•2021年7月，我們完成了與TPG Capital（TPG）的交易，組建了一家名爲DIRECTV Entertainment Holdings，LLC（DIRECTV）的新公司。隨着交易（DIRECTV交易）的結束，我們分離了由美國視頻業務組成的視頻業務，並開始按照權益法覈算我們對DIRECTV的投資。2024年9月，我們同意將DIRECTV的剩餘權益出售給TPG，預計該交易將於2025年中期完成。
我們的通信部門爲美國消費者和全球企業提供無線和有線電信以及寬帶服務。我們的通信服務和產品在AT & T、AT & T Business、Cricket、AT & T PREPAID下銷售SM、AT & T Fiber和AT & T Internet Air品牌名稱。通訊分部提供了2024年分部營業收入的約97%，並幾乎佔我們2024年分部營業總收入的全部。該部門包括移動、商業有線和消費有線業務部門。
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.
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.
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.
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.
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 byfederal, 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.
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.
16
AT&T Inc.
Dollars in millions except per share amounts
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 Services, Inc.
4/2020
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 and International
8/2023
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.
17
AT&T Inc.
Dollars in millions except per share amounts
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.
STOCK PERFORMANCE GRAPH
The comparison above assumes $100 invested on December 31, 2019, in AT&T common stock and the following Standard & Poor’s (S&P) Indices: S&P 500 Index and S&P 500 Communication Services Index. Total return equals stock price appreciation plus reinvestment of dividends.
18
AT&T Inc.
Dollars in millions except per share amounts
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
Shares (or Units) Purchased1,2
Average Price Paid Per Share (or Unit)
Total Number of Shares (or Units) Purchased
as Part of Publicly Announced Plans or Programs1
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The 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)
19
AT&T Inc.
Dollars in millions except per share amounts
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.
The following tables highlight other key measures of performance for Mobility:
Subscribers
Percent Change
(in 000s)
2024
2023
2022
2024 vs.
2023
2023 vs.
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
2023 vs.
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.
23
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
2023 vs.
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.
24
AT&T Inc.
Dollars in millions except per share amounts
Consumer Wireline Results
Percent Change
2024
2023
2022
2024 vs.
2023
2023 vs.
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
2023 vs.
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
2023 vs.
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.
25
AT&T Inc.
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
2023 vs.
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
2023 vs.
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
2023 vs.
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.
26
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.
27
AT&T Inc.
Dollars in millions except per share amounts
WirelessWe 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.
28
AT&T Inc.
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)
29
AT&T Inc.
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
30
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.
31
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 generatedfrom 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 Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year 2024
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)
32
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.
33
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 Year
1-3
Years
3-5
Years
More than 5 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 and President
Senior Executive Vice 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 consolidatedfinancial 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.
我們審計了AT & T Inc.。截至2024年12月31日，其對財務報告的內部控制基於特雷德韋委員會贊助組織委員會發布的內部控制綜合框架（2013年框架）中制定的標準（COSO標準）。在我們看來，AT & T Inc. (the截至2024年12月31日，公司）根據COSO標準，在所有重大方面對財務報告保持了有效的內部控制。
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.
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,
Plant &
Equipment
Revenues
Net Property,
Plant &
Equipment
Revenues
Net Property, Plant & 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 Equity Method Investees
Capital Expenditures
Assets
Investments in Equity Method Investees
Capital Expenditures
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
54
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.
55
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
56
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,
57
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.
58
AT&T Inc.
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
1Includes 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
59
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
new operating lease obligations
3,762
2,693
3,751
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
%
60
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 Jan. 1
Impairment
Balance at Dec. 31
Balance at Jan. 1
Dispositions and other
Balance at 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.
61
AT&T Inc.
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
Life
Gross
Carrying
Amount
Accumulated Amortization
Currency Translation Adjustment
Gross
Carrying
Amount
Accumulated Amortization
Currency Translation Adjustment
Amortized intangible
assets:
Wireless licenses
21.6 years
$
2,999
$
696
$
(343)
$
3,034
$
572
$
23
Customer lists and
relationships
10.0 years
349
275
(74)
379
286
(74)
Trademarks, trade names
and other
12.6 years
43
23
(6)
289
261
(5)
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
62
AT&T Inc.
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
63
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.
64
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 Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year 2024
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.
65
AT&T Inc.
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 Amount
Fair Value
Carrying Amount
Fair 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,”
66
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 period
$
261
$
168
$
(229)
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
67
AT&T Inc.
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
accumulated OCI into income
—
—
1
Interest rate locks:
Interest income (expense) reclassified from
accumulated OCI into income
(59)
(59)
(65)
Other income (expense) reclassified from
accumulated OCI into income
—
—
(45)
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
effective income tax rate as of the end of the year
$
6,943
$
6,584
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)
%
1Goodwill 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
during the period
$
487
$
477
$
617
$
22
$
23
$
32
Interest cost on projected benefit
obligation
1,586
1,876
1,747
310
340
277
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
remeasurement
(226)
(313)
(876)
(1,657)
(2,239)
(2,361)
Actuarial (gain) loss
38
1,717
(115)
28
181
(1,437)
Settlement (gain) loss
—
(363)
—
—
—
—
Net pension and postretirement
cost (credit)
$
(188)
$
1,041
$
(991)
$
(1,629)
$
(2,058)
$
(3,798)
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
comprehensive (income) loss
(66)
(100)
(100)
(1,457)
(1,831)
(142)
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 31
5.70
%
5.00
%
5.20
%
5.60
%
5.00
%
5.20
%
Discount rate in effect for determining
service cost1
5.10
%
5.40
%
4.40
%
5.10
%
5.20
%
4.00
%
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
increase for determining benefit
obligation
3.00
%
3.00
%
3.00
%
3.00
%
3.00
%
3.00
%
Composite rate of compensation
increase for determining net cost
(credit)
3.00
%
3.00
%
3.00
%
3.00
%
3.00
%
3.00
%
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)
77
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.
78
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.
79
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.
80
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.
81
AT&T Inc.
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
82
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
83
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
84
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.
85
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
our consolidated balance sheets
$
11,909
$
2,770
$
12,027
1,500
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).
86
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.
87
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 $1,260under 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)
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.
(3) Exhibits:
Exhibits identified in parentheses below, on file with the SEC, are incorporated herein by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 001-8610.
Securities Purchase Agreement, dated September 29, 2024, by and among AT&T Services, Inc., AT&T Diversified MVPD Holdings LLC, AT&T MVPD Holdings LLC, Merlin Parent 2024, Inc., TPG Partners IX, L.P. and DIRECTV Entertainment Holdings LLC (Exhibit 2.1 to Form 10-Q for the period ending September 30, 2024)*
No instrument which defines the rights of holders of long-term debt of the registrant and all of its consolidated subsidiaries is filed herewith pursuant to Regulation S-K, Item 601(b)(4)(iii)(A), except for the instruments referred to in 4-b, 4-c, 4-d, 4-e, 4-f below. Pursuant to this regulation, the registrant hereby agrees to furnish a copy of any such instrument not filed herewith to the SEC upon request.
Guaranty of certain obligations of Ameritech Capital Funding Corp., Indiana Bell Telephone Co. Inc., Michigan Bell Telephone Co., Pacific Bell Telephone Co., Southwestern Bell Telephone Company, Illinois Bell Telephone Company, The Ohio Bell Telephone Company, The Southern New England Telephone Company, Southern New England Telecommunications Corporation, and Wisconsin Bell, Inc. (Exhibit 4-d to Form 10-K for the period ending December 31, 2011)
Deposit Agreement, dated December 12, 2019, among the AT&T Inc., Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, and the holders from time to time of the depository receipts described therein (Exhibit 4.3 to Form 8-K filed December 12, 2019)
4-h
Deposit Agreement, dated February 18, 2020, among the Company, Computershare Inc. and Computershare Trust Company, N.A., collectively, as depositary, and the holders from time to time of the depositary receipts described therein (Exhibit 4.3 to Form 8-K filed February 18, 2020)
$12,000,000,000 Amended and Restated Credit Agreement, dated as of November 18, 2022, among AT&T Inc., the lenders named therein and Citibank, N.A., as agent (Exhibit 10.1 to Form 8-K filed on November 18, 2022)
The consolidated financial statements from the Company’s Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 12, 2025, formatted in Inline XBRL: (i) Consolidated Statements of Cash Flows, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Balance Sheets, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
* Certain schedules (or similar attachments) have been omitted pursuant to Item 601(a)(5) or Item 601(b)(2) of Regulation S-K. The registrant agrees to furnish copies of such schedules (or similar attachments) to the U.S. Securities and Exchange Commission upon request.
** Management contracts and compensatory plans and arrangements required to be filed as exhibits pursuant to Item 15(b) of this report.
We will furnish to stockholders upon request, and without charge, a copy of the Annual Report to Stockholders and the Proxy Statement, portions of which are incorporated by reference in the Form 10-K. We will furnish any other exhibit at cost.
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 Costs and Expenses (a)
Charged to Other
Accounts
Acquisitions
Deductions (b)
Balance at End
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 Costs and Expenses
Charged to Other Accounts
Acquisitions
Deductions
Balance at End 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.
