proceedings, could have a material adverse effect on our business.
We believe that our brand image, awareness and reputation strengthen our
relationship with consumers and contribute significantly to the success of our
business. Our reputation and brand image could be negatively affected by a
number of factors, including quality or reliability issues related to our
services, products and operations; cybersecurity incidents and data breaches,
including our actual or perceived responses thereto; regulatory compliance;
governance issues; our actual or perceived position or lack of position on
social and other sensitive matters; and the conduct of our employees and
former employees. Our ability to attract and retain employees is highly
dependent upon our commitment to an inclusive workplace, ethical business
practices and other qualities.
We currently are, and may in the future be, named as a defendant in lawsuits,
claims and other legal proceedings that arise in the ordinary course of our
business based on alleged acts of misconduct by employees. These actions seek,
among other things, compensation for alleged personal injury (including claims
for loss of life), workers' compensation, employment discrimination, sexual
harassment, workplace misconduct, wage and hour claims and other
employment-related damages, compensation for breach of contract, statutory or
regulatory claims, negligence or gross negligence, punitive damages,
consequential damages, and civil penalties or other losses or injunctive or
declaratory relief. The outcome of any allegations, lawsuits, claims or legal
proceedings is inherently uncertain and could result in significant costs,
damage to our brands or reputation and diversion of management's attention
from our business. In 2023, The Wall Street Journal published a series of
articles alleging that lead-clad telecommunications cables are a public-health
hazard or may pose environmental risks. We are currently subject to litigation
and have received inquiries from government authorities as a result of these
assertions. We may be subject to additional litigation, government
investigations and potentially new regulation or legislation relating to
lead-clad cables. Any damage to our reputation or payments of significant
amounts as a result of any of these issues, even if reserved, could materially
and adversely affect our business, ability to serve customers, reputation,
financial condition, results of operations and cash flows.
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Our business is subject to risks related to public health crises.
Public health crises and resulting mitigation measures have in the past, and
may in the future, cause a negative effect on our operating results. These
effects include, but are not limited to, closure of retail stores; impact on
our customers' ability to pay for our products and services; reduction in
international roaming revenue; and reduced staffing levels in call centers and
field operations. We also have in the past, and may in the future, incur
significantly higher expenses attributable to infrastructure investments and
increased labor costs due to public health crises.
Company-Specific Financial Factors:
Customer adoption of new software-based technologies may require
higher-quality services from us, and meeting these demands could create supply
chain issues and could increase capital costs.
The communications industry has experienced rapid changes in the past several
years. An increasing number of our customers are using mobile devices as their
primary means of viewing video. In addition, businesses and government bodies
are broadly shifting to wireless-based services for homes and infrastructure
to improve services to their respective customers and constituencies. We have
spent, and continue to spend, significant capital to shift our wired network
to software-based technology and are expanding 5G wireless technology to
address these demands. We have entered and continue to enter into a
significant number of software licensing agreements and continue to work with
software developers to provide network functions in lieu of installing
switches or other physical network equipment in order to respond to rapid
developments in wireless demand. While software-based functionality can be
changed much more quickly than, for example, physical switches, the rapid pace
of development means that we may increasingly need to rely on single-source
and software solutions that have not previously been deployed in production
environments. Should this software not function as intended or our license
agreements provide inadequate protection from intellectual property
infringement claims, we could be forced to either substitute (if available) or
else spend time to develop alternative technologies at a much higher cost and
incur harm to our reputation for reliability, and, as a result, our ability to
remain competitive could be materially adversely affected.
We depend on various suppliers to provide equipment to operate our business
and satisfy customer demand, and interruption or delay in supply can adversely
impact our operating results.
We depend on suppliers to provide us, directly or through other suppliers,
with items such as network equipment, customer premises equipment and
wireless-related equipment such as mobile hotspots, handsets, wirelessly
enabled computers, wireless data cards and other connected devices for our
customers. In some instances, we depend on key single-source suppliers to
provide important inputs where there are few alternative suppliers available.
These suppliers could fail to provide equipment on a timely or cost-effective
basis, or fail to meet our performance expectations, for a number of reasons,
including difficulties in obtaining export licenses for certain technologies,
inflationary pressures, inability to secure component parts, general business
disruption, natural disasters, safety issues, economic and political
instability, including the outbreak of war and other hostilities, and public
health emergencies. These factors have caused, and may again cause, delays in
the development, manufacturing (including the sourcing of key components) and
shipment of products to the extent that we or our suppliers are impacted. In
certain limited circumstances, suppliers have been unable to supply products
in a timely fashion, affecting our ability to provide products and services
precisely as and when requested by our customers. It is possible that, in some
circumstances, we could be forced to switch to a different key supplier or be
unable to meet customer demand for certain products or services. Because of
the cost and time lag that can be associated with transitioning from one
supplier to another, our business could be substantially disrupted if we were
required to, or chose to, replace the products of one or more key suppliers
with products from another source, especially if the replacement became
necessary on short notice. Any such disruption could increase our costs,
decrease our operating efficiencies and have a negative effect on our
operating results.
Increasing costs to provide services and failure to renew agreements on
favorable terms, or at all, could adversely affect operating margins.
Our operating costs, including customer acquisition and retention costs, could
continue to put pressure on margins and customer retention levels.
A number of our competitors offering comparable legacy services that rely on
alternative technologies and business models are typically subject to less
regulation, and therefore are able to operate with lower costs. These
competitors generally can focus on discrete customer segments since they do
not have regulatory obligations to provide universal service. Also, these
competitors have cost advantages compared to us, due in part to operating on
newer, more technically advanced and lower-cost networks with a nonunionized
workforce, lower employee benefits and fewer retirees. We are transitioning
services from our copper-based network and seeking regulatory approvals, where
needed, at both the state and federal levels. If we do not obtain regulatory
approvals for our network transition or obtain approvals with onerous
conditions, we could experience significant cost and competitive
disadvantages.
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A significant portion of our workforce is represented by labor unions, and we
could incur additional costs or experience work stoppages as a result of the
renegotiation of our labor contracts.
As of December 31, 2024, approximately 43% of our workforce was represented
by the Communications Workers of America (CWA), the International Brotherhood
of Electrical Workers (IBEW) or other unions. While we have labor contracts in
place with these unions, with subsequent negotiations we have in the past and
could in the future incur additional costs and/or experience work stoppages,
which could adversely affect our business operations.
We may not realize or sustain the expected benefits from our business
transformation initiatives, and these efforts could have a materially adverse
effect on our business, operations, financial condition, results of operations
and competitive position.
We have been and will be undertaking certain transformation initiatives, which
are designed to reduce costs, enable legacy rationalization, streamline and
modernize distribution and customer service, remove redundancies and simplify
and improve processes and support functions. Our focus is on supporting added
customer value with an improved customer experience. We intend for these
efficiencies to enable increased investments in our strategic areas of focus,
which include improving broadband connectivity (for example, fiber and 5G). We
also expect these initiatives to drive efficiencies and improved margins. If
we do not successfully manage and timely execute these initiatives, or if they
are inadequate or ineffective, we may fail to meet our financial goals and
achieve anticipated benefits, improvements may be delayed, not sustained or
not realized, and our business, operations and competitive position could be
adversely affected. Further, we are using and intend to further use artificial
intelligence (AI)-driven efficiencies in our network design and operations,
software development, sales, marketing, customer support services and general
and administrative costs. The models used in those products, particularly
generative AI models, may produce output or take action that is incorrect,
release private or confidential information, reflect biases included in the
data on which they are trained, infringe on the intellectual property rights
of others, or be otherwise harmful. Any of these risks could expose us to
liability or adverse legal or regulatory consequences and harm our reputation
and the public perception of our business or the effectiveness of our security
measures.
Unfavorable litigation or governmental investigation results could require us
to pay significant amounts or lead to onerous operating procedures.
We are subject to a number of lawsuits both in the United States and in
foreign countries, including, at any particular time, claims relating to
antitrust, patent infringement, wage and hour, personal injury, environmental,
customer data and privacy violations, cyberattacks, regulatory proceedings,
breach of contract, and selling and collection practices. We also spend
substantial resources complying with various government standards, which may
entail related investigations and litigation. In the wireless and wireline
area, we also face current and potential litigation relating to alleged
adverse health effects on customers or employees who use such technologies
including, for example, wireless devices. We may incur significant expenses
defending such suits or government charges and may be required to pay amounts
or otherwise change our operations in ways that could materially adversely
affect our operations or financial results.
Cyberattacks impacting our networks, systems or data or those of our suppliers
or vendors may have a material adverse effect on our operations or results of
operations.
Cyberattacks - including through the use of malware, computer viruses,
distributed denial of services attacks, ransomware attacks, credential
harvesting, social engineering and other means for obtaining unauthorized
access to or disrupting the operation of our networks and systems or accessing
our data and those of our suppliers, vendors and other service providers -
could have a material adverse effect on our operations or results of
operations. As a critical infrastructure service provider, the Company
believes that it is a particularly attractive target for such cyberattacks,
including from nation states and highly sophisticated, state-sponsored, or
otherwise well-funded actors, and the Company experiences heightened risk from
time to time as a result of geopolitical events.
Cyberattacks can cause equipment or network failures, copying or loss of
information, including sensitive personal information of customers or
employees or proprietary information, as well as disruptions to our or our
customers', suppliers' or vendors' operations, which could result in
significant expenses, potential investigations and legal liability, a loss of
current or future customers and reputational damage. Additional resources and
management attention may be necessary to respond to government inquiries and
requirements, including potentially conflicting demands and requirements from
multiple government agencies. Moreover, the amount and scope of insurance that
we maintain against losses resulting from any such events or security breaches
may not be sufficient to cover our losses or otherwise adequately compensate
us for any disruptions to our business that may result. As our networks
evolve, they are becoming increasingly reliant on software and cloud
technologies to handle growing demands for data consumption. Cyberattacks
against the Company and its suppliers and vendors have occurred in the past,
including from highly sophisticated, state-sponsored actors as noted above,
and will continue to occur in the future and are increasing in frequency,
scope and potential harm over time. For example, in July 2024, the Company
disclosed a cybersecurity incident on Item 1.05 of Form 8-K relating to the
copying of mobile customer call data.
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Due to the complexity and interconnectedness of our systems and those of our
suppliers, vendors and other service providers, the process of enhancing our
protective measures can itself create a risk of systems disruptions and
security issues. Further, the use of artificial intelligence and machine
learning by cybercriminals may increase the frequency and severity of
cybersecurity attacks against us or our suppliers, vendors and other service
providers. In addition, despite our efforts to detect unlawful intrusions, an
attack may persist for an extended period of time before being detected, and,
following detection, it may take considerable time for us to obtain sufficient
information about the nature, scope and timing of the incident as well as the
impact or reasonably likely impact on us. Indeed, as cyberattacks become
increasingly sophisticated, a post-attack investigation may not be able to
ascertain the entire scope of the attack's impact.
Extensive and costly efforts are undertaken to develop and test systems before
deployment and to conduct ongoing monitoring and updating to prevent and
withstand such attacks. While the Company may have contractual rights to
assess the effectiveness of many of its suppliers' and vendors' systems and
protocols, the Company cannot know or assess the effectiveness of all of our
providers' systems and controls at all times. While, to date, we have not been
subject to a cyberattack that has had a material adverse effect on our
operations or results of operations, the preventive actions we take, or our
suppliers or vendors take, to reduce the risks associated with cyberattacks
may be insufficient to repel or mitigate the effects of a major cyberattack in
the future.
Natural disasters, extreme weather conditions or terrorist or other hostile
acts could cause damage to our infrastructure and result in significant
disruptions to our operations.
Our business operations could be subject to interruption by equipment or
network failures caused by human error, system failures, unauthorized access
to our network and critical infrastructure, power outages, terrorist or other
hostile acts, including acts of war, and natural disasters, such as flooding,
hurricanes and forest fires. Such events could cause significant damage to the
infrastructure upon which our business operations rely, resulting in
degradation or disruption of service to our customers, as well as significant
recovery time and expenditures to resume operations. Our system redundancy and
other measures we take to protect our infrastructure and operations from the
impacts of such events may be ineffective or inadequate to sustain our
operations through all such events. Any of these occurrences could result in
lost revenues from business interruption, damage to our reputation and reduced
profits.
Increases in our debt levels to fund spectrum purchases, or other strategic
decisions could adversely affect our ability to finance future debt at
attractive rates and reduce our ability to respond to competition and adverse
economic trends.
We have incurred debt to fund significant acquisitions, as well as spectrum
purchases needed to compete in our industry. While we believe such decisions
were prudent and necessary to take advantage of both growth opportunities and
respond to industry developments, we did experience credit rating downgrades
from historical levels. Banks and potential purchasers of our publicly traded
debt may decide that these strategic decisions and similar actions we may take
in the future, as well as expected trends in the industry, will continue to
increase the risk of investing in our debt and may demand a higher rate of
interest, impose restrictive covenants or otherwise limit the amount of
potential borrowing. Additionally, our capital allocation plan is focused on,
among other things, managing our debt level going forward. Any failure to
successfully execute this plan could adversely affect our cost of funds,
liquidity, competitive position and access to capital markets.
Our business may be impacted by changes in tax laws and regulations, judicial
interpretations of the same or administrative actions by federal, state, local
and foreign taxing authorities.
Tax laws are dynamic and subject to change as new laws are passed and new
interpretations of the law are issued or applied. In many cases, the
application of existing, newly enacted or amended tax laws (such as the U.S.
Tax Cuts and Jobs Act of 2017 and the Inflation Reduction Act of 2022) may be
uncertain and subject to differing interpretations, especially when evaluated
against ever-changing products and services provided by our global
telecommunications and technology businesses. In addition, tax legislation has
been introduced or is being considered in various jurisdictions that could
significantly impact our tax rate, tax liabilities and carrying value of
deferred tax assets or deferred tax liabilities. Any of these changes could
materially impact our financial performance and our tax provision, net income
and cash flows.
We are also subject to ongoing examinations by taxing authorities in various
jurisdictions. Although we regularly assess the likelihood of an adverse
outcome resulting from these examinations to determine the adequacy of
provisions for taxes, there can be no assurance as to the outcome of these
examinations. In the event that we have not accurately or fully described,
disclosed or determined, calculated or remitted amounts that were due to
taxing authorities or if the ultimate determination of our taxes owed is for
an amount in excess of amounts previously accrued, we could be subject to
additional taxes, penalties and interest, which could materially impact our
business, financial condition and operating results.
If the distribution of WarnerMedia, together with certain related
transactions, were to fail to qualify for non-recognition treatment for U.S.
federal income tax purposes under audit, then we could be subject to
significant tax liability.
In connection with the WarnerMedia/Discovery Transaction, AT&T received a
favorable Private Letter Ruling from the Internal Revenue Service (IRS).
Nonetheless, the IRS or another applicable tax authority could determine on
audit that the distribution by us of WarnerMedia to our stockholders and
certain related transactions should be treated as taxable transactions
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if it determines that any of the facts, representations or undertakings made
in connection with the request for the ruling were incorrect or are violated.
We may be entitled to indemnification from Warner Bros. Discovery (Warner
Bros.) in the case of certain breaches of representations or undertakings by
Warner Bros. under the tax matters agreement related to the
WarnerMedia/Discovery Transaction. However, we could potentially be required
to pay such tax prior to reimbursement from Warner Bros., and such
indemnification is subject to Warner Bros.' credit risk. If the IRS or another
tax authority were to so conclude, there could be a material adverse impact on
our business, financial condition, results of operations and cash flows.
CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this report contains forward-looking statements that
are subject to risks and uncertainties, and actual results could differ
materially. Many of these factors are discussed in more detail in the "Risk
Factors" section. We claim the protection of the safe harbor for
forward-looking statements provided by the Private Securities Litigation
Reform Act of 1995.
The following factors could cause our future results to differ materially from
those expressed in the forward-looking statements:
•Adverse economic and political changes, public health emergencies and our
ability to access financial markets on favorable terms.
•Increases in our benefit plans' costs, including due to worse-than-assumed
investment returns and discount rates, mortality assumptions, medical cost
trends, or healthcare laws or regulations.
•The final outcome of FCC and other federal, state or foreign government
agency proceedings (including judicial review of such proceedings) and
legislative and regulatory efforts involving issues important to our business,
including, without limitation, pending Notices of Apparent Liability; the
transition from legacy technologies to IP-based infrastructure, including the
withdrawal of legacy TDM-based services; universal service; broadband
deployment; wireless equipment siting regulations; E911 services; rules
concerning digital discrimination; competition policy; privacy; net
neutrality; copyright protection; availability of new spectrum on fair and
reasonable terms; and wireless and satellite license awards and renewals, and
our response to such legislative and regulatory efforts.
•Enactment of or changes to state, local, federal and/or foreign tax laws
and regulations, and actions by tax agencies and judicial authorities, and the
resolution of disputes with any taxing jurisdictions, pertaining to our
subsidiaries and foreign investments.
•U.S. and foreign laws and regulations regarding intellectual property
rights protection and privacy, personal data protection and user consent,
which are rapidly evolving.
•Our ability to compete in an increasingly competitive industry and against
competitors that can offer product/service offerings at lower prices due to
lower cost structures and regulatory and legislative actions adverse to us,
including non-regulation of comparable alternative technologies and/or
government-owned or subsidized networks, and our response to such competition
and emerging technologies.
•Disruptions in our supply chain that have a material impact on our ability
to acquire needed goods and services.
•The development and delivery of attractive and profitable wireless and
broadband offerings and devices, including our ability to match speeds offered
by competitors; and the availability, cost and/or reliability of technologies
required to provide such offerings.
•Our ability to adequately fund additional wireless spectrum and network
development, deployment and maintenance; and regulations and conditions
relating to spectrum use, licensing, obtaining additional spectrum, technical
standards and deployment and usage, including network management rules.
•Our ability to manage growth in wireless data services, including network
quality.
•The outcome of pending, threatened or potential litigation and arbitration.
•The impact from major equipment, software or other failures or errors that
disrupt our networks or cyber incidents; the effect of security breaches
related to the network or customer information; our inability to obtain
handsets, equipment/software or have handsets, equipment/software serviced in
a timely and cost-effective manner from suppliers; severe weather conditions
or other natural disasters including earthquakes and forest fires; public
health emergencies; energy shortages; or wars or terrorist attacks.
•The issuance by the FASB or other accounting oversight bodies of new or
revised accounting standards.
•The uncertainty surrounding further congressional action regarding spending
and taxation, which may result in changes in government spending and affect
the ability and willingness of businesses and consumers to spend in general.
•Our ability to realize or sustain the expected benefits of our business
transformation initiatives, which are designed to reduce costs, enable legacy
rationalization, streamline distribution, remove redundancies and simplify and
improve processes and support functions.
•Our ability to successfully complete divestitures, as well as achieve our
expectations regarding the financial impact of completed and/or pending
transactions.
Readers are cautioned that other factors discussed in this report, although
not enumerated here, also could materially affect our future earnings.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
Governance
Board and Audit Committee Oversight
Our Board of Directors has delegated to the Audit Committee the oversight
responsibility to review and discuss with management the Company's privacy and
data security, including cybersecurity, risk exposures, policies and
practices, and the steps management has taken to detect, monitor and control
such risks and the potential impact of those exposures on our business,
financial results, operations and reputation. The full Board and Audit
Committee regularly receive reports and presentations on privacy and data
security, which address relevant cybersecurity issues and risks and span a
wide range of topics. These reports and presentations are provided by officers
with responsibility for privacy and data security, who include our Chief
Information Security Officer (CISO), Chief Technology Officer (CTO) and
AT&T's Legal team. In addition to regular reports to the Audit Committee,
we have protocols by which certain security incidents are escalated within the
Company and, where appropriate, reported in a timely manner to the Audit
Committee.
Chief Security Office/CISO
We maintain a Chief Security Office (CSO), which is charged with
management-level responsibility for all aspects of network and information
security within the Company. Led by our CISO and comprised of a large team of
highly trained security professionals across multiple countries, the CSO is
responsible for:
a.establishing the policies, standards and requirements for the security of
AT&T's computing and network environments;
b.protecting AT&T-owned and -managed assets and resources against
unauthorized access by monitoring potential security threats, correlating
network events and overseeing the execution of corrective actions;
c.promoting compliance with AT&T's security policies and network and
information security program in a consistent manner on network systems and
applications; and
d.providing security thought leadership in the global security arena.
Our CISO plays the key management role in assessing and managing our material
risks from cybersecurity threats. The CISO also works closely with AT&T
Legal to oversee compliance with legal, regulatory and contractual security
requirements. The CISO has extensive technical leadership experience and
cybersecurity expertise, gained from approximately 20 years of experience,
including serving as the Chief Information Security Officer and Director of
the Office of Cybersecurity at a U.S. government agency, in addition to
serving as the Chief Information Security Officer of two large public
companies. Prior to that, he served for 20 years in the U.S. military, in
various information technology roles of increasing seniority. The security
professionals in the CSO have cybersecurity backgrounds and expertise relevant
to their roles, including, in certain circumstances, relevant industry
certifications.
Risk Management and Strategy
We maintain a network and information security program that is reasonably
designed to protect our information, and that of our customers, from
unauthorized risks to their confidentiality, integrity or availability. Our
program encompasses the CSO and its policies, platforms, procedures and
processes for assessing, identifying, and managing risks from cybersecurity
threats, including third-party risk from vendors and suppliers. The program is
integrated into our overall risk management framework and is generally
designed to identify and respond to security incidents and threats in a timely
manner to minimize the loss or compromise of information assets and to
facilitate incident resolution.
We maintain continuous and near-real-time security monitoring of the AT&T
network for investigation, action and response to network security events.
This security monitoring leverages tools, where available, such as
near-real-time data correlation, situational awareness reporting, active
incident investigation, case management, trend analysis and predictive
security alerting. We assess, identify and manage risks from cybersecurity
threats through various mechanisms, which from time to time may include
tabletop exercises to test our preparedness and incident response process,
business unit assessments, control gap analyses, threat modeling, impact
analyses, internal audits, external audits, penetration tests and engaging
third parties to conduct analyses of our information security program. When
circumstances warrant, we also retain external cybersecurity experts to assist
the CSO. We conduct vulnerability testing and assess identified
vulnerabilities for severity, the potential impact to AT&T and our
customers, and likelihood of occurrence. We regularly evaluate security
controls to maintain their functionality in accordance with security policy.
We also obtain cybersecurity threat intelligence from recognized forums, third
parties and other sources as part of our risk assessment process. In addition,
as a critical infrastructure entity, we collaborate
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with numerous agencies in the U.S. government to help protect U.S.
communications networks and critical infrastructure, which, in turn, informs
our cybersecurity threat intelligence.
With respect to incident response, the Company has adopted a Cybersecurity
Incident Response Plan, as well as a Data Privacy Incident Response Plan that
applies if customer information has been compromised (together, the "IRPs"),
to provide a common framework for responding to security incidents. This
framework establishes procedures for identifying, validating, categorizing,
documenting and responding to security events that are identified by or
reported to the CSO. The IRPs apply to all AT&T personnel (including
contractors and partners) that perform functions or services that require
securing AT&T information and computing assets, and to all devices and
network services that are owned or managed by the Company.
The IRPs set out a coordinated, multi-functional approach for investigating,
containing and mitigating incidents, including reporting findings to senior
management and other key stakeholders and keeping them informed and involved
as appropriate. In general, our incident response process follows the NIST
(National Institute of Standards and Technology) framework and focuses on four
phases: preparation; detection and analysis; containment, eradication and
recovery; and post-incident remediation.
Impact of Cybersecurity Risk
In 2024, we did not identify and were not aware of any risks from
cybersecurity threats, including as a result of any previous cybersecurity
incidents, that we believe have materially affected or are reasonably likely
to materially affect our business strategy, results of operations or financial
condition. For a discussion of cybersecurity risk, please see the information
contained under the heading "Cyberattacks impacting our networks, systems or
data or those of our suppliers or vendors may have a material adverse effect
on our operations or results of operations" of Item 1A.
ITEM 2. PROPERTIES
Our properties do not lend themselves to description by character and location
of principal units. At December 31, 2024, of our total property, plant and
equipment, central office equipment represented 29%; outside plant (including
cable, wiring and other non-central office network equipment) represented 27%;
other equipment, comprised principally of wireless network equipment attached
to towers, furniture and office equipment and vehicles and other work
equipment, represented 25%; land, building and wireless communications towers
represented 12%; and other miscellaneous property represented 7%.
For our Communications segment, substantially all of the installations of
central office equipment are located in buildings and on land we own. Many
garages, administrative and business offices, wireless towers, telephone
centers and retail stores are leased. Property on which communications towers
are located may be either owned or leased.
ITEM 3. LEGAL PROCEEDINGS
We are a party to numerous lawsuits, regulatory proceedings and other matters
arising in the ordinary course of business. As of the date of this report, we
do not believe any pending legal proceedings to which we or our subsidiaries
are subject are required to be disclosed as material legal proceedings
pursuant to this item.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
As of February 1, 2025
Name Age Position Held Since
John T. Stankey 62 Chief Executive Officer and President 7/2020
F. Thaddeus Arroyo 61 Chief Strategy and Development Officer 5/2022
Pascal Desroches 60 Senior Executive Vice President and Chief Financial Officer 4/2021
Edward W. Gillespie 63 Senior Executive Vice President - External and Legislative Affairs, AT&T 4/2020
Services, Inc.
Kellyn S. Kenny 47 Chief Marketing and Growth Officer 5/2022
Lori M. Lee 59 Global Marketing Officer and Senior Executive Vice President - Human Resources 8/2023
and International
Jeremy Legg 55 Chief Technology Officer, AT&T Services, Inc. 5/2022
David R. McAtee II 56 Senior Executive Vice President and General Counsel 10/2015
Jeffery S. McElfresh 54 Chief Operating Officer 5/2022
The above executive officers have held high-level managerial positions with
AT&T or its subsidiaries for more than the past five years, except for Mr.
Desroches, Mr. Gillespie, Ms. Kenny and Mr. Legg. Executive officers are not
appointed to a fixed term of office.
Mr. Desroches was previously Executive Vice President - Finance of AT&T
from November 2020 to March 2021, Executive Vice President and Chief Financial
Officer of WarnerMedia from June 2018 to November 2020, and Executive Vice
President and Chief Financial Officer of Turner from January 2015 to June
2018.
Mr. Gillespie was previously Managing Director of Sard Verbinnen & Co.
from June 2018 to April 2020, Founder and Principal of Ed Gillespie Strategies
from February 2009 to December 2016, and Counselor to the President for George
W. Bush, Executive Office of the President at The White House, from July 2007
to January 2009.
Ms. Kenny was previously Chief Marketing and Growth Officer, AT&T
Communications, LLC from November 2020 to May 2022. Prior to that she was
Global Chief Marketing Officer of Hilton Worldwide Holdings from January 2018
to June 2020 and Vice President of Marketing for Uber Technologies from April
2016 to January 2018.
Mr. Legg was previously Chief Technology Officer - AT&T Technology
Services of AT&T from June 2020 to April 2022, Chief Technology Officer of
WarnerMedia from December 2018 to June 2020, and Chief Technology Officer of
Turner from June 2015 to December 2018.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange under the ticker
symbol "T". The number of stockholders of record as of December 31, 2024 and
2023 was 712,700 and 749,207. The number of stockholders of record as of
January 31, 2025, was 710,181. We declared dividends on common stock, on a
quarterly basis, totaling $1.11 per share in 2024 and 2023.
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A summary of our repurchases of common stock during the fourth quarter of 2024
is as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
(a) (b) (c) (d)
Period Total Number of Average Price Paid Per Share (or Unit) Total Number of Shares (or Units) Purchased Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet
Be Purchased Under The Plans or Programs1
Shares (or Units) Purchased1,2 as Part of Publicly Announced Plans or Programs1
October 1, 2024 -
October 31, 2024 424,825 $ 22.12 36,300 143,695,672
November 1, 2024 -
November 30, 2024 504 $ 22.54 - 143,695,672
December 1, 2024 -
December 31, 2024 128,898 $ 22.57 - $ 10,000
Total 554,227 $ 22.22 36,300
1 In March 2014, our Board of Directors approved an authorization to
repurchase up to 300 million shares of our common stock.
The authorization had no expiration date. In December 2024, our
Board of Directors approved an authorization to repurchase up to
$10,000 of common stock and terminated the March 2014 authorization.
No repurchases were made in December 2024
under the March 2014 authorization. The December 2024 authorization
has no expiration date.
2 Of the shares purchased, 517,927 shares were acquired through the
withholding of taxes on the vesting of restricted stock
and performance shares or in respect of the exercise price of
options.
ITEM 6. RESERVED
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
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).
Our Management's Discussion and Analysis of Financial Condition and Results of
Operations included in this document generally discusses 2024 and 2023 items
and year-to-year comparisons between 2024 and 2023. Discussions of 2022 items
and year-to-year comparisons between 2023 and 2022 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, 2023.
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. (Playdemic). These businesses are reflected in the accompanying
financial statements as discontinued operations, including for periods prior
to the consummation of the WarnerMedia/Discovery Transaction. (See Notes 6 and
24)
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We have two reportable segments: Communications and Latin America. Our segment
results presented in Note 4 and discussed below follow our internal management
reporting. Each segment's percentage calculation of total segment operating
revenue is derived from our segment results table in Note 4. Segment operating
income is primarily attributable to our Communications segment due to
prior-years operating losses in Latin America. Percentage increases and
decreases that are not considered meaningful are denoted with a dash.
Percent Change
2024 2023 2022 2024 vs. 2023 2023 vs. 2022
Operating Revenues
Communications $ 117,652 $ 118,038 $ 117,067 (0.3) % 0.8 %
Latin America 4,232 3,932 3,144 7.6 25.1
Corporate 452 458 530 (1.3) (13.6)
AT&T Operating Revenues $ 122,336 $ 122,428 $ 120,741 (0.1) % 1.4 %
Operating Income
Communications $ 27,095 $ 27,801 $ 26,736 (2.5) % 4.0 %
Latin America 40 (141) (326) - 56.7
Segment Operating Income 27,135 27,660 26,410 (1.9) 4.7
Corporate (2,902) (2,961) (2,890) 2.0 (2.5)
Certain significant items (5,184) (1,238) (28,107) - 95.6
AT&T Operating Income (Loss) $ 19,049 $ 23,461 $ (4,587) (18.8) % - %
The Communications segment accounted for approximately 97% of our 2024 and
2023 total segment operating revenues and accounted for substantially all
segment operating income in 2024 and 2023. This segment provides services to
businesses and consumers located in the United States and businesses globally.
Our business strategies reflect integrated product offerings that cut across
product lines and utilize shared assets. This segment contains the following
business units:
•Mobility provides nationwide wireless service and equipment.
•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 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. 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. Additional analysis is discussed
in our "Segment Results" section. We also discuss our expected revenue and
expense trends for 2025 in the "Operating Environment and Trends of the
Business" section.
Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Operating revenues
Service $ 100,135 $ 99,649 $ 97,831 0.5 % 1.9 %
Equipment 22,201 22,779 22,910 (2.5) (0.6)
Total Operating Revenues 122,336 122,428 120,741 (0.1) 1.4
Operating expenses
Operations and support 77,632 78,997 79,809 (1.7) (1.0)
Asset impairments and abandonments 5,075 1,193 27,498 - (95.7)
and restructuring
Depreciation and amortization 20,580 18,777 18,021 9.6 4.2
Total Operating Expenses 103,287 98,967 125,328 4.4 (21.0)
Operating Income (Loss) 19,049 23,461 (4,587) (18.8) -
Interest expense 6,759 6,704 6,108 0.8 9.8
Equity in net income of affiliates 1,989 1,675 1,791 18.7 (6.5)
Other income (expense) - net 2,419 1,416 5,810 70.8 (75.6)
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) % - %
OVERVIEW
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).
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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).
Other income (expense) - net increased in 2024. 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.
Segment Results Our segments are comprised of strategic business units or
other operations that offer products and services to different customer
segments over various technology platforms and/or in different geographies
that are managed accordingly. We evaluate segment performance based on
operating income as well as EBITDA and/or EBITDA margin. 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.
COMMUNICATIONS SEGMENT Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Segment Operating Revenues
Mobility $ 85,255 $ 83,982 $ 81,780 1.5 % 2.7 %
Business Wireline 18,819 20,883 22,538 (9.9) (7.3)
Consumer Wireline 13,578 13,173 12,749 3.1 3.3
Total Segment Operating Revenues $ 117,652 $ 118,038 $ 117,067 (0.3) % 0.8 %
Segment Operating Income (Loss)
Mobility $ 26,314 $ 25,861 $ 23,812 1.8 % 8.6 %
Business Wireline (88) 1,289 2,290 - (43.7)
Consumer Wireline 869 651 634 33.5 2.7
Total Segment Operating Income $ 27,095 $ 27,801 $ 26,736 (2.5) % 4.0 %
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. Our Communications segment operating income margin
was 23.0% in 2024, 23.6% in 2023 and 22.8% in 2022. Our Communications segment
EBITDA margin was 39.5% in 2024, 38.3% in 2023 and 37.1% in 2022.
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AT&T Inc.
Dollars in millions except per share amounts
Communications Business Unit Discussion
Mobility Results
Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Operating revenues
Service $ 65,373 $ 63,175 $ 60,499 3.5 % 4.4 %
Equipment 19,882 20,807 21,281 (4.4) (2.2)
Total Operating Revenues 85,255 83,982 81,780 1.5 2.7
Operating expenses
Operations and support 48,724 49,604 49,770 (1.8) (0.3)
Depreciation and amortization 10,217 8,517 8,198 20.0 3.9
Total Operating Expenses 58,941 58,121 57,968 1.4 0.3
Operating Income $ 26,314 $ 25,861 $ 23,812 1.8 % 8.6 %
The following tables highlight other key measures of performance for Mobility:
Subscribers
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Postpaid 89,200 87,104 84,700 2.4 % 2.8 %
Postpaid phone 72,749 71,255 69,596 2.1 2.4
Prepaid 19,023 19,236 19,176 (1.1) 0.3
Reseller 9,628 7,468 6,043 28.9 23.6
Total Mobility Subscribers1 117,851 113,808 109,919 3.6 % 3.5 %
1Effective 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.
Mobility Net Additions
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Postpaid Phone Net Additions 1,653 1,744 2,868 (5.2) % (39.2) %
Total Phone Net Additions 1,525 1,801 3,272 (15.3) (45.0)
Postpaid2 2,250 2,315 4,091 (2.8) (43.4)
Prepaid (102) 128 479 - (73.3)
Reseller 2,020 1,279 462 57.9 -
Mobility Net Subscriber Additions1 4,168 3,722 5,032 12.0 % (26.0) %
Postpaid Churn3 0.92 % 0.98 % 0.97 % (6) BP 1 BP
Postpaid Phone-Only Churn4 0.76 % 0.81 % 0.81 % (5) BP - BP
1Excludes migrations between wireless subscriber categories, including
connected devices, and acquisition-related activity during the period.
2In addition to postpaid phones, includes tablets and wearables and other.
Tablet net adds (losses) were 167, (68) and 203 for the years ended December
31, 2024, 2023 and 2022, respectively. Wearables and other net adds were 430,
639 and 1,020 for the years ended December 31, 2024, 2023 and 2022,
respectively.
3Calculated 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.
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AT&T Inc.
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
ARPU increased in 2024 and reflects pricing actions.
Churn
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.
Operating income increased in 2024 and 2023. Our Mobility operating income
margin was 30.9% in 2024, 30.8% in 2023 and 29.1% in 2022. Our Mobility EBITDA
margin was 42.8% in 2024, 40.9% in 2023 and 39.1% in 2022.
Business Wireline Results
Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Operating revenues
Service $ 18,064 $ 20,274 $ 21,891 (10.9) % (7.4) %
Equipment 755 609 647 24.0 (5.9)
Total Operating Revenues 18,819 20,883 22,538 (9.9) (7.3)
Operating expenses
Operations and support 13,352 14,217 14,934 (6.1) (4.8)
Depreciation and amortization 5,555 5,377 5,314 3.3 1.2
Total Operating Expenses 18,907 19,594 20,248 (3.5) (3.2)
Operating Income (Loss) $ (88) $ 1,289 $ 2,290 - % (43.7) %
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.
Operating income decreased in 2024 and 2023. Our Business Wireline operating
income margin was (0.5)% in 2024, 6.2% in 2023 and 10.2% in 2022. Our Business
Wireline EBITDA margin was 29.1% in 2024, 31.9% in 2023 and 33.7% in 2022.
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AT&T Inc.
Dollars in millions except per share amounts
Consumer Wireline Results
Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Operating revenues
Broadband $ 11,212 $ 10,455 $ 9,669 7.2 % 8.1 %
Legacy voice and data services 1,265 1,508 1,746 (16.1) (13.6)
Other service and equipment 1,101 1,210 1,334 (9.0) (9.3)
Total Operating Revenues 13,578 13,173 12,749 3.1 3.3
Operating expenses
Operations and support 9,048 9,053 8,946 (0.1) 1.2
Depreciation and amortization 3,661 3,469 3,169 5.5 9.5
Total Operating Expenses 12,709 12,522 12,115 1.5 3.4
Operating Income $ 869 $ 651 $ 634 33.5 % 2.7 %
The following tables highlight other key measures of performance for Consumer
Wireline:
Connections
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Broadband Connections
Total Broadband and DSL Connections 14,079 13,890 13,991 1.4 % (0.7) %
Broadband1 13,987 13,729 13,753 1.9 (0.2)
Fiber Broadband Connections 9,331 8,307 7,215 12.3 15.1
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) %
1Includes AIA.
Broadband Net Additions
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Total Broadband and DSL Net Additions 189 (101) (169) - % 40.2 %
Broadband Net Additions1 258 (24) (92) - 73.9
Fiber Broadband Net Additions 1,024 1,092 1,223 (6.2) % (10.7) %
1Includes 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.
Other service and equipment revenues decreased in 2024, 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.
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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.
Operating income increased in 2024 and 2023. Our Consumer Wireline operating
income margin was 6.4% in 2024, 4.9% in 2023 and 5.0% in 2022. Our Consumer
Wireline EBITDA margin was 33.4% in 2024, 31.3% in 2023 and 29.8% in 2022.
LATIN AMERICA SEGMENT Percent Change
2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Segment Operating revenues
Service $ 2,668 $ 2,569 $ 2,162 3.9 % 18.8 %
Equipment 1,564 1,363 982 14.7 38.8
Total Segment Operating Revenues 4,232 3,932 3,144 7.6 25.1
Segment Operating expenses
Operations and support 3,535 3,349 2,812 5.6 19.1
Depreciation and amortization 657 724 658 (9.3) 10.0
Total Segment Operating Expenses 4,192 4,073 3,470 2.9 17.4
Operating Income (Loss) $ 40 $ (141) $ (326) - % 56.7 %
The following tables highlight other key measures of performance for Mexico:
Subscribers
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Postpaid 5,837 5,236 4,925 11.5 % 6.3 %
Prepaid 17,486 16,663 16,204 4.9 2.8
Reseller 253 417 474 (39.3) (12.0)
Mexico Wireless Subscribers 23,576 22,316 21,603 5.6 % 3.3 %
Mexico Wireless Net Additions
Percent Change
(in 000s) 2024 2023 2022 2024 vs. 2023 vs.
2023 2022
Postpaid 601 311 118 93.2 % - %
Prepaid 823 459 1,147 79.3 (60.0)
Reseller (164) (57) (24) - -
Mexico Wireless Net Additions 1,260 713 1,241 76.7 % (42.5) %
Service revenues increased in 2024, reflecting growth in subscribers and ARPU,
partially offset by unfavorable foreign exchange impacts.
Equipment revenues increased in 2024, 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.
Operating income improved in 2024 and 2023. Our Mexico operating income margin
was 0.9% in 2024, (3.6)% in 2023 and (10.4)% in 2022. Our Mexico EBITDA margin
was 16.5% in 2024, 14.8% in 2023 and 10.6% in 2022.
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AT&T Inc.
Dollars in millions except per share amounts
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
2025 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.
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.
2025 Expense Trends During 2025, 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 2025. 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.
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 expect
ongoing pressure on pricing during 2025 as we respond to the geopolitical and
macroeconomic environment and our competitive marketplace, especially in
wireless services.
Included on our consolidated balance sheets are assets held by benefit plans
for the payment of future benefits. 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. 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. In addition, our policy of recognizing actuarial gains and losses
related to our pension and other postretirement plans in the period in which
they arise subjects us to earnings volatility caused by changes in market
conditions; however, these actuarial gains and losses do not impact segment
performance as they are required to be recorded in "Other income (expense) -
net." Changes in our discount rate, which are tied to changes in the bond
market, and changes in the performance of equity markets, may have significant
impacts on the valuation of our pension and other postretirement obligations
at the end of 2025 (see "Critical Accounting Policies and Estimates").
Expected Growth Areas Over the next few years, we expect our growth to come
from wireless and IP-based fiber broadband services. We provide integrated
services to diverse groups of customers in the U.S. on a converged
telecommunications network utilizing different technological platforms. In
2025, 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.
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Dollars in millions except per share amounts
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. As of December 31,
2024, we served 141 million wireless subscribers in North America, with 118
million in the United States.
Our LTE technology covers over 440 million people in North America, and in the
United States, we cover all major metropolitan areas and over 336 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, 2024, our network covers more than 314 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. At December 31, 2024, we provided LTE coverage
to over 104 million people in Mexico.
Integration of Wireless and Fiber Services The communications industry has
evolved into internet-based technologies capable of converging the offering of
wireline and wireless services. As the owner and operator of scaled wireless
and fiber networks, we plan to 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.
REGULATORY LANDSCAPE
AT&T subsidiaries operating within the United States are subject to
federal and state regulatory authorities. While these issues may apply only to
certain subsidiaries, the words "we," "AT&T" and "our" are used to
simplify the discussion. The following discussions are intended as a condensed
summary of the issues rather than as a comprehensive legal analysis and
description of all of these specific issues.
International Regulation
Our subsidiaries operating outside the United States are subject to the
jurisdiction of regulatory authorities in the territories in which the
subsidiaries operate. Our licensing, compliance and advocacy initiatives in
foreign countries primarily enable the provision of enterprise (i.e., large
business) services globally and wireless services in Mexico.
The General Data Protection Regulation went into effect in Europe in May of
2018. This regulation created a range of new compliance obligations and
significantly increased financial penalties for noncompliance. AT&T
processes and handles personal data of its customers and subscribers,
employees of its enterprise customers and its employees.
U.S. Regulation
In the Telecommunications Act of 1996 (Telecom Act), Congress established a
national policy framework intended to bring the benefits of competition and
investment in advanced telecommunications facilities and services to all
Americans by opening all telecommunications markets to competition and
reducing or eliminating regulatory burdens that harm consumer welfare.
Nonetheless, since then, the FCC and some state regulatory commissions have
maintained, re-imposed or expanded certain regulatory requirements that were
imposed decades ago on our traditional wireline subsidiaries when they
operated as legal monopolies. Recently, the FCC's regulatory approach has
depended on control of the executive branch, eliminating a variety of
antiquated and unnecessary regulations in a number of areas, while imposing or
re-imposing regulations in other areas. We continue to support regulatory and
legislative measures and efforts, at both the state and federal levels, to
reduce inappropriate regulatory burdens that inhibit our ability to compete
effectively and offer needed services to our customers, including initiatives
to transition services from traditional networks to all IP-based networks. At
the same time, we also seek to ensure that legacy regulations are not further
extended to broadband or wireless services, which are subject to vigorous
competition. We have organized the following discussion by service impacted.
Internet Until 2015, the FCC classified fixed and mobile consumer broadband
internet access services as information services subject to minimal
regulation. In 2015, the FCC reclassified such services as telecommunications
services subject to broader regulation by the FCC and imposed "net neutrality
rules." Since then, the FCC has twice reversed course, most recently again
reclassifying such services as telecommunications services subject to broader
regulation by the FCC in an order adopted on April 25, 2024. Multiple trade
associations and other parties challenged the FCC's reclassification decision
in appeals consolidated in the U.S. Court of Appeals for the Sixth Circuit.
The trade associations petitioned the Sixth Circuit to stay the FCC's order.
On August 1, 2024, the Sixth Circuit issued a stay of the FCC order pending
review of the appeals, holding that broadband providers are likely to succeed
on the merits. 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.
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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.
In June 2021, the ABA was enjoined by a federal district court, which found
the ABA preempted by federal law. 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.
On November 15, 2023, the FCC adopted rules to "facilitate" equal access to
broadband and prevent digital discrimination in broadband access. The rules,
which became effective March 22, 2024, prohibit covered entities from
implementing policies or practices not justified by genuine issues of
technical or economic feasibility, that differentially impact consumers'
access to broadband internet access service based on prohibited
characteristics (including income level, race, and ethnicity) or that have
such differential impact, whether intentional or not. The rules broadly apply
prospectively to all aspects of an ISP's service that could impact a
consumer's ability to access broadband, including deployment, marketing, and
credit checks, among other things. We may be required to answer complaints
alleging that the company has violated the FCC rules and those complaints may
seek relief, including changes to our business practices or civil forfeitures
that could result in significant costs or reputational harm. It is currently
uncertain how the FCC will implement and enforce these new rules. Several
business associations have filed appeals challenging the rules and several of
those appeals have been consolidated in the Eighth Circuit, which held oral
argument on September 25, 2024.
Privacy-related legislation continues to be adopted or considered in a number
of jurisdictions. Legislative, regulatory and litigation actions could result
in increased costs of compliance, further regulation or claims against
broadband internet access service providers and others, and increased
uncertainty in the value and availability of data.
Infrastructure Investment On November 15, 2021, the Infrastructure Investment
and Jobs Act (IIJA) was signed into law. The legislation appropriates $65,000
to support broadband deployment and adoption. The National Telecommunications
and Information Agency (NTIA) is responsible for distributing more than
$48,000 of this funding, including $42,500 in state grants for broadband
deployment projects in unserved and underserved areas through the Broadband,
Equity, Access and Deployment (BEAD) Programs. NTIA and states are in the
process of administering these grants. Where appropriate, AT&T has applied
for, and in some cases has been awarded, and may continue to apply for grants
under this or other government infrastructure programs.
Wireless Industry-wide network densification and 5G technology expansion
efforts, which are needed to satisfy extensive demand for video and internet
access, will involve significant deployment of "small cell" equipment. This
increases the importance of local permitting processes that allow for the
placement of small cell equipment in the public right-of-way on reasonable
timelines and terms. The FCC has adopted multiple Orders streamlining federal,
state, and local wireless structure review processes that had the tendency to
delay and impede deployment of small cell and related infrastructure used to
provide telecommunications and broadband services. 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. (See
Note 6)
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Dollars in millions except per share amounts
ACCOUNTING POLICIES AND STANDARDS
Critical Accounting Policies and Estimates Because of the size of the
financial statement line items they relate to or the extent of judgment
required by our management, some of our accounting policies and estimates have
a more significant impact on our consolidated financial statements than
others.
Pension and Postretirement Benefits Our actuarial estimates of retiree benefit
expense and the associated significant weighted-average assumptions are
discussed in Note 14. Our assumed weighted-average discount rates for pension
and postretirement benefits of 5.70% and 5.60%, respectively, at December 31,
2024, reflect the hypothetical rate at which the projected benefit obligations
could be effectively settled or paid out to participants. We determined our
discount rate based on a range of factors, including a yield curve composed of
the rates of return on several hundred high-quality, fixed income corporate
bonds available at the measurement date and corresponding to the related
expected durations of future cash outflows for the obligations. These bonds
had an average rating of at least Aa3 or AA- by the nationally recognized
statistical rating organizations, denominated in U.S. 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.
Our expected long-term rate of return is 7.75% on pension plan assets and
4.00% on postretirement plan assets for 2024 and 2025. Our expected return on
plan assets is calculated using the actual fair value of plan assets. If all
other factors were to remain unchanged, we expect that a 0.50% decrease in the
expected long-term rate of return would cause 2025 combined pension and
postretirement cost to increase $136, which under our accounting policy would
be adjusted to actual returns in the current year upon remeasurement of our
retiree benefit plans.
We recognize gains and losses on pension and postretirement plan assets and
obligations immediately in "Other income (expense) - net" in our consolidated
statements of income. These gains and losses are generally measured annually
as of December 31, and accordingly, will normally be recorded during the
fourth quarter, unless an earlier remeasurement is required. Should actual
experience differ from actuarial assumptions, the projected pension benefit
obligation and net pension cost and accumulated postretirement benefit
obligation and postretirement benefit cost would be affected in future years.
See Note 14 for additional discussions regarding our assumptions.
Asset Valuations and Impairments Goodwill and other indefinite-lived
intangible assets are not amortized but tested at least annually on October 1
for impairment. For impairment testing, we estimate fair values using models
that predominantly rely on the expected cash flows to be derived from the
reporting unit or use of the asset. Long-lived assets are reviewed for
impairment whenever events or circumstances indicate that the book value may
not be recoverable over the remaining life. Inputs underlying the expected
cash flows include, but are not limited to, subscriber counts, revenue per
user, capital investment and acquisition costs per subscriber, and ongoing
operating costs. We based our assumptions on a combination of our historical
results, trends, business plans and marketplace participant data.
Annual Goodwill Testing
Goodwill is tested on a reporting unit basis by comparing the estimated fair
value of each reporting unit to its book value. If the fair value exceeds the
book value, then no impairment is measured. We estimate fair values using an
income approach (also known as a discounted cash flow model) and market
multiple approaches. The income approach utilizes our future cash flow
projections with a perpetuity value discounted at an appropriate weighted
average cost of capital. The market multiple approach uses the multiples of
publicly traded companies whose services are comparable to those offered by
the reporting units.
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, 2024, 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
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AT&T Inc.
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.
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.
U.S. 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. The
Greenfield Approach assumes a company initially owns only the wireless
licenses and makes investments required to build an operation comparable to
current use. These licenses are tested annually for impairment on an
aggregated basis, consistent with their use on a national scope for the United
States. For impairment testing, we assume subscriber and revenue growth will
trend up to projected levels, with a long-term growth rate reflecting expected
long-term inflation trends. 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%.
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. Actual income taxes could vary from these estimates due to
future changes in income tax law or the final review of our tax returns by
federal, state or foreign tax authorities.
We use our judgment to determine whether it is more likely than not that we
will sustain positions that we have taken on tax returns and, if so, the
amount of benefit to initially recognize within our financial statements. We
regularly review our uncertain tax positions and adjust our unrecognized tax
benefits (UTBs) in light of changes in facts and circumstances, such as
changes in tax law, interactions with taxing authorities and developments in
case law. These adjustments to our UTBs may affect our income tax expense.
Settlement of uncertain tax positions may require use of our cash.
New Accounting Standards
See Note 1 for discussion of recently issued or adopted accounting standards.
OTHER BUSINESS MATTERS
Environmental We are subject from time to time to judicial and administrative
proceedings brought by various governmental authorities under federal, state
or local environmental laws. We reference in our Forms 10-Q and 10-K certain
environmental proceedings that could result in monetary sanctions (exclusive
of interest and costs) of three hundred thousand dollars or more. However, we
do not believe that any of those currently pending will have a material
adverse effect on our results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Continuing operations for the years ended December 31, 2024 2023 2022
Cash provided by operating activities $ 38,771 $ 38,314 $ 35,812
Cash used in investing activities (17,490) (19,660) (26,899)
Cash used in financing activities (24,708) (15,614) (59,564)
At December 31, 2024 2023
Cash and cash equivalents $ 3,298 $ 6,722
Total debt 123,532 137,331
We had $3,298 in cash and cash equivalents available at December 31, 2024,
decreasing $3,424 since December 31, 2023. Cash and cash equivalents included
cash of $2,149 and money market funds and other cash equivalents of $1,149.
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.
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AT&T Inc.
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. 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.
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 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. All supplier financing
payments are due within one year. (See Note 22)
Cash Used in Investing Activities from Continuing Operations
During 2024, cash used in investing activities totaled $17,490, consisting
primarily of $20,263 (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. Vendor financing payments were $1,792 in 2024, compared to $5,742
in 2023. Capital expenditures in 2024 were $20,263, and when including $1,792
cash paid for vendor financing, capital investment was $22,055 ($1,540 lower
than the prior year).
The vast majority of our capital expenditures are spent on our networks,
including product development and related support systems. In 2024, we placed
$700 of productive assets (primarily software) in service under vendor
financing arrangements (compared to $2,651 in 2023).
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.
A tabular summary of our debt activity during 2024 is as follows:
First Second Third Fourth Full Year 2024
Quarter
Quarter
Quarter
Quarter
Net commercial paper borrowings $ 428 $ 262 $ (2,686) $ - $ (1,996)
Repayments:
USD notes $ (2,300) $ (1,615) $ - $ (2,575) $ (6,490)
EUR notes (2,181) (32) - - (2,213)
CAD notes - (442) - - (442)
CHF notes - - - (467) (467)
Other (204) (136) (203) (142) (685)
Repayments of long-term debt $ (4,685) $ (2,225) $ (203) $ (3,184) $ (10,297)
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AT&T Inc.
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. We had $122,116 of
total notes and debentures outstanding at December 31, 2024. This also
included Euro, British pound sterling, Canadian dollar, Swiss franc and
Australian dollar denominated debt that totaled approximately $30,685.
At December 31, 2024, we had $5,089 of long-term debt maturing within one
year. We had no outstanding commercial paper borrowings or other short-term
borrowings on December 31, 2024. The weighted average interest rate on our
outstanding short-term borrowings was approximately 6.0% as of December 31,
2023.
During 2024, we paid $1,792 of cash under our vendor financing program,
compared to $5,742 in 2023. Total vendor financing payables included in our
December 31, 2024 consolidated balance sheet were $1,448, with $749 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.
We paid dividends on common and preferred shares of $8,208 in 2024, compared
with $8,136 in 2023. Dividends on common stock declared by our Board of
Directors totaled $1.11 per share in 2024 and in 2023. 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. The timing and mix of any debt issuance and/or refinancing will be
guided by credit market conditions and interest rate trends.
Credit Facilities
The following summary of our various credit and loan agreements does not
purport to be complete and is qualified in its entirety by reference to each
agreement filed as exhibits to our Annual Report on Form 10-K.
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.
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. As of
December 31, 2024, we were in compliance with the covenants for our credit
facilities.
Collateral Arrangements
Most of our counterparty collateral arrangements require cash collateral
posting by AT&T only when derivative market values exceed certain
thresholds. Under these arrangements, which cover the majority of our $34,884
derivative portfolio, counterparties are still required to post collateral.
During 2024, we received $477 of cash collateral, on a net basis. Cash
postings under these arrangements vary with changes in credit ratings and
netting agreements. (See Note 12)
Other
Our total capital consists of debt (long-term debt and debt maturing within
one year), redeemable noncontrolling interest and stockholders' equity. Our
capital structure does not include debt issued by our equity method
investments. At December 31, 2024, our debt ratio was 50.7%, compared to
53.5% at December 31, 2023 and 56.1% at December 31, 2022. 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.
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AT&T Inc.
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:
•Total taxes incurred, collected and remitted by AT&T during 2024 and
2023 were $16,968 and $16,877. These taxes include income, franchise,
property, sales, excise, payroll, gross receipts and various other taxes and
fees.
•Total domestic spectrum acquired primarily through FCC auctions, including
cash, exchanged spectrum, auction deposits and spectrum relocation and
clearing costs, was approximately $380 in 2024, $2,940 in 2023 and $10,200 in
2022.
•Total health and welfare benefits provided to certain active and retired
employees and their dependents totaled approximately $2,550 in 2024 and $2,990
in 2023, with $736 paid from plan assets in 2024, compared to $624 in 2023. Of
those benefits, approximately $2,290 related to medical and prescription drug
benefits in 2024, compared to $2,730 in 2023. We paid $2,447 of pension
benefits out of plan assets in 2024, compared to $4,863 in 2023.
Contractual Obligations
Our contractual obligations as of December 31, 2024, and the estimated timing
of payment, are in the following table:
Payments Due By Period
Total Less than 1-3 3-5 More than
5 Years
1 Year Years Years
Long-term debt obligations1 $ 135,952 $ 5,399 $ 14,962 $ 13,823 $ 101,768
Interest payments on long-term debt2 90,504 5,549 10,300 9,326 65,329
Purchase obligations3 27,997 9,916 10,982 5,495 1,604
Operating lease obligations4 25,475 4,789 7,693 5,015 7,978
FirstNet sustainability payments5 16,449 420 2,462 3,132 10,435
Unrecognized tax benefits (UTB)6 9,912 245 - - 9,667
Other finance obligations7 8,802 1,522 2,039 1,566 3,675
Total Contractual Obligations $ 315,091 $ 27,840 $ 48,438 $ 38,357 $ 200,456
1Represents principal or payoff amounts of notes, debentures and credit
agreement borrowings at maturity (see Note 11). Foreign debt includes the
impact from hedges, when applicable.
2Includes credit agreement borrowings.
3We expect to fund the purchase obligations with 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. (See Note 21)
4Represents operating lease payments (see Note 8).
5Represents contractual commitment to make sustainability payments over the
25-year contract. These sustainability payments represent our commitment to
fund FirstNet's operating expenses and future reinvestment in the network,
which we own and operate. FirstNet has a statutory requirement to reinvest
funds that exceed the agency's operating expenses, which we anticipate to be
$15,000. (See Note 20)
6The noncurrent portion of the UTBs is included in the "More than 5 Years"
column, as we cannot reasonably estimate the timing or amounts of additional
cash payments, if any, at this time (see Note 13).
7Represents future minimum payments under the Crown Castle and other
arrangements (see Note 18), payables subject to extended payment terms (see
Note 22) and finance lease payments (see Note 8).
Certain items were excluded from this table because the year of payment is
unknown and could not be reliably estimated, we believe the obligations are
immaterial, or the settlement of the obligation will not require the use of
cash. These items include: deferred income tax liability of $58,939 (see Note
13); net postemployment benefit obligations of $9,595 (including current
portion); and other noncurrent liabilities of $8,292.
34
AT&T Inc.
Dollars in millions except per share amounts
DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES
We also evaluate segment and business unit performance based on EBITDA, which
is defined as operating income excluding depreciation and amortization, and/or
EBITDA margin, which is defined as EBITDA divided by total revenue. EBITDA is
used as part of our management reporting, and we believe EBITDA to be a
relevant and useful measurement to our investors as it measures the cash
generation potential of our business units. EBITDA does not give effect to
depreciation and amortization expenses incurred in operating income nor is it
burdened by cash used for debt service requirements and thus does not reflect
available funds for distributions, reinvestment or other discretionary uses.
There are material limitations to using these non-GAAP financial measures.
EBITDA and EBITDA margin, as we have defined them, may not be comparable to
similarly titled measures reported by other companies.
2024 2023 2022
Communications Segment
Operating income $ 27,095 $ 27,801 $ 26,736
Add: Depreciation and amortization expense 19,433 17,363 16,681
EBITDA $ 46,528 $ 45,164 $ 43,417
Operating income margin 23.0 % 23.6 % 22.8 %
EBITDA margin 39.5 % 38.3 % 37.1 %
Mobility
Operating income $ 26,314 $ 25,861 $ 23,812
Add: Depreciation and amortization expense 10,217 8,517 8,198
EBITDA $ 36,531 $ 34,378 $ 32,010
Operating income margin 30.9 % 30.8 % 29.1 %
EBITDA margin 42.8 % 40.9 % 39.1 %
Business Wireline
Operating income $ (88) $ 1,289 $ 2,290
Add: Depreciation and amortization expense 5,555 5,377 5,314
EBITDA $ 5,467 $ 6,666 $ 7,604
Operating income margin (0.5) % 6.2 % 10.2 %
EBITDA margin 29.1 % 31.9 % 33.7 %
Consumer Wireline
Operating income $ 869 $ 651 $ 634
Add: Depreciation and amortization expense 3,661 3,469 3,169
EBITDA $ 4,530 $ 4,120 $ 3,803
Operating income margin 6.4 % 4.9 % 5.0 %
EBITDA margin 33.4 % 31.3 % 29.8 %
Latin America Segment
Operating income $ 40 $ (141) $ (326)
Add: Depreciation and amortization expense 657 724 658
EBITDA $ 697 $ 583 $ 332
Operating income margin 0.9 % (3.6) % (10.4) %
EBITDA margin 16.5 % 14.8 % 10.6 %
35
AT&T Inc.
Dollars in millions except per share amounts
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risks primarily from changes in interest rates and
foreign currency exchange rates. These risks, along with other business risks,
impact our cost of capital. It is our policy to manage our debt structure and
foreign exchange exposure in order to manage capital costs, control financial
risks and maintain financial flexibility over the long term. In managing
market risks, we employ derivatives according to documented policies and
procedures, including interest rate swaps, interest rate locks, foreign
currency exchange contracts and combined interest rate foreign currency
contracts (cross-currency swaps). We do not use derivatives for trading or
speculative purposes. We do not foresee significant changes in the strategies
we use to manage market risk in the near future.
One of the most significant assumptions used in estimating our postretirement
benefit obligations is the assumed weighted-average discount rate, which is
the hypothetical rate at which the projected benefit obligations could be
effectively settled or paid out to participants. We determined our discount
rate based on a range of factors, including a yield curve composed of the
rates of return on several hundred high-quality, fixed income corporate bonds
available at the measurement date and corresponding to the related expected
durations of future cash outflows for the obligations. In recent years, the
discount rates have been increasingly volatile, and on average have been lower
than in historical periods. Lower discount rates used to measure our pension
and postretirement plans result in higher obligations. Future increases in
these rates could result in lower obligations, improved funded status and
actuarial gains.
Interest Rate Risk
The majority of our financial instruments are medium- and long-term fixed-rate
notes and debentures. Changes in interest rates can lead to significant
fluctuations in the fair value of these instruments. The principal amounts by
expected maturity, average interest rate and fair value of our liabilities
that are exposed to interest rate risk are described in Notes 11 and 12. In
managing interest expense, we control our mix of fixed- and floating-rate debt
through term loans, floating- rate notes, and interest rate swaps. We have
established interest rate risk limits that we closely monitor by measuring
interest rate sensitivities in our debt and interest rate derivatives
portfolios.
Our foreign-denominated long-term debt has been swapped from fixed-rate or
floating-rate foreign currencies to fixed-rate U.S. dollars at issuance
through cross-currency swaps, removing interest rate risk and foreign currency
exchange risk associated with the underlying interest and principal payments.
Likewise, periodically we enter into interest rate locks to partially hedge
the risk of increases in the benchmark interest rate during the period leading
up to the probable issuance of fixed-rate debt. We expect gains or losses on
our cross-currency swaps and interest rate locks to offset the losses and
gains in the financial instruments they hedge.
We had no interest rate swaps and no interest rate locks at December 31,
2024.
Foreign Exchange Risk
We principally use foreign exchange contracts to hedge costs and debt
denominated in foreign currencies. We are also exposed to foreign currency
exchange risk through our foreign affiliates and equity investments in foreign
companies.
Through cross-currency swaps, our foreign-denominated debt has been swapped
from fixed-rate or floating-rate foreign currencies to fixed-rate U.S. dollars
at issuance, removing interest rate and foreign currency exchange risk
associated with the underlying interest and principal payments. We expect
gains or losses in our cross-currency swaps to offset the gains and losses in
the financial instruments they hedge. We had cross-currency swaps with a
notional value of $34,884 and a fair value of $(4,076) outstanding at
December 31, 2024.
For the purpose of assessing specific risks, we use a sensitivity analysis to
determine the effects that market risk exposures may have on the fair value of
our financial instruments and results of operations. We had no foreign
exchange forward contracts at December 31, 2024.
36
AT&T Inc.
REPORT OF MANAGEMENT
The consolidated financial statements have been prepared in conformity with
U.S. generally accepted accounting principles. The integrity and objectivity
of the data in these financial statements, including estimates and judgments
relating to matters not concluded by year end, are the responsibility of
management, as is all other information included in the Annual Report, unless
otherwise indicated.
The financial statements of AT&T Inc. (AT&T) have been audited by
Ernst & Young LLP, Independent Registered Public Accounting Firm.
Management has made available to Ernst & Young LLP all of AT&T's
financial records and related data, as well as the minutes of stockholders'
and directors' meetings. Furthermore, management believes that all
representations made to Ernst & Young LLP during its audit were valid and
appropriate.
Management maintains disclosure controls and procedures that are designed to
ensure that information required to be disclosed by AT&T is recorded,
processed, summarized, accumulated and communicated to its management,
including its principal executive and principal financial officers, to allow
timely decisions regarding required disclosure, and reported within the time
periods specified by the Securities and Exchange Commission's rules and forms.
Management also seeks to ensure the objectivity and integrity of its financial
data by the careful selection of its managers, by organizational arrangements
that provide an appropriate division of responsibility and by communication
programs aimed at ensuring that its policies, standards and managerial
authorities are understood throughout the organization.
The Audit Committee of the Board of Directors meets periodically with
management, the internal auditors and the independent auditors to review the
manner in which they are performing their respective responsibilities and to
discuss auditing, internal accounting controls and financial reporting
matters. Both the internal auditors and the independent auditors periodically
meet alone with the Audit Committee and have access to the Audit Committee at
any time.
Assessment of Internal Control
The management of AT&T is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rule
13a-15(f) or 15d-15(f) under the Securities Exchange Act of 1934. AT&T's
internal control system was designed to provide reasonable assurance to the
company's management and Board of Directors regarding the preparation and fair
presentation of published financial statements.
AT&T management assessed the effectiveness of the company's internal
control over financial reporting as of December 31, 2024. In making this
assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control -
Integrated Framework (2013 framework). Based on its assessment, AT&T
management believes that, as of December 31, 2024, the company's internal
control over financial reporting is effective based on those criteria.
Ernst & Young LLP, the independent registered public accounting firm that
audited the financial statements included in this Annual Report, has issued an
attestation report on the company's internal control over financial reporting.
/s/John T. Stankey /s/Pascal Desroches
John T. Stankey Pascal Desroches
Chief Executive Officer Senior Executive Vice President
and President
and Chief Financial Officer
37
AT&T Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of AT&T Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AT&T Inc.
(the Company) as of December 31, 2024 and 2023, the related consolidated
statements of income, comprehensive income, cash flows and changes in
stockholders' equity for each of the three years in the period ended December
31, 2024, and the related notes and financial statement schedule listed in the
Index at Item 15(a) (collectively referred to as the "consolidated financial
statements"). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company at
December 31, 2024 and 2023, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2024, in
conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the Company's internal
control over financial reporting as of December 31, 2024, based on criteria
established in Internal Control-Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (2013 framework) and
our report dated February 12, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on the Company's financial
statements based on our audits. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company
in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the
current period audit of the financial statements that were communicated or
required to be communicated to the audit committee and that: (1) relate to
accounts or disclosures that are material to the financial statements and (2)
involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion
on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on
the critical audit matters or on the accounts or disclosures to which they
relate.
Discount rates used in determining pension and postretirement benefit
obligations
Description of the Matter At December 31, 2024, the Company's defined benefit pension obligation was
$30,944 million and exceeded the fair value of pension plan assets of $27,919
million, resulting in an unfunded benefit obligation of $3,025 million.
Additionally, at December 31, 2024, the Company's postretirement benefit
obligation was $6,339 million and exceeded the fair value of postretirement
plan assets of $1,144 million, resulting in an unfunded benefit obligation of
$5,195 million. As explained in Note 14 to the consolidated financial
statements, the Company updates the assumptions used to measure the defined
benefit pension and postretirement benefit obligations, including discount
rates, at December 31 or upon a remeasurement event. The Company determines
the discount rates used to measure the obligations based on the development of
a yield curve using high-quality corporate bonds selected to yield cash flows
that correspond to the expected timing and amount of the expected future
benefit payments.
38
AT&T Inc.
Auditing the defined benefit pension and postretirement benefit obligations
was complex due to the judgmental nature of the actuarial assumptions made by
management, primarily the discount rates, used in the Company's measurement
process. The discount rates have a significant effect on the measurement of
the defined benefit pension and postretirement benefit obligations, and
auditing the discount rates was complex because it required an evaluation of
the credit quality of the corporate bonds used to develop the discount rates
and the correlation of those bonds' cash inflows to the timing and amount of
future expected benefit payments.
How We We obtained an understanding, evaluated the design and tested the operating
Addressed the Matter in Our effectiveness of certain controls over management's review of the
Audit determination of the discount rates used in the defined benefit pension and
postretirement benefit obligations calculations.
To test the determination of the discount rates used in the calculation of the
defined benefit pension and postretirement benefit obligations, we performed
audit procedures that focused on evaluating, with the assistance of our
actuarial specialists, the determination of the discount rates, among other
procedures. For example, we evaluated the selected yield curve used to
determine the discount rates applied in measuring the defined benefit pension
and postretirement benefit obligations. As part of this assessment, we
considered the credit quality of the corporate bonds that comprised the yield
curve and compared the timing and amount of cash flows at maturity with the
expected amounts and duration of the related benefit payments.
Evaluation of goodwill for impairment
Description of the Matter At December 31, 2024, the Company's goodwill balance was $63,432 million. As
discussed in Note 1 to the consolidated financial statements, reporting unit
goodwill is tested at least annually for impairment. Estimating fair value in
connection with the impairment evaluation involves the utilization of
discounted cash flow and market multiple approaches.
Auditing management's annual goodwill impairment test for the Consumer
Wireline reporting unit was complex because the estimation of fair value
involves subjective management assumptions, such as the projected terminal
growth rate, projected long-term EBITDA margin, and weighted average cost of
capital, and complex valuation methodologies, such as the discounted cash flow
and market multiple approaches. Assumptions used in these valuation models are
forward-looking, and changes in these assumptions can have a material effect
on the determination of fair value.
How We Addressed the We obtained an understanding, evaluated the design and tested the operating
Matter in Our effectiveness of certain controls over the Company's impairment evaluation
Audit processes. Our procedures included testing controls over management's review
of the valuation models and its determination of the significant assumptions
described above.
Our audit procedures to test management's impairment evaluations included,
among others, assessing the valuation methodologies and significant
assumptions discussed above and the underlying data used to develop such
assumptions. For example, we compared the significant assumptions to current
industry, market and economic trends, and other guideline companies in the
same industry. Where appropriate, we evaluated whether changes to the
Company's business and other factors would affect the significant assumptions.
We also assessed the historical accuracy of management's estimates and
performed independent sensitivity analyses. We involved our valuation
specialists to assist us in evaluating the methodologies and auditing the
assumptions used to calculate the estimated fair value of the Consumer
Wireline reporting unit.
/s/ Ernst & Young LLP
We have served as the Company's auditor since 1999.
Dallas, Texas
February 12, 2025
39
AT&T Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of AT&T Inc.
Opinion on Internal Control Over Financial Reporting
We have audited AT&T Inc.'s internal control over financial reporting as
of December 31, 2024, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
In our opinion, AT&T Inc. (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December
31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated
financial statements of the Company and our report dated February 12, 2025
expressed an unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness
of internal control over financial reporting included in the accompanying
Report of Management. Our responsibility is to express an opinion on the
Company's internal control over financial reporting based on our audit. We are
a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those
standards require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial reporting
was maintained in all material respects.
Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides
a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company's internal
control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Dallas, Texas
February 12, 2025
40
AT&T Inc.
Dollars in millions except per share amounts
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Income
2024 2023 2022
Operating Revenues
Service $ 100,135 $ 99,649 $ 97,831
Equipment 22,201 22,779 22,910
Total operating revenues 122,336 122,428 120,741
Operating Expenses
Cost of revenues
Equipment 22,249 23,136 24,009
Other cost of revenues (exclusive of depreciation 26,972 26,987 26,839
and amortization shown separately below)
Selling, general and administrative 28,411 28,874 28,961
Asset impairments and abandonments and restructuring 5,075 1,193 27,498
Depreciation and amortization 20,580 18,777 18,021
Total operating expenses 103,287 98,967 125,328
Operating Income (Loss) 19,049 23,461 (4,587)
Other Income (Expense)
Interest expense (6,759) (6,704) (6,108)
Equity in net income of affiliates 1,989 1,675 1,791
Other income (expense) - net 2,419 1,416 5,810
Total other income (expense) (2,351) (3,613) 1,493
Income (Loss) from Continuing Operations Before Income Taxes 16,698 19,848 (3,094)
Income tax expense on continuing operations 4,445 4,225 3,780
Income (Loss) from Continuing Operations 12,253 15,623 (6,874)
Loss from discontinued operations, net of tax - - (181)
Net Income (Loss) 12,253 15,623 (7,055)
Less: Net Income Attributable to Noncontrolling Interest (1,305) (1,223) (1,469)
Net Income (Loss) Attributable to AT&T $ 10,948 $ 14,400 $ (8,524)
Less: Preferred Stock Dividends (202) (208) (203)
Net Income (Loss) Attributable to Common Stock $ 10,746 $ 14,192 $ (8,727)
Basic Earnings (Loss) Per Share from continuing operations $ 1.49 $ 1.97 $ (1.10)
Basic Loss Per Share from discontinued operations $ - $ - $ (0.03)
Basic Earnings (Loss) Per Share Attributable to Common Stock $ 1.49 $ 1.97 $ (1.13)
Diluted Earnings (Loss) Per Share from continuing operations $ 1.49 $ 1.97 $ (1.10)
Diluted Loss Per Share from discontinued operations $ - $ - $ (0.03)
Diluted Earnings (Loss) Per Share Attributable to Common Stock $ 1.49 $ 1.97 $ (1.13)
The accompanying notes are an integral part of the consolidated financial
statements.
41
AT&T Inc.
Dollars in millions except per share amounts
Consolidated Statements of Comprehensive Income
2024 2023 2022
Net income (loss) $ 12,253 $ 15,623 $ (7,055)
Other comprehensive income (loss), net of tax:
Foreign Currency:
Translation adjustment, net of taxes of $(175), $143 and $90 (545) 463 346
Reclassification adjustment included in net income (loss), net of taxes of 127 - -
$(14), $0 and $0
Distributions of WarnerMedia, net of taxes of $0, $0 and $(38) - - (182)
Securities:
Net unrealized gains (losses), net of taxes of $(5), $8 and $(49) (19) 22 (143)
Reclassification adjustment included in net income (loss), net of taxes of 30 11 8
$10, $4
and $3
Derivative Instruments:
Net unrealized gains (losses), net of taxes of $121, $228 and $(183) 380 922 (648)
Reclassification adjustment included in net income (loss), net of taxes of 45 47 96
$14, $12
and $25
Distributions of WarnerMedia, net of taxes of $0, $0 and $(12) - - (24)
Defined benefit postretirement plans:
Net prior service (cost) credit arising during period, net of taxes of $0, $10 - 32 1,787
and $583
Amortization of net prior service credit included in net income (loss), net of (1,523) (1,963) (2,028)
taxes of
$(492), $(642) and $(663)
Distributions of WarnerMedia, net of taxes of $0, $0 and $5 - - 25
Other comprehensive income (loss) (1,505) (466) (763)
Total comprehensive income (loss) 10,748 15,157 (7,818)
Less: Total comprehensive income attributable to noncontrolling interest (1,305) (1,223) (1,469)
Total Comprehensive Income (Loss) Attributable to AT&T $ 9,443 $ 13,934 $ (9,287)
The accompanying notes are an integral part of the consolidated financial
statements.
42
AT&T Inc.
Dollars in millions except per share amounts
Consolidated Balance Sheets
December 31,
2024 2023
Assets
Current Assets
Cash and cash equivalents $ 3,298 $ 6,722
Accounts receivable - net of related allowance for credit loss of $375 and 9,638 10,289
$499
Inventories 2,270 2,177
Prepaid and other current assets 15,962 17,270
Total current assets 31,168 36,458
Property, Plant and Equipment - Net 128,871 128,489
Goodwill - Net 63,432 67,854
Licenses - Net 127,035 127,219
Other Intangible Assets - Net 5,255 5,283
Investments in and Advances to Equity Affiliates 295 1,251
Operating Lease Right-Of-Use Assets 20,909 20,905
Other Assets 17,830 19,601
Total Assets $ 394,795 $ 407,060
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year $ 5,089 $ 9,477
Accounts payable and accrued liabilities 35,657 35,852
Advanced billings and customer deposits 4,099 3,778
Dividends payable 2,027 2,020
Total current liabilities 46,872 51,127
Long-Term Debt 118,443 127,854
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 58,939 58,666
Postemployment benefit obligation 9,025 8,734
Operating lease liabilities 17,391 17,568
Other noncurrent liabilities 23,900 23,696
Total deferred credits and other noncurrent liabilities 109,255 108,664
Redeemable Noncontrolling Interest 1,980 1,973
Stockholders' Equity
Preferred stock ($1 par value, 10,000,000 authorized at December 31, 2024
and December 31, 2023):
Series A (48,000 issued and outstanding at December 31, 2024 and - -
December 31, 2023)
Series B (20,000 issued and outstanding at December 31, 2024 and - -
December 31, 2023)
Series C (70,000 issued and outstanding at December 31, 2024 and - -
December 31, 2023)
Common stock ($1 par value, 14,000,000,000 authorized at December 31, 2024 7,621 7,621
and
December 31, 2023: issued 7,620,748,598 at December 31, 2024 and
December 31, 2023)
Additional paid-in capital 109,108 114,519
Retained earnings (deficit) 1,871 (5,015)
Treasury stock (444,853,148 at December 31, 2024 and 470,685,237 at (15,023) (16,128)
December 31, 2023, at cost)
Accumulated other comprehensive income 795 2,300
Noncontrolling interest 13,873 14,145
Total stockholders' equity 118,245 117,442
Total Liabilities and Stockholders' Equity $ 394,795 $ 407,060
The accompanying notes are an integral part of the consolidated financial
statements.
43
AT&T Inc.
Dollars in millions except per share amounts
Consolidated Statements of Cash Flows
2024 2023 2022
Operating Activities
Income (loss) from continuing operations $ 12,253 $ 15,623 $ (6,874)
Adjustments to reconcile income (loss) from continuing operations to net cash
provided by operating activities from continuing operations:
Depreciation and amortization 20,580 18,777 18,021
Provision for uncollectible accounts 1,969 1,969 1,865
Deferred income tax expense 1,570 3,037 2,975
Net (gain) loss on investments, net of impairments 80 441 381
Pension and postretirement benefit expense (credit) (1,883) (2,552) (3,237)
Actuarial and settlement (gain) loss on pension and postretirement benefits - 56 1,594 (1,999)
net
Asset impairments and abandonments and restructuring 5,075 1,193 27,498
Changes in operating assets and liabilities:
Receivables 123 82 727
Inventories, prepaid and other current assets (383) (642) (674)
Accounts payable and other accrued liabilities (810) (1,764) (1,109)
Equipment installment receivables and related sales (1,846) (133) 154
Deferred customer contract acquisition and fulfillment costs 497 1 (947)
Postretirement claims and contributions (166) (735) (823)
Other - net 1,656 1,423 (146)
Total adjustments 26,518 22,691 42,686
Net Cash Provided by Operating Activities from Continuing Operations 38,771 38,314 35,812
Investing Activities
Capital expenditures (20,263) (17,853) (19,626)
Acquisitions, net of cash acquired (380) (2,942) (10,200)
Dispositions 75 72 199
Distributions from DIRECTV in excess of cumulative equity in earnings 928 2,049 2,649
(Purchases), sales and settlements of securities and investments - net 2,575 (902) 82
Other - net (425) (84) (3)
Net Cash Used in Investing Activities from Continuing Operations (17,490) (19,660) (26,899)
Financing Activities
Net change in short-term borrowings with original maturities of three months - (914) (519)
or less
Issuance of other short-term borrowings 491 5,406 3,955
Repayment of other short-term borrowings (2,487) (3,415) (18,345)
Issuance of long-term debt 19 10,004 2,979
Repayment of long-term debt (10,297) (12,044) (25,118)
Note payable to DIRECTV, net of payments - (130) (1,211)
Payment of vendor financing (1,792) (5,742) (4,697)
Purchase of treasury stock (215) (194) (890)
Issuance of treasury stock 15 3 28
Issuance of preferred interests in subsidiary - 7,151 -
Redemption of preferred interests in subsidiary - (5,333) (2,665)
Dividends paid (8,208) (8,136) (9,859)
Other - net (2,234) (2,270) (3,222)
Net Cash Used in Financing Activities from Continuing Operations (24,708) (15,614) (59,564)
Net increase (decrease) in cash and cash equivalents and restricted cash from (3,427) 3,040 (50,651)
continuing operations
Cash flows from Discontinued Operations:
Cash used in operating activities - - (3,789)
Cash provided by investing activities - - 1,094
Cash provided by financing activities - - 35,823
Net increase in cash and cash equivalents and restricted cash from - - 33,128
discontinued operations
Net increase (decrease) in cash and cash equivalents and restricted cash (3,427) 3,040 (17,523)
Cash and cash equivalents and restricted cash beginning of year 6,833 3,793 21,316
Cash and Cash Equivalents and Restricted Cash End of Year $ 3,406 $ 6,833 $ 3,793
The accompanying notes are an integral part of the consolidated financial
statements.
44
AT&T Inc.
Dollars and shares in millions except per share amounts
Consolidated Statements of Changes in Stockholders' Equity
2024 2023 2022
Shares Amount Shares Amount Shares Amount
Preferred Stock - Series A
Balance at beginning of year - $ - - $ - - $ -
Balance at end of year - $ - - $ - - $ -
Preferred Stock - Series B
Balance at beginning of year - $ - - $ - - $ -
Balance at end of year - $ - - $ - - $ -
Preferred Stock - Series C
Balance at beginning of year - $ - - $ - - $ -
Balance at end of year - $ - - $ - - $ -
Common Stock
Balance at beginning of year 7,621 $ 7,621 7,621 $ 7,621 7,621 $ 7,621
Balance at end of year 7,621 $ 7,621 7,621 $ 7,621 7,621 $ 7,621
Additional Paid-In Capital
Balance at beginning of year $ 114,519 $ 123,610 $ 130,112
Distribution of WarnerMedia - - (6,832)
Preferred stock dividends (134) (205) -
Common stock dividends ($1.11, $1.11 (4,020) (7,991) -
and $1.11 per share in 2024, 2023 and 2022)
Issuance of treasury stock (516) (379) (171)
Share-based payments (184) (109) (162)
Redemption or reclassification of (557) (407) 663
interests held by noncontrolling owners
Balance at end of year $ 109,108 $ 114,519 $ 123,610
Retained Earnings (Deficit)
Balance at beginning of year $ (5,015) $ (19,415) $ 42,350
Net income (loss) attributable to AT&T 10,948 14,400 (8,524)
Distribution of WarnerMedia - - (45,041)
Preferred stock dividends (71) - (207)
Common stock dividends ($1.11, $1.11 (3,991) - (7,993)
and $1.11 per share in 2024, 2023 and 2022)
Balance at end of year $ 1,871 $ (5,015) $ (19,415)
The accompanying notes are an integral part of the consolidated financial
statements.
45
AT&T Inc.
Dollars and shares in millions except per share amounts
Consolidated Statements of Changes in Stockholders' Equity - continued
2024 2023 2022
Shares Amount Shares Amount Shares Amount
Treasury Stock
Balance at beginning of year (471) $ (16,128) (493) $ (17,082) (480) $ (17,280)
Repurchase and acquisition of (12) (215) (10) (194) (44) (890)
common stock
Issuance of treasury stock 38 1,320 32 1,148 31 1,088
Balance at end of year (445) $ (15,023) (471) $ (16,128) (493) $ (17,082)
Accumulated Other Comprehensive Income
Attributable to AT&T, net of tax
Balance at beginning of year $ 2,300 $ 2,766 $ 3,529
Other comprehensive income (loss) (1,505) (466) (763)
attributable to AT&T
Balance at end of year $ 795 $ 2,300 $ 2,766
Noncontrolling Interest1
Balance at beginning of year $ 14,145 $ 8,957 $ 17,523
Net income attributable to 1,163 1,146 1,469
noncontrolling interest
Issuance and acquisition (disposition) of (29) 5,180 (21)
noncontrolling owners
Redemption of noncontrolling interest (76) (53) (2,665)
Reclassification of noncontrolling - - (5,997)
interest
Distributions (1,330) (1,085) (1,352)
Balance at end of year $ 13,873 $ 14,145 $ 8,957
Total Stockholders' Equity at $ 117,442 $ 106,457 $ 183,855
beginning of year
Total Stockholders' Equity at $ 118,245 $ 117,442 $ 106,457
end of year
1 Excludes redeemable noncontrolling interest.
The accompanying notes are an integral part of the consolidated financial
statements.
46
AT&T Inc.
Dollars in millions except per share amounts
Notes to Consolidated Financial Statements
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation Throughout this document, AT&T Inc. is referred to
as "AT&T," "we" 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.
On April 8, 2022, we completed the separation of our WarnerMedia business,
which represented substantially all of our WarnerMedia segment, in a Reverse
Morris Trust transaction, under which Magallanes, Inc. (Spinco), a formerly
wholly-owned subsidiary of AT&T that held the WarnerMedia business, was
distributed to AT&T stockholders via a pro rata dividend, followed by the
combination of Spinco with a subsidiary of Discovery, Inc. (Discovery), which
was renamed Warner Bros. Discovery, Inc. (WBD). (See Note 6)
Upon the separation and distribution, 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 previously did not individually
meet the criteria due to materiality, and have determined discontinued
operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic Ltd.
(Playdemic). These businesses are reflected in the accompanying financial
statements as discontinued operations, including for periods prior to the
consummation of the WarnerMedia/Discovery Transaction. (See Notes 6 and 24)
All significant intercompany transactions are eliminated in the consolidation
process. Investments in subsidiaries and partnerships which we do not control
but have significant influence are accounted for under the equity method.
Earnings from certain investments accounted for using the equity method are
included in our results on a one quarter lag. We also record our proportionate
share of our equity method investees' other comprehensive income (OCI) items,
including translation adjustments. We treat distributions received from equity
method investees as returns on investment and classify them as cash flows from
operating activities until those distributions exceed our cumulative equity in
the earnings of that investment. We treat the excess amount as a return of
investment and classify it as cash flows from investing activities. In the
event we receive dividends in excess of the carrying amount of the investment,
and we have no obligation to provide financial support to the equity method
investee, we treat those dividends as returns on investment and classify them
as cash flows from operating activities.
The preparation of financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates
and assumptions, including other 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.
Moreover, unfavorable changes in market conditions, including interest rates,
could adversely impact those estimates and result in asset impairments.
Certain prior-period amounts have been conformed to the current period's
presentation. Unless otherwise noted, the information in Notes 1 through 23
refer only to our continuing operations and do not include discussion of
balances or activity of WarnerMedia, Vrio, Xandr and Playdemic, which are part
of discontinued operations.
Adopted and New Accounting Standards
Segment Reporting In November 2023, the Financial Accounting Standards Board
(FASB) issued ASU No. 2023-07, "Segment Reporting (Topic 280): Improvements to
Reportable Segment Disclosures" (ASU 2023-07). Beginning with our 2024 annual
reporting, we adopted, through retrospective application, ASU No. 2023-07,
which requires that a public entity disclose, on an interim and annual basis,
significant segment expense categories and amounts that are regularly provided
to its chief operating decision maker (CODM) and included in each reported
measure of segment profit or loss. An entity must also disclose, by reportable
segment, the amount and composition of other expenses. The standard requires
an entity disclose the title and position of its CODM and explain how the CODM
uses these reported measures in assessing segment performance and determining
how to allocate resources.
Convertible Instruments Beginning with 2022 interim reporting, we adopted,
through retrospective application, ASU No. 2020-06, "Debt - Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging -
Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible
Instruments and Contracts in an Entity's Own Equity" (ASU 2020-06). ASU
2020-06 requires that instruments which may be settled in cash or stock are
presumed settled in stock in calculating diluted earnings per share. Prior to
the April 2023 repurchase, settlement of our Series A Cumulative Perpetual
Membership Interests in AT&T Mobility II LLC (Mobility preferred
interests) could have resulted in additional dilutive impact, the magnitude of
which was influenced by the fair value of the Mobility preferred interests and
the average AT&T common stock price during the reporting period, which
varied from period-to-period (see Note 16).
47
AT&T Inc.
Dollars in millions except per share amounts
Income Taxes In December 2023, the FASB issued ASU No. 2023-09, "Income Taxes
(Topic 740): Improvements to Income Tax Disclosures" (ASU 2023-09), which
requires that a public entity disclose specific categories in its annual
income tax rate reconciliation table and provide additional qualitative
information for reconciling items representing at least 5% of pre-tax income
or loss from continuing operations, using the federal statutory tax rate. The
standard also requires an annual breakdown of income taxes paid by
jurisdiction (i.e., federal, state and foreign), with further disaggregation
by jurisdictions representing at least 5% of total income taxes paid. ASU
2023-09 is effective for annual periods beginning after December 15, 2024,
with prospective application.
Disaggregation of Income Statement Expenses In November 2024, the FASB issued
ASU No. 2024-03, "Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income
Statement Expenses" (ASU 2024-03), which requires that a public entity
disclose the amounts of (a) purchases of inventory, (b) employee compensation,
(c) depreciation and (d) intangible asset amortization included in each
relevant expense caption presented on the face of the income statement. The
standard also requires an entity to disclose a qualitative description of the
amounts remaining in relevant expense captions that are not separately
disaggregated quantitatively as well as disclose the total amount of selling
expenses and, annually, the entity's definition of selling expenses. ASU
2024-03 will be effective for annual periods beginning after December 15,
2026, with either retrospective or prospective application. The standard
allows for early adoption of these requirements; we are currently evaluating
the disclosure impacts of our adoption.
Accounting Policies
Income Taxes We record deferred income taxes for temporary differences between
the carrying amounts of assets and liabilities for financial reporting
purposes and the computed tax basis of those assets and liabilities. We record
valuation allowances against the deferred tax assets (included, together with
our deferred income tax assets, as part of our reportable net deferred income
tax liabilities on our consolidated balance sheets), for which the realization
is uncertain. We review these items regularly in light of changes in federal,
state and foreign tax laws and changes in our business.
Cash and Cash Equivalents Cash and cash equivalents include all highly liquid
investments with original maturities of three months or less. The carrying
amounts approximate fair value. At December 31, 2024, we held $2,149 in cash
and $1,149 in money market funds and other cash equivalents. Of our total cash
and cash equivalents, $1,268 resided in foreign jurisdictions, some of which
is subject to restrictions on repatriation.
Allowance for Credit Losses We record expense to maintain an allowance for
credit losses for estimated losses that result from the failure or inability
of our customers to make required payments deemed collectible from the
customer when the service was provided or product was delivered. When
determining the allowances for trade receivables and loans, we consider the
probability of recoverability of accounts receivable based on past experience,
taking into account current collection trends and general economic factors,
including bankruptcy rates. We also consider future economic trends to
estimate expected credit losses over the lifetime of the asset. Credit risks
are assessed based on historical write-offs, net of recoveries, as well as an
analysis of the aged accounts receivable balances with allowances generally
increasing as the receivable ages. Accounts receivable may be fully reserved
for when specific collection issues are known to exist, such as catastrophes
or pending bankruptcies.
Inventories Inventories primarily consist of wireless devices and accessories
and are valued at the lower of cost or net realizable value.
Property, Plant and Equipment Property, plant and equipment is stated at cost,
except for assets acquired through business combinations, which are initially
recorded at fair value. The cost of additions and substantial improvements to
property, plant and equipment is capitalized, and includes internal
compensation costs for these projects. The cost of maintenance and repairs of
property, plant and equipment is charged to operating expenses. Property,
plant and equipment costs are depreciated using straight-line methods over
their estimated economic lives. Certain subsidiaries follow composite group
depreciation methodology. Accordingly, when a portion of their depreciable
property, plant and equipment is retired in the ordinary course of business,
the gross book value is reclassified to accumulated depreciation, and no gain
or loss is recognized on the disposition of these assets.
Property, plant and equipment is reviewed for recoverability whenever events
or changes in circumstances indicate that the carrying amount of an asset
group may not be recoverable. We recognize an impairment loss when the
carrying amount of a long-lived asset is not recoverable. The carrying amount
of a long-lived asset is not recoverable if it exceeds the sum of the
undiscounted cash flows expected to result from the use and eventual
disposition of the asset. (See Note 7)
The liability for the fair value of an asset retirement obligation is recorded
in the period in which it is incurred if a reasonable estimate of fair value
can be made. In periods subsequent to initial measurement, we recognize
period-to-period changes in the
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AT&T Inc.
Dollars in millions except per share amounts
liability resulting from the passage of time and revisions to either the
timing or the amount of the original estimate. The increase in the carrying
value of the associated long-lived asset is depreciated over the corresponding
estimated economic life.
Software Costs We capitalize certain costs incurred in connection with
developing or obtaining internal-use software. Capitalized software costs are
included in "Property, Plant and Equipment - Net" on our consolidated balance
sheets.
We amortize our capitalized software costs over a three-year to seven-year
period, reflecting the estimated period during which these assets will remain
in service.
Goodwill and Other Intangible Assets We have the following major classes of
intangible assets: goodwill; licenses, which include Federal Communications
Commission (FCC) and other wireless licenses; customer lists and
relationships; and trademarks, trade names and various other finite-lived
intangible assets (see Note 9).
Goodwill represents the excess of consideration paid over the fair value of
identifiable net assets acquired in business combinations.
Wireless licenses provide us with the exclusive right to utilize certain radio
frequency spectrum to provide wireless communications services. While wireless
licenses are issued for a fixed period of time (generally ten years), renewals
of domestic wireless licenses have occurred routinely and at nominal cost. We
have determined that there are currently no legal, regulatory, contractual,
competitive, economic or other factors that limit the useful lives of our FCC
wireless licenses. Cash paid, including spectrum deposits (net of refunds),
capitalized interest, and any payments for incentive and relocation costs are
included in "Acquisitions, net of cash acquired" in our consolidated
statements of cash flows. Interest is capitalized until the spectrum is ready
for its intended use.
We amortize our wireless licenses in Mexico over their average remaining
economic life of 25 years.
We acquired the rights to the AT&T and other trade names in previous
acquisitions, classifying certain of those trade names as indefinite-lived. We
have the effective ability to retain these exclusive rights permanently at a
nominal cost.
Goodwill, FCC wireless licenses and other indefinite-lived intangible assets
are not amortized but are tested at least annually for impairment (see Note
9). The testing is performed on the value as of October 1 each year and
compares the book values of the assets to their fair values. Goodwill is
tested by comparing the carrying amount of each reporting unit, deemed to be
our principal operating segments or one level below them, to the fair value
using both discounted cash flow as well as market multiple approaches. FCC
wireless licenses are tested on an aggregate basis, consistent with our use of
the licenses on a national scope, using a discounted cash flow approach. Trade
names are tested by comparing their book values to their fair values
calculated using a discounted cash flow approach on a presumed royalty rate
derived from the revenues related to each brand name.
Intangible assets that have finite useful lives are amortized over their
estimated economic lives (see Note 9). Customer lists and relationships are
amortized using primarily the sum-of-the-months-digits method of amortization
over the period in which those relationships are expected to contribute to our
future cash flows. Finite-lived trademarks and trade names are amortized using
the straight-line method over the estimated useful life of the assets. The
remaining finite-lived intangible assets are generally amortized using the
straight-line method. These assets, along with other long-lived assets, are
reviewed for recoverability whenever events or changes in circumstances
indicate that the carrying amount of an asset group may not be recoverable.
Advertising Costs We expense advertising costs for products and services or
for promoting our corporate image as incurred (see Note 23).
Foreign Currency Translation Our foreign subsidiaries and foreign investments
generally report their earnings in their local currencies. We translate their
foreign assets and liabilities at exchange rates in effect at the balance
sheet dates. We translate their revenues and expenses using average rates
during the year. The resulting foreign currency translation adjustments are
recorded as a separate component of accumulated OCI on our consolidated
balance sheets (see Note 3).
Pension and Other Postretirement Benefits See Note 14 for a comprehensive
discussion of our pension and postretirement benefits, including a discussion
of the actuarial assumptions, our policy for recognizing the associated gains
and losses and our method used to estimate service and interest cost
components.
49
AT&T Inc.
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:
Year Ended December 31, 2024 2023 2022
Numerators
Numerator for basic earnings per share:
Income (loss) from continuing operations, net of tax $ 12,253 $ 15,623 $ (6,874)
Net income from continuing operations attributable to (1,305) (1,223) (1,469)
noncontrolling interests
Preferred Stock Dividends (202) (208) (203)
Income (loss) from continuing operations attributable to 10,746 14,192 (8,546)
common stock
Adjustment to carrying value of noncontrolling interest - - 663
Numerator for basic earnings per share from continuing operations1 10,746 14,192 (7,883)
Loss from discontinued operations attributable to common stock - - (181)
Numerator for basic earnings per share1 $ 10,746 $ 14,192 $ (8,064)
Dilutive potential common shares:
Mobility preferred interests2 - 72 526
Share-based payment2 - 13 17
Numerator for diluted earnings per share $ 10,746 $ 14,277 $ (7,521)
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding 7,199 7,181 7,166
Dilutive potential common shares:
Mobility preferred interests (in shares) - 71 378
Share-based payment (in shares) 5 6 43
Denominator for diluted earnings per share2 7,204 7,258 7,587
1For 2022, in the calculation of basic earnings per share, income (loss)
attributable to common stock for continuing operations and total company has
been increased by $663 from adjustment to carrying value of noncontrolling
interest. (See Note 16)
2For 2022, dilutive potential common shares are not included in the
computation of diluted earnings per share because their effect is antidilutive
as a result of the net loss.
On April 5, 2023, we repurchased all of our Mobility preferred interests (see
Note 16). For periods prior to repurchase, under ASU 2020-06, the ability to
settle the Mobility preferred interests in stock was reflected in our diluted
earnings per share calculation (see Note 1).
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AT&T Inc.
Dollars in millions except per share amounts
NOTE 3. OTHER COMPREHENSIVE INCOME
Changes in the balances of each component included in accumulated OCI are
presented below. All amounts are net of tax and exclude noncontrolling
interest.
Foreign Net Unrealized Net Unrealized Defined Benefit Accumulated Other
Currency
Postretirement
Comprehensive
Translation Gains (Losses) on Securities Gains (Losses) on Derivative Instruments
Plans
Income
Adjustment
Balance as of December 31, 2021 $ (1,964) $ 45 $ (1,422) $ 6,870 $ 3,529
Other comprehensive income 346 (143) (648) 1,787 1,342
(loss) before reclassifications
Amounts reclassified from - 1 8 1 96 2 (2,028) 3 (1,924)
accumulated OCI
Distribution of WarnerMedia (182) - (24) 25 (181)
Net other comprehensive 164 (135) (576) (216) (763)
income (loss)
Balance as of December 31, 2022 (1,800) (90) (1,998) 6,654 2,766
Other comprehensive income 463 22 922 32 1,439
(loss) before reclassifications
Amounts reclassified from - 1 11 1 47 2 (1,963) 3 (1,905)
accumulated OCI
Net other comprehensive 463 33 969 (1,931) (466)
income (loss)
Balance as of December 31, 2023 (1,337) (57) (1,029) 4,723 2,300
Other comprehensive income (545) (19) 380 - (184)
(loss) before reclassifications
Amounts reclassified from 127 1 30 1 45 2 (1,523) 3 (1,321)
accumulated OCI
Net other comprehensive (418) 11 425 (1,523) (1,505)
income (loss)
Balance as of December 31, 2024 $ (1,755) $ (46) $ (604) $ 3,200 $ 795
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 12).
3The amortization of prior service credits associated with postretirement
benefits is included in "Other income (expense) - net" in the consolidated
statements of income (see Note 14).
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 two reportable segments: Communications and Latin
America.
Our chief operating decision maker (CODM) is our 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 at a segment and business unit level, with
Communications and Latin America segments primarily evaluated on a direct cost
basis and comprised of equipment, compensation, network and technology, sales,
advertising and other costs.
Additionally, business unit expenses within the Communications segment include
direct and shared costs. Direct costs are incurred in support of products and
services offered by the business units, such as equipment costs (predominantly
wireless devices), network access, rents, leases, sales support, customer
provisioning and commission expenses. Shared costs amongst the business units
generally include information technology, network engineering and construction
costs, advertising and other general and administrative expense.
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AT&T Inc.
Dollars in millions except per share amounts
The Communications segment provides wireless and wireline telecom and
broadband services to consumers located in the United States and businesses
globally. Our business strategies reflect integrated product offerings that
cut across product lines and utilize shared assets. This segment contains the
following business units:
•Mobility provides nationwide wireless service and equipment.
•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 our fixed wireless access product
(AT&T Internet Air or "AIA") that provides internet services delivered
over our 5G wireless network, to residential customers in select locations.
Consumer Wireline also provides legacy telephony voice communication services.
The Latin America segment provides wireless service and equipment in Mexico.
Corporate and Other reconciles our segment results to consolidated operating
income and income before income taxes.
Corporate includes:
•DTV-related retained costs, which are costs previously allocated to the
Video business that were retained after the transaction, net of reimbursements
from DIRECTV under transition service agreements.
•Parent administration support, which includes costs borne by AT&T where
the business units do not influence decision making.
•Securitization fees associated with our sales of receivables (see Note 17).
•Value portfolio, which are businesses no longer integral to our operations
or which we no longer actively market.
Other items consist of:
•Certain significant items, which includes items associated with the merger
and integration of acquired or divested businesses, including amortization of
intangible assets, employee separation charges associated with voluntary
and/or strategic offers, asset impairments and abandonments and restructuring,
and other items for which the segments are not being evaluated.
"Interest expense" and "Other income (expense) - net" are managed only on a
total company basis and are, accordingly, reflected only in consolidated
results.
For the year ended December 31, 2024
Revenues Operations Depreciation Operating
and Support
Income
Expenses and
(Loss)
Amortization
Communications
Mobility $ 85,255 $ 48,724 $ 10,217 $ 26,314
Business Wireline 18,819 13,352 5,555 (88)
Consumer Wireline 13,578 9,048 3,661 869
Total Communications 117,652 71,124 19,433 27,095
Latin America - Mexico 4,232 3,535 657 40
Segment Total 121,884 74,659 20,090 27,135
Corporate and Other
Corporate:
DTV-related retained costs - 465 414 (879)
Parent administration support (2) 1,722 6 (1,730)
Securitization fees 116 628 - (512)
Value portfolio 338 102 17 219
Total Corporate 452 2,917 437 (2,902)
Certain significant items - 5,131 53 (5,184)
Total Corporate and Other 452 8,048 490 (8,086)
AT&T Inc. $ 122,336 $ 82,707 $ 20,580 $ 19,049
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AT&T Inc.
Dollars in millions except per share amounts
For the year ended December 31, 2023
Revenues Operations Depreciation Operating
and Support
and
Income
Expenses
Amortization
(Loss)
Communications
Mobility $ 83,982 $ 49,604 $ 8,517 $ 25,861
Business Wireline 20,883 14,217 5,377 1,289
Consumer Wireline 13,173 9,053 3,469 651
Total Communications 118,038 72,874 17,363 27,801
Latin America - Mexico 3,932 3,349 724 (141)
Segment Total 121,970 76,223 18,087 27,660
Corporate and Other
Corporate:
DTV-related retained costs - 686 586 (1,272)
Parent administration support (7) 1,416 6 (1,429)
Securitization fees 85 604 - (519)
Value portfolio 380 99 22 259
Total Corporate 458 2,805 614 (2,961)
Certain significant items - 1,162 76 (1,238)
Total Corporate and Other 458 3,967 690 (4,199)
AT&T Inc. $ 122,428 $ 80,190 $ 18,777 $ 23,461
For the year ended December 31, 2022
Revenues Operations Depreciation Operating
and Support
and
Income
Expenses
Amortization
(Loss)
Communications
Mobility $ 81,780 $ 49,770 $ 8,198 $ 23,812
Business Wireline 22,538 14,934 5,314 2,290
Consumer Wireline 12,749 8,946 3,169 634
Total Communications 117,067 73,650 16,681 26,736
Latin America - Mexico 3,144 2,812 658 (326)
Segment Total 120,211 76,462 17,339 26,410
Corporate and Other
Corporate:
DTV-related retained costs 8 878 549 (1,419)
Parent administration support (32) 1,378 16 (1,426)
Securitization fees 65 419 - (354)
Value portfolio 489 139 41 309
Total Corporate 530 2,814 606 (2,890)
Certain significant items - 28,031 76 (28,107)
Total Corporate and Other 530 30,845 682 (30,997)
AT&T Inc. $ 120,741 $ 107,307 $ 18,021 $ (4,587)
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AT&T Inc.
Dollars in millions except per share amounts
The following table is a reconciliation of Segment Operating Income to "Income
(Loss) from Continuing Operations Before Income Taxes" reported in our
consolidated statements of income:
For the years ended December 31, 2024 2023 2022
Communications $ 27,095 $ 27,801 $ 26,736
Latin America 40 (141) (326)
Segment Operating Income 27,135 27,660 26,410
Reconciling Items:
Corporate (2,902) (2,961) (2,890)
Transaction and other costs (123) (98) (425)
Amortization of intangibles acquired (53) (76) (76)
Asset impairments and abandonments and restructuring (5,075) (1,193) (27,498)
Benefit-related gains (losses) 67 129 (108)
AT&T Operating Income (Loss) 19,049 23,461 (4,587)
Interest expense 6,759 6,704 6,108
Equity in net income of affiliates 1,989 1,675 1,791
Other income (expense) - net 2,419 1,416 5,810
Income (Loss) from Continuing Operations Before Income Taxes $ 16,698 $ 19,848 $ (3,094)
The following table sets forth revenues earned from customers, and property,
plant and equipment located in different geographic areas:
At or for the years ended December 31, 2024 2023 2022
Revenues Net Property, Revenues Net Property, Revenues Net Property,
Plant &
Plant & Plant &
Equipment
Equipment Equipment
United States $ 116,882 $ 125,573 $ 117,097 $ 124,387 $ 116,006 $ 123,305
Mexico 4,286 2,981 3,993 3,750 3,210 3,718
Asia/Pacific Rim 462 82 521 99 592 124
Europe 441 139 504 166 584 201
Latin America 149 60 194 67 217 74
Other 116 36 119 20 132 23
Total $ 122,336 $ 128,871 $ 122,428 $ 128,489 $ 120,741 $ 127,445
The following table presents assets, investments in equity affiliates and
capital expenditures by segment:
At or for the years ended December 31, 2024 2023
Assets Investments in Capital Assets Investments in Capital
Equity Method
Expenditures
Equity Method
Expenditures
Investees
Investees
Communications $ 481,757 $ - $ 19,335 $ 504,006 $ - $ 16,876
Latin America 7,808 - 269 9,314 - 298
Corporate and eliminations (94,770) 295 659 (106,260) 1,251 679
Total $ 394,795 $ 295 $ 20,263 $ 407,060 $ 1,251 $ 17,853
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AT&T Inc.
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. No customer
accounted for more than 10% of consolidated revenues in 2024, 2023 or 2022.
Wireless, Advanced Data, Legacy Voice & Data Services and Equipment
Revenue
We offer service-only contracts and contracts that bundle equipment used to
access the services and/or with other service offerings. Some contracts have
fixed terms and others are cancelable on a short-term basis (i.e.,
month-to-month arrangements).
Examples of service revenues include wireless, fiber and other advanced
connectivity, transitional and legacy voice and data. These services represent
a series of distinct services that is considered a separate performance
obligation. Service revenue is recognized when services are provided, based
upon either period of time (e.g., monthly service fees) or usage (e.g., bytes
of data processed).
Some of our services require customer premises equipment that, when combined
and integrated with AT&T's specific network infrastructure, facilitates
the delivery of service to the customer. In evaluating whether the equipment
is a separate performance obligation, we consider the customer's ability to
benefit from the equipment on its own or together with other readily available
resources and if so, whether the service and equipment are separately
identifiable (i.e., is the service highly dependent on, or highly interrelated
with the equipment). When equipment is a separate performance obligation, we
record the sale of equipment when title has passed and the products are
accepted by the customer. For devices sold through indirect channels (e.g.,
national retailers), revenue is recognized when the retailer accepts the
device, not upon activation.
Our equipment and service revenues are predominantly recognized on a gross
basis, as most of our services do not involve a third party and we typically
control the equipment that is sold to our customers.
Revenue recognized from fixed-term contracts that bundle services and/or
equipment is allocated based on the standalone selling price of all required
performance obligations of the contract (i.e., each item included in the
bundle). Promotional discounts are attributed to each required component of
the arrangement, resulting in recognition over the contract term. Standalone
selling prices are determined by assessing prices paid for service-only
contracts (e.g., arrangements where customers bring their own devices) and
standalone device pricing.
We offer the majority of our customers the option to purchase certain wireless
devices in installments over a specified period of time, and, in many cases,
they may be eligible to trade in the original equipment for a new device and
have the remaining unpaid balance paid or settled. For customers that elect
these equipment installment payment programs, at the point of sale, we
recognize revenue for the entire amount of revenue allocated to the customer
receivable net of fair value of the trade-in right guarantee, when applicable.
The difference between the revenue recognized and the consideration received
is recorded as a note receivable when the devices are not discounted and our
right to consideration is unconditional. When installment sales include
promotional discounts that are earned by customers over the contract term
(e.g., "buy one get one free" or equipment discounts with trade-in of a
device), notes receivable are recognized net of discounts and the difference
between revenue recognized and consideration received is recorded as a
contract asset to be amortized over the contract term.
Less commonly, we offer certain customers highly discounted devices when they
enter into a minimum service agreement term. For these contracts, we recognize
equipment revenue at the point of sale based on a standalone selling price
allocation. The difference between the revenue recognized and the cash
received is recorded as a contract asset that will amortize over the contract
term.
Our contracts allow for customers to frequently modify their arrangement,
without incurring penalties in many cases. When a contract is modified, we
evaluate the change in scope or price of the contract to determine if the
modification should be treated as a new contract or if it should be considered
a change of the existing contract. We generally do not have significant
impacts from contract modifications.
Revenues from transactions between us and our customers are recorded net of
revenue-based regulatory fees and taxes. Cash incentives given to customers
are recorded as a reduction of revenue. Nonrefundable, upfront service
activation and setup fees associated with service arrangements are deferred
and recognized over the associated service contract period or customer
relationship life.
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AT&T Inc.
Dollars in millions except per share amounts
Revenue Categories
The following tables set forth reported revenue by category and by business
unit:
For the year ended December 31, 2024
Communications
Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total
Wireless service $ 65,373 $ - $ - $ 2,668 $ - $ 68,041
Business service - 18,064 - - - 18,064
Broadband - - 11,212 - - 11,212
Legacy voice and data - - 1,265 - 253 1,518
Other - - 1,101 - 199 1,300
Total Service 65,373 18,064 13,578 2,668 452 100,135
Equipment 19,882 755 - 1,564 - 22,201
Total $ 85,255 $ 18,819 $ 13,578 $ 4,232 $ 452 $ 122,336
For the year ended December 31, 2023
Communications
Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total
Wireless service $ 63,175 $ - $ - $ 2,569 $ - $ 65,744
Business service - 20,274 - - - 20,274
Broadband - - 10,455 - - 10,455
Legacy voice and data - - 1,508 - 294 1,802
Other - - 1,210 - 164 1,374
Total Service 63,175 20,274 13,173 2,569 458 99,649
Equipment 20,807 609 - 1,363 - 22,779
Total $ 83,982 $ 20,883 $ 13,173 $ 3,932 $ 458 $ 122,428
For the year ended December 31, 2022
Communications
Mobility Business Wireline Consumer Wireline Latin America Corporate & Other Total
Wireless service $ 60,499 $ - $ - $ 2,162 $ 13 $ 62,674
Business service - 21,891 - - - 21,891
Broadband - - 9,669 - - 9,669
Legacy voice and data - - 1,746 - 323 2,069
Other - - 1,334 - 194 1,528
Total Service 60,499 21,891 12,749 2,162 530 97,831
Equipment 21,281 647 - 982 - 22,910
Total $ 81,780 $ 22,538 $ 12,749 $ 3,144 $ 530 $ 120,741
Deferred Customer Contract Acquisition and Fulfillment Costs
Costs to acquire and fulfill customer contracts, including commissions on
service activations, for our Mobility, Business Wireline and Consumer Wireline
services, are deferred and amortized over the contract period or expected
customer relationship life, which typically ranges from three years to five
years.
During the first quarter of 2022, we updated our analysis of expected economic
lives of customer relationships. As of January 1, 2022, we extended the
amortization period for deferred acquisition and fulfillment contract costs
within Mobility, Business Wireline and Consumer Wireline to better reflect the
estimated economic lives of the relationships. These changes in
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AT&T Inc.
Dollars in millions except per share amounts
accounting estimate decreased "Other cost of revenues" approximately $395, or
$0.04 per diluted share from continuing operations for the year ended December
31, 2022.
The following table presents the deferred customer contract acquisition and
fulfillment costs included on our consolidated balance sheets at December 31:
Consolidated Balance Sheets 2024 2023
Deferred Acquisition Costs
Prepaid and other current assets $ 3,239 $ 3,233
Other Assets 4,177 4,077
Total deferred customer contract acquisition costs $ 7,416 $ 7,310
Deferred Fulfillment Costs
Prepaid and other current assets $ 2,101 $ 2,340
Other Assets 3,289 3,843
Total deferred customer contract fulfillment costs $ 5,390 $ 6,183
The following table presents deferred customer contract acquisition and
fulfillment cost amortization, which are primarily included in "Selling,
general and administrative" and "Other cost of revenues," respectively, for
the years ended December 31:
Consolidated Statements of Income 2024 2023
Deferred acquisition cost amortization $ 3,667 $ 3,476
Deferred fulfillment cost amortization 2,525 2,700
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 at December 31:
Consolidated Balance Sheets 2024 2023
Contract asset $ 6,855 $ 6,518
Current portion in "Prepaid and other current assets" 3,845 3,549
Contract liability 4,272 3,994
Current portion in "Advanced billings and customer deposits" 3,981 3,666
Our beginning of period contract liabilities recorded as customer contract
revenue during 2024 was $3,666.
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,
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AT&T Inc.
Dollars in millions except per share amounts
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 December 31, 2024, the aggregate amount of the
transaction price allocated to remaining performance obligations was $40,914,
of which we expect to recognize approximately 85% by the end of 2026, with
the balance recognized thereafter.
NOTE 6. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS
Acquisitions
Spectrum Auctions On January 14, 2022, the Federal Communications Commission
(FCC) announced that we were the winning bidder for 1,624 3.45 GHz licenses in
Auction 110. We provided the FCC an upfront deposit of $123 in the third
quarter of 2021 and paid the remaining $8,956 in the first quarter of 2022,
for a total of $9,079. We funded the purchase price using cash and short-term
investments. We received the licenses in May 2022 and classified the auction
deposits and related capitalized interest as "Licenses - Net" on our December
31, 2022 consolidated balance sheet.
In February 2021, the FCC announced that AT&T was the winning bidder for
1,621 C-Band licenses, comprised of a total of 80 MHz nationwide, including 40
MHz in Phase I. We provided to the FCC an upfront deposit of $550 in 2020 and
cash payments totaling $22,856 in the first quarter of 2021, for a total of
$23,406. We received the licenses in July 2021 and classified the auction
deposits, related capitalized interest and billed relocation costs as
"Licenses - Net" on our December 31, 2021 consolidated balance sheet. In
December 2021, we paid $955 of Incentive Payments upon clearing of Phase I
spectrum and paid $2,112 upon clearing of Phase II spectrum in 2023.
Additionally, we are responsible for approximately $1,100 of compensable
relocation costs over the next several years as the spectrum is being cleared
by satellite operators, of which we paid $650 in 2021, $98 in 2022, $109 in
2023 and $138 in 2024. Funding for the purchase price of the spectrum included
a combination of cash on hand and short-term investments, as well as short-
and long-term debt.
Dispositions Reflected as Discontinued Operations
WarnerMedia On April 8, 2022, we completed the separation and distribution of
our WarnerMedia business, and merger of Spinco, an AT&T subsidiary formed
to hold the WarnerMedia business, with a subsidiary of Discovery, Inc., which
was renamed Warner Bros. Discovery, Inc (WBD). Each AT&T shareholder was
entitled to receive 0.241917 shares of WBD common stock for each share of
AT&T common stock held as of the record date, which represented
approximately 71% of WBD. In connection with and in accordance with the terms
of the Separation and Distribution Agreement (SDA), prior to the distribution
and merger, AT&T received approximately $40,400, which includes $38,800 of
Spinco cash and $1,600 of debt retained by WarnerMedia. During the second
quarter of 2022, $45,041 of retained earnings and $5,632 of additional paid-in
capital associated with the transaction were removed from our balance sheet.
Additionally, in August 2022, we and WBD finalized the post-closing
adjustment, pursuant to Section 1.3 of the SDA, which resulted in a $1,200
payment to WBD in the third quarter of 2022 and was reflected in the balance
sheet as an adjustment to additional paid-in capital. (See Note 24)
Xandr On June 6, 2022, we completed the sale of the marketplace component of
Xandr to Microsoft Corporation. Xandr was reflected in our historical
financial statements as discontinued operations.
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Dollars in millions except per share amounts
NOTE 7. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment is summarized as follows at December 31:
Lives (years) 2024 2023
Land - $ 1,372 $ 1,377
Buildings and improvements 2-44 39,947 39,380
Central office equipment1 3-10 101,607 100,264
Cable, wiring and conduit 15-50 95,217 90,109
Other equipment 3-20 87,656 85,379
Software 3-7 17,663 17,742
Under construction - 7,452 5,640
350,914 339,891
Accumulated depreciation and amortization 222,043 211,402
Property, plant and equipment - net $ 128,871 $ 128,489
1 Includes certain network software.
Our depreciation expense was $20,421 in 2024, $18,593 in 2023, and $17,852 in
2022. Depreciation expense included amortization of software totaling $3,076
in 2024, $3,023 in 2023 and $2,972 in 2022.
In December 2022, we recorded a noncash pre-tax charge of $1,413 to abandon
conduits that will not be utilized to support future network activity. The
abandonment was considered outside the ordinary course of business.
During the first quarter of 2022, we updated our analysis of economic lives of
AT&T-owned fiber network assets. As of January 1, 2022, we extended the
estimated economic life and depreciation period of such costs to better
reflect the physical life of the assets that we had been experiencing and
absence of technological changes that would replace fiber as the best
broadband technology in the industry. The change in accounting estimate
decreased depreciation expense $280, or $0.03 per diluted share from
continuing operations for the year ended December 31, 2022.
NOTE 8. LEASES
We have operating and finance leases for certain facilities and equipment used
in our operations. Our leases generally have remaining lease terms of up to 15
years. Some of our operating leases (e.g., for towers and real estate) contain
renewal options that may be exercised, and some of our leases include options
to terminate the leases within one year.
We have recognized a right-of-use asset for both operating and finance leases,
and a corresponding lease liability that represents the present value of our
obligation to make payments over the lease term. The present value of the
lease payments is calculated using the incremental borrowing rate for
operating and finance leases, which was determined using a portfolio approach
based on the rate of interest that we would have to pay to borrow an amount
equal to the lease payments on a collateralized basis over a similar term. We
use the unsecured borrowing rate and risk-adjust that rate to approximate a
collateralized rate in the currency of the lease, which will be updated on a
quarterly basis for measurement of new lease liabilities.
The components of lease expense were as follows:
2024 2023 2022
Operating lease cost $ 5,776 $ 5,577 $ 5,437
Finance lease cost:
Amortization of leased assets in property, plant and equipment $ 205 $ 232 $ 204
Interest on lease obligation 171 184 159
Total finance lease cost $ 376 $ 416 $ 363
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AT&T Inc.
Dollars in millions except per share amounts
The following table provides supplemental cash flows information related to
leases:
2024 2023 2022
Cash Flows from Operating Activities
Cash paid for amounts included in lease obligations:
Operating cash flows from operating leases $ 4,757 $ 4,588 $ 4,679
Supplemental Lease Cash Flow Disclosures
Operating lease right-of-use assets obtained in exchange for 3,762 2,693 3,751
new operating lease obligations
The following tables set forth supplemental balance sheet information related
to leases at December 31:
2024 2023
Operating Leases
Operating lease right-of-use assets $ 20,909 $ 20,905
Accounts payable and accrued liabilities $ 3,533 $ 3,524
Operating lease obligation 17,391 17,568
Total operating lease obligation $ 20,924 $ 21,092
Finance Leases
Property, plant and equipment, at cost $ 2,449 $ 2,828
Accumulated depreciation and amortization (1,378) (1,399)
Property, plant and equipment - net $ 1,071 $ 1,429
Current portion of long-term debt $ 179 $ 183
Long-term debt 1,237 1,655
Total finance lease obligation $ 1,416 $ 1,838
2024 2023
Weighted-Average Remaining Lease Term (years)
Operating leases 7.6 7.7
Finance leases 6.7 7.2
Weighted-Average Discount Rate
Operating leases 4.5 % 4.1 %
Finance leases 8.5 % 8.3 %
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AT&T Inc.
Dollars in millions except per share amounts
The following table provides the expected future minimum maturities of lease
obligations:
At December 31, 2024 Operating Leases Finance
Leases
2025 $ 4,789 $ 293
2026 4,166 285
2027 3,527 284
2028 2,885 286
2029 2,130 294
Thereafter 7,978 416
Total lease payments 25,475 1,858
Less: Imputed interest (4,551) (442)
Total $ 20,924 $ 1,416
NOTE 9. GOODWILL AND OTHER INTANGIBLE ASSETS
We test goodwill for impairment at a reporting unit level, which is deemed to
be our principal operating segments or one level below. With our annual
impairment testing as of October 1, the calculated fair value of each
reporting unit exceeded its book value.
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 goodwill impairment. As a result, in the
third quarter of 2024, we recorded a noncash goodwill impairment charge of
$4,422 in our consolidated statements of income, which represented the
entirety of Business Wireline reporting unit goodwill.
In 2022, we recorded noncash impairment charges of $13,478 in our Business
Wireline reporting unit, $10,508 in our Consumer Wireline reporting unit and
the entire $826 in our Mexico reporting unit. The decline in fair values was
primarily due to changes in the macroeconomic environment, namely increased
weighted-average cost of capital. Also, inflation pressure and lower projected
cash flows driven by secular declines, predominantly at Business Wireline,
impacted the fair values.
Changes to our goodwill in 2024 resulted from the noncash impairment discussed
above. Changes to our goodwill in 2023 resulted from goodwill attributed to
assets contributed to the formation of strategic joint ventures.
Our Communications segment has three reporting units: Mobility, Consumer
Wireline and Business Wireline. Business Wireline goodwill was fully impaired
in the third quarter of 2024. The reporting unit is deemed to be the operating
segment for Latin America and its goodwill was fully impaired in 2022. At
December 31, 2024, accumulated goodwill impairments totaled $29,234.
The following table sets forth the changes in the carrying amounts of goodwill
for the Communications segment:
2024 2023
Balance at Impairment Balance at Balance at Dispositions Balance at
Jan. 1
Dec. 31
Jan. 1
and other
Dec. 31
Communications
Goodwill $ 91,840 $ - $ 91,840 $ 91,881 $ (41) $ 91,840
Accumulated Impairments (23,986) (4,422) (28,408) (23,986) - (23,986)
Total $ 67,854 $ (4,422) $ 63,432 $ 67,895 $ (41) $ 67,854
We review amortizing intangible assets for impairment whenever events or
circumstances indicate that the carrying amount may not be recoverable over
the remaining life of the asset or asset group.
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Dollars in millions except per share amounts
Indefinite-lived wireless licenses increased in 2024 primarily due to
compensable relocation and incentive payments and $199 of capitalized
interest. Indefinite-lived wireless licenses increased in 2023 primarily due
to compensable relocation and incentive payments and $695 of capitalized
interest. (See Notes 6 and 23)
Our other intangible assets at December 31 are summarized as follows:
2024 2023
Other Intangible Assets Weighted-Average Gross Accumulated Currency Gross Accumulated Currency
Amortization
Translation
Amortization
Translation
Life Carrying
Adjustment Carrying
Adjustment
Amount Amount
Amortized intangible
assets:
Wireless licenses 21.6 years $ 2,999 $ 696 $ (343) $ 3,034 $ 572 $ 23
Customer lists and 10.0 years 349 275 (74) 379 286 (74)
relationships
Trademarks, trade names 12.6 years 43 23 (6) 289 261 (5)
and other
Total 21.6 years $ 3,391 $ 994 $ (423) $ 3,702 $ 1,119 $ (56)
Indefinite-lived intangible assets not subject to amortization:
Wireless licenses $ 125,075 $ 124,734
Trade names 5,241 5,241
Total $ 130,316 $ 129,975
Amortized intangible assets are definite-life assets, and, as such, we record
amortization expense based on a method that most appropriately reflects our
expected cash flows from these assets. Amortization expense for definite-life
intangible assets was $159 for the year ended December 31, 2024, $184 for the
year ended December 31, 2023 and $169 for the year ended December 31, 2022.
Estimated amortization expense for the next five years is: $129 for 2025, $131
for 2026, $130 for 2027, $130 for 2028 and $130 for 2029.
NOTE 10. EQUITY METHOD INVESTMENTS
Investments in partnerships, joint ventures and less than majority-owned
subsidiaries in which we have significant influence are accounted for under
the equity method.
Our investments in equity affiliates at December 31, 2024, primarily included
our interests in DIRECTV and Gigapower.
DIRECTV We account for our investment in DIRECTV under the equity method of
accounting. DIRECTV is considered a variable interest entity for accounting
purposes. As DIRECTV is jointly governed by a board with representation from
both AT&T and TPG Capital (TPG), with TPG having tie-breaking authority on
certain key decisions, most significantly the appointment and removal of the
CEO, we have concluded that we are not the primary beneficiary of DIRECTV. The
initial fair value of the equity considerations at the date of acquisition was
$6,852, which was determined using a discounted cash flow model reflecting
distribution rights and preference of the individual instruments.
The ownership interests in DIRECTV, based on seniority, are as follows:
•Preferred units with distribution rights of $1,800 held by TPG, which have
been fully distributed.
•Junior preferred units with distribution rights of $4,250 held by AT&T,
which were fully distributed as of December 31, 2023.
•Distribution preference associated with Common units of $4,200 held by
AT&T, of which $1,370 of distribution rights remain as of December 31,
2024.
•Common units, with 70% held by AT&T and 30% held by TPG.
On September 29, 2024, we agreed to sell our interest in DIRECTV to TPG for
approximately $7,600 in cash payments through 2029, inclusive of third-quarter
and fourth-quarter 2024 combined distributions of $1,695. In addition to
quarterly distributions through 2025, including payout of common catch-up
units, this consideration includes notes payable to AT&T of approximately
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Dollars in millions except per share amounts
$2,550 and a dividend of $1,150. The transaction is expected to close in
mid-2025, pending customary closing conditions. We expect a gain on sale,
whose amount will be dependent on the timing of close.
Beginning in third-quarter 2024, our investment in DIRECTV was reduced to zero
on our consolidated balance sheet, resulting from aggregate cash receipts
exceeding our initial investment balance plus our cumulative equity in DIRECTV
earnings. As we are not committed, implicitly or explicitly, to provide
financial or other support to DIRECTV, we record cash distributions received
in excess of our share of DIRECTV's earnings in "Equity in net income of
affiliates" in the consolidated statements of income and as cash provided by
operations in the consolidated statements of cash flows.
During 2024, 2023 and 2022, we recognized $2,027, $1,666 and $1,808 of equity
in net income of affiliates and received total distributions of $2,955, $3,715
and $4,457, respectively, from DIRECTV. The book value of our investment in
DIRECTV was $0 and $877 at December 31, 2024 and 2023.
Our share of net income or loss may differ from the stated ownership
percentage interest of DIRECTV as the terms of the arrangement prescribe
substantive non-proportionate cash distributions, both from operations and in
liquidation, that are based on classes of interests held by investors. In the
event that DIRECTV records a loss, that loss will be allocated to ownership
interests based on their seniority, beginning with the most subordinated
interests.
Gigapower On May 11, 2023, we closed our transaction with BlackRock, through a
fund managed by its Diversified Infrastructure business, related to Gigapower,
LLC (Gigapower). We hold a 50% interest in this joint venture, which provides
a fiber network in select areas to internet service providers and other
businesses across the U.S. We deconsolidated Gigapower's operations and began
accounting for it as an equity method investment on May 12, 2023.
SKY Mexico In June 2024, we sold our 41.3% interest in SKY Mexico, a leading
pay-TV provider in Mexico.
The following table presents summarized financial information for DIRECTV and
our other equity method investments, consisting primarily of Gigapower, SKY
Mexico (prior to disposition) and certain sports-related programming
investments, at December 31, or for the year then ended:
2024 2023 2022
Income Statements1,2
Operating revenues $ 20,003 $ 22,938 $ 25,794
Operating income 2,343 2,873 3,175
Net income 1,811 2,393 2,581
Balance Sheets2
Current assets 2,857 3,058
Noncurrent assets 9,496 12,203
Current liabilities 5,312 5,148
Noncurrent liabilities 7,389 8,193
1Does not include Gigapower for periods prior to May 2023.
2Does not include SKY Mexico after disposition in June 2024.
The following table is a reconciliation of our investments in equity
affiliates as presented on our consolidated balance sheets:
2024 2023
Beginning of year $ 1,251 $ 3,533
Additional investments 117 135
Distributions from DIRECTV in excess of cumulative equity in earnings (928) (2,049)
Dividends and distributions of cumulative earnings received (2,033) (1,668)
Equity in net income of affiliates 1,989 1,675
Impairments (155) (450)
Currency translation adjustments - 61
Other adjustments 54 14
End of year $ 295 $ 1,251
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AT&T Inc.
Dollars in millions except per share amounts
NOTE 11. DEBT
Long-term debt of AT&T and its subsidiaries, including interest rates and
maturities, is summarized as follows at December 31:
2024 2023
Notes and debentures
Interest Rates1 Maturities
0.00% - 2.99% 2024 - 2033 $ 21,860 $ 24,560
3.00% - 4.99% 2024 - 2061 83,725 87,855
5.00% - 6.99% 2024 - 2095 22,679 27,286
7.00% - 8.75% 2024 - 2097 3,565 3,639
Fair value of interest rate swaps recorded in debt 6 7
131,835 143,347
Unamortized (discount) premium - net (9,340) (9,509)
Unamortized issuance costs (379) (436)
Total notes and debentures 122,116 133,402
Finance lease obligations 1,416 1,838
Total long-term debt, including current maturities 123,532 135,240
Current maturities of long-term debt (5,089) (7,386)
Total long-term debt $ 118,443 $ 127,854
1Foreign debt includes the impact from hedges, when applicable.
We had outstanding Euro, British pound sterling, Canadian dollar, Swiss franc
and Australian dollar denominated debt of approximately $30,685 and $35,192 at
December 31, 2024 and 2023, respectively.
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.
Debt maturing within one year consisted of the following at December 31:
2024 2023
Current maturities of long-term debt $ 5,089 $ 7,386
Commercial paper - 2,091
Total $ 5,089 $ 9,477
The weighted average interest rate on our outstanding short-term borrowings,
comprised solely of commercial paper, was approximately 6.0% as of
December 31, 2023.
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AT&T Inc.
Dollars in millions except per share amounts
Financing Activities
During 2024, we repaid $10,112 of long-term debt and credit agreement
borrowings with a weighted average interest rate of 4.1%. Our debt activity
during 2024 primarily consisted of the following:
First Second Third Fourth Full Year 2024
Quarter
Quarter
Quarter
Quarter
Net commercial paper borrowings $ 428 $ 262 $ (2,686) $ - $ (1,996)
Repayments:
USD notes $ (2,300) $ (1,615) $ - $ (2,575) $ (6,490)
EUR notes (2,181) (32) - - (2,213)
CAD notes - (442) - - (442)
CHF notes - - - (467) (467)
Other (204) (136) (203) (142) (685)
Repayments of long-term debt $ (4,685) $ (2,225) $ (203) $ (3,184) $ (10,297)
As of December 31, 2024 and 2023, we were in compliance with all covenants
and conditions of instruments governing our debt. Substantially all of our
outstanding long-term debt is unsecured. Maturities of outstanding long-term
notes and debentures, as of December 31, 2024, and the corresponding
weighted-average interest rate scheduled for repayment are as follows:
2025 2026 2027 2028 2029 Thereafter
Debt repayments1,2 $ 5,399 $ 8,652 $ 6,310 $ 6,905 $ 6,918 $ 101,768
Weighted-average interest rate 2 4.7 % 3.1 % 3.7 % 3.2 % 4.6 % 4.2 %
1Debt repayments represent maturity value. Foreign debt includes the impact
from hedges, when applicable.
2Includes credit agreement borrowings.
Credit Facilities
General
In November 2022, we entered into and drew on a $2,500 term loan agreement due
February 16, 2025 (Term Loan), with Mizuho Bank, Ltd., as agent. On March 30,
2023, the $2,500 Term Loan was paid off and terminated.
Revolving Credit Agreement
We currently have a $12,000 revolving credit agreement that terminates on
November 18, 2029 (Revolving Credit Agreement), for which we extended the
termination date, pursuant to the terms of the agreement, by one year in
November 2024. No amount was outstanding under the Revolving Credit Agreement
as of December 31, 2024.
Our Revolving Credit Agreement contains covenants that are customary for an
issuer with investment grade senior debt credit rating as well as a net
debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of
the last day of each fiscal quarter, a ratio of not more than 3.75-to-1.
The events of default are customary for agreements of this type and such
events would result in the acceleration of, or would permit the lenders to
accelerate, as applicable, required payments and would increase each
agreement's relevant Applicable Margin by 2.00% per annum.
The obligations of the lenders under the Revolving Credit Agreement to provide
advances will terminate on November 18, 2029, unless the commitments are
terminated in whole prior to that date. All advances must be repaid no later
than the date on which lenders are no longer obligated to make any advances
under the Revolving Credit Agreement.
The Revolving Credit Agreement provides that we have the right to terminate,
in whole or in part, amounts committed by the lenders under the credit
agreement in excess of any outstanding advances; however, any such terminated
commitments may not be reinstated.
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Dollars in millions except per share amounts
Advances under the Revolving Credit Agreement would bear interest, at our
option, either:
•at a variable annual rate equal to: (1) the highest of (but not less than
zero) (a) the rate of interest announced publicly by Citibank in New York, New
York, from time to time, as Citibank's base rate, (b) 0.5% per annum above the
federal funds rate, and (c) the forward-looking term rate based on the secured
overnight financing rate (Term SOFR) for a period of one month plus a credit
spread adjustment of 0.10% plus 1.00%, plus (2) an applicable margin, as set
forth in the credit agreement (the "Applicable Margin for Base Advances"); or
•at a rate equal to: (i) Term SOFR for a period of one, three or six months,
as applicable, plus (ii) a credit spread adjustment of 0.10%, plus (iii) an
applicable margin, as set forth in the Revolving Credit Agreement (the
"Applicable Margin for Benchmark Rate Advances").
We pay a facility fee of 0.060%, 0.070%, 0.080% or 0.100% per annum of the
amount of the lender commitments, depending on AT&T's credit rating.
NOTE 12. 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, 2023.
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:
December 31, 2024 December 31, 2023
Carrying Fair Carrying Fair
Amount
Value
Amount
Value
Notes and debentures1 $ 122,116 $ 114,167 $ 133,402 $ 128,474
Commercial paper - - 2,091 2,091
Investment securities2 1,603 1,603 2,836 2,836
1Includes credit agreement borrowings.
2Excludes 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 December 31, 2024 and
December 31, 2023. Derivatives designated as hedging instruments are
reflected as "Prepaid and other current assets,"
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AT&T Inc.
Dollars in millions except per share amounts
"Other Assets," "Accounts payable and accrued liabilities," and "Other
noncurrent liabilities" on our consolidated balance sheets.
December 31, 2024
Level 1 Level 2 Level 3 Total
Equity Securities
Domestic equities $ 484 $ - $ - $ 484
International equities 8 - - 8
Fixed income equities 178 - - 178
Available-for-Sale Debt Securities - 689 - 689
Asset Derivatives
Cross-currency swaps - 87 - 87
Liability Derivatives
Cross-currency swaps - (4,163) - (4,163)
December 31, 2023
Level 1 Level 2 Level 3 Total
Equity Securities
Domestic equities $ 1,002 $ - $ - $ 1,002
International equities 215 - - 215
Fixed income equities 209 - - 209
Available-for-Sale Debt Securities - 1,228 - 1,228
Asset Derivatives
Cross-currency swaps - 424 - 424
Liability Derivatives
Interest rate swaps - (2) - (2)
Cross-currency swaps - (3,601) - (3,601)
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:
For the years ended December 31, 2024 2023 2022
Total gains (losses) recognized on equity securities $ 209 $ 257 $ (309)
Gains (Losses) recognized on equity securities sold (52) 89 (80)
Unrealized gains (losses) recognized on equity securities held at end of $ 261 $ 168 $ (229)
period
At December 31, 2024, available-for-sale debt securities totaling $689 have
maturities as follows - less than one year: $66; one to three years: $120;
three to five years: $99; five or more years: $404.
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
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Dollars in millions except per share amounts
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 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 years ended December 31, 2024 and 2023, 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.
On September 30, 2022, we de-designated most of our cross-currency swaps from
cash flow hedges and re-designated these swaps as fair value hedges. The
amount remaining in accumulated other comprehensive loss related to cash flow
hedges on the de-designation date was $1,857. The amount will be reclassified
to earnings when the hedged item is recognized in earnings or when it becomes
probable that the forecasted transactions will not occur. The election of fair
value hedge designation for cross-currency swaps does not have an impact on
our financial results.
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 December 31, 2024, we
had posted collateral of $188 (a deposit asset) and held collateral of $0 (a
receipt liability). Under the agreements, if AT&T's credit rating had been
downgraded two ratings levels by Fitch Ratings, one level by S&P and one
level by Moody's, before the final collateral exchange in December, we would
have been required to post additional collateral of $52. If AT&T's credit
rating had been downgraded three ratings levels by Fitch Ratings, two levels
by S&P and two levels by Moody's, we would have been required to post
additional collateral of $3,986. At December 31, 2023, we had posted
collateral of $670 (a deposit asset) and held collateral of $5 (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.
68
AT&T Inc.
Dollars in millions except per share amounts
Following are the notional amounts of our outstanding derivative positions at
December 31:
2024 2023
Interest rate swaps $ - $ 1,750
Cross-currency swaps 34,884 38,006
Total $ 34,884 $ 39,756
Following are the related hedged items affecting our financial position and
performance:
Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships
For the years ended December 31, 2024 2023 2022
Interest rate swaps ("Interest expense"):
Gain (loss) on interest rate swaps $ (1) $ (6) $ (3)
Gain (loss) on long-term debt 1 6 3
Cross-currency swaps:
Gain (loss) on cross-currency swaps (1,347) 1,121 2,195
Gain (loss) on long-term debt 1,347 (1,121) (2,195)
Gain (loss) recognized in accumulated OCI 501 1,126 297
Foreign exchange contracts:
Gain (loss) on foreign exchange contracts - 12 (12)
Gain (loss) on long-term debt - (12) 12
Gain (loss) recognized in accumulated OCI - 12 (12)
In addition, the net swap settlements that accrued and settled in the periods
above were offset against "Interest expense."
Cash Flow Hedging Relationships
For the years ended December 31, 2024 2023 2022
Cross-currency swaps:
Gain (loss) recognized in accumulated OCI $ - $ 12 $ (1,119)
Foreign exchange contracts:
Gain (loss) recognized in accumulated OCI - - 3
Other income (expense) - net reclassified from - - 1
accumulated OCI into income
Interest rate locks:
Interest income (expense) reclassified from (59) (59) (65)
accumulated OCI into income
Other income (expense) reclassified from - - (45)
accumulated OCI into income
Distribution of WarnerMedia - - (12)
Nonrecurring Fair Value Measurements
In addition to assets and liabilities that are recorded at fair value on a
recurring basis, impairment indicators may subject goodwill and long-lived
assets to nonrecurring fair value measurements. The implied fair values of the
Business Wireline, Consumer Wireline and Mexico reporting units were estimated
using both the discounted cash flow as well as market multiple approaches (see
Note 9). The inputs to these models are considered Level 3.
69
AT&T Inc.
Dollars in millions except per share amounts
NOTE 13. INCOME TAXES
Significant components of our deferred tax liabilities (assets) are as follows
at December 31:
2024 2023
Depreciation and amortization $ 36,531 $ 37,931
Licenses and nonamortizable intangibles 20,660 20,049
Lease right-of-use assets 5,103 5,100
Lease liabilities (5,107) (5,146)
Employee benefits (3,017) (2,970)
Deferred fulfillment costs 1,788 1,941
Equity in partnership 2,716 2,943
Net operating loss and other carryforwards (5,619) (6,484)
Other - net 1,466 563
Subtotal 54,521 53,927
Deferred tax assets valuation allowance 4,338 4,656
Net deferred tax liabilities $ 58,859 $ 58,583
Noncurrent deferred tax liabilities $ 58,939 $ 58,666
Less: Noncurrent deferred tax assets (80) (83)
Net deferred tax liabilities $ 58,859 $ 58,583
At December 31, 2024, we had combined net operating and capital loss
carryforwards (tax effected) for federal income tax purposes of $692, state of
$683 and foreign of $2,447, expiring through 2044. Additionally, we had
federal credit carryforwards of $299 and state credit carryforwards of $1,498,
expiring primarily through 2044.
We recognize a valuation allowance if, based on the weight of available
evidence, it is more likely than not that some portion, or all, of a deferred
tax asset will not be realized. Our valuation allowances at December 31, 2024
and 2023 related primarily to state and foreign net operating losses and state
credit carryforwards.
We consider post-1986 unremitted foreign earnings subjected to the one-time
transition tax not to be indefinitely reinvested as such earnings can be
repatriated without any significant incremental tax costs. We consider other
types of unremitted foreign earnings to be indefinitely reinvested. U.S.
income and foreign withholding taxes have not been recorded on temporary
differences related to investments in certain foreign subsidiaries as such
differences are considered indefinitely reinvested. The amount of unrecognized
deferred tax liability does not have a material impact on the financial
statements.
We recognize the financial statement effects of a tax return position when it
is more likely than not, based on the technical merits, that the position will
ultimately be sustained. For tax positions that meet this recognition
threshold, we apply our judgment, taking into account applicable tax laws, our
experience in managing tax audits and relevant GAAP, to determine the amount
of tax benefits to recognize in our financial statements. For each position,
the difference between the benefit realized on our tax return and the benefit
reflected in our financial statements is recorded on our consolidated balance
sheets as an unrecognized tax benefit (UTB). We update our UTBs at each
financial statement date to reflect the impacts of audit settlements and other
resolutions of audit issues, the expiration of statutes of limitation,
developments in tax law and ongoing discussions with taxing authorities.
70
AT&T Inc.
Dollars in millions except per share amounts
A reconciliation of the change in our UTB balance from January 1 to December
31 for 2024 and 2023 is as follows:
Federal, State and Foreign Tax 2024 2023
Balance at beginning of year $ 11,924 $ 9,657
Increases for tax positions related to the current year 369 1,026
Increases for tax positions related to prior years 1,017 448
Decreases for tax positions related to prior years (772) (212)
Lapse of statute of limitations (8) (16)
Settlements 3 1,021
Balance at end of year 12,533 11,924
Accrued interest and penalties 2,223 1,785
Gross unrecognized income tax benefits 14,756 13,709
Less: Deferred federal and state income tax benefits (849) (687)
Less: Tax attributable to timing items included above (6,964) (6,438)
Total UTB that, if recognized, would impact the $ 6,943 $ 6,584
effective income tax rate as of the end of the year
Periodically we make deposits to taxing jurisdictions which reduce our UTB
balance but are not included in the reconciliation above. The amount of
deposits that reduced our UTB balance was $2,282 at December 31, 2024 and
$2,361 at December 31, 2023. Current tax assets on our consolidated balance
sheets were $2,236 at December 31, 2024 and $2,079 at December 31, 2023.
Accrued interest and penalties included in UTBs were $2,223 as of
December 31, 2024 and $1,785 as of December 31, 2023. We record interest and
penalties related to federal, state and foreign UTBs in income tax expense.
The net interest and penalty expense (benefit) included in income tax expense
was $474 for 2024, $324 for 2023 and $(86) for 2022.
We file income tax returns in the U.S. federal jurisdiction and various state,
local and foreign jurisdictions. As a large taxpayer, our income tax returns
are regularly audited by the Internal Revenue Service (IRS) and other taxing
authorities.
The IRS has completed field examinations of our tax returns through 2015. All
audit periods prior to 2006 are closed for federal examination purposes, and
we have effectively resolved all outstanding audit issues for years through
2010 with the IRS Appeals Division.
While we do not expect material changes, we are generally unable to estimate
the range of impacts on the balance of the remaining uncertain tax positions
or the impact on the effective tax rate from the resolution of these issues
until each year is closed; it is possible that the amount of unrecognized
benefit with respect to our uncertain tax positions could increase or decrease
within the next 12 months.
71
AT&T Inc.
Dollars in millions except per share amounts
The components of income tax (benefit) expense are as follows:
2024 2023 2022
Federal:
Current $ 2,769 $ 2,280 $ 579
Deferred 1,289 2,250 2,206
4,058 4,530 2,785
State and local:
Current 859 423 21
Deferred (512) (832) 912
347 (409) 933
Foreign:
Current 68 66 106
Deferred (28) 38 (44)
40 104 62
Total $ 4,445 $ 4,225 $ 3,780
"Income (Loss) from Continuing Operations Before Income Taxes" in the
consolidated statements of income included the following components for the
years ended December 31:
2024 2023 2022
U.S. income (loss) before income taxes $ 16,674 $ 20,506 $ (1,480)
Foreign income (loss) before income taxes 24 (658) (1,614)
Total $ 16,698 $ 19,848 $ (3,094)
A reconciliation of income tax expense (benefit) on continuing operations and
the amount computed by applying the statutory federal income tax rate of 21%
to income from continuing operations before income taxes is as follows:
2024 2023 2022
Taxes computed at federal statutory rate $ 3,507 $ 4,168 $ (650)
Increases (decreases) in income taxes resulting from:
State and local income taxes - net of federal income tax benefit 478 345 795
Tax on foreign investments 3 102 43
Noncontrolling interest (274) (259) (308)
Permanent items and R&D credit (174) (207) (121)
Audit resolutions 192 319 (642)
Divestitures - (75) (481)
Goodwill impairment1 929 9 5,210
Other - net (216) (177) (66)
Total $ 4,445 $ 4,225 $ 3,780
Effective Tax Rate 26.6 % 21.3 % (122.2) %
1 Goodwill impairments are not deductible for tax purposes.
NOTE 14. PENSION AND POSTRETIREMENT BENEFITS
We offer noncontributory pension programs covering the majority of domestic
nonmanagement employees in our Communications business. Nonmanagement
employees' pension benefits are generally calculated using one of two
formulas: a flat dollar amount applied to years of service according to job
classification, or a cash balance plan with negotiated annual pension band
credits as well as interest credits. Most employees can elect to receive their
pension benefits in either a lump sum payment or an annuity.
72
AT&T Inc.
Dollars in millions except per share amounts
Pension programs covering U.S. management employees are closed to new
entrants. These programs continue to provide benefits to participants that
were generally hired before January 1, 2015, who receive benefits under either
cash balance pension programs that include annual or monthly credits based on
salary as well as interest credits, or a traditional pension formula (i.e., a
stated percentage of employees' adjusted career income).
We also provide a variety of medical, dental and life insurance benefits to
certain retired employees under various plans and accrue actuarially
determined postretirement benefit costs as active employees earn these
benefits.
On April 26, 2023, AT&T and State Street Global Advisors Trust Company, as
independent fiduciary of the AT&T Pension Benefit Plan (Plan), entered
into a commitment agreement with subsidiaries of Athene Holding Ltd. (Athene)
under which AT&T agreed to purchase nonparticipating single premium group
annuity contracts that would transfer to Athene $8,067 of the Plan's defined
benefit pension obligations related to certain retirees, participants and
beneficiaries under the Plan.
The purchase of the group annuity contracts closed on May 3, 2023, covering
approximately 96,000 AT&T participants and beneficiaries (Transferred
Participants). Under the group annuity contracts, Athene, through its
wholly-owned subsidiaries Athene Annuity and Life Company and Athene Annuity
& Life Assurance Company of New York, made an irrevocable commitment, and
is solely responsible, to pay the pension benefits of each Transferred
Participant beginning with their August 2023 pension payments. The transaction
does not change the amount of pension benefits payable to the Transferred
Participants.
The purchase of the group annuity contracts was funded directly by assets of
the Plan via the pension trust underlying the Plan and required no cash or
asset contributions by AT&T. We transferred $8,067 of pension benefit
obligation and related plan assets upon close of the transaction and
recognized a pre-tax pension settlement gain of $363. The funded status of the
Plan did not materially change due to this transaction.
This transaction with Athene was considered a settlement for accounting
purposes and required us to remeasure our pension plan assets and obligations
at quarter-end for the second and third quarters of 2023.
Obligations and Funded Status
For defined benefit pension plans, the benefit obligation is the projected
benefit obligation, the actuarial present value, as of our December 31
measurement date, of all benefits attributed by the pension benefit formula to
employee service rendered to that date. The amount of benefit to be paid
depends on a number of future events incorporated into the pension benefit
formula, including estimates of the average life of employees and their
beneficiaries and average years of service rendered. It is measured based on
assumptions concerning future interest rates and future employee compensation
levels as applicable.
For postretirement benefit plans, the benefit obligation is the accumulated
postretirement benefit obligation, the actuarial present value as of the
measurement date of all future benefits attributed under the terms of the
postretirement benefit plans to employee service.
The following table presents the change in the projected benefit obligation
for the years ended December 31:
Pension Benefits Postretirement Benefits
2024 2023 2024 2023
Benefit obligation at beginning of year $ 33,227 $ 42,828 $ 6,693 $ 7,280
Service cost - benefits earned during the period 487 477 22 23
Interest cost on projected benefit obligation 1,586 1,876 310 340
Amendments - - - (42)
Actuarial (gain) loss (1,909) 976 84 278
Benefits paid, including settlements (2,447) (4,863) (770) (1,186)
Group annuity contract transfer - (8,067) - -
Benefit obligation at end of year $ 30,944 $ 33,227 $ 6,339 $ 6,693
73
AT&T Inc.
Dollars in millions except per share amounts
The following table presents the change in the fair value of plan assets for
the years ended December 31 and the plans' funded status at December 31:
Pension Benefits Postretirement Benefits
2024 2023 2024 2023
Fair value of plan assets at beginning of year $ 30,098 $ 40,874 $ 1,763 $ 2,160
Actual return on plan assets 265 1,791 117 227
Benefits paid, including settlements1 (2,447) (4,863) (736) (624)
Contributions 3 - - -
Group annuity contract transfer - (7,704) - -
Fair value of plan assets at end of year 27,919 30,098 1,144 1,763
Unfunded status at end of year2 $ (3,025) $ (3,129) $ (5,195) $ (4,930)
1At our discretion, certain postretirement benefits may be paid from our cash
accounts, which does not reduce Voluntary Employee Benefit Association (VEBA)
assets. Future benefit payments may be made from VEBA trusts and thus reduce
those asset balances.
2Funded status is not indicative of our ability to pay ongoing pension
benefits or of our obligation to fund retirement trusts. Required pension
funding is determined in accordance with the Employee Retirement Income
Security Act of 1974, as amended (ERISA), and applicable regulations.
Amounts recognized on our consolidated balance sheets at December 31 are
listed below:
Pension Benefits Postretirement Benefits
2024 2023 2024 2023
Current portion of employee benefit obligation1 $ - $ - $ (455) $ (521)
Employee benefit obligation2 (3,025) (3,129) (4,740) (4,409)
Net amount recognized $ (3,025) $ (3,129) $ (5,195) $ (4,930)
1Included in "Accounts payable and accrued liabilities."
2Included in "Postemployment benefit obligation," combined with international
pension obligations and other postemployment obligations of $157 and $1,103 at
December 31, 2024, and $152 and $1,044 at December 31, 2023, respectively.
The accumulated benefit obligation for our pension plans represents the
actuarial present value of benefits based on employee service and compensation
as of a certain date and does not include an assumption about future
compensation levels. The accumulated benefit obligation for our pension plans
was $30,322 at December 31, 2024, and $32,481 at December 31, 2023.
Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive
Income
Periodic Benefit Costs
The service cost component of net periodic pension cost (credit) is recorded
in operating expenses in the consolidated statements of income while the
remaining components are recorded in "Other income (expense) - net." Our
combined net pension and postretirement cost (credit) recognized in our
consolidated statements of income was $(1,817), $(1,017) and $(4,789) for the
years ended December 31, 2024, 2023 and 2022.
74
AT&T Inc.
Dollars in millions except per share amounts
The following table presents the components of net periodic benefit cost
(credit):
Pension Benefits Postretirement Benefits
2024 2023 2022 2024 2023 2022
Service cost - benefits earned $ 487 $ 477 $ 617 $ 22 $ 23 $ 32
during the period
Interest cost on projected benefit 1,586 1,876 1,747 310 340 277
obligation
Expected return on assets (2,212) (2,533) (3,107) (61) (130) (112)
Amortization of prior service credit (87) (133) (133) (1,928) (2,472) (2,558)
Net periodic benefit cost (credit) before (226) (313) (876) (1,657) (2,239) (2,361)
remeasurement
Actuarial (gain) loss 38 1,717 (115) 28 181 (1,437)
Settlement (gain) loss - (363) - - - -
Net pension and postretirement $ (188) $ 1,041 $ (991) $ (1,629) $ (2,058) $ (3,798)
cost (credit)
Other Changes in Benefit Obligations Recognized in Other Comprehensive Income
The following table presents the after-tax changes in benefit obligations
recognized in OCI and the after-tax prior service credits that were amortized
from OCI into net periodic benefit costs:
Pension Benefits Postretirement Benefits
2024 2023 2022 2024 2023 2022
Balance at beginning of year $ 216 $ 316 $ 416 $ 4,523 $ 6,354 $ 6,496
Prior service (cost) credit - - - - 32 1,786
Amortization of prior service credit (66) (100) (100) (1,457) (1,863) (1,928)
Total recognized in other (66) (100) (100) (1,457) (1,831) (142)
comprehensive (income) loss
Balance at end of year $ 150 $ 216 $ 316 $ 3,066 $ 4,523 $ 6,354
75
AT&T Inc.
Dollars in millions except per share amounts
Assumptions
In determining the projected benefit obligation and the net pension and
postretirement benefit cost, we used the following significant
weighted-average assumptions:
Pension Benefits Postretirement Benefits
2024 2023 2022 2024 2023 2022
Weighted-average discount rate for determining benefit obligation at December 5.70 % 5.00 % 5.20 % 5.60 % 5.00 % 5.20 %
31
Discount rate in effect for determining 5.10 % 5.40 % 4.40 % 5.10 % 5.20 % 4.00 %
service cost1
Discount rate in effect for determining interest cost1 4.90 % 5.30 % 3.90 % 4.90 % 5.10 % 3.20 %
Weighted-average interest credit rate for cash balance pension programs2 4.60 % 4.20 % 4.10 % - % - % - %
Long-term rate of return on plan assets 7.75 % 7.50 % 6.75 % 4.00 % 6.50 % 4.50 %
Composite rate of compensation 3.00 % 3.00 % 3.00 % 3.00 % 3.00 % 3.00 %
increase for determining benefit
obligation
Composite rate of compensation 3.00 % 3.00 % 3.00 % 3.00 % 3.00 % 3.00 %
increase for determining net cost
(credit)
1Weighted-average discount rates shown for years with interim remeasurements:
2023 and 2022 for pension benefits and 2022 for postretirement benefits.
2Weighted-average interest crediting rates for cash balance pension programs
relate only to the cash balance portion of total pension benefits. A 0.50%
increase in the weighted-average interest crediting rate would increase the
pension benefit obligation by $150.
We recognize gains and losses on pension and postretirement plan assets and
obligations immediately in "Other income (expense) - net" in our consolidated
statements of income. These gains and losses are generally measured annually
as of December 31 and accordingly, will normally be recorded during the
fourth quarter, unless an earlier remeasurement is required. Should actual
experience differ from actuarial assumptions, the projected pension benefit
obligation and net pension cost and accumulated postretirement benefit
obligation and postretirement benefit cost would be affected in future years.
Discount Rate Our assumed weighted-average discount rates for pension and
postretirement benefits of 5.70% and 5.60% respectively, at December 31,
2024, reflect the hypothetical rate at which the projected benefit obligation
could be effectively settled or paid out to participants. We determined our
discount rates based on a range of factors, including a yield curve composed
of the rates of return on several hundred high-quality, fixed income corporate
bonds available at the measurement date and corresponding to the related
expected durations of future cash outflows. These bonds had an average rating
of at least Aa3 or AA- by the nationally recognized statistical rating
organizations, denominated in U.S. 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, 2023, we decreased our pension discount rate by
0.20%, resulting in an increase in our pension plan benefit obligation of
$916, and decreased our postretirement discount rate by 0.20%, resulting in an
increase in our postretirement benefit obligation of $110.
We utilize a full yield curve approach in the estimation of the service and
interest components of net periodic benefit costs for pension and other
postretirement benefits. Under this approach, we apply discounting using
individual spot rates from a yield curve composed of the rates of return on
several hundred high-quality, fixed income corporate bonds available at the
measurement date. These spot rates align to each of the projected benefit
obligations and service cost cash flows. The service cost component relates to
the active participants in the plan, so the relevant cash flows on which to
apply the yield curve are considerably longer in duration on average than the
total projected benefit obligation cash flows, which also include benefit
payments to retirees. Interest cost is computed by multiplying each spot rate
by the corresponding discounted projected benefit obligation cash flows. The
full yield curve approach reduces any actuarial gains and losses based upon
interest rate expectations (e.g., built-in gains in interest cost in an upward
sloping yield curve scenario), or gains and losses merely resulting from the
timing and magnitude of cash outflows associated with our benefit obligations.
Neither the annual measurement of our total benefit obligations nor annual net
benefit cost is affected by the full yield curve approach.
76
AT&T Inc.
Dollars in millions except per share amounts
Expected Long-Term Rate of Return In 2025, our expected long-term rate of
return is 7.75% on pension plan assets and 4.00% on postretirement plan
assets. Our long-term rates of return reflect the average rate of earnings
expected on the funds invested, or to be invested, to provide for the benefits
included in the projected benefit obligations. In setting the long-term
assumed rate of return, management considers capital markets' future
expectations, the asset mix of the plans' investment and average historical
asset return. Actual long-term returns can, in relatively stable markets, also
serve as a factor in determining future expectations. We consider many factors
that include, but are not limited to, historical returns on plan assets,
current market information on long-term returns (e.g., long-term bond rates)
and current and target asset allocations between asset categories. The target
asset allocation is determined based on consultations with external investment
advisers. If all other factors were to remain unchanged, we expect that a
0.50% decrease in the expected long-term rate of return would cause 2025
combined pension and postretirement cost to increase $136. However, any
differences in the rate and actual returns will be included with the actuarial
gain or loss recorded in the fourth quarter when our plans are remeasured.
Composite Rate of Compensation Increase Our expected composite rate of
compensation increase cost of 3.00% in 2024 and 2023 reflects the long-term
average rate of salary increases.
Healthcare Cost Trend Our healthcare cost trend assumptions are developed
based on historical cost data, the near-term outlook and an assessment of
likely long-term trends. Based on our assessment of expectations of healthcare
industry inflation, our 2025 assumed annual healthcare prescription drug cost
trend and medical cost trend for eligible participants will increase to 8.25%,
grading down to an ultimate trend rate of 4.25% in 2032. This change in
initial and ultimate assumptions increased our obligation by $144. For 2024,
our assumed annual healthcare prescription drug cost trend and medical cost
trend for eligible participants remained at an annual and ultimate trend rate
of 4.50%.
Plan Assets
Plan assets consist primarily of private and public equity, government and
corporate bonds, and real assets (real estate and natural resources). The
asset allocations of the pension plans are maintained to meet ERISA
requirements. Any plan contributions, as determined by ERISA regulations, are
made to a pension trust for the benefit of plan participants. We do not have
significant ERISA required contributions to our pension plans for 2025.
We maintain VEBA trusts to partially fund postretirement benefits; however,
there are no ERISA or regulatory requirements that these postretirement
benefit plans be funded annually.
The principal investment objectives are to ensure the availability of funds to
pay pension and postretirement benefits as they become due under a broad range
of future economic scenarios, maximize long-term investment return with an
acceptable level of risk based on our pension and postretirement obligations,
and diversify broadly across and within the capital markets to insulate asset
values against adverse experience in any one market. Each asset class has
broadly diversified characteristics. Substantial biases toward any particular
investing style or type of security are sought to be avoided by managing the
aggregation of all accounts with portfolio benchmarks. Asset and benefit
obligation forecasting studies are conducted periodically, generally every two
to three years, or when significant changes have occurred in market
conditions, benefits, participant demographics or funded status. Decisions
regarding investment policy are made with an understanding of the effect of
asset allocation on funded status, future contributions and projected
expenses.
The plans' weighted-average asset targets and actual allocations as a
percentage of plan assets, including the notional exposure of future contracts
by asset categories, at December 31 are as follows:
Pension Assets Postretirement (VEBA) Assets
Target 2024 2023 Target 2024 2023
Equity securities:
Domestic 7 % - 17 % 12 % 10 % 5 % - 15 % 10 % 16 %
International 4 % - 14 % 9 7 - % - 9 % 4 11
Fixed income securities 39 % - 49 % 44 47 7 % - 17 % 12 8
Real assets 14 % - 24 % 15 16 - % - 6 % 1 1
Private equity 11 % - 21 % 19 20 - % - 6 % 1 1
Other - % - 3 % 1 - 68 % - 78 % 72 63
Total 100 % 100 % 100 % 100 %
Prior to April 2023, the pension trust held preferred equity interests in
AT&T Mobility II LLC (Mobility II), the primary holding company for our
wireless business. The preferred equity interests were repurchased in April
2023. (See Note 16)
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AT&T Inc.
Dollars in millions except per share amounts
At December 31, 2024, AT&T securities represented less than 1% of assets
held by our pension trust. The VEBA trusts do not hold AT&T securities.
Investment Valuation
Investments are stated at fair value. Fair value is the price that would be
received to sell an asset or paid to transfer a liability at the measurement
date.
Investments in securities traded on a national securities exchange are valued
at the last reported sales price on the final business day of the year. If no
sale was reported on that date, they are valued at the last reported bid
price. Investments in securities not traded on a national securities exchange
are valued using pricing models, quoted prices of securities with similar
characteristics or discounted cash flows. Shares of registered investment
companies are valued based on quoted market prices, which represent the net
asset value of shares held at year-end.
Other commingled investment entities are valued at quoted redemption values
that represent the net asset values of units held at year-end which management
has determined approximates fair value.
Real estate and natural resource direct investments are valued at amounts
based upon appraisal reports. Fixed income securities valuation is based upon
observable prices for comparable assets, broker/dealer quotes (spreads or
prices), or a pricing matrix that derives spreads for each bond based on
external market data, including the current credit rating for the bonds,
credit spreads to Treasuries for each credit rating, sector add-ons or
credits, issue-specific add-ons or credits as well as call or other options.
Purchases and sales of securities are recorded as of the trade date. Realized
gains and losses on sales of securities are determined on the basis of average
cost. Interest income is recognized on the accrual basis. Dividend income is
recognized on the ex-dividend date.
Non-interest bearing cash and overdrafts are valued at cost, which
approximates fair value.
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AT&T Inc.
Dollars in millions except per share amounts
Fair Value Measurements
See Note 12 for a discussion of the fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value.
The following tables set forth by level, within the fair value hierarchy, the
pension and postretirement assets and liabilities at fair value as of
December 31, 2024:
Pension Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
Non-interest bearing cash $ 146 $ - $ - $ 146
Interest bearing cash 23 - - 23
Foreign currency contracts - 2 - 2
Equity securities:
Domestic equities 2,608 - 2 2,610
International equities 1,145 - - 1,145
Fixed income securities:
Corporate bonds and other investments - 6,925 1 6,926
Government and municipal bonds - 4,274 - 4,274
Mortgage-backed securities - 267 - 267
Real estate and real assets - - 2,311 2,311
Securities lending collateral 643 961 - 1,604
Receivable for variation margin 4 - - 4
Assets at fair value 4,569 12,429 2,314 19,312
Investments sold short and other liabilities at fair value (152) (12) - (164)
Total plan net assets at fair value $ 4,417 $ 12,417 $ 2,314 $ 19,148
Assets held at net asset value practical expedient
Private equity funds 5,138
Real estate funds 1,957
Commingled funds 3,895
Total assets held at net asset value practical expedient 10,990
Other assets (liabilities)1 (2,219)
Total Plan Net Assets $ 27,919
1Other assets (liabilities) include amounts receivable, accounts payable and
net adjustment for securities lending payable.
Postretirement Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
Interest bearing cash $ 816 $ 6 $ - $ 822
Equity securities:
Domestic equities 1 - - 1
Total plan net assets at fair value $ 817 $ 6 $ - $ 823
Assets held at net asset value practical expedient
Private equity funds 9
Real estate funds 9
Commingled funds 299
Total assets held at net asset value practical expedient 317
Other assets (liabilities)1 4
Total Plan Net Assets $ 1,144
1Other assets (liabilities) include amounts receivable and accounts payable.
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AT&T Inc.
Dollars in millions except per share amounts
The following tables set forth by level, within the fair value hierarchy, the
pension and postretirement assets and liabilities at fair value as of
December 31, 2023:
Pension Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
Non-interest bearing cash $ 102 $ - $ - $ 102
Interest bearing cash 5 - - 5
Foreign currency contracts - 5 - 5
Equity securities:
Domestic equities 2,146 - 2 2,148
International equities 1,085 - - 1,085
Fixed income securities:
Corporate bonds and other investments - 7,584 1 7,585
Government and municipal bonds 1 4,856 - 4,857
Mortgage-backed securities - 329 - 329
Real estate and real assets - - 2,954 2,954
Securities lending collateral 719 985 - 1,704
Receivable for variation margin 2 - - 2
Assets at fair value 4,060 13,759 2,957 20,776
Investments sold short and other liabilities at fair value (147) (1) - (148)
Total plan net assets at fair value $ 3,913 $ 13,758 $ 2,957 $ 20,628
Assets held at net asset value practical expedient
Private equity funds 5,889
Real estate funds 1,877
Commingled funds 3,863
Total assets held at net asset value practical expedient 11,629
Other assets (liabilities)1 (2,159)
Total Plan Net Assets $ 30,098
1Other assets (liabilities) include amounts receivable, accounts payable and
net adjustment for securities lending payable.
Postretirement Assets and Liabilities at Fair Value
Level 1 Level 2 Level 3 Total
Interest bearing cash $ 1,109 $ 3 $ - $ 1,112
Equity securities:
Domestic equities 1 - - 1
International equities - - 1 1
Total plan net assets at fair value $ 1,110 $ 3 $ 1 $ 1,114
Assets held at net asset value practical expedient
Private equity funds 8
Real estate funds 11
Commingled funds 624
Total assets held at net asset value practical expedient 643
Other assets (liabilities)1 6
Total Plan Net Assets $ 1,763
1Other assets (liabilities) include amounts receivable and accounts payable.
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AT&T Inc.
Dollars in millions except per share amounts
For the years ended December 31, 2024 and 2023, our postretirement assets did
not include significant investments in Level 3 assets, nor were there
significant changes in fair value of those assets during the period. The
tables below set forth a summary of changes in the fair value of the Level 3
pension assets:
Equities Fixed Income Funds Real Estate and Real Assets Total
Balance as of December 31, 2023 $ 2 $ 1 $ 2,954 $ 2,957
Realized gains (losses) - - 159 159
Unrealized gains (losses) - - (510) (510)
Purchases - - 291 291
Sales - - (583) (583)
Balance as of December 31, 2024 $ 2 $ 1 $ 2,311 $ 2,314
Equities Fixed Income Funds Real Estate and Real Assets Total
Balance as of December 31, 2022 $ 5,429 $ 1 $ 4,343 $ 9,773
Realized gains (losses) (639) - 569 (70)
Unrealized gains (losses) 643 - (1,270) (627)
Purchases - - 128 128
Sales (5,431) - (816) (6,247)
Balance as of December 31, 2023 $ 2 $ 1 $ 2,954 $ 2,957
Estimated Future Benefit Payments
Expected benefit payments are estimated using the same assumptions used in
determining our benefit obligation at December 31, 2024. Because benefit
payments will depend on future employment and compensation levels; average
years employed; average life spans; and payment elections, among other
factors, changes in any of these assumptions could significantly affect these
expected amounts. The following table provides expected benefit payments under
our pension and postretirement plans:
Pension Benefits Postretirement Benefits
2025 $ 3,508 $ 672
2026 2,964 638
2027 2,919 627
2028 2,860 606
2029 2,808 518
Years 2030 - 2034 12,995 2,419
Supplemental Retirement Plans
We also provide certain senior- and middle-management employees with
nonqualified, unfunded supplemental retirement and savings plans. While these
plans are unfunded, we have assets in a designated non-bankruptcy remote trust
that are independently managed and used to provide for certain of these
benefits. These plans include supplemental pension benefits as well as
compensation-deferral plans, some of which include a corresponding match by us
based on a percentage of the compensation deferral. For our supplemental
retirement plans, the projected benefit obligation was $1,305 and the net
supplemental retirement pension cost was $18 at and for the year ended
December 31, 2024. The projected benefit obligation was $1,437 and the net
supplemental retirement pension cost was $87 at and for the year ended
December 31, 2023.
We use the same significant assumptions for the composite rate of compensation
increase in determining our projected benefit obligation and the net pension
and postemployment benefit cost. Our discount rates of 5.50% at December 31,
2024 and 4.90% at December 31, 2023 were calculated using the same
methodologies used in calculating the discount rates for our qualified pension
and postretirement benefit plans.
Deferred compensation expense was $152 in 2024, $101 in 2023 and $94 in 2022.
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Dollars in millions except per share amounts
Contributory Savings Plans
We maintain contributory savings plans that cover substantially all employees.
Under the savings plans, we match in cash or company stock a stated percentage
of eligible employee contributions, subject to a specified ceiling. There are
no debt-financed shares held by the Employee Stock Ownership Plans, allocated
or unallocated.
Our match of employee contributions to the savings plans is fulfilled with
purchases of our stock on the open market or company cash. Benefit cost, which
is based on the cost of shares or units allocated to participating employees'
accounts or the cash contributed to participant accounts, was $565, $570 and
$611 for the years ended December 31, 2024, 2023 and 2022.
NOTE 15. SHARE-BASED PAYMENTS
Under our various share-based payment plans, senior and other management
employees and nonemployee directors have received performance stock units and
other nonvested stock units.
As of December 31, 2024, we were authorized to issue up to approximately 84
million shares of common stock (including shares that may be issued upon
exercise of outstanding options or upon vesting of performance stock units or
other nonvested stock units) pursuant to these various plans:
•Performance stock units, which are nonvested stock units, which are valued
based upon the market price of our common stock at the date of grant and
performance expectations. These distribute in the form of AT&T common
stock and cash at the end of a three-year period, subject to the achievement
of certain performance goals. We treat the cash-settled portion of these
awards as a liability.
•Restricted stock and restricted stock units are valued at the market price
of our common stock at the date of grant and do not have any performance
conditions. Restricted stock predominantly vests over a three- to ten-year
period and restricted stock units predominantly vest over a three-year period.
We account for our share-based payment arrangements based on the fair value of
the awards on their respective grant date, which may affect our ability to
fully realize the value shown on our consolidated balance sheets of deferred
tax assets associated with compensation expense. We record a valuation
allowance when our future taxable income is not expected to be sufficient to
recover the asset. Accordingly, there can be no assurance that the current
stock price of our common shares will rise to levels sufficient to realize the
entire tax benefit currently reflected on our consolidated balance sheets.
However, to the extent we generate excess tax benefits (i.e., those additional
tax benefits in excess of the deferred taxes associated with compensation
expense previously recognized) the potential future impact on income would be
reduced.
Our consolidated statements of income include the share-based compensation
cost recognized for the plans described above as "Selling, general and
administrative" expense. Those expenses, as well as the associated tax
benefits, are reflected in the table below:
2024 2023 2022
Performance stock units $ 127 $ 79 $ 168
Restricted stock and stock units 378 400 350
Total $ 505 $ 479 $ 518
Income tax benefit $ 123 $ 118 $ 127
A summary of the status of our nonvested stock units as of December 31, 2024,
and changes during the year then ended is presented as follows (shares in
millions):
Nonvested Stock Units Shares Weighted-Average Grant-
Date Fair Value
Nonvested at January 1, 2024 28 $ 20.05
Granted 37 18.68
Vested (25) 18.42
Forfeited (3) 18.55
Nonvested at December 31, 2024 37 $ 19.88
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AT&T Inc.
Dollars in millions except per share amounts
As of December 31, 2024, there was $666 of total unrecognized compensation
cost related to nonvested share-based payment arrangements outstanding. That
cost is expected to be recognized over a weighted-average period of 2.21
years. The total fair value of shares vested during the year was $452 for
2024, compared to $592 for 2023 and $783 for 2022.
NOTE 16. STOCKHOLDERS' AND MEZZANINE EQUITY
Authorized Shares We have authorized 14 billion common shares of AT&T
stock and 10 million preferred shares of AT&T stock, each with a par value
of $1.00 per share. Cumulative perpetual preferred shares consist of the
following:
•Series A: 48 thousand shares outstanding at December 31, 2024 and
December 31, 2023, with a $25,000 per share liquidation preference and a
dividend rate of 5.000%.
•Series B: 20 thousand shares outstanding at December 31, 2024 and
December 31, 2023, with a €100,000 per share liquidation preference, and an
initial rate of 2.875%, subject to reset after May 1, 2025. On January 31,
2025, we issued a call notice for the Series B cumulative preferred shares,
with a redemption date of March 3, 2025.
•Series C: 70 thousand shares outstanding at December 31, 2024 and
December 31, 2023, with a $25,000 per share liquidation preference, and a
dividend rate of 4.75%.
So long as the quarterly preferred dividends are declared and paid on a timely
basis on each series of preferred shares, there are no limitations on our
ability to declare a dividend on or repurchase AT&T common shares. The
preferred shares are optionally redeemable by AT&T at the liquidation
price on or after five years from the issuance date, or upon certain other
contingent events.
Stock Repurchase Program From time to time, we repurchase shares of common
stock. Over the past few years, these repurchases have generally been for
distribution through our employee benefit plans or in connection with certain
acquisitions. In December 2024, the Board approved an authorization to
repurchase up to $10,000 of common stock and terminated the March 2014
authorization.
To implement repurchase authorizations, we have used open market repurchases,
relying on Rule 10b5-1 of the Securities Exchange Act of 1934, where feasible.
We also used accelerated share repurchase agreements with large financial
institutions to repurchase our stock. During 2024, we repurchased
approximately 36 thousand shares totaling $1 and during 2023, there were no
shares repurchased under the March 2014 authorization.
Dividend Declarations In December 2024 and December 2023, AT&T declared a
quarterly preferred dividend of $36. In December 2024 and December 2023,
AT&T declared a quarterly common dividend of $0.2775 per share of common
stock.
Preferred Interests Issued by Subsidiaries We have issued cumulative perpetual
preferred membership interests in certain subsidiaries. The preferred
interests are entitled to cash distributions, subject to declaration.
Mobility II Preferred Interests
In 2018, we issued 320 million Series A Cumulative Perpetual Preferred
Membership Interests in Mobility II (Mobility preferred interests), which paid
cash distributions of 7% per annum, subject to declaration. So long as the
distributions were declared and paid, the terms of the Mobility preferred
interests did not impose any limitations on cash movements between affiliates,
or our ability to declare a dividend on or repurchase AT&T shares. All
outstanding Mobility preferred interests were repurchased as of April 2023,
leaving no amounts outstanding at December 31, 2023.
Prior to repurchase, a holder of the Mobility preferred interests could put
the interests to Mobility II, or Mobility II could have redeemed the interests
upon a change in control of Mobility II or on or after September 9, 2022, with
either option only allowed to be exercised during certain periods.
The price at which a put option or a redemption option could be exercised was
the greater of (1) the market value of the interests as of the last date of
the quarter preceding the date of the exercise of a put or redemption option
and (2) the sum of (a) twenty-five dollars plus (b) any accrued and unpaid
distributions. The redemption price was to be paid with cash, AT&T common
stock, or a combination of cash and AT&T common stock, at Mobility II's
sole election. In no event was Mobility II required to deliver more than
250 million shares of AT&T common stock to settle put and redemption
options.
On October 24, 2022, approximately 105 million Mobility preferred interests
were put to AT&T by a third-party investor, for which we paid
approximately $2,600 cash to redeem. On December 27, 2022, the AT&T
pension trust provided written notice of its right to require us to purchase
the remaining 213 million, or approximately $5,340, of Mobility preferred
interests outstanding. The terms of the instruments limited the amount we were
required to redeem in any 12-month period to approximately 107 million
shares, or $2,670. With the certainty of redemption, the Mobility preferred
interests were reclassified from equity to a liability at fair value, with
approximately $2,670 recorded in current liabilities as "Accounts payable and
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AT&T Inc.
Dollars in millions except per share amounts
accrued liabilities," representing the amount required to be redeemed within
one year, and $2,670 recorded in "Other noncurrent liabilities." The
liabilities associated with the Mobility preferred interests were considered
Level 3 under the Fair Value Measurement and Disclosure framework (see Note
12). The difference between the carrying value of the Mobility preferred
interest, which represented fair value at contribution, and the fair value of
the instrument upon settlement and/or balance sheet reclassification was
recorded as an adjustment to additional paid-in capital. As of December 31,
2022, we had approximately 213 million Mobility preferred interests
outstanding, which had a redemption value of approximately $5,340 and paid
cash distributions of $373 per annum, subject to declaration. In April 2023,
we accepted the December 2022 put option notice from the AT&T pension
trust and repurchased the remaining 213 million Mobility preferred interests
for a purchase price, including accrued and unpaid distributions, of $5,414.
Tower Holdings Preferred Interests
In 2019, we issued $6,000 nonconvertible cumulative preferred interests in a
wireless subsidiary (Tower Holdings) that holds interests in various tower
assets and have the right to receive approximately $6,000 if the purchase
options from the tower companies are exercised.
The membership interests in Tower Holdings consist of (1) common interests,
which are held by a consolidated subsidiary of AT&T, and (2) two series of
preferred interests (collectively the "2019 Tower preferred interests"). The
2019 Tower preferred interests were subject to reset in December 2024 and
included a September series (Tower Class A-1) totaling $1,500 that paid an
initial preferred distribution of 5.0%, and a December series (Tower Class
A-2) totaling $4,500 that paid an initial preferred distribution of 4.75%.
In August 2024, we amended the 2019 Tower preferred interests, effective
November 2024, to reset the rate and restructure the membership interests
whereby all of the 2019 Tower preferred interests are now designated Fixed
Rate Class A Limited Membership Interests (Tower Fixed Rate Interests). A
portion of the Tower Fixed Rate Interests will move to Floating Rate Class A
Limited Membership Interests (Tower Floating Rate Interests) each year over a
five-year period. The Tower Fixed Rate Interests pay a preferred distribution
of 5.90%, and the Tower Floating Rate Interests, which could equal $525 by
2028 if not called prior, pay a preferred distribution equal to the Secured
Overnight Financing Rate (SOFR) plus 250 basis points, as defined in the
agreement. Distributions are paid quarterly, subject to declaration, and reset
every five years. Any failure to declare or pay distributions on the Tower
Fixed Rate Interests or Tower Floating Rate Interests (collectively, the
"Tower preferred interests") would not impose any limitation on cash movements
between affiliates, or our ability to declare a dividend on or repurchase
AT&T shares. We can call the Tower preferred interests at the issue price
beginning in November 2029, and we can call the Tower Floating Rate Interests
at any time. The Tower preferred interests are included in "Noncontrolling
interest" on the consolidated balance sheets.
The holders of the Tower preferred interests have the option to require
redemption upon the occurrence of certain contingent events, such as the
failure of AT&T to pay the preferred distribution for two or more periods
or to meet certain other requirements, including a minimum credit rating. If
notice is given upon such an event, all other holders of equal or more
subordinate classes of membership interests in Tower Holdings are entitled to
receive the same form of consideration payable to the holders of the preferred
interests, resulting in a deemed liquidation for accounting purposes.
Telco LLC Preferred Interests
In September 2020, we issued $2,000 nonconvertible cumulative preferred
interests (Telco Class A-1) out of a newly created limited liability company
(Telco LLC) that was formed to hold telecommunications-related assets. In
April 2023, we expanded our September 2020 transaction and issued an
additional $5,250 of nonconvertible cumulative preferred interests (Telco
Class A-2 and A-3). As of December 31, 2024 and 2023, cumulative preferred
interests in our Telco LLC totaled $7,250 (collectively the "Telco preferred
interests").
Members' equity in Telco LLC consists of (1) members' interests, which are
held by a consolidated subsidiary of AT&T, (2) Telco Class A-1 preferred
interests, which pay an initial preferred distribution of 4.25% annually,
subject to declaration, and subject to reset every seven years, and (3) Telco
Class A-2 and A-3 preferred interests, which pay an initial preferred
distribution of 6.85% annually, subject to declaration, and subject to reset
on November 1, 2027, and every seven years thereafter. Failure to pay
distributions on the Telco preferred interests would not limit cash movements
between affiliates, or our ability to declare a dividend on or repurchase
AT&T shares. We can call the Telco preferred interests at the issue price
beginning seven years from the issuance date. The Telco preferred interests
are included in "Noncontrolling interest" on the consolidated balance sheets.
The holders of the Telco preferred interests have the option to require
redemption upon the occurrence of certain contingent events, such as the
failure of Telco LLC to pay the preferred distribution for two or more periods
or to meet certain other requirements, including a minimum credit rating. If
notice is given, all other holders of equal or more subordinate classes of
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AT&T Inc.
Dollars in millions except per share amounts
members' equity are entitled to receive the same form of consideration payable
to the holders of the preferred interests, resulting in a deemed liquidation
for accounting purposes.
In October 2024, we entered into an agreement to issue in the first quarter of
2025 an additional $2,250 of nonconvertible cumulative preferred interests in
Telco LLC (Telco Class A-4). The Telco Class A-4 interests will pay an initial
preferred distribution of 5.94% annually, subject to declaration, and subject
to reset on November 1, 2028, and every four years thereafter. The Telco Class
A-4 interests can be called at issue price beginning on November 1, 2028, and
are subject to the same redemption and liquidation rights as the Telco Class
A-1, A-2 and A-3 interests. Upon the expected issuance in the first quarter of
2025, we intend to use the Telco Class A-4 proceeds to fund the redemption of
preferred equity securities.
Mobility II Redeemable Noncontrolling Interests
In June 2023, we issued two million Series B Cumulative Perpetual Preferred
Membership Interests in Mobility II LLC (Mobility noncontrolling interests),
which pay cash distributions of 6.8% per annum, subject to declaration. So
long as the distributions are declared and paid, the terms of the Mobility
noncontrolling interests will not impose any limitations on cash movements
between affiliates, or our ability to declare a dividend on or repurchase
AT&T shares.
The Mobility noncontrolling interests are required to be initially recorded at
fair value less issuance costs and will accrete to redemption value of $2,000
through "Net Income Attributable to Noncontrolling Interest." The Mobility
noncontrolling interests are considered Level 3 under the Fair Value
Measurement and Disclosures framework (see Note 12) and included in
"Redeemable Noncontrolling Interest" on the consolidated balance sheets.
A holder of the Mobility noncontrolling interests may put the interests to
Mobility II on or after the earliest of certain events or each June 15 and
December 15, beginning on June 15, 2028. Mobility II may redeem the interests
on each March 15 and September 15, beginning on March 15, 2028. The price at
which a put option or a redemption option can be exercised is the sum of (a)
$1,000 per Mobility noncontrolling interest plus (b) any accrued and unpaid
distributions. The redemption price must be paid in cash.
NOTE 17. 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.
The following table sets forth a summary of cash proceeds received, net of
remittances paid, from sales of receivables for the years ended December 31:
2024 2023 2022
Net cash received (paid) from equipment installment receivables program1 $ (1,358) $ 648 $ 1,875
Net cash received (paid) from revolving receivables program 1,147 1,456 -
Net cash received (paid) from other programs - (632) 620
Total net cash impact to cash flows from operating activities2 $ (211) $ 1,472 $ 2,495
1Cash from initial sales of $10,587, $10,980 and $11,129 for the years ended
December 31, 2024, 2023 and 2022, respectively.
2Net 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.
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AT&T Inc.
Dollars in millions except per share amounts
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 at December 31:
2024 2023
Equipment Installment Revolving Equipment Installment Revolving
Gross receivables: $ 3,504 $ 553 $ 3,714 $ 924
Balance sheet classification
Accounts receivable
Notes receivable 1,817 - 1,695 -
Trade receivables 237 553 548 924
Other Assets
Noncurrent notes and trade receivables 1,450 - 1,471 -
Outstanding portfolio of receivables derecognized from $ 11,909 $ 2,770 $ 12,027 1,500
our consolidated balance sheets
Cash proceeds received, net of remittances1 8,243 2,770 9,361 1,500
1Represents 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.
The following table sets forth a summary of equipment installment receivables
sold under this program:
2024 2023 2022
Gross receivables sold1 $ 10,696 $ 11,104 $ 11,510
Net receivables sold2 10,160 10,603 11,061
Cash proceeds received 10,587 10,980 11,129
Beneficial interests recorded - - 245
Guarantee obligation recorded 930 932 703
1Receivables net of promotion credits.
2Receivables 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 12).
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AT&T Inc.
Dollars in millions except per share amounts
The following table presents the previously transferred equipment installment
receivables, which we repurchased in exchange for the associated beneficial
interests:
2024 2023 2022
Fair value of repurchased receivables $ 3,185 $ 2,997 $ 3,314
Carrying value of beneficial interests 3,199 3,013 3,335
Gain (loss) on repurchases1 $ (14) $ (16) $ (21)
1These gains (losses) are included in "Selling, general and administrative"
expense in the consolidated statements of income.
At December 31, 2024 and December 31, 2023, our beneficial interests were
$3,185 and $2,270, respectively, of which $1,906 and $1,296 are included in
"Prepaid and other current assets" on our consolidated balance sheets, with
the remainder in "Other Assets." The guarantee obligation at December 31,
2024 and December 31, 2023 was $301 and $385, respectively, of which $150 and
$111 are included in "Accounts payable and accrued liabilities" on our
consolidated balance sheets, with the remainder in "Other noncurrent
liabilities." Our maximum exposure to loss as a result of selling these
equipment installment receivables is limited to the total amount of our
beneficial interests and guarantee obligation.
Revolving Receivables Program
During 2024, we expanded our revolving agreement to transfer up to $2,770 of
certain receivables through our bankruptcy-remote subsidiaries to various
financial institutions on a recurring basis in exchange for cash equal to the
gross receivables transferred. This agreement is subject to renewal on an
annual basis and the transfer limit may be expanded or reduced from time to
time. 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 $553 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.
The following table sets forth a summary of the revolving receivables sold:
2024 2023 2022
Gross receivables sold/cash proceeds received1 $ 21,632 $ 8,882 $ -
Total collections under revolving agreement 20,362 7,382 -
Net cash proceeds received $ 1,270 $ 1,500 $ -
Net receivables sold2 $ 21,039 $ 8,679 $ -
1Includes initial sales of receivables of $1,270, $1,500 and $0 for the years
ended December 31, 2024, 2023 and 2022, respectively.
2Receivables net of allowance and other reserves.
NOTE 18. TOWER TRANSACTION
In December 2013, we closed our transaction with Crown Castle International
Corp. (Crown Castle) in which Crown Castle gained the exclusive rights to
lease and operate 9,048 wireless towers and purchased 627 of our wireless
towers for $4,827 in cash. The leases have various terms with an average
length of approximately 28 years. As the leases expire, Crown Castle will have
fixed price purchase options for these towers totaling approximately $4,200,
based on their estimated fair market values at the end of the lease terms. We
are subleasing space on the towers from Crown Castle over an estimated
original term of 20 years, at current market rates, subject to further
optional renewals in the future.
We determined that we did not transfer control of the tower assets, which
prevented us from achieving sale-leaseback accounting for the transaction, and
we accounted for the cash proceeds from Crown Castle as a financing obligation
on our consolidated balance sheets. We record interest on the financing
obligation using the effective interest method at a rate of approximately
3.9%. The financing obligation is increased by interest expense and estimated
future net cash flows generated and retained by Crown Castle from operation of
the tower sites, and reduced by our contractual payments. We continue to
include the tower assets in "Property, Plant and Equipment - Net" on our
consolidated balance sheets and depreciate them accordingly. At December 31,
2024 and 2023, the tower assets had a balance of $608 and $647, respectively.
Our depreciation expense for these assets was $39 for each of 2024, 2023 and
2022.
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AT&T Inc.
Dollars in millions except per share amounts
Payments made to Crown Castle under this arrangement were $269 for 2024. At
December 31, 2024, the future minimum payments under the sublease arrangement
are $274 for 2025, $280 for 2026, $285 for 2027, $291 for 2028, $297 for 2029
and $1,389 thereafter.
NOTE 19. TRANSACTIONS WITH DIRECTV
We account for our investment in DIRECTV under the equity method and record
our share of DIRECTV earnings as equity in net income of affiliates, with
DIRECTV considered a related party. On September 29, 2024, we agreed to sell
our interest in DIRECTV to TPG. (See Note 10)
The following table sets forth our share of DIRECTV's earnings included in
"Equity in net income of affiliates" and cash distributions received from
DIRECTV:
2024 2023 2022
DIRECTV's earnings included in Equity in net income of affiliates $ 2,027 $ 1,666 $ 1,808
Distributions classified as operating activities $ 2,027 $ 1,666 $ 1,808
Distributions classified as investing activities 928 2,049 2,649
Cash distributions received from DIRECTV $ 2,955 $ 3,715 $ 4,457
For the years ended December 31, 2024, 2023 and 2022, we billed DIRECTV
approximately $536, $730 and $1,260 under commercial arrangements and
transition service agreements, which were recorded as a reduction to the
operations and support expenses incurred.
At December 31, 2024, we had accounts receivable from DIRECTV of $256 and
accounts payable to DIRECTV of $17.
We are not committed, implicitly or explicitly, to provide financial or other
support, as our involvement with DIRECTV is limited to the carrying amount of
the assets and liabilities recognized on our balance sheet.
NOTE 20. FIRSTNET
In 2017, the First Responder Network Authority (FirstNet) selected AT&T to
build and manage the first nationwide broadband network dedicated to America's
first responders. Under the 25-year agreement, FirstNet provides 20 MHz of
valuable telecommunications spectrum and success-based payments of $6,500 to
support network buildout, which has been substantially completed. We are
required to construct a network that achieves coverage and nationwide
interoperability requirements and have a contractual commitment to make
sustainability payments of $18,000 over the 25-year contract. These
sustainability payments represent our commitment to fund FirstNet's operating
expenses and future reinvestments in the network which we own and operate,
which we estimate in the $3,000 or less range over the life of the 25-year
contract. After FirstNet's operating expenses are paid, we anticipate the
remaining amount, expected to be in the $15,000 range, will be reinvested into
the network. On January 30, 2024, FirstNet agreed to reinvest up to $6,300 in
the network over 10 years, subject to authorization.
During 2024, we submitted $561 in sustainability payments, with future
payments under the agreement of $420 for 2025, $896 for 2026, $1,566 for 2027,
$1,658 for 2028, $1,474 for 2029 and $10,435 thereafter. Amounts paid to
FirstNet, which are not expected to be returned to AT&T to be reinvested
into our network, will be expensed in the period paid. In the event FirstNet
does not reinvest any funds to construct, operate, improve and maintain this
network, our maximum exposure to loss is the total amount of the
sustainability payments, which would be reflected in higher expense.
NOTE 21. CONTINGENT LIABILITIES
We are party to numerous lawsuits, regulatory proceedings and other matters
arising in the ordinary course of business. In evaluating these matters on an
ongoing basis, we take into account amounts already accrued on the balance
sheet. In our opinion, although the outcomes of these proceedings are
uncertain, they should not have a material adverse effect on our financial
position, results of operations or cash flows. See Note 12 for a discussion of
collateral and credit-risk contingencies.
We have contractual obligations to purchase certain goods or services from
various other parties. Our purchase obligations are expected to be
approximately $9,916 in 2025, $10,982 in total for 2026 and 2027, $5,495 in
total for 2028 and 2029 and $1,604 in total for years thereafter.
88
AT&T Inc.
Dollars in millions except per share amounts
NOTE 22. 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.
Our outstanding payment obligations are included in "Accounts payable and
accrued liabilities" on our consolidated balance sheets and are reported as
operating or investing (when capitalizable) activities in our statements of
cash flows when paid.
The following table presents the change in the supplier financing obligation
for the years ended December 31:
2024 2023
Confirmed obligations outstanding at the beginning of year $ 2,844 $ 2,869
Invoices received 15,510 12,496
Invoices paid (15,856) (12,521)
Confirmed obligations outstanding at the end of year $ 2,498 $ 2,844
Direct Supplier Financing
We also have arrangements with suppliers of handset inventory that allow us to
extend the stated payment terms by up to 90 days at an additional cost to us
(variable rate extension fee). Direct supplier financing outstanding is
included in "Accounts payable and accrued liabilities" on our consolidated
balance sheets and is reported as operating activities in our statements of
cash flows when paid.
The following table presents the change in the direct supplier financing
obligation for the years ended December 31:
2024 2023
Obligations outstanding at the beginning of year $ 5,442 $ 5,486
Invoices extended 15,831 17,376
Invoices paid (15,001) (17,420)
Obligations outstanding at the end of year $ 6,272 $ 5,442
Vendor Financing
In connection with capital improvements and the acquisition of other
productive assets, we negotiate favorable payment terms of 120 days or more
(referred to as vendor financing), which are reported as financing activities
in our statements of cash flows when paid.
The following table presents the change in the vendor financing obligation for
the years ended December 31:
2024 2023
Obligations outstanding at the beginning of year $ 2,516 $ 5,607
Commitments 700 2,651
Payments (1,792) (5,742)
Obligations outstanding at the end of year1,2 $ 1,424 $ 2,516
1Total vendor financing payables at December 31, 2024 and 2023 were $1,448 and
$2,833, respectively, of which $749 and $1,975 are included in "Accounts
payable and accrued liabilities."
2Includes software licensing arrangements with payment terms of two to five
years totaling approximately $850 and $630 at December 31, 2024 and 2023,
respectively.
89
AT&T Inc.
Dollars in millions except per share amounts
NOTE 23. ADDITIONAL FINANCIAL INFORMATION
December 31,
Consolidated Balance Sheets 2024 2023
Accounts payable and accrued liabilities:
Accounts payable $ 27,433 $ 27,309
Accrued payroll and commissions 2,015 1,698
Current portion of employee benefit obligation 570 631
Accrued interest 2,020 2,187
Accrued taxes 1,301 1,022
Other 2,318 3,005
Total accounts payable and accrued liabilities $ 35,657 $ 35,852
Consolidated Statements of Income 2024 2023 2022
Advertising expense $ 2,505 $ 2,576 $ 2,462
Interest income $ 212 $ 303 $ 143
Interest expense incurred $ 7,120 $ 7,578 $ 7,402
Capitalized interest - capital expenditures (162) (179) (174)
Capitalized interest - spectrum1 (199) (695) (1,120)
Total interest expense $ 6,759 $ 6,704 $ 6,108
1Included in "Acquisitions, net of cash acquired" in our consolidated
statements of cash flows.
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:
December 31,
Cash and Cash Equivalents and Restricted Cash 2024 2023 2022 2021
Cash and cash equivalents from continuing operations $ 3,298 $ 6,722 $ 3,701 $ 19,223
Cash and cash equivalents from discontinued operations - - - 1,946
Restricted cash in Prepaid and other current assets 1 2 1 3
Restricted cash in Other Assets 107 109 91 144
Cash and cash equivalents and restricted cash $ 3,406 $ 6,833 $ 3,793 $ 21,316
90
AT&T Inc.
Dollars in millions except per share amounts
The following tables summarize certain cash flow activities from continuing
operations:
Consolidated Statements of Cash Flows 2024 2023 2022
Cash paid (received) during the year for:
Interest $ 7,132 $ 7,370 $ 7,772
Income taxes, net of refunds1 2,456 1,599 592
1Total cash income taxes paid, net of refunds, by AT&T was $2,456, $1,599
and $696 for 2024, 2023 and 2022, respectively.
Purchase of property and equipment $ 20,101 $ 17,674 $ 19,452
Interest during construction - capital expenditures1 162 179 174
Total Capital expenditures $ 20,263 $ 17,853 $ 19,626
Business acquisitions $ - $ - $ -
Spectrum acquisitions 181 2,247 9,080
Interest during construction - spectrum1 199 695 1,120
Total Acquisitions, net of cash acquired $ 380 $ 2,942 $ 10,200
1Total capitalized interest was $361, $874 and $1,294 for 2024, 2023 and 2022,
respectively.
Labor Contracts As of December 31, 2024, we employed approximately 140,990
persons. Approximately 43% of our employees are represented by the
Communications Workers of America (CWA), the International Brotherhood of
Electrical Workers (IBEW) or other unions. After expiration of collective
bargaining agreements, work stoppages or labor disruptions may occur in the
absence of new contracts or other agreements being reached. The main contract
set to expire in 2025 covers approximately 9,000 employees in Arkansas,
Kansas, Missouri, Oklahoma and Texas and is set to expire in April.
NOTE 24. DISCONTINUED OPERATIONS
Upon the separation and distribution, 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 previously did not individually
meet the criteria due to materiality, and have determined discontinued
operations to be comprised of WarnerMedia, Vrio, Xandr and Playdemic.
The following is a summary of operating results included in income (loss) from
discontinued operations for the years ended:
2024 2023 2022
Revenues $ - $ - $ 9,454
Operating Expenses
Cost of revenues - - 5,481
Selling, general and administrative - - 2,791
Depreciation and amortization - - 1,172
Total operating expenses - - 9,444
Interest expense - - 131
Equity in net income (loss) of affiliates - - (27)
Other income (expense) - net - - (87)
Total other income (expense) - - (245)
Net loss before income taxes - - (235)
Income tax expense (benefit) - - (54)
Net loss from discontinued operations $ - $ - $ (181)
In preparation for close of the separation and distribution, on April 7, 2022,
Spinco drew $10,000 on its $10,000 term loan credit agreement (Spinco Term
Loan), which conveyed to WBD. Total debt conveyed was approximately $41,600,
which included $1,600 of existing WarnerMedia debt, $30,000 of Spinco senior
notes issued in March 2022 and the $10,000 Spinco Term Loan. WarnerMedia cash
transfer to Discovery was approximately $2,660.
91
AT&T Inc.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
During our two most recent fiscal years, there has been no change in the
independent accountant engaged as the principal accountant to audit our
financial statements, and the independent accountant has not expressed
reliance on other independent accountants in its reports during such time
period.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
The registrant maintains disclosure controls and procedures that are designed
to ensure that information required to be disclosed by the registrant is
recorded, processed, summarized, accumulated and communicated to its
management, including its principal executive and principal financial
officers, to allow timely decisions regarding required disclosure, and
reported within the time periods specified in the SEC's rules and forms. The
Chief Executive Officer and Chief Financial Officer have performed an
evaluation of the effectiveness of the design and operation of the
registrant's disclosure controls and procedures as of December 31, 2024.
Based on that evaluation, the Chief Executive Officer and Chief Financial
Officer concluded that the registrant's disclosure controls and procedures
were effective as of December 31, 2024.
There have not been any changes in our internal control over financial
reporting during our most recent fiscal quarter that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting.
Internal Control Over Financial Reporting
a.Management's Annual Report on Internal Control over Financial Reporting
The management of AT&T is responsible for establishing and maintaining
adequate internal control over financial reporting. AT&T's internal
control system was designed to provide reasonable assurance as to the
integrity and reliability of the published financial statements. AT&T
management assessed the effectiveness of the company's internal control over
financial reporting as of December 31, 2024. In making this assessment, it
used the criteria set forth by the Committee of Sponsoring Organizations of
the Treadway Commission (COSO) in Internal Control - Integrated Framework
(2013 framework). Based on its assessment, AT&T management believes that,
as of December 31, 2024, the Company's internal control over financial
reporting is effective based on those criteria.
b.Attestation Report of the Independent Registered Public Accounting Firm
The independent registered public accounting firm that audited the financial
statements included in the Annual Report containing the disclosure required by
this Item, Ernst & Young LLP, has issued an attestation report on the
Company's internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
a.There is no information that was required to be disclosed in a report on
Form 8-K during the fourth quarter of 2024 but was not reported.
b.In the quarter ended December 31, 2024, none of our directors or officers
(as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan
for the purchase or sale of our securities intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement
for the purchase or sale of our securities, within the meaning of Item 408 of
Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
92
AT&T Inc.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding executive officers required by Item 401 of Regulation
S-K is furnished in a separate disclosure at the end of Part I of this report
entitled "Information about our Executive Officers." Information regarding
directors required by Item 401 of Regulation S-K is incorporated herein by
reference pursuant to General Instruction G(3) from the registrant's 2025
definitive proxy statement (Proxy Statement) under the heading "Management
Proposal Item No. 1. Election of Directors."
Information required by Item 405 of Regulation S-K is incorporated herein by
reference pursuant to General Instruction G(3) from the registrant's Proxy
Statement under the heading "Delinquent Section 16(a) Reports."
The registrant has a separately-designated standing audit committee
established in accordance with Section 3(a)(58)(A) of the Securities Exchange
Act of 1934. The members of the committee are Messrs. Luczo and McCallister,
and Mses. Mayer and Taylor. The additional information required by Item
407(d)(5) of Regulation S-K is incorporated herein by reference pursuant to
General Instruction G(3) from the registrant's Proxy Statement under the
heading "Audit Committee."
The registrant has adopted a code of ethics entitled "Code of Ethics" that
applies to the registrant's principal executive officer, principal financial
officer, principal accounting officer, or controller or persons performing
similar functions. The additional information required by Item 406 of
Regulation S-K is provided in this report under the heading "General" under
Part I, Item 1. Business.
Information required by Item 408(b) of Regulation S-K is incorporated herein
by reference pursuant to General Instruction G(3) from the registrant's Proxy
Statement under the heading "Insider Trading Policy."
ITEM 11. EXECUTIVE COMPENSATION
Information required by this Item is incorporated herein by reference pursuant
to General Instruction G(3) from the registrant's Proxy Statement under the
headings "Director Compensation," "2024 Director Compensation Table," "CEO Pay
Ratio," "Pay Versus Performance," and the pages beginning with the heading
"Compensation Discussion and Analysis" and ending with, and including, the
pages under the heading "Potential Payments upon Change in Control."
Information required by Item 407(e)(5) of Regulation S-K is included in the
registrant's Proxy Statement under the heading "Compensation Committee Report"
and is incorporated herein by reference pursuant to General Instruction G(3)
and shall be deemed furnished in this Annual Report on Form 10-K and will not
be deemed incorporated by reference into any filing under the Securities Act
of 1933 or the Securities Exchange Act of 1934.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Information required by Item 201(d) of Regulation S-K is included in the
registrant's Proxy Statement under the heading "Equity Compensation Plan
Information," which is incorporated herein by reference pursuant to General
Instruction G(3). Information required by Item 403 of Regulation S-K is
included in the registrant's Proxy Statement under the heading "Common Stock
Ownership," which is incorporated herein by reference pursuant to General
Instruction G(3).
93
AT&T Inc.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Information required by Item 404 of Regulation S-K is included in the
registrant's Proxy Statement under the heading "Related Person Transactions,"
which is incorporated herein by reference pursuant to General Instruction
G(3). Information required by Item 407(a) of Regulation S-K is included in the
registrant's Proxy Statement under the heading "Director Independence," which
is incorporated herein by reference pursuant to General Instruction G(3).
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information required by this Item is included in the registrant's Proxy
Statement under the heading "Principal Accountant Fees and Services," which is
incorporated herein by reference pursuant to General Instruction G(3).
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)Documents filed as a part of the report:
Page
(1) Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) 38
Financial Statements covered by Report of Independent Registered Public
Accounting Firm:
Consolidated Statements of Income 41
Consolidated Statements of Comprehensive Income 42
Consolidated Balance Sheets 43
Consolidated Statements of Cash Flows 44
Consolidated Statements of Changes in Stockholders' Equity 45
Notes to Consolidated Financial Statements 47
(2) Financial Statement Schedules:
II - Valuation and Qualifying Accounts 97
Financial statement schedules other than those listed above have been omitted
because the required information is contained in the financial statements and
notes thereto, or because such schedules are not required or applicable.
94
AT&T Inc.
95
AT&T Inc.
96
AT&T Inc.
ITEM 16. FORM 10-K SUMMARY
None.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Allowance for Credit Losses
COL. A COL. B COL. C COL. D COL. E
Additions
(1) (2) (3)
Balance at Beginning of Period Charged to Charged to Other Acquisitions Deductions (b) Balance at End
Costs and Expenses (a)
Accounts of Period (c)
Year 2024 $ 756 1,969 - - 2,172 $ 553
Year 2023 $ 1,011 1,969 - - 2,224 $ 756
Year 2022 $ 1,163 1,865 - - 2,017 $ 1,011
(a)Includes amounts previously written off which were credited directly to
this account when recovered.
Excludes direct charges and credits to expense for nontrade receivables in the
consolidated statements of income.
(b)Amounts written off as uncollectible.
(c)Includes balances applicable to trade receivables, loans, contract assets
and other assets subject to credit loss measurement (see Note 1).
Allowance for Deferred Tax Assets
COL. A COL. B COL. C COL. D COL. E
Additions
(1) (2) (3)
Balance at Beginning of Period Charged to Charged to Other Acquisitions Deductions Balance at End
Costs and Expenses
Accounts
of Period
Year 2024 $ 4,656 (318) - - - $ 4,338
Year 2023 $ 4,175 481 - - - $ 4,656
Year 2022 $ 4,343 (168) - - - $ 4,175
97
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, on the 12th day of
February, 2025.
AT&T INC.
/s/ Pascal Desroches
Pascal Desroches
Senior Executive Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Principal Executive Officer:
John T. Stankey*
Chief Executive Officer
and President
Principal Financial Officer:
Pascal Desroches
Senior Executive Vice President
and Chief Financial Officer
/s/ Pascal Desroches
Pascal Desroches, as attorney-in-fact
and on his own behalf as Principal
Financial Officer
Principal Accounting Officer:
Sabrina Sanders
Senior Vice President, Chief
Accounting Officer and Controller
/s/ Sabrina Sanders
February 12, 2025
Directors:
William E. Kennard* Beth E. Mooney*
Scott T. Ford* Matthew K. Rose*
Glenn H. Hutchins* John T. Stankey*
Stephen J. Luczo* Cynthia B. Taylor*
Marissa A. Mayer* Luis A. Ubiñas*
Michael B. McCallister*
* by power of attorney
98
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