Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
PART III
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
PART IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
AT&T Inc.
Dollars in millions except per share amounts
PART I
ITEM 1. BUSINESS
GENERAL
AT&T Inc. (“AT&T,” “we” or the “Company”) is a holding company incorporated under the laws of the State of Delaware in 1983 and has its principal executive offices at 208 S. Akard St., Dallas, Texas, 75202 (telephone number 210-821-4105). We maintain an internet website at www.att.com. (This website address is for information only and is not intended to be an active link or to incorporate any website information into this document.) We file electronically with the Securities and Exchange Commission (SEC) required reports on Form 8-K, Form 10-Q and Form 10-K; proxy materials; registration statements on Forms S-3 and S-8, as necessary; and other forms or reports as required. The SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. We make available, free of charge, on our website our annual report on Form 10-K, our quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such reports are electronically filed with, or furnished to, the SEC. We also make available on that website, and in print, if any stockholder or other person so requests, our “Code of Ethics” applicable to all employees and Directors, our “Corporate Governance Guidelines,” and the charters for all committees of our Board of Directors, including Audit, Human Resources and Governance and Policy committees. Any changes to our Code of Ethics or waiver of our Code of Ethics for senior financial officers, executive officers or Directors will be posted on that website.
A reference to a “Note” refers to the Notes to Consolidated Financial Statements in Item 8.
History
AT&T, formerly known as SBC Communications Inc. (SBC), was formed as one of several regional holding companies created to hold AT&T Corp.’s (ATTC) local telephone companies. On January 1, 1984, we were spun-off from ATTC pursuant to an anti-trust consent decree, becoming an independent publicly traded telecommunications services provider.
Following our formation, we expanded our communications footprint and operations, most significantly:
• Our subsidiaries merged with incumbent local exchange carriers (ILEC) Pacific Telesis Group in 1997 and Ameritech Corporation in 1999.
• In 2005, we merged one of our subsidiaries with ATTC, creating one of the world’s leading telecommunications providers. In connection with the merger, we changed the name of our company from “SBC Communications Inc.” to “AT&T Inc.”
• In 2006, we acquired ILEC BellSouth Corporation (BellSouth), which included BellSouth’s 40% economic interest in AT&T Mobility LLC (AT&T Mobility), formerly Cingular Wireless LLC, resulting in 100% ownership of AT&T Mobility.
• In 2014, we completed the acquisition of wireless provider Leap Wireless International, Inc.
• In 2015, we acquired wireless properties in Mexico and acquired DIRECTV, a leading provider of digital television entertainment services in both the United States (included in our former Video business) and Latin America (referred to as Vrio, which was sold in November 2021).
• In July 2021, we closed our transaction with TPG Capital (TPG) to form a new company named DIRECTV Entertainment Holdings, LLC (DIRECTV). With the close of the transaction (DIRECTV Transaction), we separated our Video business, comprised of our U.S. video operations, and began accounting for our investment in DIRECTV under the equity method. In July 2025, we sold our remaining interest in DIRECTV to TPG.
General
We are a leading provider of telecommunications and technology services globally. The services and products that we offer vary by market and utilize various technology platforms in a range of geographies. Our reportable segments are organized as follows:
The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the United States and businesses globally. Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets. This segment contains the following business units:
• Mobility provides nationwide wireless service and equipment.
• Business Wireline provides advanced ethernet-based fiber services, fixed wireless services, IP Voice and managed professional services, as well as legacy voice and data services and related equipment, to business customers.
• Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services, and our fixed wireless access product (AT&T Internet Air or “AIA”) that provides internet services delivered over our 5G wireless network, to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services.
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The Latin America segment provides wireless service and equipment in Mexico.
Corporate support costs, including administrative support costs borne by AT&T where business units do not influence decision making, and results from business no longer integral to our operations are reported as Corporate and Other , which reconciles our segment results to consolidated operating income and income before income taxes.
Areas of Focus
We are a leader in providing connectivity services through our market focus areas of 5G and fiber. Fiber underpins the connectivity we deliver, both wired and wireless. Building on that fiber foundation is our solid spectrum portfolio, strengthened through Federal Communications Commission (FCC) auctions, other spectrum acquisitions and 5G deployment. We believe our fixed wireline and mobile approach will differentiate our services and provide us with additional convergence growth opportunities in the future as bandwidth demands continue to grow. We will continue to demonstrate our commitment to ensure management attention is sharply focused on growth areas and operational efficiencies.
Our integrated telecommunications network utilizes different technological platforms to provide instant connectivity at the higher speeds made possible by our fiber network expansion and wireless network enhancements. Streaming, augmented reality, “smart” technologies, user generated content and artificial intelligence (AI) are expected to continue to drive greater demand for broadband, which we believe will allow us to capitalize on our fiber and 5G deployments. During 2026, we are focused on the core capabilities of our products, our infrastructure and our network. We will also focus on accelerating our fiber expansion, organically and through our pending acquisition of substantially all of Lumen’s Mass Markets fiber business. We will continue to deploy low- and mid-band spectrum to improve speed and capacity, including spectrum to be acquired from our pending transactions with EchoStar Corporation (EchoStar) and other spectrum acquisitions. Our concentration is to aggregate the most traffic on the largest, lowest marginal cost, converged network through efficient spectrum deployment and construction of the largest high-capacity broadband solutions in the United States, while also working with regulators and customers to decommission high-cost legacy technologies over the next several years.
Wireless Service We continue to experience rapid growth in data usage as consumers are demanding seamless access across their wireless and wired devices, and businesses and municipalities are connecting an increasing number of equipment and facilities to the internet. The deployment of 5G, which allows for faster connectivity, lower latency and greater bandwidth, requires modifications of existing cell sites to add equipment supporting new frequencies, like the C-Band and the 3.45 GHz band. The increased speeds and network operating efficiency expected with 5G technology has enabled massive deployment of devices connected to the internet as well as faster delivery of data services. As the wireless industry has matured, with nearly full penetration of smartphones in the U.S. population, future wireless growth will depend on our ability to offer innovative services, plans and devices that bundle product offerings, add converged customer relationships and take advantage of our 5G wireless network.
To support higher mobile data usage, our priority is to best utilize a wireless network that has sufficient spectrum and capacity to support these innovations on as broad a geogra phic basis as possible. We expect to continue to invest significant capital in expanding our network capacity, as well as obtaining additional spectrum, when needed and available, that meets our long-term needs. We participate in FCC spectrum auctions, acquire spectrum licenses from third parties as it becomes available and redeploy existing spectrum previously used for more basic services to support more advanced mobile internet services.
In North America, our network covers over 441 million people with 4G LTE and over 322 million with 5G technology. In the United States, our network covers all major metropolitan areas and more than 337 million people with our LTE technology and more than 322 million people with our 5G technology.
Broadband Technology Fiber is a core priority for our business and over the last several years we have enhanced our focus to expand our fiber footprint and grow customers. At December 31, 2025, we had 10.4 million fiber consumer wireline broadband customers, adding 1.1 million during the year. The expansion builds on our recent investments to convert to a software-based network, managing the migration of wireline customers to services using our fiber infrastructure to provide broadband technology. Software-based technologies align with our global leadership in software defined network (SDN) and network function virtualization (NFV). This network approach delivers a demonstrable cost advantage in the deployment of next-generation technology over the traditional, hardware-intensive network approach. Our virtualized network supports next-generation applications like 5G and broadband-based services quickly and efficiently. At December 31, 2025, we had 16.0 million broadband connections, compared to 15.3 million broadband connections in the prior year.
In areas where fiber services are not available, in recent years we have offered fixed wireless access under our AT&T Internet Air (AIA) brand. At December 31, 2025, we had 1.5 million AIA connections, adding 875,000 during the year. With recent spectrum acquisitions, including our pending transaction with EchoStar we are expanding the capacity of the wireless network over which these services are provided to support this growth initiative.
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Dollars in millions except per share amounts
Copper Decommissioning While building the network of the future, we are actively working to exit our legacy copper network operations across the large majority of our wireline footprint. Our exit strategy includes migrating customers to fiber and wireless alternatives, and working with policy-makers to decommission our inefficient and less reliable copper network. At December 31, 2025, we had 2.1 million customer location switched access lines in service and 2.8 million legacy consumer internet connections compared to 2.7 million customer location switched access lines in service and 4.1 million legacy consumer internet connections in the prior year.
BUSINESS OPERATIONS
OPERATING SEGMENTS
Our segments are strategic business units that offer different products and services over various technology platforms and/or in different geographies that are managed accordingly. We have two reportable segments: Communications and Latin America.
Additional information about our segments, including financial information, is included under the heading “Segment Results” in Item 7 and in Note 4 of Item 8.
COMMUNICATIONS
Our Communications segment provides wireless and wireline telecom and broadband services to consumers located in the United States and businesses globally. Our Communications services and products are marketed under the AT&T, AT&T Business, Cricket, AT&T PREPAID SM , AT&T Fiber and AT&T Internet Air brand names. The Communications segment provided approximately 97% of 2025 segment operating revenues and accounted for substantially all of our 2025 total segment operating income. This segment contains the Mobility, Business Wireline and Consumer Wireline business units.
Mobility – Our Mobility business unit provides nationwide wireless service to consumers and wholesale and resale wireless subscribers located in the United States by utilizing our network to provide voice and data services, including high-speed internet over wireless devices. We classify our subscribers as either postpaid, prepaid or reseller. As of December 31, 2025, we served 120 million Mobility subscribers, including 91 million postpaid (74 million phone), 18 million prepaid and 11 million through resellers. Our Mobility business unit revenue includes the following categories: service and equipment.
Service
We offer a comprehensive range of high-quality nationwide wireless voice and data communications services in a variety of pricing plans to meet the communications needs of targeted customer categories. Through FirstNet ® services, we also provide a nationwide wireless broadband network dedicated to public safety.
Consumers continue to require increasing availability of data-centric services and a network to connect and control wireless devices. An increasing number of our subscribers are using more advanced devices, including embedded computing systems and/or software, commonly called the Internet of Things (IoT). We offer unlimited plans that include features allowing for the sharing of voice, text and data across multiple devices, which attracts subscribers from other providers and helps minimize subscriber churn. We continue to upgrade our network and coordinate with equipment manufacturers and application developers to further capitalize on the continued growing demand for wireless data services.
We also offer nationwide wireless voice and data communications to certain customers who prefer to pay in advance. These services are offered under the Cricket and AT&T PREPAID brands and are typically monthly prepaid services.
Equipment
We sell a wide variety of handsets, wireless data cards and wireless computing devices manufactured by various suppliers for use with our voice and data services. We also sell accessories, such as carrying cases/protective covers and wireless chargers. We sell online and through our own company-owned stores, agents and third-party retail stores. We provide our customers the ability to purchase handsets on an installment basis and the opportunity to bring their own device. Subscribers that bring their own devices or retain handsets for longer periods impact upgrade activity. Like other wireless service providers, we also provide postpaid contract subscribers promotional equipment offers to initiate, renew or upgrade service.
Business Wireline – Our Business Wireline business unit provides services to business customers, including multinational corporations, small and mid-sized businesses, and governmental and wholesale customers. Our Business Wireline business unit revenue includes the following categories: legacy and other transitional services, fiber and advanced connectivity services, and equipment.
Legacy and Other Transitional Services
We offer legacy voice and other transitional services comprised of copper-based voice and data, Virtual Private Networks (VPN), wholesale, outsourcing and IP sales. Historically, a majority of our Business Wireline service revenues came from
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legacy copper-based voice and data and traditional products; however, over recent years those services have been declining due to secular pressures. We plan to continue to focus on our owned and operated connectivity services powered by 5G and fiber as well as evaluating opportunities where we can turn down existing copper infrastructure.
Fiber and Advanced Connectivity Services
We offer fiber and other advanced connectivity services, such as AT&T Dedicated Internet, fiber ethernet and broadband, fixed wireless, and hosted and managed professional services. We continue to reconfigure our wireline network to take advantage of the latest technologies and services, and rely on our SDN and NFV to enhance business customers’ digital agility in a rapidly evolving environment.
Equipment
Equipment revenues include customer premises equipment.
Consumer Wireline – Our Consumer Wireline business unit provides broadband services, including fiber connections, AIA and legacy telephony voice communication services, to customers in the United States by utilizing our IP-based and copper wired network. Our Consumer Wireline business unit revenue includes the following categories: broadband, legacy voice and data services and other service and equipment.
Broadband Service
We provide broadband and internet services to approximately 14.7 million customers, including 10.4 million fiber broadband connections and 1.5 million AIA connections at December 31, 2025. With the continued rise of data-intensive activities, like on-the-go video streaming, augmented reality, user generated content, AI-enabled applications, remote work and the widespread adoption of smart devices, we are experiencing increasing demand for high-speed broadband services. We believe our investment in expanding our industry-leading fiber network positions us to be a leader in wired connectivity. Our focus on fiber and AIA brings owner’s economics and expected efficiencies while we continue to evaluate opportunities where we can turn down existing copper infrastructure.
We believe that our flexible platform, with a broadband and wireless connection, is the most efficient way to transport direct-to-consumer experiences both at home and on mobile devices. Through this integrated approach, we can optimize the use of storage in the home as well as in the cloud, while also providing a seamless service for consumers across screens and locations.
Legacy Voice and Data Services
Revenues from our traditional voice services continue to decline as customers switch to wireless or VoIP services provided by us, cable companies or other internet-based providers.
Other Service and Equipment
Other service revenues include VoIP services, customer fees and limited equipment.
Additional information on our Communications segment is contained in the “Overview” section of Item 7.
LATIN AMERICA
Our Latin America segment provides wireless service in Mexico. We utilize our regional and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice communication services. The Latin America segment provided approximately 3% of 2025 segment operating revenues and less than 1% of our 2025 total segment operating income. We divide our revenue into the following categories: service and equipment.
Service
We provide postpaid and prepaid wireless services in Mexico to approximately 24.7 million subscribers under the AT&T and Unefon brands. Postpaid service allows for (1) no annual service contract for subscribers who bring their own device or purchase a device on installment and (2) service contracts for periods up to 36 months for subscribers who purchase their equipment under the traditional device subsidy model. We also offer prepaid plans.
Equipment
We sell a wide variety of handsets, including smartphones manufactured by various suppliers for use with our voice and data services. We sell through our own company-owned stores, agents and third-party retail stores.
Additional information on our Latin America segment is contained in the “Overview” section of Item 7.
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MAJOR CLASSES OF SERVICE
The following table sets forth the percentage of total consolidated reported operating revenues by any class of service that accounted for 10% or more of our consolidated total operating revenues in any of the last three fiscal years:
Percentage of Total
Consolidated Operating Revenues
Communications Segment
Wireless service
Fiber and advanced connectivity 1
Legacy and other transitional
Equipment
Latin America Segment
Wireless service
Equipment
1 Includes Fiber revenues reported in our Consumer Wireline business unit and Fiber and advanced connectivity services
reported in our Business Wireline business unit.
Additional information on our geographical distribution of revenues is contained in Note 4 of Item 8.
GOVERNMENT REGULATION
Facilities-based wireless communications providers in the United States, like AT&T, must be licensed by the FCC to provide communications services at specified spectrum frequencies within defined geographic areas and must comply with FCC rules and policies governing the use of the spectrum. The FCC’s rules have a direct impact on whether the wireless industry has sufficient spectrum available to support the high-quality, innovative services our customers demand. Wireless licenses are issued for a fixed time period, typically 10 to 15 years, and we must seek renewal of these licenses. While the FCC has generally renewed licenses, the FCC has authority to both revoke a license for cause and to deny a license renewal if a renewal is not in the public interest. Additionally, while wireless communications providers’ prices and service offerings have historically not been subject to prescriptive regulation, the federal government and various states periodically consider new regulations and legislation relating to various aspects of wireless services.
The Communications Act of 1934 and other related laws give the FCC authority to regulate the U.S. operations of our interstate telecommunications services. In addition, our ILEC subsidiaries are subject to regulation by state governments, which may regulate intrastate services, provided such state regulation is consistent with federal law. Some states have eliminated or reduced regulations on our retail offerings. AT&T subsidiaries are also subject to the jurisdiction of the FCC with respect to intercarrier compensation, interconnection, and interstate and international services, including interstate access charges. Access charges are a form of intercarrier compensation designed to reimburse our wireline subsidiaries for the use of their networks by other carriers.
We continue to support regulatory and legislative measures and efforts at both the federal and state levels to minimize and/or moderate regulatory burdens that are no longer appropriate in a competitive communications market and that inhibit our ability to compete more effectively and offer services wanted and needed by our customers, including initiatives to transition services from traditional networks to all IP-based networks. At the same time, we also seek to ensure that legacy regulations are not further extended to broadband or wireless services, which are subject to vigorous competition.
Our subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulatory authorities in the market where service is provided.
For a discussion of significant regulatory issues directly affecting our operations, please see the information contained under the headings “Operating Environment and Trends of the Business” and “Regulatory Landscape” of Item 7, which information is incorporated herein by reference.
IMPORTANCE, DURATION AND EFFECT OF LICENSES
Certain of our subsidiaries own or have licenses to various patents, copyrights, trademarks and other intellectual property necessary to conduct business. Many of our subsidiaries also hold government-issued licenses or franchises to provide wireline or wireless services. Additional information relating to regulations affecting those rights is contained under the heading “Regulatory Landscape” of Item 7. We actively pursue patents, trademarks and service marks to protect our intellectual property within the United States and abroad. We maintain a significant global portfolio of patents, trademarks and service mark registrations. We have also entered into licenses that permit other companies to utilize certain of our patents, trademarks,
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service marks, and technologies, in exchange for payments and subject to appropriate safeguards and restrictions. As we transition our network from a switch-based network to an IP, software-based network, we have increasingly entered into licensing agreements with software developers.
We periodically license third-party patents and other intellectual rights in exchange for payments. We also receive claims from third parties asserting that our products, services or technologies infringe on their patents or other intellectual property rights. These claims could require us to pay damages or acquire license rights, stop offering the relevant products or services, and/or cease network functions or other activities. While the outcome of any litigation is uncertain, we do not believe that the resolution of any of these infringement claims or the expiration or non-renewal of any of our intellectual property rights would have a material adverse effect on our results of operations.
MAJOR CUSTOMERS
No customer accounted for 10% or more of our consolidated revenues in 2025, 2024 or 2023.
COMPETITION
Competition continues to increase for communications and digital services from traditional and nontraditional competitors. Technological advances have expanded the types and uses of services and products available. In addition, lack of or a reduced level of regulation of comparable legacy services has lowered costs for alternative communications service providers. As a result, we face continuing competition as well as some new opportunities in significant portions of our business.
Wireless We face substantial competition in our wireless businesses. Under current FCC rules, multiple licensees, who provide wireless services on the cellular, PCS, Advanced Wireless Services, 700 MHz and other spectrum bands, may operate in each of our U.S. service areas. Our competitors include two national wireless providers; a larger number of regional providers and resellers of each of those providers’ services; and certain cable companies. In addition, we face competition from providers who offer voice, text messaging and other services as applications on data networks. We are one of three facilities-based providers in Mexico (retail and wholesale), with the most significant market share controlled by América Móvil. We may experience significant competition from companies that provide similar services using other communications technologies and services. While some of these technologies and services are now operational, others are being developed or may be developed. We compete for customers based principally on service/device offerings, price, network quality, coverage area and customer service.
Broadband The desire for high-speed data on demand, including data-intensive activities, is continuing to lead customers to terminate their traditional wired or copper-based services and use our fiber or fixed wireless services or competitors’ fixed wireless, satellite and internet-based services. In most U.S. markets, we compete for customers with large cable companies and wireless broadband providers for high-speed internet and voice services.
Legacy Voice and Data We continue to lose legacy voice and data customers due to industry-wide secular declines and competitors (e.g., wireless, cable and VoIP providers) who can provide comparable services at lower prices because they are not subject to traditional telephone industry regulation (or the extent of regulation they are subject to is in dispute), utilize different technologies or promote a different business model. In most U.S. markets, we compete for customers with large cable companies and other smaller telecommunications companies.
Additionally, we provide local and interstate telephone and switched services to other service providers, primarily large internet service providers using the largest class of nationwide internet networks (internet backbone), wireless carriers, other telephone companies, cable companies and systems integrators. These services are subject to additional competitive pressures from the development of new technologies, the introduction of innovative offerings and increasing satellite, wireless, fiber-optic and cable transmission capacity for services.
RESEARCH AND DEVELOPMENT
AT&T scientists and engineers conduct research in a variety of areas, including IP networking, advanced network design and architecture, network and cybersecurity, network operations support systems and data analytics. The majority of the development activities are performed to create new services and to invent tools and systems to manage secure and reliable networks for us and our customers. Research and development expenses were $843 in 2025, $955 in 2024, and $954 in 2023.
HUMAN CAPITAL
Number of Employees As of December 31, 2025, we employed approximately 133,030 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.
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Labor Contracts Approximately 43% of our employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. After expiration of collective bargaining agreements, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached. The main contracts set to expire in 2026 include the following:
• A contract covering approximately 9,000 employees across 36 states and the District of Columbia is set to expire in February.
• A contract covering approximately 4,300 employees across five states is set to expire in April.
• Two wireline contracts covering approximately 1,800 employees across all 50 states as well as the U.S. Virgin Islands and Puerto Rico are set to expire in April.
Compensation and Benefits In addition to salaries, we provide a variety of benefit programs to help meet the needs of our employees. These programs cover active and former employees and may vary by subsidiary and region. These programs include 401(k) plans, pension benefits, and health and welfare benefits, among many others. In addition to our active employee base, at December 31, 2025, we had approximately 477,000 retirees and dependents who were eligible to receive retiree benefits.
We review our benefit plans to maintain competitive packages that reflect the needs of our workforce. We also adapt our compensation model to provide fair and inclusive pay practices across our business. We are committed to pay equity for employees who hold the same jobs, work in the same geographic area, and have the same levels of experience and performance.
Employee Wellness We provide our employees access to flexible and convenient health and welfare programs and workplace accommodations. We have prioritized self-care and emphasized a focus on wellness and providing flexible scheduling or time-off options.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this document, including the matters contained under the heading “Cautionary Language Concerning Forward-Looking Statements,” you should carefully read the matters described below. We believe that each of these matters could materially affect our business. Most, if not all, of these factors are beyond our ability to control.
Macro-Economic Factors:
Adverse changes in the U.S. securities markets, a higher interest rate environment, rising inflation and medical costs could materially increase our benefit plan costs and future funding requirements.
Our costs to provide current benefits and funding for future benefits are subject to increases, primarily due to continuing increases in medical and prescription drug costs, in part due to inflation, and can be affected by lower returns on assets held by our pension and other benefit plans, which are reflected in our financial statements for that year. In calculating the recognized benefit costs, we have made certain assumptions regarding future investment returns, interest rates and medical costs. These assumptions could change significantly over time and could be materially different than originally projected. Lower than assumed investment returns, an increase in our benefit obligations, and higher than assumed medical and prescription drug costs will increase expenses.
The Financial Accounting Standards Board (FASB) requires companies to recognize the funded status of defined benefit pension and postretirement plans as an asset or liability in their statement of financial position and to recognize changes in that funded status in the year in which the changes occur. We have elected to reflect the annual adjustments to the funded status in our consolidated statement of income. Therefore, an increase in our costs or adverse market conditions will have a negative effect on our operating results.
Significant adverse changes in capital markets could result in the deterioration of our defined benefit plans’ funded status.
Inflationary pressures on costs, such as inputs for devices we sell and network components, labor and distribution costs, may impact our network construction, our financial condition or results of operations.
As a provider of telecommunications and technology services, we sell handsets, wireless data cards, wireless computing devices and customer premises equipment manufactured by various suppliers for use with our voice and data services and depend on suppliers to provide us, directly or through other suppliers, with items such as network equipment, customer premises equipment, and wireless-related equipment such as mobile hotspots, handsets, wirelessly enabled computers, wireless data cards and other connected devices for our customers. In recent years, the costs of these inputs and the costs of labor necessary to develop, deploy and maintain our networks and our products and services have increased. In addition, many of these inputs are subject to price fluctuations from a number of factors, including, but not limited to, market conditions, demand for raw
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materials used in the production of these devices and network components, severe weather, energy costs, currency fluctuations, supplier capacities, governmental actions, import and export requirements (including tariffs), and other factors beyond our control. Recent spending by hyperscalers and others to support AI is beginning to pressure supply chains for goods such as semiconductors and other network components. Inflationary and supply pressures may continue into the future and could have an adverse impact on our ability to source materials.
Our attempts to offset these cost and supply pressures, such as through increases in the selling prices of some of our products and services, may not be successful. Higher product or service prices may result in reductions in sales volume or increases in subscriber churn. Consumers may be less willing to pay a price differential for our products and services and may increasingly purchase lower-priced offerings from us or our competitors, or may forego some purchases altogether, during a period of inflationary pressure or an economic downturn. To the extent that price increases are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result in significant decreases in sales volume, our business, financial condition or operating results may be adversely affected. Furthermore, we may not be able to offset any cost increases through productivity and cost-saving initiatives.
Adverse changes in global financial markets could limit our ability and our larger customers’ and suppliers’ ability to access capital or increase the cost of capital needed to fund business operations.
In recent years, uncertainty surrounding global growth rates, inflation and the interest rate environment produced volatility in the credit, currency and equity markets. Volatility may affect companies’ access to the credit markets, leading to higher borrowing costs, or, in some cases, the inability to fund ongoing operations. In addition, we contract with large financial institutions to support our own treasury operations, including contracts to hedge our exposure to interest rates and foreign exchange and the funding of credit lines and other short-term debt obligations, including commercial paper. These financial institutions face stricter capital-related and other regulations in the United States and Europe, as well as ongoing legal and financial issues concerning their loan portfolios, which may hamper their ability to provide credit or raise the cost of providing such credit.
While we have been successful in continuing to access the credit and fixed income markets when needed, adverse changes in the financial markets could render us either unable to access these markets or able to access these markets only at higher interest costs and with restrictive financial or other conditions, severely affecting our business operations. Additionally, downgrades of our credit rating by the major credit rating agencies could increase our cost of borrowing and also impact the collateral we would be required to post under certain agreements we have entered into with our derivative counterparties, which could negatively impact our liquidity. Further, valuation changes in our derivative portfolio due to interest rates and foreign exchange rates could require us to post collateral and thus may negatively impact our liquidity.
Our international operations increase our exposure to political instability, to changes in the international economy and to regulation on our business, and these risks could offset our expected growth opportunities.
We have international operations, particularly in Mexico, and other countries worldwide where we need to comply with a wide variety of complex local laws, regulations and treaties, and are subject to evolving political environments. In addition, we are exposed to, among other factors, fluctuations in currency values, changes in relationships between U.S. and foreign governments, war or other hostilities, and other regulations that may materially affect our earnings. Involvement with foreign firms also exposes us to the risk of being unable to control the actions of those firms and therefore exposes us to risks associated with our obligation to comply with the Foreign Corrupt Practices Act (FCPA). Violations of the FCPA could have a material adverse effect on our operating results.
Industry-Wide Factors:
Changes to federal, state and foreign government regulations and decisions in regulatory proceedings, as well as private litigation, could further increase our operating costs and/or alter customer perceptions of our operations, which could materially adversely affect us.
Our subsidiaries providing wired services are subject to significant federal and state regulation, while many of our competitors are not. In addition, our subsidiaries and affiliates operating outside the United States are also subject to the jurisdiction of national and supranational regulatory authorities in the markets where service is provided. Our wireless subsidiaries are regulated to varying degrees by the FCC and in some instances, by state and local agencies. Adverse regulations and rulings by the courts, the FCC or states relating to broadband and wireless deployment could impede our ability to manage our networks and recover costs and lessen incentives to invest in our networks. The continuing growth of IP-based services, especially when accessed by wireless devices, has created or potentially could create conflicting regulation between the FCC and various state and local authorities, which may involve lengthy litigation to resolve and may result in outcomes unfavorable to us. In addition, increased public focus on a variety of issues related to our operations, such as privacy issues, government requests or orders for customer data, state rate regulation of broadband and concerns about global climate change, have led to proposals or new
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legislation at state, federal and foreign government levels to change or increase regulation on our operations, which could result in additional costs of compliance or litigation. Enactment of new privacy laws and regulations could, among other things, adversely affect our ability to collect data and offer targeted advertisements or result in additional costs of compliance or litigation. Should customers decide that our competitors offer a more customer-friendly environment, our competitive position, results of operations or financial condition could be materially adversely affected.
Extreme weather events and other potential effects of climate change may impose risk of damage to our infrastructure, our ability to provide services, and may cause changes in federal, state and foreign government regulation, all of which may result in potential adverse impact to our financial results.
The potential physical effects of extreme weather events and other potential effects of climate change, such as increased frequency and severity of storms, floods, fires, freezing conditions, sea-level rise and other climate-related events, could damage our networks and cause disruptions in our services, which could adversely affect our operations, infrastructure and financial results. Operational impacts resulting from the potential physical effects of climate change, such as damage to our network infrastructure, could result in increased costs and loss of revenue. While we currently do not believe the potential losses or costs associated with the physical effects of climate change will be material, it is difficult to accurately and precisely calculate the future impacts of the physical effects of climate change given the dynamic nature of its impacts on the environment.
Continuing growth in and the converging nature of wireless and broadband services will require us to deploy significant amounts of capital and require ongoing access to spectrum in order to provide attractive services to customers.
Wireless and broadband services are undergoing rapid and significant technological changes and a dramatic increase in usage, including, in particular, the demand for faster and seamless usage of data across mobile and fixed devices. Recent world events and trends accelerated these changes and also resulted in higher network utilization, as more customers consumed bandwidth. Streaming, augmented reality, “smart” technologies, user generated content and AI are expected to continue to drive greater demand for broadband. We must continually invest in our networks in order to improve our wireless and broadband services to meet this increasing demand and changes in customer expectations while remaining competitive. Improvements in these services depend on many factors, including continued access to and deployment of adequate spectrum and the capital needed to expand our wireline network to support transport of these services. In order to stem broadband connectivity losses to cable competitors in our non-fiber wireline areas, we have been expanding our all-fiber wireline network and where we offer our fixed wireless access product. We must maintain and expand our network capacity and coverage for transport of data, including video, and voice between cell and fixed landline sites. To this end, we participate in spectrum auctions and continue to deploy software and other technology advancements in order to invest in our network.
We have spent, and plan to continue spending, significant capital and other resources on the ongoing development and deployment of our 5G and fiber networks. This deployment and other network service enhancements and product launches may not occur as scheduled or at the cost expected due to many factors, including unexpected inflation, delays in determining equipment and wireless handset operating standards, supplier delays, software issues, increases in network and handset component costs, regulatory permitting delays for tower sites or enhancements, or labor-related delays. Deployment of new technology also may adversely affect the performance of the network for existing services. If we cannot acquire needed spectrum, if our 5G and fiber standalone or converged offerings fail to gain acceptance in the marketplace or if we otherwise fail to deploy the services customers desire on a timely basis with acceptable quality and at reasonable costs, then our ability to attract and retain customers, and, therefore, maintain and our operating margins, could be materially affected.
Increasing competition could materially adversely affect our operating results.
We have multiple wireless competitors in each of our service areas and compete for customers based principally on service/device offerings, price, network quality, reliability, speed, coverage area and customer service. In addition, we are facing growing competition from providers offering services using advanced wireless technologies and IP-based networks, among others. We expect market saturation to continue, which may cause the wireless industry’s customer growth rate to moderate in comparison with historical growth rates, leading to increased competition for customers, including from strategic alliances in converged connectivity. Our share of industry sales could be reduced due to aggressive pricing or promotional strategies pursued by competitors. We also expect that our customers’ growing demand for high-speed video and data services will place constraints on our network capacity. These competition and capacity constraints will continue to put pressure on pricing and margins as companies compete for potential customers. Additionally, we may not be able to accurately predict future consumer demands or the success of new services in markets. Our ability to address these issues will depend, among other things, on continued improvement in network quality and customer service and our ability to price our products and services competitively as well as marketing of products and services. These efforts will involve significant expenses and require strategic management decisions on, and timely implementation of, equipment choices, network deployment and service offerings. In addition, a sustained in a reporting unit’s revenues and earnings has resulted in the past, and may
AT&T Inc.
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again result in the future, in a significant negative impact on its fair value, requiring us to record an impairment charge, which could have an adverse impact on our results of operations.
Intellectual property rights may be inadequate to take advantage of business opportunities, which may materially adversely affect our operations.
We may need to spend significant amounts of money to protect our intellectual property rights. Any impairment of our intellectual property rights, including due to changes in U.S. or foreign intellectual property laws or the absence of effective legal protections or enforcement measures, could materially adversely impact our operations.
Incidents or public assertions leading to damage to our reputation or questions about our business conduct, and any resulting lawsuits, claims or other legal proceedings, could have a material adverse effect on our business.
We believe that our brand image, awareness and reputation strengthen our relationship with consumers and contribute significantly to the success of our business. Our reputation and brand image could be negatively affected by a number of factors, including the safety, quality or reliability of our services, products and operations; cybersecurity incidents and data breaches, including our actual or perceived responses thereto; regulatory compliance; governance issues; our actual or perceived position or lack of position on social and other sensitive matters; and the conduct of our employees and former employees. Our ability to attract and retain employees is highly dependent upon our commitment to an inclusive workplace, ethical business practices and other qualities.
We currently are, and may in the future be, named as a defendant in lawsuits, claims and other legal proceedings that arise in or outside the ordinary course of our business based on alleged acts of misconduct by employees, contractors or other third parties. These actions seek, among other things, compensation for alleged personal injury (including claims for loss of life), workers’ compensation, employment discrimination, sexual harassment, workplace misconduct, wage and hour claims and other employment-related damages, compensation for breach of contract, statutory or regulatory claims, negligence or gross negligence, , consequential , and civil or other or injunctive or declaratory relief. The outcome of any , lawsuits, or legal proceedings is inherently uncertain and could result in significant costs, to our brands or reputation and of management’s attention from our business. In 2023, The Wall Street Journal published a series of articles that lead-clad telecommunications cables are a public health or may pose environmental risks. We are currently subject to and have received inquiries from government authorities as a result of these . We may be subject to additional , government and potentially new regulation or legislation relating to lead-clad cables. Any to our reputation or payments of significant amounts as a result of any of these issues, even if reserved, could materially and affect our business, ability to serve customers, reputation, financial condition, results of operations and cash flows.
Our business is subject to risks related to public health crises.
Public health crises and resulting mitigation measures have in the past, and may in the future, cause a negative effect on our operating results. These effects include, but are not limited to, closure of retail stores; impact on our customers’ ability to pay for our products and services; reduction in international roaming revenue; and reduced staffing levels in call centers and field operations. We also have in the past, and may in the future, incur significantly higher expenses attributable to infrastructure investments and increased labor costs due to public health crises.
Company-Specific Financial Factors:
Customer adoption of new software-based technologies may require higher-quality services from us, and meeting these demands could create supply chain issues and could increase capital costs.
The communications industry has experienced rapid changes in the past several years. An increasing number of our customers are using mobile devices for using AI-enabled applications and as their primary means of viewing video. In addition, businesses and government bodies are broadly shifting to wireless-based services for homes and infrastructure to improve services to their respective customers and constituencies. We have spent, and continue to spend, significant capital to shift our wired network to software-based technology and are expanding 5G wireless technology to address these demands. We have entered and continue to enter into a significant number of software licensing agreements and continue to work with software developers to provide network functions in lieu of installing switches or other physical network equipment in order to respond to rapid developments in wireless demand. While software-based functionality can be changed much more quickly than, for example, physical switches, the rapid pace of development means that we may increasingly need to rely on single-source and software solutions that have not previously been deployed in production environments. Should this software not function as intended or our license agreements provide inadequate protection from intellectual property infringement claims, we could be forced to either substitute (if available) or else spend time to develop alternative technologies at a much higher cost and incur to our reputation for reliability, and, as a result, our ability to remain competitive could be materially affected.
AT&T Inc.
Dollars in millions except per share amounts
We depend on various suppliers to provide equipment to operate our business and satisfy customer demand, and interruption or delay in supply can adversely impact our operating results.
We depend on suppliers to provide us, directly or through other suppliers, with items such as network equipment, customer premises equipment and wireless-related equipment such as mobile hotspots, handsets, wirelessly enabled computers, wireless data cards and other connected devices for our customers. In some instances, we depend on key single-source suppliers to provide important inputs where there are few alternative suppliers available. These suppliers could fail to provide equipment on a timely or cost-effective basis, or fail to meet our performance expectations, for a number of reasons, including difficulties in obtaining export licenses for certain technologies, inflationary pressures, inability to secure component parts, general business disruption, natural disasters, safety issues, economic and political instability, including the outbreak of war and other hostilities, and public health emergencies. In certain circumstances, we could be liable for the actions of our suppliers and other third parties we do business with. These factors have caused, and may again cause, in the development, manufacturing (including the sourcing of key components) and shipment of products to the extent that we or our suppliers are impacted. In certain limited circumstances, suppliers have been to supply products in a timely fashion, affecting our ability to provide products and services precisely as and when requested by our customers. It is possible that, in some circumstances, we could be to switch to a different key supplier or be to meet customer demand for certain products or services. Because of the cost and time that can be associated with transitioning from one supplier to another, our business could be substantially if we were required to, or chose to, replace the products of one or more key suppliers with products from another source, especially if the replacement became necessary on short notice. Any such could increase our costs, decrease our operating and have a effect on our operating results.
Increasing costs to provide services and failure to renew agreements on favorable terms, or at all, could adversely affect operating margins.
Our operating costs, including customer acquisition and retention costs, could continue to put pressure on margins and customer retention levels.
A number of our competitors offering comparable legacy services that rely on alternative technologies and business models are typically subject to less regulation, and therefore are able to operate with lower costs. These competitors generally can focus on discrete customer segments since they do not have regulatory obligations to provide universal service. Also, these competitors have cost advantages compared to us, due in part to operating on newer, more technically advanced and lower-cost networks with a nonunionized workforce, lower employee benefits and fewer retirees. We are transitioning services from our copper-based network and seeking regulatory approvals, where needed, at both the state and federal levels. If we do not obtain regulatory approvals for our network transition or obtain approvals with onerous conditions, we could experience significant cost and competitive disadvantages.
A significant portion of our workforce is represented by labor unions, and we could incur additional costs or experience work stoppages as a result of the renegotiation of our labor contracts.
As of December 31, 2025, approximately 43% of our workforce was represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW) or other unions. While we have labor contracts in place with these unions, with subsequent negotiations we have in the past and could in the future incur additional costs and/or experience work stoppages, which could adversely affect our business operations.
We may not realize or sustain the expected benefits from acquisitions, joint ventures or our business transformation initiatives, including dispositions, which could have a material adverse effect on our business, operations, financial condition, results of operations and competitive position.
We have been and will be undertaking certain transformation initiatives and investments, which are designed to reduce costs, enable legacy rationalization, streamline and modernize distribution and customer service, improve our products and services, 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 and investments, which may include acquisitions, joint ventures, particularly those aimed at enhancing our fiber serviceable locations, and other strategic transactions, or if they are or , we may to meet our financial goals and anticipated benefits, may be , not sustained or not realized, and our business, operations and competitive position could be affected. In addition, any such initiative or investment entails certain risks and could present financial, managerial and operational . Further, we are using and intend to further use AI-driven in our network design and operations, software development, sales, marketing, customer support services and general and administrative costs. The models used in those products or operations, particularly generative AI models, may produce output or take action that is , release private or confidential information, reflect biases included in the data on which they are trained, on the intellectual property rights of others, or be otherwise . AI-related laws and regulations continue to remain uncertain and may vary from jurisdiction to jurisdiction. There can be no assurance that the usage of AI will meaningfully our
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products or operations, and 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 subject to or required to pay amounts or otherwise change our operations in ways that could materially affect our operations or financial results.
Cyberattacks impacting our networks, systems or data or those of our suppliers or vendors may have a material adverse effect on our operations or results of operations.
Cyberattacks – including through the use of malware, computer viruses, distributed denial of services attacks, ransomware attacks, credential harvesting, social engineering and other means for obtaining unauthorized access to or disrupting the operation of our networks and systems or accessing our data and those of our suppliers, vendors and other service providers – could have a material adverse effect on our operations or results of operations. As a critical infrastructure service provider, we believe that we are a particularly attractive target for such cyberattacks, including from nation states and highly sophisticated, state-sponsored, or otherwise well-funded actors, and we experience heightened risk from time to time as a result of geopolitical events.
Cyberattacks have caused, and may in the future cause, equipment or network failures, copying or loss of information, including sensitive personal information of customers or employees or proprietary information, as well as disruptions to our or our customers’, suppliers’ or vendors’ operations, which have and in the future could result in significant expenses, potential investigations and legal liability, a loss of current or future customers and reputational damage. Additional resources and management attention may be necessary to respond to government inquiries and requirements, including potentially conflicting demands and requirements from multiple government agencies. Moreover, the amount and scope of insurance that we maintain against losses resulting from any such events or security breaches may not be sufficient to cover our losses or otherwise adequately compensate us for any to our business that may result. As our networks evolve, they are becoming increasingly reliant on software and cloud technologies to handle growing demands for data consumption. us and our suppliers and vendors have occurred in the past, including from highly sophisticated, state-sponsored actors as noted above, and will continue to occur in the future and are increasing in frequency, scope and potential over time. For example, in July 2024, we a cybersecurity on Item 1.05 of Form 8-K relating to the copying of mobile customer call data.
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 we may have contractual rights to assess the effectiveness of many of our suppliers’ and vendors’ systems and protocols, we cannot know or assess the effectiveness of all of our providers’ systems and controls at all times. While, to date, we have not been subject to a cyberattack that has had a material adverse effect on our operations or results of operations, the preventive actions we take, or our suppliers or vendors take, to reduce the risks associated with cyberattacks may be insufficient to repel or mitigate the effects of a major cyberattack in the future.
Natural disasters, extreme weather conditions or terrorist or other hostile acts could cause damage to our infrastructure and result in significant disruptions to our operations.
Our business operations could be subject to interruption by equipment or network failures caused by human error, system failures, unauthorized access to our network and critical infrastructure, power outages, terrorist or other hostile acts, including acts of war, and natural disasters, such as flooding, hurricanes and forest fires. Such events could cause significant damage to the infrastructure upon which our business operations rely, resulting in degradation or disruption of service to our customers, as well as significant recovery time and expenditures to resume operations. Our system redundancy and other measures we take to
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protect our infrastructure and operations from the impacts of such events may be ineffective or inadequate to sustain our operations through all such events. Any of these occurrences could result in lost revenues from business interruption, damage to our reputation and reduced profits.
Increases in our debt levels to fund spectrum purchases, or other strategic decisions could adversely affect our ability to finance future debt at attractive rates and reduce our ability to respond to competition and adverse economic trends.
We intend to and 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. Any failure to successfully execute this plan could adversely affect our cost of funds, liquidity, competitive position and access to capital markets.
Our business may be impacted by changes in tax laws and regulations, judicial interpretations of the same or administrative actions by federal, state, local and foreign taxing authorities.
Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In many cases, the application of existing, newly enacted or amended tax laws 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.
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CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS
Information set forth in this report contains forward-looking statements that are subject to risks and uncertainties, and actual results could differ materially. Many of these factors are discussed in more detail in the “Risk Factors” section. We claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.
The following factors could cause our future results to differ materially from those expressed in the forward-looking statements:
• Adverse economic and political changes, public health emergencies and our ability to access financial markets on favorable terms.
• Increases in our benefit plans’ costs, including due to worse-than-assumed investment returns and discount rates, mortality assumptions, medical cost trends, or healthcare laws or regulations.
• The final outcome of FCC and other federal, state or foreign government agency proceedings (including judicial review of such proceedings) and legislative and regulatory efforts involving issues important to our business, including, without limitation, results of pending governmental investigations; the transition from legacy technologies to IP-based infrastructure, including the withdrawal of legacy TDM-based services; universal service; broadband deployment; wireless equipment siting regulations; E911 services; rules concerning digital discrimination; competition policy; privacy; net neutrality; copyright protection; availability of new spectrum on fair and reasonable terms; and wireless and satellite license awards and renewals, and our response to such legislative and regulatory efforts.
• Enactment of or changes to state, local, federal and/or foreign tax laws and regulations, and actions by tax agencies and judicial authorities, and the resolution of disputes with any taxing jurisdictions.
• U.S. and foreign laws and regulations regarding intellectual property rights protection and privacy, personal data protection and user consent.
• Our ability to compete in a competitive industry and against competitors that can offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including non-regulation of comparable alternative technologies and/or government-owned or subsidized networks, and our response to such competition and emerging technologies, including artificial intelligence.
• Disruptions in our supply chain that have a material impact on our ability to acquire needed goods and services.
• The development and delivery of attractive and profitable wireless and broadband offerings and devices, including our ability to match speeds offered by competitors; and the availability, cost and/or reliability of technologies required to provide such offerings.
• Our ability to adequately fund additional wireless spectrum and network development, deployment and maintenance; and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.
• Our ability to manage growth in wireless data services, including network quality.
• The outcome of pending, threatened or potential litigation and arbitration.
• The impact from major equipment, software or other failures or errors that disrupt our networks or cyber incidents; the effect of security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner; severe weather conditions or other natural disasters including earthquakes and forest fires; public health emergencies; energy shortages; or wars or terrorist attacks.
• The issuance by the FASB or other accounting oversight bodies of new or revised accounting standards.
• The imposition of tariffs and their duration and uncertainty surrounding further tariffs and congressional action regarding spending and taxation, which may result in changes in government spending and affect business and consumer spending trends.
• Our ability to realize or sustain the expected benefits of our business transformation initiatives, which are designed to reduce costs, enable legacy rationalization, streamline distribution, remove redundancies and simplify and improve processes and support functions.
• Our ability to successfully complete acquisitions, divestitures and joint venture transactions, as well as achieve our expectations regarding the financial impact of completed and/or pending transactions.
Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future earnings.
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ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 1C. CYBERSECURITY
Governance
Board and Audit Committee Oversight
Our Board of Directors has delegated to the Audit Committee the oversight responsibility to review and discuss with management the Company’s privacy and data security, including cybersecurity, risk exposures, policies and practices, and the steps management has taken to detect, monitor and control such risks and the potential impact of those exposures on our business, financial results, operations and reputation. The full Board and Audit Committee regularly receive reports and presentations on privacy and data security, which address relevant cybersecurity issues and risks and span a wide range of topics. These reports and presentations are provided by officers with responsibility for privacy and data security, who include our Chief Information Security Officer (CISO), Chief Technology Officer (CTO) and AT&T’s Legal team . In addition to regular reports to the Audit Committee, we have protocols by which certain security incidents are escalated within the Company and, where appropriate, reported in a timely manner to the Audit Committee.
Chief Security Office/CISO
We maintain a Chief Security Office (CSO) , which is charged with management-level responsibility for all aspects of network and information security within the Company. Led by our CISO and comprised of a large team of highly trained security professionals across multiple countries , the CSO is responsible for:
a. establishing the policies, standards and requirements for the security of AT&T’s computing and network environments;
b. protecting AT&T-owned and -managed assets and resources against unauthorized access by monitoring potential security threats, correlating network events and overseeing the execution of corrective actions;
c. promoting compliance with AT&T’s security policies and network and information security program in a consistent manner on network systems and applications; and
d. providing security thought leadership in the global security arena.
Our CISO plays the key management role in assessing and managing our material risks from cybersecurity threats. The CISO also works closely with AT&T Legal to oversee compliance with legal, regulatory and contractual security requirements. The CISO has extensive technical leadership experience and cybersecurity expertise, gained from over 20 years of experience, including serving as the Chief Information Security Officer and Director of the Office of Cybersecurity at a U.S. government agency, in addition to serving as the Chief Information Security Officer of two large public companies. Prior to that, he served for 20 years in the U.S. military, in various information technology roles of increasing seniority. The security professionals in the CSO have cybersecurity backgrounds and expertise relevant to their roles, including, in certain circumstances, relevant industry certifications.
Risk Management and Strategy
We maintain a network and information security program that is reasonably designed to protect our information, and that of our customers, from unauthorized risks to their confidentiality, integrity or availability. Our program encompasses the CSO and its policies, platforms, procedures and processes for assessing, identifying and managing risks from cybersecurity threats, including third-party risk from vendors and suppliers. The program is integrated into our overall risk management framework and is generally designed to identify and respond to security incidents and threats in a timely manner to minimize the loss or compromise of information assets and to facilitate incident resolution.
We maintain continuous and near-real-time security monitoring of the AT&T network for investigation, action and response to network security events. This security monitoring leverages tools, where available, such as near-real-time data correlation, situational awareness reporting, active incident investigation, case management, trend analysis and predictive security alerting. We assess, identify and manage risks from cybersecurity threats through various mechanisms, which from time to time may include tabletop exercises to test our preparedness and incident response process, business unit assessments, control gap analyses, threat modeling, impact analyses, internal audits, external audits, penetration tests and engaging third parties to conduct analyses of our information security program. When circumstances warrant, we also retain external cybersecurity experts to assist the CSO. We conduct vulnerability testing and assess identified vulnerabilities for severity, the potential impact to AT&T and our customers, and likelihood of occurrence. We regularly evaluate security controls to maintain their functionality in accordance with security policy. We also obtain cybersecurity intelligence from recognized forums, third parties and other sources as part of our risk assessment process. In addition, as a infrastructure entity, we
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with numerous agencies in the U.S. government to help protect U.S. communications networks and critical infrastructure, which, in turn, informs our cybersecurity threat intelligence.
With respect to incident response, the Company has adopted a Cybersecurity Incident Response Plan, as well as a Data Privacy Incident Response Plan that applies if customer information has been compromised (together, the “IRPs”), to provide a common framework for responding to security incidents. This framework establishes procedures for identifying, validating, categorizing, documenting and responding to security events that are identified by or reported to the CSO. The IRPs apply to all AT&T personnel (including contractors and partners) that perform functions or services that require securing AT&T information and computing assets, and to all devices and network services that are owned or managed by the Company.
The IRPs set out a coordinated, multi-functional approach for investigating, containing and mitigating incidents, including reporting findings to senior management and other key stakeholders and keeping them informed and involved as appropriate. In general, our incident response process follows the NIST (National Institute of Standards and Technology) framework and focuses on four phases: preparation; detection and analysis; containment, eradication and recovery; and post-incident remediation.
Impact of Cybersecurity Risk
In 2025, 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, 2025, of our total property, plant and equipment, outside plant (including cable, wiring and other non-central office network equipment) represented 29%; other equipment, comprised principally of wireless network equipment attached to towers, furniture and office equipment and vehicles and other work equipment, represented 26%; central office equipment represented 25%; land, building and wireless communications towers represented 12%; and other miscellaneous property represented 8%.
For our Communications segment, substantially all of the installations of central office equipment are located in buildings and on land we own. Many garages, administrative and business offices, wireless towers, telephone centers and retail stores are leased. Property on which communications towers are located may be either owned or leased.
ITEM 3. LEGAL PROCEEDINGS
We are a party to numerous lawsuits, regulatory proceedings and other matters arising in the ordinary course of business. As of the date of this report, we do not believe any pending legal proceedings to which we or our subsidiaries are subject are required to be disclosed as material legal proceedings pursuant to this item.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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INFORMATION ABOUT OUR EXECUTIVE OFFICERS
As of February 1, 2026
Name
Age
Position
Held Since
John T. Stankey
Chairman of the Board, Chief Executive Officer and President
Darcie (Henry) Cakaric
Senior Executive Vice President and Chief Human Resources Officer
Pascal Desroches
Senior Executive Vice President and Chief Financial Officer
Edward W. Gillespie
Senior Executive Vice President - External and Legislative Affairs, AT&T Services, Inc.
Kellyn S. Kenny
Chief Marketing and Growth Officer
Lori M. Lee
Global Marketing Officer and Senior Executive Vice President - International
Jeremy Legg
Chief Technology Officer, AT&T Services, Inc.
David R. McAtee II
Senior Executive Vice President and General Counsel
Jeffery S. McElfresh
Chief Operating Officer
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 Ms. Cakaric. Executive officers are not appointed to a fixed term of office.
Ms. Cakaric was previously Chief People Officer of StackAdapt from July 2024 to October 2025, Chief People Officer of Flexport from September 2023 to July 2024, Chief People Officer of Snap from October 2022 to September 2023, Chief Human Resources Officer of Amazon.com from July 2021 to October 2022 and Vice President of Human Resources of Amazon.com from June 2016 to June 2021.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed on the New York Stock Exchange and NYSE Texas under the ticker symbol “T”. The number of stockholders of record as of December 31, 2025 and 2024 was 671,341 and 712,700. The number of stockholders of record as of January 28, 2026, was 668,838. We declared dividends on common stock, on a quarterly basis, totaling $1.11 per share in 2025 and 2024.
STOCK PERFORMANCE GRAPH
The comparison above assumes $100 invested on December 31, 2020, 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.
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A summary of our repurchases of common stock during the fourth quarter of 2025 is as follows:
ISSUER PURCHASES OF EQUITY SECURITIES
Period
Total Number of
Shares (or Units) Purchased 1,2
Average Price Paid Per Share (or Unit)
Total Number of Shares (or Units) Purchased
as Part of Publicly Announced Plans or Programs 1
Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs 1
October 1, 2025 –
October 31, 2025
November 1, 2025 –
November 30, 2025
December 1, 2025 –
December 31, 2025
Total
1 In December 2024, our Board of Directors approved, and we announced, an authorization to repurchase up to $10,000 of common stock (the “2024 Authorization”). Amounts in Column (d) represent amounts remaining under the 2024 Authorization. In January 2026, our Board of Directors approved, and we announced, an authorization to repurchase an additional $10,000 of common stock. The authorizations have no expiration date.
2 Of the shares purchased, 232,811 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]
AT&T Inc.
Dollars in millions except per share amounts
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 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this document can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10 ‑ K for the fiscal year ended December 31, 2024.
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
Operating Revenues
Communications
Latin America
Corporate
AT&T Operating Revenues
Operating Income (Loss)
Communications
Latin America
Segment Operating Income
Corporate
Certain significant items
AT&T Operating Income
The Communications segment accounted for approximately 97% of our 2025 and 2024 total segment operating revenues and accounted for substantially all segment operating income in 2025 and 2024. 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 AT&T Internet Air (AIA) services, to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services.
The Latin America segment accounted for approximately 3% of our 2025 and 2024 total segment operating revenues and less than 1% of segment operating income in 2025 and 2024. This segment provides wireless service and equipment in Mexico.
AT&T Inc.
Dollars in millions except per share amounts
RESULTS OF OPERATIONS
Consolidated Results Our financial results are summarized in the following table. We then discuss factors affecting our overall results. Additional analysis is discussed in our “Segment Results” section. We also discuss our expected revenue and expense trends for 2026 in the “Operating Environment and Trends of the Business” section.
Percent Change
Operating revenues
Service
Equipment
Total Operating Revenues
Operating expenses
Operations and support
Asset impairments and abandonments
and restructuring
Depreciation and amortization
Total Operating Expenses
Operating Income
Interest expense
Equity in net income of affiliates
Other income (expense) – net
Income Before Income Taxes
Net Income
Net Income Attributable to AT&T
Net Income Attributable to Common Stock
OVERVIEW
Operating revenues increased in 2025, reflecting higher Mobility and Consumer Wireline revenues, partially offset by declines in Business Wireline. Operating revenues in Mexico were also higher, overcoming unfavorable foreign exchange impacts during the first half of 2025.
Operations and support expenses increased in 2025, reflecting higher sales volumes in our Mobility business unit, which drove higher equipment, advertising, selling and bad debt expenses. Also contributing to higher costs were approximately $440 of apportioned legal settlements during 2025, higher network-related expenses and advertising costs due to the launch of a new campaign in 2025. Increases were partially offset by declines from our continued transformation efforts and lower content licensing fees.
Asset impairments and abandonments and restructuring decreased in 2025, with higher impairments in 2024. Noncash charges in 2024 primarily related to a goodwill impairment charge of $4,422 associated with our Business Wireline reporting unit as well as restructuring charges, including termination fees associated with our network modernization program to deploy commercial scale open radio access network (Open RAN). Expenses in 2025 primarily relate to restructuring severance charges.
Depreciation and amortization expense increased in 2025, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades, partially offset by lower depreciation from fully depreciated legacy assets and impacts from our Open RAN network modernization efforts.
Operating income increased in 2025 and decreased in 2024. Our operating margin was 19.2% in 2025, compared to 15.6% in 2024, and 19.2% in 2023.
Interest expense increased in 2025, primarily due to lower capitalized interest associated with spectrum acquisitions. The increase was partially offset by lower average commercial paper balances.
AT&T Inc.
Dollars in millions except per share amounts
Equity in net income of affiliates decreased in 2025, reflecting our sale of DIRECTV in July 2025. The decrease was partially offset by cash distributions received by AT&T in excess of the carrying amount of our investment in DIRECTV prior to disposition (see Notes 10 and 19).
Other income (expense) – net increased in 2025. The increase was primarily due to a gain of approximately $5,600 recognized on the sale of our interest in DIRECTV (see Note 10). The increase was also driven by a gain on a prior disposition and noncash impairment charges for a held-for-sale business and our SKY Mexico equity investment. Partially offsetting the increases were lower pension and postretirement benefit credits and lower returns on other benefit-related investments.
Income tax expense decreased in 2025, primarily due to a lower effective tax rate driven by a tax-free gain on sale of DIRECTV in 2025 and a goodwill impairment in 2024, which is not deductible for tax purposes.
Our effective tax rate was 13.4% in 2025, 26.6% in 2024, and 21.3% in 2023, reflecting the nonrecognition of income taxes on the DIRECTV gain and larger discrete tax benefits in 2025, and the goodwill impairment in 2024, which was not deductible for tax purposes.
Segment Results Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We evaluate segment performance based on operating income as well as EBITDA and/or EBITDA margin. See “Discussion and Reconciliation of Non-GAAP Measures” for a reconciliation of EBITDA and EBITDA margin to the most comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP).
COMMUNICATIONS SEGMENT
Percent Change
Segment Operating Revenues
Mobility
Business Wireline
Consumer Wireline
Total Segment Operating Revenues
Segment Operating Income (Loss)
Mobility
Business Wireline
Consumer Wireline
Total Segment Operating Income
Operating revenues increased in 2025, driven by increases in Mobility service revenue and our Consumer Wireline business unit, driven by gains in wireless and broadband services. Partially offsetting these increases were declines in our Business Wireline business unit, which reflects lower demand for legacy services.
Operating income increased in 2025 and decreased in 2024. The 2025 operating income reflects an increase in operating income from our Mobility and Consumer Wireline business units, partially offset by a decrease in our Business Wireline business unit. Our Communications segment operating income margin was 23.1% in 2025, 23.0% in 2024 and 23.6% in 2023. Our Communications segment EBITDA margin was 39.6% in 2025, 39.5% in 2024 and 38.3% in 2023.
AT&T Inc.
Dollars in millions except per share amounts
Communications Business Unit Discussion
Mobility Results
Percent Change
Operating revenues
Service
Equipment
Total Operating Revenues
Operating expenses
Operations and support
Depreciation and amortization
Total Operating Expenses
Operating Income
The following tables highlight other key measures of performance for Mobility:
Subscribers
Percent Change
Postpaid
Postpaid phone
Prepaid
Reseller
Total Mobility Subscribers 1
1 Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines.
Mobility Net Additions
Percent Change
Postpaid Phone Net Additions
Total Phone Net Additions
Postpaid 1
Prepaid
Reseller
Mobility Net Subscriber Additions 2,3
Postpaid Churn 4
Postpaid Phone Churn 4
1 In addition to postpaid phones, includes tablets and wearables and other. Tablet net adds (losses) were 143, 167 and (68) for the years ended December 31, 2025, 2024 and 2023, respectively. Wearables and other net adds were 44, 430 and 639 for the years ended December 31, 2025, 2024 and 2023, respectively.
2 Excludes migrations between wireless subscriber categories, including connected devices, and acquisition-related activity during the period.
3 Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines.
4 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month by the total number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period.
AT&T Inc.
Dollars in millions except per share amounts
Service revenue increased during 2025, largely due to growth from subscriber gains, partially offset by promotional activity.
ARPU
Postpaid ARPU increased in 2025 reflecting pricing actions that were largely offset by increased promotional activity, growth in our converged customer relationships, and our success in attracting customers in underpenetrated segments with lower ARPUs but attractive lifetime values, such as age 55-plus in our “value customers.”
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 churn were higher in 2025, partially driven by an increase in our customer base that reached the end of device financing periods, which normalized in the second half of 2025.
Equipment revenue increased in 2025, primarily driven by higher wireless device sales volumes.
Operations and support expenses increased in 2025, primarily due to higher sales volumes, which drove higher equipment, advertising, selling and bad debt expenses. The increase also reflected higher advertising due to the launch of a new campaign, and higher network costs that were partially offset by lower content licensing fees and expense declines from transformation efforts.
Depreciation expense increased in 2025, primarily due to ongoing capital spending for network upgrades and expansion, partially offset by lower depreciation impacts from our network modernization efforts.
Operating income increased in 2025 and 2024. Our Mobility operating income margin was 30.4% in 2025, 30.9% in 2024 and 30.8% in 2023. Our Mobility EBITDA margin was 42.0% in 2025, 42.8% in 2024 and 40.9% in 2023.
Business Wireline Results
Percent Change
Operating revenues
Legacy and other transitional services
Fiber and advanced connectivity
services
Equipment
Total Operating Revenues
Operating expenses
Operations and support
Depreciation and amortization
Total Operating Expenses
Operating Income (Loss)
Legacy and other transitional services revenues decreased in 2025, driven by lower demand for legacy and VPN services, which we expect to continue as we decommission our copper-based legacy network. These revenue declines were partially offset by targeted pricing actions in the first quarter of 2025.
Fiber and advanced connectivity services revenues increased in 2025, driven by higher fiber and fixed wireless revenues.
Equipment revenues decreased in 2025, driven by lower customer premises equipment sales, which can vary from year to year based on the nature of services purchased.
Operations and support expenses decreased in 2025, primarily driven by lower personnel and customer support costs associated with ongoing transformation initiatives. Expense declines also include lower network and advertising costs.
Depreciation expense increased in 2025, primarily due to ongoing capital investment for strategic initiatives such as fiber, partially offset by fully depreciated legacy assets.
AT&T Inc.
Dollars in millions except per share amounts
Operating income decreased in 2025 and 2024. Our Business Wireline operating income margin was (4.7)% in 2025, (0.5)% in 2024 and 6.2% in 2023. Our Business Wireline EBITDA margin was 29.1% in 2025, 29.1% in 2024 and 31.9% in 2023.
Consumer Wireline Results
Percent Change
Operating revenues
Broadband
Legacy voice and data services
Other service and equipment
Total Operating Revenues
Operating expenses
Operations and support
Depreciation and amortization
Total Operating Expenses
Operating Income
The following tables highlight other key measures of performance for Consumer Wireline:
Broadband Connections
Percent Change
Broadband 1
Fiber Broadband Connections
1 Includes AIA.
Broadband Net Additions
Percent Change
Broadband Net Additions 1,2
Fiber Broadband Net Additions
1 Includes AIA.
2 Excludes the impact of customer disconnections resulting from the termination of AIA services in areas with unfavorable regulatory requirements in the first quarter of 2025.
Broadband revenues increased in 2025, driven by an increase in fiber revenues of 17.0%. Higher fiber revenues reflect an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU. This increase also includes growth in AIA revenues and was partially offset by declines in copper-based broadband services.
Legacy voice and data service revenues decreased in 2025, reflecting the continued decline in demand for these services in favor of other technologies, such as wireless and fiber services.
Other service and equipment revenues decreased in 2025, reflecting the continued decline in the number of VoIP customers.
Operations and support expenses decreased in 2025, driven by lower customer support costs and content licensing fees, offset by higher network-related expenses and marketing costs.
Depreciation expense increased in 2025, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion, partially offset by fully depreciated legacy assets.
Operating income increased in 2025 and 2024. Our Consumer Wireline operating income margin was 10.9% in 2025, 6.4% in 2024 and 4.9% in 2023. Our Consumer Wireline EBITDA margin was 37.0% in 2025, 33.4% in 2024 and 31.3% in 2023.
AT&T Inc.
Dollars in millions except per share amounts
LATIN AMERICA SEGMENT
Percent Change
Segment Operating revenues
Service
Equipment
Total Segment Operating Revenues
Segment Operating expenses
Operations and support
Depreciation and amortization
Total Segment Operating Expenses
Operating Income (Loss)
The following tables highlight other key measures of performance for Mexico:
Subscribers
Percent Change
Postpaid
Prepaid
Reseller
Mexico Wireless Subscribers
Mexico Wireless Net Additions
Percent Change
Postpaid
Prepaid
Reseller
Mexico Wireless Net Additions
Service revenues increased in 2025, reflecting growth in subscribers and ARPU, partially offset by unfavorable foreign exchange impacts.
Equipment revenues increased in 2025, driven by higher equipment sales, partially offset by unfavorable foreign exchange impacts.
Operations and support expenses increased in 2025, driven by increased sales volume, resulting in higher equipment, selling and bad debt expense, partially offset by favorable impact of foreign exchange.
Depreciation expense increased in 2025, primarily due to accelerated depreciation on certain network assets and higher in-service assets, partially offset by favorable impact of foreign exchange.
Operating income improved in 2025 and 2024. Our Mexico operating income margin was 3.3% in 2025, 0.9% in 2024 and (3.6)% in 2023. Our Mexico EBITDA margin was 18.6% in 2025, 16.5% in 2024 and 14.8% in 2023.
OPERATING ENVIRONMENT AND TRENDS OF THE BUSINESS
2026 Revenue Trends We expect revenue growth in our wireless and broadband businesses as customers demand instant connectivity and higher speeds made possible by wireless network enhancements through 5G deployment and our fiber network expansion. We believe that our simplified go-to-market strategy for 5G in underpenetrated markets will continue to contribute
AT&T Inc.
Dollars in millions except per share amounts
to wireless subscriber and service revenue growth and that expansion of our fiber and AIA serviceable locations will drive greater demand for broadband services. We expect that an increasing portion of our revenues will come from converged customers with seamless connectivity through an innovative product portfolio and strong customer relationships.
As we expand our fiber reach, we will be orienting our business portfolio to leverage this opportunity to offset continuing declines in legacy Business Wireline products by growing connectivity with small to mid-sized businesses. We plan to use our strong fiber and wireless assets, broad distribution and integrated product offerings to strengthen our overall market position. We will continue to rationalize our product portfolio with a longer-term shift of the business to fiber and wireless 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 newer technologies, such as AT&T Internet Air.
2026 Expense Trends During 2026, we expect expense trends consistent with the prior year, and that we will continue to focus on efficiency, led by our cost transformation initiative. We expect the spending required to support growth and efficiency initiatives, primarily our continued deployment of fiber and 5G, to pressure expense trends in 2026. These investments will help prepare us to meet the continued increase in customer demand for enhanced wireless and broadband services, including on-the-go video streaming, augmented reality, “smart” technologies, user generated content and AI. Our network modernization efforts should result in a more efficient use of capital and lower network-related expenses in the coming years. Furthermore, access to our network and newer technology may drive customers to upgrade devices and equipment, the expenses associated with those equipment sales are expected to contribute to higher costs.
We continue to transform our operations to be more efficient and effective. We are restructuring businesses, working with regulators and customers to sunset legacy networks, improving customer service and ordering functions through digital transformation, sizing our support costs and staffing with current activity levels, and reassessing overall benefit costs. We also expect cost savings through AI-driven efficiencies in network design and operations, software development, sales, marketing, customer support services and general and administrative costs.
Market Conditions In recent years, uncertainty surrounding global growth rates, tariffs, inflation and a higher interest rate environment continued to produce volatility in the credit, currency and equity markets. We expect ongoing pressure on pricing during 2026 as we respond to the geopolitical and macroeconomic environment and our competitive marketplace, especially in wireless services.
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 plan to voluntarily contribute approximately $350 to our pension plans in 2026 and expect only minimal ERISA contribution requirements. Investment returns on these assets depend largely on trends in the economy, and a weakness in the equity, fixed income and real asset markets could require us to make future contributions to the pension plans. 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 2026 (see “ 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 United States. on a converged telecommunications network utilizing different technological platforms. In 2026, our key initiatives include:
• Continuing our wireless subscriber momentum and 5G deployment, with expansion of wireless subscribers in underpenetrated markets and converged connectivity.
• Continuing our fiber deployment, improving fiber penetration, growing AT&T Internet Air services, accelerating connectivity growth and increasing broadband revenues, inclusive of impact of integrating recent acquisitions of spectrum and fiber assets.
• Continuing our deployment of Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, fostering lower network costs, improved operational efficiencies and allowing for continued investment in our fast-growing broadband network.
• Continuing to drive efficiencies and a competitive advantage through cost transformation initiatives, including modernization of our IT infrastructure and product simplification.
Wireless We expect to continue to deliver revenue growth in the coming years. We are in a period of rapid growth in wireless video and data usage and believe that there are substantial opportunities available for next-generation integrated services that
AT&T Inc.
Dollars in millions except per share amounts
combine technologies and services. As of December 31, 2025, we served 145 million wireless subscribers in North America, with 120 million in the United States.
Our LTE technology covers over 441 million people in North America, and in the United States, we cover all major metropolitan areas and over 337 million people. At December 31, 2025, our network covers more than 322 million people with 5G technology in the United States and North America. When combined with our upgraded backhaul network, we provide enhanced network capabilities and superior mobile broadband speeds for data and video services.
Our networks covering both the United States and Mexico have enabled our customers to use wireless services without roaming on other companies’ networks. At December 31, 2025, we provided LTE coverage to over 104 million people in Mexico.
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. 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.
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. The Supreme Court subsequently denied the trade association’s request for review. Under an agreement
AT&T Inc.
Dollars in millions except per share amounts
with the New York Attorney General, the law began to be enforced on January 15, 2025. A number of state legislatures have since considered legislation regulating the rates of fixed broadband service, with Connecticut adopting a law requiring wireline ISPs that are state contractors to stand up a discounted broadband offering to low-income customers.
Since 2018, some states have adopted legislation or issued executive orders that established state net neutrality rules, including California, Maine, Minnesota, Vermont and Washington. Additional states may seek to impose net neutrality requirements in the future.
On November 15, 2023, the FCC adopted rules to “facilitate” equal access to broadband and prevent digital discrimination in broadband access. 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 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 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. On July 4, 2025, as part of the omnibus reconciliation package (One Big Beautiful Bill (OBBB)), the President signed into law a provision that reauthorized, for 10 years, FCC statutory authority to conduct spectrum auctions and further required auction of 800 MHz of spectrum within eight years. The FCC’s implementation of this legislation will have a direct impact on whether the wireless industry has sufficient spectrum to support future wireless services. As a first step, in November 2025, the FCC opened a rulemaking to consider the auctioning of spectrum in the upper C-Band, as required by OBBB.
ACCOUNTING POLICIES AND STANDARDS
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 5.50% and 5.30%, respectively, at December 31, 2025, 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, 2025, when compared to the year ended December 31, 2024, we decreased our pension discount rate by 0.20%, resulting in an increase in our pension plan benefit obligation of $680, and decreased our postretirement discount rate by 0.30%, resulting in an increase in our postretirement benefit obligation of $167.
AT&T Inc.
Dollars in millions except per share amounts
Our expected long-term rate of return is 7.75% on pension plan assets and 4.00% on postretirement plan assets for 2025 and 2026. 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 2026 combined pension and postretirement cost to increase $139, 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.
As of October 1, 2025, the calculated fair values of the reporting units with remaining goodwill exceeded their book values in all circumstances in excess of 10%. If either the projected long-term growth rates declined by 0.5%, if the projected long-term 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
We have the option to first perform a qualitative assessment to determine whether it is more likely than not that the book value of our wireless licenses exceeds the fair value. On a periodic basis, or if the qualitative assessment indicates potential impairment, we will perform a quantitative impairment test.
Our quantitative assessment involves assessing the fair value of U.S. wireless licenses using a discounted cash flow model (the Greenfield Approach) and a qualitative corroborative market approach based on auction prices, depending upon auction activity. The Greenfield Approach assumes a company initially owns only the wireless licenses and makes investments required to build an operation comparable to current use. 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.
During 2025, we performed a qualitative impairment assessment that considered several factors, including macroeconomic conditions, industry and regulatory considerations, recent and projected performance of the reporting unit and the prior quantitative impairment testing results. The qualitative assessment indicated it is more likely than not that the fair value of our wireless licenses exceeded the book value; thus, a quantitative assessment was not performed.
For our most recent quantitative assessment, which was performed in 2024, we used a discount rate of 8.75%, based on the optimal long-term capital structure of a market participant and its associated cost of debt and equity for the licenses, to calculate the present value of the projected cash flows. The quantitative impairment assessment indicated the fair value of our wireless licenses exceeded their book value by more than 10%. If either the projected rate of long-term growth of cash flows or revenues
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Dollars in millions except per share amounts
declined by 0.5%, or if the discount rate increased by 0.5%, the fair values of these wireless licenses would still be higher than the book value.
Income Taxes Our estimates of income taxes and the significant items giving rise to the deferred assets and liabilities are shown in Note 13 and reflect our assessment of actual future taxes to be paid on items reflected in the financial statements, giving consideration to both timing and probability of these estimates. 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
For the years ended December 31,
Cash provided by operating activities
Cash used in investing activities
Cash used in financing activities
At December 31,
Cash and cash equivalents
Total debt
We had $18,234 in cash and cash equivalents available at December 31, 2025, increasing $14,936 since December 31, 2024. Cash and cash equivalents included cash of $3,521 and money market funds and other cash equivalents of $14,713. Approximately $1,330 of our cash and cash equivalents were held in accounts outside of the United States and may be subject to restrictions on repatriation. Our cash and cash equivalents at December 31, 2025 was elevated in anticipation of the consummation of announced transactions. (See Note 6)
In 2025, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, and the disposition of our investment in DIRECTV. These inflows exceeded cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, including higher device payments from higher sales volumes. The cash generated from operating activities was primarily used to fund capital improvements, make dividend payments to stockholders, repurchase preferred and common stock, and repay long-term debt. We maintain availability under our credit facilities and our commercial paper program to meet our short-term liquidity requirements.
Refer to “Contractual Obligations” discussion below for additional information regarding our cash requirements.
Cash Provided by Operating Activities
During 2025, cash provided by operating activities was $40,284, compared to $38,771 in 2024, driven by operational growth and lower cash tax payments. Partially offsetting this increase and lowering cash from operations during 2025 were voluntarily pension contributions of approximately $1,150 and advanced cash payments of about $900 to Frontier Communications, a subsidiary of Verizon Communications Inc.
We actively manage the timing of our supplier payments for operating items to optimize the use of our cash. Among other things, we seek to make payments on 90-day or greater terms, while providing the suppliers with access to bank facilities that
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Dollars in millions except per share amounts
permit earlier payments at their cost (referred to as supplier financing program). In addition, for payments to suppliers of handset inventory, as part of our working capital initiatives, we have arrangements that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (referred to as direct supplier financing). The net impact of direct supplier financing, including principal and interest payments, was to improve cash from operating activities $443 in 2025 and $661 in 2024. All supplier financing payments are due within one year. (See Note 22)
Cash Used in Investing Activities
During 2025, cash used in investing activities totaled $18,777, consisting primarily of $20,842 (including interest during construction) for capital expenditures. During 2025, investing activities also included $148 of FirstNet sustainability receipts net of investment and $620 for our investment in a new strategic partner, DriveNets, related to wireline network transformation accounted for under the equity method of accounting.
On July 2, 2025, we completed the sale of our interest in DIRECTV to TPG and recorded a current note receivable of approximately $3,600, of which we had received $3,100 by the end of 2025, and a long-term note receivable of $500. (See Note 10)
We enter into multi-year software licensing arrangements, which are typically paid over the license terms of two to five years and referred to as vendor financing. Additionally, for capital improvements, we have negotiated favorable vendor payment terms of 120 days or more with some of our vendors, which are also referred to as vendor financing. Vendor financing is excluded from capital expenditures and reported as financing activities. Vendor financing payments were $1,181 in 2025, compared to $1,792 in 2024. Capital expenditures in 2025 were $20,842, and when including $1,181 cash paid for vendor financing, capital investment was $22,023 ($32 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 2025, we placed $1,594 of productive assets in service under vendor financing arrangements (compared to $700 in 2024).
In November 2024, we agreed to purchase select spectrum licenses from United States Cellular Corporation (UScellular) for approximately $1,000, subject to closing conditions, including the consummation of UScellular’s sale of its wireless operations and select spectrum assets to T-Mobile US, Inc. We completed our acquisition of these licenses on January 13, 2026, with a cash payment of $1,018.
On May 21, 2025, we agreed to acquire substantially all of Lumen’s Mass Markets fiber business for $5,750 in cash, subject to purchase price adjustments. At the time of signing, the pending acquisition covered approximately one million fiber customers, and also included fiber network assets that reached more than four million fiber locations. On February 2, 2026, we completed the transaction and expect to manage the customer relationships in our Consumer Wireline business and place the fiber network assets in a new, wholly owned subsidiary. We plan to sell a controlling interest in the subsidiary to an equity partner that will co-invest in the ongoing business, and, as such, it is expected to meet the criteria for discontinued operations.
On August 25, 2025, we agreed to purchase FCC licenses in the 600 MHz and 3.45 GHz bands from EchoStar for approximately $23,000, subject to certain adjustments. The transaction is expected to close in early 2026 and is subject to regulatory approval and other closing conditions. The FCC licenses will be used to expand our 5G network, meet future capacity demands and support future wireless communications services. We signed a short-term spectrum manager lease on the 3.45 GHz spectrum, which was deployed in cell sites covering nearly two-thirds of the U.S. population.
The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements. In 2026, we expect that our capital investment, which includes capital expenditures and cash paid for vendor financing, will be in the $23,000 to $24,000 range.
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Dollars in millions except per share amounts
Cash Provided by or Used in Financing Activities
In 2025, cash used in financing activities totaled $6,386 and was comprised of dividend payments, common and preferred stock repurchases, debt repayments and vendor financing payments, partially offset by issuances of long-term debt and issuances of preferred interests in a subsidiary.
A tabular summary of our debt activity during 2025 is as follows:
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
Full Year 2025
Issuance of notes and debentures:
USD notes
EUR notes
Debt issuances
Repayments:
USD notes
EUR notes
CAD notes
Other
Repayments of long-term debt
The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2% as of December 31, 2025 and 2024. We had $134,718 of total notes and debentures outstanding at December 31, 2025. This also included Euro, British pound sterling, Canadian dollar, Australian dollar and Swiss franc denominated debt that totaled approximately $35,307.
At December 31, 2025, we had $9,011 of long-term debt maturing within one year. We had no outstanding commercial paper borrowings or other short-term borrowings on December 31, 2025.
During 2025, we paid $1,181 of cash under our vendor financing program, compared to $1,792 in 2024. Total vendor financing payables included in our December 31, 2025 consolidated balance sheet were $1,892, with $956 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).
During 2025, we repurchased approximately 159 million shares totaling $4,269 under our $10,000 common stock repurchase authorization approved by the Board of Directors in December 2024, excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022. At December 31, 2025, we had approximately $5,731 remaining under this 2024 repurchase authorization. On January 27, 2026, the Board approved an authorization to repurchase an additional $10,000 of common stock.
We paid dividends on common and preferred shares of $8,180 in 2025, compared with $8,208 in 2024. Dividends on common stock declared by our Board of Directors totaled $1.11 per share in 2025 and in 2024. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities.
Financing activities in 2025 also included the issuance of $2,250 of nonconvertible cumulative preferred interests in Telco LLC, with the funds used to redeem all outstanding Series B preferred stock for $2,075 (see Note 16). We also received approximately $850 in upfront cash proceeds from a structured sale-leaseback of real estate.
On February 5, 2026, we issued $6,500 principal amount of global notes due 2031 to 2056 with a weighted average coupon of 5.2%. We intend to use the net proceeds from this issuance for general corporate purposes, which may include debt repayments and pending acquisitions.
Our 2026 financing activities will focus on managing our debt level, funding pending acquisitions, paying dividends, subject to approval by our Board of Directors, and repurchasing common stock when deemed appropriate. We plan to fund our financing
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Dollars in millions except per share amounts
uses of cash through a combination of cash from operations, issuance of debt and asset sales. The timing and mix of any debt issuance and/or refinancing will be guided by credit market conditions and interest rate trends.
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. On November 3, 2025, we entered into (i) a $12,000 Second Amended and Restated Credit Agreement (Revolving Credit Agreement), with Citibank, N.A., as agent, amending and restating our existing $12,000 Amended and Restated Credit Agreement, dated as of November 18, 2022, and (ii) a $17,500 Delayed Draw Term Loan Credit Agreement (Term Loan), with Bank of America, N.A., as agent. No amount was outstanding under the Revolving Credit Agreement or the Term Loan as of December 31, 2025. (See Note 11)
We also utilize other external financing sources, which include various credit arrangements supported by government agencies to support network equipment purchases as well as a commercial paper program.
The Revolving Credit Agreement and the Term Loan contain covenants that are customary for an issuer with investment grade senior debt credit ratings, including a net debt-to-EBITDA financial ratio covenant requiring us to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1. As of December 31, 2025, we were in compliance with the covenants for our credit facilities.
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 $35,741 derivative portfolio, counterparties are still required to post collateral. During 2025, we posted $11 of cash collateral, on a net basis. Cash postings under these arrangements vary with changes in credit ratings and netting agreements. (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, 2025, our debt ratio was 51.4%, compared to 50.7% at December 31, 2024 and 53.5% at December 31, 2023. 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.
A significant amount of our cash outflows is related to tax items, acquisition of spectrum and benefits paid for current and former employees:
• Total taxes incurred, collected and remitted by AT&T during 2025 and 2024 were $16,326 and $16,968. 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 $379 in 2025, $380 in 2024 and $2,940 in 2023.
• Total health and welfare benefits provided to certain active and retired employees and their dependents totaled approximately $2,490 in 2025 and $2,550 in 2024, with $483 paid from plan assets in 2025, compared to $736 in 2024. Of those benefits, approximately $2,220 related to medical and prescription drug benefits in 2025, compared to $2,290 in 2024. We paid $2,957 of pension benefits out of plan assets in 2025, compared to $2,447 in 2024.
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Dollars in millions except per share amounts
Contractual Obligations
Our contractual obligations as of December 31, 2025, and the estimated timing of payment, are in the following table:
Payments Due By Period
Total
Less than
1 Year
Years
Years
More than
5 Years
Long-term debt obligations 1
Interest payments on long-term debt 2
Purchase obligations 3
Operating lease obligations 4
FirstNet sustainability payments 5
Unrecognized tax benefits (UTB) 6
Other finance obligations 7
Total Contractual Obligations 8
1 Represents 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.
2 Includes credit agreement borrowings.
3 We expect to fund the purchase obligations with cash on hand, which may include cash provided by operations or through incremental borrowings. The minimum commitment for certain obligations is based on termination penalties that could be paid to exit the contracts. (See Note 21)
4 Represents operating lease payments (see Note 8).
5 Represents 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)
6 The 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).
7 Represents future minimum payments under the Crown Castle and other arrangements (see Note 18), payables subject to extended payment terms (see Note 22) and finance lease payments (see Note 8).
8 Excludes debt transactions, pending acquisitions and other investment funding completed after December 31, 2025 (see Note 6).
Certain items were excluded from this table because the year of payment is unknown and could not be reliably estimated, we believe the obligations are immaterial, or the settlement of the obligation will not require the use of cash. These items include: deferred income tax liability of $58,312 (see Note 13); net postemployment benefit obligations of $9,113 (including current portion); and other noncurrent liabilities of $7,155.
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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.
Communications Segment
Operating income
Add: Depreciation and amortization
EBITDA
Operating income margin
EBITDA margin
Mobility
Operating income
Add: Depreciation and amortization
EBITDA
Operating income margin
EBITDA margin
Business Wireline
Operating income (loss)
Add: Depreciation and amortization
EBITDA
Operating income margin
EBITDA margin
Consumer Wireline
Operating income
Add: Depreciation and amortization
EBITDA
Operating income margin
EBITDA margin
Latin America Segment
Operating income (loss)
Add: Depreciation and amortization
EBITDA
Operating income margin
EBITDA margin
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Dollars in millions except per share amounts
