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 AT&T Reports Strong Subscriber Gains and Solid Revenue Growth in Fourth Quarter
   Tuesday, January 27, 2015 4:03:13 PM ET

--Due to non-cash charges, loss of $0.77 per share in the fourth quarter compared to $1.31 diluted EPS in the year-ago quarter. Excluding significant items, EPS was $0.55 versus $0.53 a year ago, up 3.8 percent

--Fourth-quarter consolidated revenues of $34.4 billion, up 3.8 percent versus the year-earlier period and up 4.5 percent when adjusting for the sale of Connecticut wireline properties; full-year revenues up 2.9 percent, 3.1 percent when adjusted

--Full-year capital investment of more than $21 billion while exceeding Project VIP objectives

--More than $11 billion returned to shareowners in 2014 through dividends and share repurchases

--More than 2 million new wireless and wireline high-speed broadband connections added in the fourth quarter

--Strong Wireless Revenue and Subscriber Growth



--Wireless revenues up 7.7 percent versus the year-ago quarter

--Wireless data billings up 18 percent versus the year-earlier quarter

--1.9 million total net adds with 5.6 million total net adds in 2014

--Postpaid net adds of 854,000; nearly 3.3 million postpaid net adds in 2014

--Wireless operating income margin of 16.3 percent for the fourth quarter and 23.1 percent for the full year; adjusted EBITDA service margin of 36.7 percent with a record full-year adjusted margin of 42.0 percent

--More than 1 million new postpaid smartphones added in the fourth quarter and nearly 5 million in 2014

--More than 52 million connections on AT&T Mobile Share(R), representing nearly 70 percent of postpaid subscribers; half of Mobile Share accounts are on data plans of 10 gigabytes or higher

--Record 10.1 million postpaid smartphone gross adds and upgrades in fourth quarter, 29.1 million in 2014

--5.9 million, or 58 percent, of all postpaid smartphone gross adds and upgrades on AT&T Next(SM); 15 million postpaid smartphones on Next plans

--U-verse and Strategic Business Services Drives Adjusted Wireline Revenue Growth

--Reported wireline revenues of $14.6 billion with adjusted revenues up 0.4 percent

--Strategic business services revenues of $2.6 billion up 14.3 percent when adjusted for the Connecticut wireline sale

--Reported wireline consumer revenues of $5.6 billion with adjusted revenues up 2.4 percent versus the year-earlier period

--Total U-verse(R) revenues, including business, of $3.9 billion with adjusted revenues up 21.9 percent year over year; U-verse a more than $15 billion annualized revenue stream 405,000 U-verse high speed Internet subscriber net adds; more than 12 million total U-verse high speed Internet subscribers

--73,000 U-verse TV subscribers added

--Note: AT&T’s fourth-quarter earnings conference call will be broadcast live via the Internet at 4:30 p.m. ET on Tuesday, January 27, 2015, at www.att.com/investor.relations.

AT&T Inc. (T ) today reported solid fourth-quarter results with adjusted consolidated revenues up 4.5 percent, strong wireless net adds, record postpaid gross adds and upgrades and adjusted wireline revenue growth.

"Over the last year, we’ve made several moves to significantly transform our business for the future," said Randall Stephenson, AT&T chairman and CEO. "Our transactions with DIRECTV and Mexican wireless companies Iusacell and Nextel Mexico will make us a very different company. We’ll be unique in the industry because we’ll be able to offer integrated capabilities across a diversified base of services, customers, geographies and technology platforms. After we close DIRECTV, our largest revenue stream will come from business-related accounts, followed by U.S. TV and broadband, U.S. consumer mobility and then international mobility and TV.

"We ended the year substantially complete with our Project VIP network initiative and with most of our postpaid smartphone customers off of device subsidy plans. As a result, our full-year performance saw record-low postpaid customer churn and best-ever wireless service margins - all in a highly competitive wireless market."

Fourth-Quarter Financial Results

For the quarter ended December 31, 2014, AT&T’s consolidated revenues totaled $34.4 billion, up 3.8 percent versus the year-earlier period. When excluding the divested Connecticut wireline properties, revenues were up 4.5 percent. Compared with results for the fourth quarter of 2013, operating expenses were $40.0 billion versus $20.9 billion; operating loss was $5.6 billion versus operating income of $12.2 billion; and operating income margin was (16.1) percent versus 36.9 percent. On an adjusted basis, operating expenses were $29.5 billion, compared to $28.0 billion in the year-ago quarter; operating income was $4.9 billion versus $5.2 billion a year ago; and operating income margin was 14.2 percent versus 15.5 percent a year ago.

Fourth-quarter 2014 net loss attributable to AT&T totaled $4.0 billion, or $0.77 per diluted share, compared to net income of $6.9 billion, or $1.31 per diluted share in the year-ago quarter. Adjusting for $(0.94) from the non-cash actuarial loss on benefit plans, $(0.25) non-cash write-off of certain network assets, and $(0.13) for merger and integration-related expenses, the loss on the sale of Connecticut wireline operations, and other asset impairments, earnings per share was $0.55 compared to an adjusted $0.53 in the year-ago quarter.

(The actuarial loss on benefit plans was driven primarily by a reduction in the combined discount rates from 5.0 percent to 4.2 percent. While investment returns were better than assumptions, they were not enough to offset the actuarial losses.)

Cash from operating activities totaled $5.7 billion in the fourth quarter and capital expenditures totaled $4.4 billion. Free cash flow -- cash from operating activities minus capital expenditures -- totaled $1.3 billion. Asset monetization totaled $2.0 billion with free cash flow and asset monetization of $3.3 billion in the fourth quarter.

Full-Year Results

For full-year 2014, compared with 2013 results, AT&T’s consolidated revenues totaled $132.4 billion versus $128.8 billion; when excluding the divested Connecticut wireline properties, revenues were up 3.1 percent for the year. Operating expenses reflect actuarial gains and losses on benefit plans and were $120.7 billion compared with $98.3 billion, up 22.8 percent; net income attributable to AT&T was $6.2 billion versus $18.2 billion; and earnings per diluted share was $1.19, compared with $3.39 in the prior year. With adjustments for both years, earnings per share totaled $2.51, compared with $2.50.

AT&T’s full-year cash from operating activities was $31.3 billion and capital expenditures, including capitalized interest, totaled $21.4 billion. Full-year free cash flow was $9.9 billion including $560 million of impact from pension funding. Asset monetization for the year totaled $8.1 billion with free cash flow and asset monetization of $18.0 billion for the full year.

Outlook

On a business-as-usual basis without the impact of DIRECTV and the Mexico wireless properties, AT&T expects to deliver in 2015:

-- Continued consolidated revenue growth

-- Adjusted EPS growth in the low single-digit range

-- Expanding margins -- consolidated, wireless and wireline

-- Improving free cash flow and dividend coverage

As previously announced, with the completion of many Project VIP initiatives, AT&T expects capital expenditures to be in the $18 billion range.

The 2015 outlook excludes adjustments such as non-cash mark-to-market benefit plan adjustments.

At this time, AT&T is in the midst of several strategic initiatives and pending acquisitions that will diversify its networks, geographies, products and revenue streams. Including DIRECTV and the Mexico wireless properties, by the end of 2015, AT&T expects its largest revenue streams will be: business (both wireless and wireline); broadband and video; consumer mobility; and international mobility and video. Further, the company expects no dilution to adjusted EPS in 2015 from DIRECTV and the Mexico wireless properties. The company also expects to achieve higher than originally expected multi-year synergies from its acquisition of DIRECTV. The company expects to provide updated 2015 guidance following the expected close of this pending acquisition.

WIRELESS OPERATIONAL HIGHLIGHTS

Repositioning the company’s wireless business model with no-device subsidy AT&T Next and Mobile Share Value(SM) plans resulted in solid revenue growth and strong subscriber gains. Highlights included:

Wireless Revenues Grow 7.7 Percent. Total wireless revenues were up 7.7 percent year over year to $19.9 billion. Wireless equipment revenues increased 72.3 percent to $4.8 billion, as more customers chose equipment installment plans versus subsidized devices. Wireless service revenues were down 3.7 percent to $15.1 billion reflecting continued customer growth of Mobile Share Value plans. Fourth-quarter wireless operating expenses totaled $16.6 billion, up 14.8 percent versus the year-earlier quarter, largely due to higher equipment costs from record gross adds and upgrades and costs associated with the company’s acquisition of Leap Wireless. Wireless operating income was $3.2 billion, down 18.1 percent year over year largely due to increased volumes and Leap integration costs. Fourth-quarter 2014 service revenue comparisons included impacts from strong customer adoption of Mobile Share Value plans, partially offset by increased revenues from Leap.

Postpaid Phone with Next ARPU Grows Sequentially. The continued adoption of AT&T Next and Mobile Share Value plans is reflected in a year-over-year reduction in postpaid service ARPU (average revenues per user). Phone-only postpaid ARPU decreased 10.7 percent versus the year-earlier quarter. Phone-only postpaid ARPU with AT&T Next monthly billings decreased 4.1 percent year over year, but increased 0.4 percent sequentially. The strong adoption of Mobile Share Value plans also is impacting service revenues. As customers upgrade on AT&T Next, phone-only ARPU with AT&T Next monthly billings is expected to continue to increase.

Smartphones and Tablets Drive Postpaid Growth. AT&T posted a fourth-quarter net increase in total wireless subscribers of 1.9 million, led by gains in postpaid and connected devices. That’s twice as many as in the year-ago quarter. The company added 854,000 postpaid subscribers, up both year over year and sequentially. Connected device net adds were 1,296,000, including about 800,000 connected cars. Prepaid lost 180,000 subscribers primarily due to declines in GoPhone subscribers and session-based tablets; however, Cricket subscribers increased in the quarter reflecting progress in the integration of its operations. The company also lost 65,000 reseller subscribers, primarily due to losses in low-end subscribers.

Postpaid net adds include 148,000 smartphones. Total branded smartphone net adds (both postpaid and prepaid) were 324,000. The company had 969,000 postpaid tablet net adds in the quarter.

Record Smartphone Gross Adds and Upgrades. The company had 10.1 million postpaid smartphone gross adds and upgrades, including a record number of upgrades in the quarter. Sales on AT&T Next also increased during the quarter as 58 percent, or 5.9 million, of all postpaid smartphone gross adds and upgrades chose AT&T Next. The company also had 386,000 bring-your-own-device gross adds, up more than three times year over year. AT&T added 1 million postpaid smartphones in the fourth quarter. At the end of the quarter, 83 percent, or 56.8 million, of AT&T’s postpaid phone subscribers had smartphones, up from 77 percent, or 51.9 million, a year earlier. AT&T’s ARPU for smartphones is about twice that of non-smartphone subscribers. At the end of the fourth quarter, 75 percent of AT&T’s postpaid smartphone customers had an LTE-capable device.

Mobile Share Value Plans Continue to Grow. AT&T continues to reposition the customer experience with attractive Mobile Share Value pricing for customers who choose to transition from the traditional device subsidy model. In the fourth quarter, an increasing number of subscribers chose Mobile Share Value plans. The number of Mobile Share accounts more than doubled year over year to reach 18.4 million with an average of about three devices per account. Mobile Share plans, including Mobile Share Value, now represent more than 52 million connections, or almost 70 percent of postpaid subscribers.

At the end of the fourth quarter, half of Mobile Share accounts had 10 gigabyte or larger data plans, up from 27 percent in the year-ago quarter. That helped drive an 18 percent year-over-year increase in wireless data billings. In total, about 85 percent of postpaid smartphone subscribers are on usage-based data plans (tiered data and Mobile Share plans). This compares to 75 percent a year ago.

Postpaid Churn Increases. Postpaid churn was 1.22 percent. This compares to an all-time fourth-quarter best of 1.11 percent in the year-ago quarter. About 95 percent of AT&T’s total postpaid base is on AT&T Family Talk(R), Mobile Share or business plans. Churn for these plans is significantly lower than for other postpaid subscribers.

Strong Sales Impact Margins. As expected, wireless margins were impacted by strong seasonal gross adds and upgrades, adoption of Mobile Share Value plans and continued investment in new services. AT&T’s reported fourth-quarter wireless operating income margin was 16.3 percent versus 21.4 percent in the year-earlier quarter. Wireless EBITDA margin was 26.4 percent compared to 31.8 percent in the fourth quarter of 2013. (EBITDA margin is operating income before depreciation and amortization, divided by total wireless revenues.)

When adjusting for integration costs, AT&T’s wireless EBITDA margin was 27.9 percent compared to 31.8 percent in the fourth quarter of 2013 and wireless EBITDA service margin was 36.7 percent compared to 37.4 percent in the year-ago quarter. (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

WIRELINE OPERATIONAL HIGHLIGHTS

Continued strong wireline consumer and strategic business services growth drove year-over-year adjusted revenue growth. Highlights included:

Adjusted Wireline Revenues Increase. Total fourth-quarter wireline revenues were $14.6 billion, down 1.0 percent versus the year-earlier quarter and down slightly versus the third quarter of 2014. When adjusting for the fourth-quarter sale of the company’s Connecticut wireline operations, revenues were up 0.4 percent year over year. Total adjusted U-verse revenues grew 21.9 percent year over year. Fourth-quarter wireline operating expenses were $13.1 billion, down 1.2 percent versus the fourth quarter of 2013. AT&T’s wireline operating income totaled $1.5 billion, up 0.8 percent versus the fourth quarter of 2013. Fourth-quarter wireline operating income margin was 10.1 percent versus 9.9 percent in the year-earlier quarter and 8.8 percent in the third quarter of 2014.

Strategic Business Services Accounts for Nearly 30 Percent of Wireline Business Revenues. Total revenues from business customers were $8.6 billion, down 2.8 percent versus the year-earlier quarter. When adjusting for the sale of the company’s Connecticut wireline properties, total revenues declined 1.8 percent year over year. Overall, declines in legacy products were partially offset by continued double-digit growth in strategic business services. Revenues from these services, the next-generation capabilities that lead AT&T’s most advanced business solutions -- including VPNs, Ethernet, cloud, hosting, IP conferencing, VoIP, MIS over Ethernet, U-verse and security services -- grew 13.8 percent versus the year-earlier quarter and grew 14.3 when adjusting for the sale of Connecticut wireline properties. These services represent an annualized revenue stream of more than $10 billion and were nearly 30 percent of wireline business revenues in the fourth quarter. During the quarter, the company also added 31,000 U-verse high speed broadband business subscribers.

U-verse Drives Solid Consumer Revenue Growth. Revenues from residential customers totaled $5.6 billion, an increase of 0.1 percent versus the fourth quarter a year ago. When adjusted for the sale of the Connecticut wireline operations, revenue growth was 2.4 percent. Continued strong growth in consumer IP data services in the fourth quarter more than offset lower revenues from legacy voice and data products. U-verse, which includes high speed Internet, TV and Voice over IP, now represents 67 percent of wireline consumer revenues, up from 57 percent in the year-earlier quarter. Adjusted consumer U-verse revenues grew 21.1 percent year over year.

U-verse Broadband Has More Than 12 Million Subscribers. U-verse high speed Internet had a fourth-quarter net gain of 405,000 subscribers, for a total of 12.2 million. (The Connecticut wireline properties had about 407,000 total broadband subscribers and 298,000 U-verse high speed Internet subscribers.) Overall, total wireline broadband subscribers decreased by 51,000 in the quarter but slightly increased for the full year. Total wireline broadband ARPU was up more than 7 percent year over year. Total U-verse high speed Internet subscribers now represent 76 percent of all wireline broadband subscribers, compared with 63 percent in the year-earlier quarter.

U-verse TV added 73,000 subscribers in the fourth quarter for nearly 6 million in service at the end of the fourth quarter after adjusting for the sale of the Connecticut operations. (The Connecticut wireline properties had about 197,000 U-verse TV subscribers.) More than 97 percent of AT&T’s video customers subscribe to bundled services. Nearly two-thirds of U-verse TV subscribers take three or four services from AT&T. ARPU for U-verse triple-play customers continues to be more than $170. At the end of the quarter, U-verse TV penetration was about 22 percent and U-verse broadband penetration was about 21 percent.

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.

About AT&T

AT&T Inc. (T ) helps millions of people and businesses around the globe stay connected through leading wireless, high-speed Internet, voice and cloud-based services. We’re helping people mobilize their worlds with state-of-the-art communications, entertainment services and amazing innovations like connected cars and devices for homes, offices and points in between. Our U.S. wireless network offers customers the nation’s strongest LTE signal and the nation’s most reliable 4G LTE network. We offer the best global wireless coverage. We’re improving how our customers stay entertained and informed with AT&T U-verse(R) TV and High Speed Internet services. And businesses worldwide are serving their customers better with AT&T’s mobility and highly secure cloud solutions.

Additional information about AT&T products and services is available at http://about.att.com . Follow our news on Twitter at @ATT, on Facebook at http://www.facebook.com/att and YouTube at http://www.youtube.com/att .

(C) 2015 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Reliability and signal strength claims based on nationwide carriers’ LTE. Signal strength claim based ONLY on avg. LTE signal strength. LTE not available everywhere. Global coverage claim based on offering voice and data roaming in more countries than any other U.S. based carrier, and offering the most wireless smartphones and tablets that work in the most countries.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at www.att.com/investor.relations.

The ’quiet period’ for FCC Spectrum Auction 97 (also known as the AWS-3 Auction) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy, and post auction market structure with other auction applicants.

NOTE: EBITDA is defined as operating income before depreciation and amortization. EBITDA differs from Segment Operating Income (loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

NOTE: Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted diluted EPS, as presented, may differ from similarly titled measures reported by other companies.

 
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  Financial Data
                                                                                                                                                                                                                                                                                                                                                                                                                           
  AT&T Inc.
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Consolidated Statements of Income
  Dollars in millions except per share amounts
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Unaudited                                                                                                                                                                                                                           Three Months Ended                                                                                                                                                                                                                                                                                        Twelve Months Ended                                                                                                                     
                                                                                                                                  -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                           -------------------- --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  12/31/2014                                                         12/31/2013                                                  % Chg                                                                                          12/31/2014                                                         12/31/2013                                                  % Chg                   
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- --------------------------------------------------------------                                           -------------------- ----------------------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------------- -------------------- --------------------------------------------------------------
                     Operating Revenues                                                                                                                                   $               34,439                                                                                   $               33,163                                                                                 3.8 %                                                                                                                           $              132,447                                                                                   $              128,752                                                                                 2.9 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Operating Expenses
                                                                                                                                                                                          18,537                                                                                                   12,237                                                                                51.5 %                                                                                                                                           60,611                                                                                                   51,464                                                                                17.8 %
                       Cost of services and sales (exclusive of depreciation and
                       amortization shown separately below)
                       Selling, general and administrative                                                                                                                                14,765                                                                                                    4,008                                                                                   -                                                                                                                                             39,697                                                                                                   28,414                                                                                39.7 %
                       Abandonment of network assets                                                                                                                                       2,120                                                                                                        -                                                                                   -                                                                                                                                              2,120                                                                                                        -                                                                                   -
    Depreciation and amortization                                                           4,567                        4,680                       -2.4 %                                                                                  18,273                       18,395                       -0.7 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Total Operating Expenses                                                             39,989                       20,925                       91.1 %                                                                                 120,701                       98,273                       22.8 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Operating Income (Loss)                                                                  (5,550 )                                        12,238                          -                                                                 11,746                       30,479                      -61.5 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                     Interest Expense                                                                                                                                                        856                                                                                                    1,459                                                                               -41.3 %                                                                                                                                            3,613                                                                                                    3,940                                                                                -8.3 %
                     Equity in Net Income (Loss) of Affiliates                                                                                                                               (13 )                                                                                                    148                                                                                   -                                                                                                                                                175                                                                                                      642                                                                               -72.7 %
  Other Income (Expense) - Net                                                                196                          226                      -13.3 %                                                                                   1,652                          596                          -    
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                     Income (Loss) Before Income Taxes                                                                                                                                    (6,223 )                                                                                                 11,153                                                                                   -                                                                                                                                              9,960                                                                                                   27,777                                                                               -64.1 %
  Income Tax (Benefit) Expense                                                             (2,327 )                                         4,158                          -                                                                  3,442                        9,224                      -62.7 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Net Income (Loss)                                                                        (3,896 )                                         6,995                          -                                                                  6,518                       18,553                      -64.9 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
    Less: Net Income Attributable to Noncontrolling Interest                                  (81 )                                           (82 )                                         1.2 %                                                                                    (294 )                                          (304 )                                         3.3 %                     
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------                                           -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Net Income (Loss) Attributable to AT&T                                                      $               (3,977 )                                           $                6,913                          -                                                                    $                6,224                          $               18,249                      -65.9 %                     
==================== ================================================================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================                                           ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Basic Earnings (Loss) Per Share Attributable to AT&T                                                                                                 $                (0.77 )                                                                                 $                 1.31                                                                                   -                                                                                                                             $                 1.19                                                                                   $                 3.39                                                                               -64.9 %
                     Weighted Average Common Shares Outstanding (000,000)                                                                                                                  5,198                                                                                                    5,267                                                                                -1.3 %                                                                                                                                            5,205                                                                                                    5,368                                                                                -3.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Diluted Earnings (Loss) Per Share Attributable to AT&T                                                                                               $                (0.77 )                                                                                 $                 1.31                                                                                   -                                                                                                                             $                 1.19                                                                                   $                 3.39                                                                               -64.9 %
                     Weighted Average Common Shares Outstanding with Dilution (000,000)                                                                                                    5,214                                                                                                    5,283                                                                                -1.3 %                                                                                                                                            5,221                                                                                                    5,385                                                                                -3.0 %
                                                                                                                 
-------------------- ------------------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
 
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  Financial Data
                                                                                                                                                      
  AT&T Inc.
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Consolidated Balance Sheets
  Dollars in millions
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                        December 31,                                                                  
                                                                                                                                     -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  2014                                                  2013                        
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                                                                                                                                                                               Unaudited
                     Assets
                     Current Assets
                     Cash and cash equivalents                                                                                                                               $   8,603                                                                                   $   3,339
                     Accounts receivable - net of allowances for doubtful accounts of                                                                                           14,527                                                                                      12,918
                     $454 and $483
                     Prepaid expenses                                                                                                                                              831                                                                                         960
                     Deferred income taxes                                                                                                                                       1,142                                                                                       1,199
  Other current assets                                                            6,925           4,780    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total current assets                                                           32,028          23,196    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                     Property, Plant and Equipment - Net                                                                                                                       112,898                                                                                     110,968
                     Goodwill                                                                                                                                                   69,692                                                                                      69,273
                     Licenses                                                                                                                                                   60,824                                                                                      56,433
                     Other Intangible Assets - Net                                                                                                                               6,139                                                                                       5,779
                     Investments in Equity Affiliates                                                                                                                              250                                                                                       3,860
  Other Assets                                                                   10,998           8,278    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total Assets                                                                                   $ 292,829                          $ 277,787    
==================== ===================================================================== ==================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ==================== ======= ==================== ====================
                                                                                                                                                                                                                                                                                                         
                     Liabilities and Stockholders’ Equity
                     Current Liabilities
                     Debt maturing within one year                                                                                                                           $   6,056                                                                                   $   5,498
                     Accounts payable and accrued liabilities                                                                                                                   23,592                                                                                      21,107
                     Advanced billing and customer deposits                                                                                                                      4,105                                                                                       4,212
                     Accrued taxes                                                                                                                                               1,091                                                                                       1,774
  Dividends payable                                                               2,438           2,404    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total current liabilities                                                      37,282          34,995    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Long-Term Debt                                                                 76,011          69,290    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                     Deferred Credits and Other Noncurrent Liabilities
                     Deferred income taxes                                                                                                                                      37,544                                                                                      36,308
                     Postemployment benefit obligation                                                                                                                          37,079                                                                                      29,946
  Other noncurrent liabilities                                                   17,989          15,766    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total deferred credits and other noncurrent liabilities                        92,612          82,020    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                     Stockholders’ Equity
                     Common stock                                                                                                                                                6,495                                                                                       6,495
                     Additional paid-in capital                                                                                                                                 91,108                                                                                      91,091
                     Retained earnings                                                                                                                                          27,736                                                                                      31,141
                     Treasury stock                                                                                                                                            (47,029 )                                                                                   (45,619 )
                     Accumulated other comprehensive income                                                                                                                      8,060                                                                                       7,880
  Noncontrolling interest                                                           554             494    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total stockholders’ equity                          86,924          91,482    
-------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total Liabilities and Stockholders’ Equity                          $ 292,829                          $ 277,787    
==================== ===================================================================== ==================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ==================== ======= ==================== ====================
                                                                                                                                                                                                                                                                                                         
 
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  Financial Data
                                                                                                                                                
  AT&T Inc.
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Consolidated Statements of Cash Flows
  Dollars in millions
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Unaudited                                                                                                                                                                             Twelve Months Ended December 31,
                                                                            2014                                                  2013                        
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                   
                     Operating Activities
                     Net income                                                                                                                                        $   6,518                                                                                   $  18,553
                     Adjustments to reconcile net income to net cash provided by
                     operating activities:
                        Depreciation and amortization                                                                                                                     18,273                                                                                      18,395
                        Undistributed earnings from investments in equity affiliates                                                                                         (27 )                                                                                      (324 )
                        Provision for uncollectible accounts                                                                                                               1,032                                                                                         954
                        Deferred income tax expense                                                                                                                        1,772                                                                                       6,242
                        Net gain from sale of investments, net of impairments                                                                                             (1,532 )                                                                                      (492 )
                        Actuarial loss (gain) on pension and postretirement benefits                                                                                       7,869                                                                                      (7,584 )
                        Abandonment of network assets                                                                                                                      2,120                                                                                           -
                     Changes in operating assets and liabilities:
                        Accounts receivable                                                                                                                               (2,651 )                                                                                    (1,329 )
                        Other current assets                                                                                                                                (962 )                                                                                       412
                        Accounts payable and accrued liabilities                                                                                                           2,412                                                                                        (152 )
                     Retirement benefit funding                                                                                                                             (560 )                                                                                      (209 )
  Other - net                                                              (2,926 )                              330    
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total adjustments                                                        24,820          16,243    
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Net Cash Provided by Operating Activities                                31,338          34,796    
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                   
                     Investing Activities
                     Construction and capital expenditures:
                        Capital expenditures                                                                                                                             (21,199 )                                                                                   (20,944 )
                        Interest during construction                                                                                                                        (234 )                                                                                      (284 )
                     Acquisitions, net of cash acquired                                                                                                                   (3,141 )                                                                                    (4,113 )
                     Dispositions                                                                                                                                          8,123                                                                                       1,923
                     Purchases of securities                                                                                                                              (1,890 )                                                                                         -
                     Return of advances to and investments in equity affiliates                                                                                                4                                                                                         301
  Other                                                                         -              (7 )                     
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Net Cash Used in Investing Activities                                   (18,337 )                          (23,124 )                     
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                   
                     Financing Activities
                     Net change in short-term borrowings with
                      original maturities of three months or less                                                                                                            (16 )                                                                                        20
                     Issuance of other short-term borrowings                                                                                                                   -                                                                                       1,476
                     Repayment of other short-term borrowings                                                                                                                  -                                                                                      (1,476 )
                     Issuance of long-term debt                                                                                                                           15,926                                                                                      12,040
                     Repayment of long-term debt                                                                                                                         (10,400 )                                                                                    (7,698 )
                     Issuance of other long-term financing obligations                                                                                                       107                                                                                       4,796
                     Purchase of treasury stock                                                                                                                           (1,617 )                                                                                   (13,028 )
                     Issuance of treasury stock                                                                                                                               39                                                                                         114
                     Dividends paid                                                                                                                                       (9,552 )                                                                                    (9,696 )
  Other                                                                    (2,224 )                              251    
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Net Cash Used in Financing Activities                                    (7,737 )                          (13,201 )                     
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                     Net increase (decrease) in cash and cash equivalents                                                                                                  5,264                                                                                      (1,529 )
  Cash and cash equivalents beginning of year                               3,339           4,868    
-------------------- --------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Cash and Cash Equivalents End of Year                                                    $   8,603                          $   3,339    
==================== =============================================================== ==================== ==================== ==================== ==================== ======= ==================== ==================== ==================== ==================== ======= ==================== ====================
                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                          
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ----------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                
  AT&T Inc.
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Statements of Segment Income
  Dollars in millions
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Unaudited                                                                                                                                                                               Three Months Ended                                                                                                                                                                                                                                                  Twelve Months Ended                                                                                                  
                                                                                                         -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------            --------------------                                           -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------            --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
  Wireless                                                           12/31/2014                                           12/31/2013                                      % Chg                                                                              12/31/2014                                           12/31/2013                                      % Chg              
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ----------------------------------------------------                                           -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ----------------------------------------------------
                     Segment Operating Revenues
                       Service                                                                                                                   $ 15,074                                                                                   $ 15,660                                                                      -3.7 %                                                                                                                           $ 61,032                                                                                   $ 61,552                                                                      -0.8 %
    Equipment                                        4,785          2,777             72.3 %                                                                    12,960          8,347             55.3 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
      Total Segment Operating Revenues              19,859         18,437              7.7 %                                                                    73,992         69,899              5.9 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Segment Operating Expenses
                       Operations and support                                                                                                      14,619                                                                                     12,576                                                                      16.2 %                                                                                                                             48,924                                                                                     44,508                                                                       9.9 %
    Depreciation and amortization                    2,010          1,915              5.0 %                                                                     7,941          7,468              6.3 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
      Total Segment Operating Expenses              16,629         14,491             14.8 %                                                                    56,865         51,976              9.4 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
                     Segment Operating Income                                                                                                       3,230                                                                                      3,946                                                                     -18.1 %                                                                                                                             17,127                                                                                     17,923                                                                      -4.4 %
  Equity in Net Income (Loss) of Affiliates            (37 )                             (20 )                             -85.0 %                                                                      (112 )                             (75 )                             -49.3 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
  Segment Income                                                     $  3,193                          $  3,926            -18.7 %                                                                                     $ 17,015                          $ 17,848             -4.7 %                     
==================== ========================================= ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ========== ==================== ====================                                           ==================== ==================== ====== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ========== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Segment Operating Income Margin                                                                                                 16.3 %                                                                                    21.4  %                                                                                                                                                                                                         23.1 %                                                                                    25.6  %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
  Wireline                                                                                                                                                                                                                                                         
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ----------------------------------------------------                                           -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ----------------------------------------------------
                     Segment Operating Revenues
                       Service                                                                                                                   $ 14,240                                                                                   $ 14,434                                                                      -1.3 %                                                                                                                           $ 57,405                                                                                   $ 57,700                                                                      -0.5 %
    Equipment                                          332            282             17.7 %                                                                     1,020          1,114             -8.4 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
      Total Segment Operating Revenues              14,572         14,716             -1.0 %                                                                    58,425         58,814             -0.7 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Segment Operating Expenses
                       Operations and support                                                                                                      10,553                                                                                     10,501                                                                       0.5 %                                                                                                                             42,471                                                                                     41,638                                                                       2.0 %
    Depreciation and amortization                    2,554          2,761             -7.5 %                                                                    10,323         10,907             -5.4 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
      Total Segment Operating Expenses              13,107         13,262             -1.2 %                                                                    52,794         52,545              0.5 %                     
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
                     Segment Operating Income                                                                                                       1,465                                                                                      1,454                                                                       0.8 %                                                                                                                              5,631                                                                                      6,269                                                                     -10.2 %
  Equity in Net Income (Loss) of Affiliates             (2 )                               1                -                                                        -              2                -    
-------------------- ----------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------- -------------------- --------------------
  Segment Income                                                     $  1,463                          $  1,455              0.5 %                                                                                     $  5,631                          $  6,271            -10.2 %                     
==================== ========================================= ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ========== ==================== ====================                                           ==================== ==================== ====== ==================== ==================== ==================== ==================== ====== ==================== ==================== ==================== ========== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Segment Operating Income Margin                                                                                                 10.1 %                                                                                     9.9  %                                                                                                                                                                                                          9.6 %                                                                                    10.7  %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                         
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- --------------------                      ----------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------                      -------------------- -----------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                                                                
  AT&T Inc.
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Supplementary Operating and Financial Data
  Dollars in millions except per share amounts, subscribers and
                     connections in (000s)
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Unaudited                                                                                                                                                                                                   Three Months Ended                                                                                                                                                                                                                                                             Twelve Months Ended                                                                                                        
                                                                                                                        -------------------- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                           -------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    12/31/2014                                           12/31/2013                                  % Chg                                                                          12/31/2014                                            12/31/2013                                  % Chg         
                     -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -----------------------------------------                                           -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- -----------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Wireless
  Subscribers and Connections                                                                                                                                                                                                                                                                                                         
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
       Total                                                                                                                                                                                                                                                         120,554         110,376                                                      9.2 %
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                               Postpaid                                                                                                                                                                                                                                                                                                                                                                                                                                                75,931                                                                                      72,638                                                                                            4.5 %
                               Prepaid                                                                                                                                                                                                                                                                                                                                                                                                                                                 10,986                                                                                       7,384                                                                                           48.8 %
                               Reseller                                                                                                                                                                                                                                                                                                                                                                                                                                                13,855                                                                                      14,028                                                                                           -1.2 %
                               Connected Devices                                                                                                                                                                                                                                                                                                                                                                                                                                       19,782                                                                                      16,326                                                                                           21.2 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Wireless Net Adds                                                                                                                                                                                                                                                                                                                   
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
       Total                                                        1,905            809                                                        -                                                                                5,608           2,721                                                        -
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                               Postpaid                                                                                                                              854                                                                                        566                                                                                           50.9 %                                                                                                                    3,290                                                                                       1,776                                                                                           85.2 %
                               Prepaid                                                                                                                              (180 )                                                                                      (32 )                                                                                            -                                                                                                                       (775 )                                                                                       (13 )                                                                                            -
                               Reseller                                                                                                                              (65 )                                                                                     (123 )                                                                                         47.2 %                                                                                                                     (346 )                                                                                    (1,074 )                                                                                         67.8 %
                               Connected Devices                                                                                                                   1,296                                                                                        398                                                                                              -                                                                                                                      3,439                                                                                       2,032                                                                                           69.2 %
                          M&A Activity, Partitioned Customers and Other Adjs.                                                                                         (1 )                                                                                      107                                                                                              -                                                                                                                      4,570                                                                                         698                                                                                              -
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Wireless Churn
                          Postpaid Churn                                                                                                                            1.22 %                                                                                     1.11 %                                                                                                  11 BP                                                                                                             1.04 %                                                                                      1.06 %                                                                                                  -2 BP
                          Total Churn                                                                                                                               1.59 %                                                                                     1.43 %                                                                                                  16 BP                                                                                                             1.45 %                                                                                      1.37 %                                                                                                   8 BP
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Other
                          Licensed POPs (000,000)                                                                                                                                                                                                                                                                                                                                                                                                                                         321                                                                                         317                                                                                            1.3 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     Wireline
  Voice                                                                                                                                                                                                                                                                                                                               
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
       Total Wireline Voice Connections                                                                                                                                                                                                                               24,778          28,489                                                    -13.0 %
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                               Net Change                                                                                                                         (1,442 )                                                                                     (807 )                                                                                        -78.7 %                                                                                                                   (3,711 )                                                                                    (3,695 )                                                                                         -0.4 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Broadband                                                                                                                                                                                                                                                                                                                           
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
       Total Wireline Broadband Connections                                                                                                                                                                                                                           16,028          16,425                                                     -2.4 %
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                               Net Change                                                                                                                           (458 )                                                                                       (2 )                                                                                            -                                                                                                                       (397 )                                                                                        35                                                                                              -
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Video                                                                                                                                                                                                                                                                                                                               
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
       Total U-verse Video Connections                                                                                                                                                                                                                                 5,943           5,460                                                      8.8 %
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                               Net Change                                                                                                                           (124 )                                                                                      194                                                                                              -                                                                                                                        483                                                                                         924                                                                                          -47.7 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
  Consumer Revenue Connections                                                                                                                                                                                                                                                                                                        
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                          Broadband(1)                                                                                                                                                                                                                                                                                                                                                                                                                                                 14,444                                                                                      14,697                                                                                           -1.7 %
                          U-verse Video Connections                                                                                                                                                                                                                                                                                                                                                                                                                                     5,920                                                                                       5,442                                                                                            8.8 %
       Voice(2)                                                                                                                                                                                                                                                       14,002          16,251                                                    -13.8 %
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                                                                                                               -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Total Consumer Revenue Connections(1)                                                                                                                                                                                                                               34,366          36,390                                                     -5.6 %
==================== ======================================================== ==================== ==================== ==================== ===================================================================== ==================== =====================================================================                                                                                                                               ==================== ==================== ======= ==================== ==================== ==================== ==================== ======= ==================== ====================
                          Net Change                                                                                                                              (1,403 )                                                                                     (273 )                                                                                            -                                                                                                                     (2,024 )                                                                                    (1,277 )                                                                                        -58.5 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                     AT&T Inc.
                          Construction and capital expenditures:
                               Capital expenditures                                                                                                             $  4,370                                                                                   $  5,379                                                                                          -18.8 %                                                                                                                $  21,199                                                                                   $  20,944                                                                                            1.2 %
                               Interest during construction                                                                                                     $     56                                                                                   $     71                                                                                          -21.1 %                                                                                                                $     234                                                                                   $     284                                                                                          -17.6 %
                          Dividends Declared per Share                                                                                                          $   0.47                                                                                   $   0.46                                                                                            2.2 %                                                                                                                $    1.85                                                                                   $    1.81                                                                                            2.2 %
                          End of Period Common Shares Outstanding (000,000)                                                                                                                                                                                                                                                                                                                                                                                                             5,187                                                                                       5,226                                                                                           -0.7 %
                          Debt Ratio(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                  48.6 %                                                                                      45.0 %                                                                                                 360 BP
                          Total Employees                                                                                                                                                                                                                                                                                                                                                                                                                                             243,620                                                                                     243,360                                                                                            0.1 %
                                                                                                                                                                                                         
-------------------- -------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- ----------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- -----------------------------------------
                     (1)Consumer wireline broadband connections include DSL
                     lines, U-verse high speed Internet access and satellite broadband.
                     (2)Includes consumer U-verse Voice over Internet Protocol
                     connections of 4,759 as of December 31, 2014.
                     (3)Total long-term debt plus debt maturing within one
                     year divided by total debt plus total stockholders’ equity.
                     Note: For the end of 4Q14, total switched access lines were
                     19,896; retail business switched access lines totaled 8,939; and
                     wholesale, national mass markets and coin switched access lines
                     totaled 1,714. Restated switched access lines do not include ISDN
                     lines.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
                                                                                                                                                                                                                                                                         
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                                                                                 
                     AT&T Inc.
  Non-GAAP Wireless Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Wireless Segment EBITDA
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                Three Months Ended                                                                                                                                                                                                                                                                                                                                                       Twelve Months Ended
                                                                                                                          12/31/13                                              3/31/14                                              6/30/14                                              9/30/14                                             12/31/14                                                                                       12/31/13                                             12/31/14                      
                                                                                                    -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                           -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
                     Segment Operating Revenues
                      Service                                                                                                               $ 15,660                                                                                   $ 15,387                                                                                   $ 15,148                                                                                   $ 15,423                                                                                   $ 15,074                                                                                                                             $ 61,552                                                                                   $ 61,032
   Equipment                                    2,777          2,479          2,782          2,914          4,785                                                    8,347         12,960    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
      Total Segment Operating Revenues                          $ 18,437                          $ 17,866                          $ 17,930                          $ 18,337                          $ 19,859                                                                    $ 69,899                          $ 73,992    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                     Segment Operating Expenses
                      Operations and support                                                                                                  12,576                                                                                     10,882                                                                                     11,568                                                                                     11,855                                                                                     14,619                                                                                                                               44,508                                                                                     48,924
   Depreciation and amortization                1,915          1,931          2,035          1,965          2,010                                                    7,468          7,941    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
      Total Segment Operating Expenses         14,491         12,813         13,603         13,820         16,629                                                   51,976         56,865    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Segment Operating Income                      3,946          5,053          4,327          4,517          3,230                                                   17,923         17,127    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     Segment Operating Income Margin                                                                                            21.4 %                                                                                     28.3 %                                                                                     24.1 %                                                                                     24.6 %                                                                                     16.3 %                                                                                                                               25.6 %                                                                                     23.1 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
  Plus: Depreciation and amortization           1,915          1,931          2,035          1,965          2,010                                                    7,468          7,941    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  EBITDA(1)                                                     $  5,861                          $  6,984                          $  6,362                          $  6,482                          $  5,240                                                                    $ 25,391                          $ 25,068    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     EBITDA as a % of Service Revenues(2)                                                                                       37.4 %                                                                                     45.4 %                                                                                     42.0 %                                                                                     42.0 %                                                                                     34.8 %                                                                                                                               41.3 %                                                                                     41.1 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
                     (1)EBITDA is defined as Operating Income Before
                     Depreciation and Amortization.
                     (2)Service revenues include Wireless data, voice, text
                     and other service revenues.
                      
                                                                                                                                                                                                                                                         
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                                              
                     AT&T Inc.
  Non-GAAP Wireless Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Wireless Segment Adjusted EBITDA
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                       Three Months Ended                                                                                                                                                                                                                                                                                                         Twelve Months Ended
                                                                                                                                                                                                                                                        December 31,                                                                                                                                                                                                                                                                                                               December 31,
                                                                                        2012                                                 2013                                                 2014                                                                                           2012                                                 2013                                                 2014  
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                           -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
                     Reported Service Revenues                                                                                                                $ 14,949                                                                                   $ 15,660                                                                                   $ 15,074                                                                                                                             $ 59,186                                                                                   $ 61,552                                                                                   $ 61,032
                     Adjustments:
     Storm Impacts                                                   22              -              -                                                       22              -              -    
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Adjusted Service Revenues                                                       $ 14,971                          $ 15,660                          $ 15,074                                                                    $ 59,208                          $ 61,552                          $ 61,032    
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     EBITDA(1)                                                                                                                                $  4,346                                                                                   $  5,861                                                                                   $  5,240                                                                                                                             $ 23,467                                                                                   $ 25,391                                                                                   $ 25,068
                     EBITDA as a % of Service Revenues(2)                                                                                                         29.1 %                                                                                     37.4 %                                                                                     34.8 %                                                                                                                               39.6 %                                                                                     41.3 %                                                                                     41.1 %
                     Adjustments:
                                                                                                                                                                     -                                                                                          -                                                                                        293                                                                                                                                    -                                                                                          -                                                                                        577
                        Wireless integration expense(3)
     Storm impact                                                   128              -              -                                                      128              -              -    
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Adjusted EBITDA(1)                                                              $  4,474                          $  5,861                          $  5,533                                                                    $ 23,595                          $ 25,391                          $ 25,645    
-------------------- ------------------------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     Adjusted EBITDA as a % of Adjusted Service Revenues(2)                                                                                       29.9 %                                                                                     37.4 %                                                                                     36.7 %                                                                                                                               39.9 %                                                                                     41.3 %                                                                                     42.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
                     (1)EBITDA is defined as operating income before
                     depreciation and amortization.
                     (2)Service revenues include Wireless data, voice, text
                     and other service revenues.
                     (3)Operations and Support expenses for Leap and Alltel
                     wireless integration costs.
                                                                                                                                                                                                                                                           
                                                                                                                                                                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                      
                     AT&T Inc.
                     Non-GAAP Consolidated Reconciliation
                     ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Free Cash Flow
                     Dollars in millions
                     Unaudited                                                                                                                                                               Three Months Ended                                                                                                                                                                     Twelve Months Ended
                                                                                                                                                                                                December 31,                                                                                                                                                                           December 31,
                                                       2013                                                 2014                                                  2013                                                  2014                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Net cash provided by operating activities                                                                                     $  7,917                                                                                   $  5,745                                                                                   $  34,796                                                                                   $  31,338
                     Less: Construction and capital expenditures                                                                                     (5,450 )                                                                                   (4,426 )                                                                                   (21,228 )                                                                                   (21,433 )
  Free Cash Flow                                                       $  2,467                          $  1,319                          $  13,568                          $   9,905    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                                                                                                                                                                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Free Cash Flow after Dividends
                     Dollars in millions
                     Unaudited                                                                                                                                                               Three Months Ended                                                                                                                                                                     Twelve Months Ended
                                                                                                                                                                                                December 31,                                                                                                                                                                           December 31,
                                                       2013                                                 2014                                                  2013                                                  2014                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Net cash provided by operating activities                                                                                     $  7,917                                                                                   $  5,745                                                                                   $  34,796                                                                                   $  31,338
                     Less: Construction and capital expenditures                                                                                     (5,450 )                                                                                   (4,426 )                                                                                   (21,228 )                                                                                   (21,433 )
  Free Cash Flow                                       2,467          1,319          13,568           9,905    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                     Less: Dividends paid                                                                                                            (2,371 )                                                                                   (2,382 )                                                                                    (9,696 )                                                                                    (9,552 )
  Free Cash Flow after Dividends                                       $     96                          $ (1,063 )                                           $   3,872                          $     353    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
                     Free cash flow includes reimbursements of certain postretirement
                     benefits paid.
                      
                     Free cash flow is defined as cash from operations minus
                     construction and capital expenditures. Free cash flow after
                     dividends is defined as cash from operations minus construction,
                     capital expenditures and dividends. We believe these metrics
                     provide useful information to our investors because management
                     regularly reviews free cash flow as an important indicator of how
                     much cash is generated by normal business operations, including
                     capital expenditures, and makes decisions based on it. Management
                     also views free cash flow as a measure of cash available to pay
                     debt and return cash to shareowners.
                      
                                                                                    
-------------------- ------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Financial Data
                                                                                                                                                                                                  
                     AT&T Inc.
  Non-GAAP Consolidated Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Annualized Net-Debt-to-Adjusted-EBITDA Ratio
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                         Three Months Ended
                                                                      3/31/14                  6/30/14                  9/30/14                 12/31/14                     2014  
-------------------- ------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                       Operating Revenues                                                                                                                           $ 32,476                                                       $ 32,575                                                       $ 32,957                                                       $ 34,439                                                      $ 132,447
                       Operating Expenses                                                                                                                             26,198                                                         26,959                                                         27,555                                                         39,989                                                        120,701
                     Total Operating Income (Loss)                                                                                                                     6,278                                                          5,616                                                          5,402                                                        (5,550)                                                         11,746
                       Add Back Depreciation and Amortization                                                                                                          4,617                                                          4,550                                                          4,539                                                          4,567                                                         18,273
                     Consolidated Reported EBITDA                                                                                                                     10,895                                                         10,166                                                          9,941                                                          (983)                                                         30,019
                       Add Back:
                        Actuarial loss on benefit plans                                                                                                                    -                                                              -                                                              -                                                          7,869                                                          7,869
                        Abandonment of network assets                                                                                                                      -                                                              -                                                              -                                                          2,120                                                          2,120
                        Merger, wireless integration, and other costs(1)                                                                                                  81                                                             97                                                            213                                                            396                                                            787
                     Total Consolidated Adjusted EBITDA                                                                                                               10,976                                                         10,263                                                         10,154                                                          9,402                                                         40,795
                     Annualized Consolidated Adjusted EBITDA                                                                                                                                                                                                                                                                                                                                                                      40,795
                       End-of-period current debt                                                                                                                                                                                                                                                                                                                                                                                  6,056
                       End-of-period long-term debt                                                                                                                                                                                                                                                                                                                                                                               76,011
                     Total End-of-Period Debt                                                                                                                                                                                                                                                                                                                                                                                     82,067
                       Less Cash and Cash Equivalents                                                                                                                                                                                                                                                                                                                                                                              8,603
                       Less Bank Securities - Certificates of Deposit & Time Deposits(2)                                                                                                                                                                                                                                                                                                                                           1,890
  Net Debt Balance                                                                                                71,574  
-------------------- ------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
  Annualized Net-Debt-to-Adjusted-EBITDA Ratio                                                                      1.75  
-------------------- ------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                          
                     (1)Adjustments include Operations and Support expenses
                     for Leap and Alltel wireless integration costs, DIRECTV merger
                     costs and other asset write-off costs.
                     (2)Bank Securities are included in "Other current assets"
                     on the Consolidated Balance Sheets.
                      
                     Net-Debt-to-EBITDA ratios are non-GAAP financial measures
                     frequently used by investors and credit rating agencies.
                     Management believes these measures provide relevant and useful
                     information to investors and other users of our financial data.
                     Net debt is calculated by subtracting cash and cash equivalents
                     from the sum of debt maturing within one year and long-term debt.
                     The Net-Debt-to-EBITDA ratio is calculated by dividing the Net
                     Debt by annualized EBITDA. Annualized EBITDA is calculated by
                     annualizing the year-to-date EBITDA.
                      
                     Our calculation of EBITDA, as presented, may differ from similarly
                     titled measures reported by other companies.
                      
                                                                                                                                                                                                                                                 
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                                     
                     AT&T Inc.
  Non-GAAP Consolidated Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Adjusted Operating Revenues, Operating Income and Margin
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                            Three Months Ended                                                                                                                                                                                                                                                                                                           Twelve Months Ended
                                                                                                                                                                                                                                             December 31,                                                                                                                                                                                                                                                                                                                 December 31,
                                                       2012                                                 2013                                                 2014                                                                                            2012                                                  2013                                                  2014                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                           -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Reported Operating Revenues                                                                                                   $ 32,578                                                                                   $ 33,163                                                                                   $ 34,439                                                                                                                             $ 127,434                                                                                   $ 128,752                                                                                   $ 132,447
                     Adjustments:
                        Removal of Advertising Solutions                                                                                                  -                                                                                          -                                                                                          -                                                                                                                                (1,049 )                                                                                         -                                                                                           -
     Storm Impacts                                        27              -              -                                                        27               -               -    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Adjusted Operating Revenues                                          $ 32,605                          $ 33,163                          $ 34,439                                                                    $ 126,412                          $ 128,752                          $ 132,447    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
        Year-over-year growth - Adjusted                                                   1.7 %                             3.8 %                                                                     1.9 %                              2.9 %                     
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                     Adjusted Operating Revenues is a non-GAAP financial measure
                     calculated by excluding from operating revenues significant items
                     that are non-operational or non-recurring in nature, including
                     dispositions. Management believes that this measure provides
                     relevant and useful information to investors and other users of
                     our financial data in evaluating the effectiveness of our
                     operations and underlying business trends.
                      
                     Adjusted Operating Revenues should be considered in addition to,
                     but not as a substitute for, other measures of financial
                     performance reported in accordance with GAAP. Our calculations of
                     Adjusted Operating Revenues may differ from similarly titled
                     measures reported by other companies.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                 
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Adjusted Operating Income and Margin
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                            Three Months Ended                                                                                                                                                                                                                                                                                                           Twelve Months Ended
                                                                                                                                                                                                                                             December 31,                                                                                                                                                                                                                                                                                                                 December 31,
                                                       2012                                                 2013                                                 2014                                                                                            2012                                                  2013                                                  2014                        
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------                                           -------------------- ---------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------
                     Reported Operating Income                                                                                                     $ (5,958 )                                                                                 $ 12,238                                                                                   $ (5,550 )                                                                                                                           $  12,997                                                                                   $  30,479                                                                                   $  11,746
                     Adjustments:
                        Actuarial (gain) / loss on benefit plans                                                                                      9,994                                                                                     (7,584 )                                                                                    7,869                                                                                                                                 9,994                                                                                      (7,584 )                                                                                     7,869
                        Abandonment of network assets                                                                                                     -                                                                                          -                                                                                      2,120                                                                                                                                     -                                                                                           -                                                                                       2,120
                        Other significant adjustments(1)                                                                                                176                                                                                          -                                                                                        460                                                                                                                                   176                                                                                        (229 )                                                                                       948
                        Employee separation charges                                                                                                       -                                                                                        501                                                                                          -                                                                                                                                     -                                                                                         501                                                                                           -
     Removal of Advertising Solutions                      -              -              -                                                      (170 )                                -               -    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Adjusted Operating Income                                            $  4,212                          $  5,155                          $  4,899                                                                    $  22,997                          $  23,167                          $  22,683    
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
        Year-over-year growth - Adjusted                                                  22.4 %                            -5.0 %                                                                                                           0.7 %                             -2.1 %                     
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------                                           -------------------- ---------------------------------------------------------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Adjusted Operating Income Margin*                     12.9 %                            15.5 %                            14.2 %                                 18.2 %                             18.0 %                             17.1 %                     
-------------------- ------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                     (1)Other significant adjustments include 2014 costs related
                     to the Leap and Alltel wireless integrations, DIRECTV merger, and
                     other asset write-offs; 2013 costs related to spectrum transfer; and
                     2012 costs related to a storm impact.
                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                     Adjusted Operating Income and Margin are non-GAAP financial
                     measures calculated by excluding from operating revenues and
                     operating expenses significant items that are non-operational or
                     non-recurring in nature. Management believes that these measures
                     provide relevant and useful information to investors and other
                     users of our financial data in evaluating the effectiveness of our
                     operations and underlying business trends.
                      
                     Adjusted Operating Income and Margin exclude all actuarial gains
                     or losses ($7.9 billion loss in 2014) associated with our pension
                     and postemployment benefit plans, which we immediately recognize
                     in the income statement, pursuant to our accounting policy for the
                     recognition of actuarial gains/losses. As a result, Adjusted
                     Operating Income and Margin reflect an expected return on plan
                     assets of $4.1 billion (based on an average expected return on
                     plan assets of 7.75%), rather than the actual return on plan
                     assets excluding international pension of $4.6 billion (actual
                     return of 8.8%), as included in the GAAP measure of income.
                      
                     Adjusted Operating Income and Margin should be considered in
                     addition to, but not as a substitute for, other measures of
                     financial performance reported in accordance with GAAP. Our
                     calculation of Adjusted Operating Income and Margin, as presented,
                     may differ from similarly titled measures reported by other
                     companies.
                      
                     *Adjusted Operating Income Margin is calculated by dividing
                     Adjusted Operating Income by Adjusted Operating Revenues.
                      
                                                                                                                                                                                               
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                              
                     AT&T Inc.
  Non-GAAP Consolidated Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Adjusted Diluted EPS
                     Unaudited                                                                                                                                                                                        Three Months Ended                                                                                                                                                                    Twelve Months Ended
                                                                                                                                                                                                                         December 31,                                                                                                                                                                          December 31,
                                                                                2013                                                 2014                                                 2013                                                 2014                        
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
                     Reported Diluted EPS                                                                                                                                   $   1.31                                                                                   $  (0.77 )                                                                                 $   3.39                                                                                   $   1.19
                     Adjustments:
                        Actuarial (gain) / loss on benefit plans                                                                                                               (0.89 )                                                                                     0.94                                                                                      (0.88 )                                                                                     0.94
                        Abandonment of network assets                                                                                                                              -                                                                                       0.25                                                                                          -                                                                                       0.25
                        Other significant adjustments(1)                                                                                                                           -                                                                                       0.13                                                                                          -                                                                                       0.19
                        Early debt redemption costs                                                                                                                             0.07                                                                                          -                                                                                       0.07                                                                                       0.02
                        Employee separation charges                                                                                                                             0.06                                                                                          -                                                                                       0.06                                                                                          -
                        Tax and spectrum transfer                                                                                                                                  -                                                                                          -                                                                                      (0.08 )                                                                                        -
     America Movil - Gain on AMX shares sale          (0.02 )                               -          (0.06 )                           (0.08 )                     
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Adjusted Diluted EPS                                                                          $   0.53                          $   0.55                          $   2.50                          $   2.51    
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
        Year-over-year growth - Adjusted                                                                            3.8 %                                                               0.4 %                     
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------- ------ -------------------- --------------------
  Weighted Average Common Shares Outstanding with Dilution (000,000)            5,283          5,214          5,385          5,221    
-------------------- -------------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                     (1)Includes a loss from the divestiture of Connecticut
                     Wireline Properties, Leap and Alltel wireless integration costs,
                     DIRECTV merger costs, and other asset write-off costs.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                     Adjusted Diluted EPS is a non-GAAP financial measure calculated by
                     excluding from operating revenues, operating expenses and equity
                     in net income of affiliates certain significant items that are
                     non-operational or non-recurring in nature, including
                     dispositions. Management believes that this measure provides
                     relevant and useful information to investors and other users of
                     our financial data in evaluating the effectiveness of our
                     operations and underlying business trends.
                      
                     Adjusted Diluted EPS should be considered in addition to, but not
                     as a substitute for, other measures of financial performance
                     reported in accordance with GAAP. Our calculation of Adjusted
                     Diluted EPS, as presented, may differ from similarly titled
                     measures reported by other companies.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                     Sum of components may not tie due to rounding.
                                                                                                                                                    
-------------------- ---------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ----------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                  
                     AT&T Inc.
  Non-GAAP Consolidated Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Adjusted Operating Revenues Excluding Connecticut Wireline
                     Properties
                     Dollars in millions
                     Unaudited                                                                                                                                                                     Three Months Ended                                                                                                                                                    Twelve Months Ended
                                                                                                                                                                                                      December 31,                                                                                                                                                          December 31,
                                                              2013                                        2014                                         2013                                         2014                        
-------------------- ---------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                     Reported Operating Revenues                                                                                                                  $     33,163                                                              $ 34,439                                                                                   $    128,752                                                              $ 132,447
                     Adjustments:
       Operating Revenues of Connecticut Wireline Properties                275           67              1,108           888    
-------------------- ---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
  Adjusted Operating Revenues Excluding Connecticut Wireline                          $     32,888                        $ 34,372                          $    127,644                        $ 131,559    
                     Properties
-------------------- ---------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------- -------------------- --------------------
          Year-over-year growth - Adjusted                                               4.5 %                                               3.1 %                     
-------------------- ---------------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- ------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                     Adjusted Operating Revenues is a non-GAAP financial measure
                     calculated by excluding the operating revenues of Connecticut
                     Wireline Properties sold in October 2014. Management believes that
                     this measure provides relevant and useful information to investors
                     and other users of our financial data in evaluating the
                     effectiveness of our operations and underlying business trends.
                      
                     Adjusted Operating Revenues should be considered in addition to,
                     but not as a substitute for, other measures of financial
                     performance reported in accordance with GAAP. Our calculations of
                     Adjusted Operating Revenues may differ from similarly titled
                     measures reported by other companies.
                      
                                                                                                                             
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
  Financial Data
                                                                                                                                                                         
                     AT&T Inc.
  Non-GAAP Wireline Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Wireline Segment EBITDA
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                     Three Months Ended
                                                                                                                          12/31/13                                              9/30/14                                             12/31/14                      
                                                                                                    -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                 
                     Segment Operating Revenues
                      Service                                                                                                               $ 14,434                                                                                   $ 14,368                                                                                   $ 14,240
   Equipment                                      282            247            332    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
      Total Segment Operating Revenues                          $ 14,716                          $ 14,615                          $ 14,572    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     Segment Operating Expenses
                      Operations and support                                                                                                  10,501                                                                                     10,761                                                                                     10,553
   Depreciation and amortization                2,761          2,571          2,554    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
      Total Segment Operating Expenses         13,262         13,332         13,107    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Segment Operating Income                      1,454          1,283          1,465    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     Segment Operating Income Margin                                                                                             9.9 %                                                                                      8.8 %                                                                                     10.1 %
                                                                                                                                                                                                                                                                                                                                                                 
  Plus: Depreciation and amortization           2,761          2,571          2,554    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  EBITDA(1)                                                     $  4,215                          $  3,854                          $  4,019    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                     EBITDA Margin                                                                                                              28.6 %                                                                                     26.4 %                                                                                     27.6 %
                                                                                                                                                                                                                                                                                                                                                                 
                     (1)EBITDA is defined as Operating Income Before
                     Depreciation and Amortization.
                      
                                                                                                                                                                                                                  
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                                             
                     AT&T Inc.
  Non-GAAP Wireline Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Adjusted Operating Revenues Excluding Connecticut Wireline
                     Properties
                     Unaudited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        Three Months Ended
                                                                                                                                                             12/31/13                            09/30/14                                    12/31/14                      
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     Reported Operating Revenues(1)                                                                                                                                                                                                                                                                                                  $     14,716                                                              $     14,615                                                              $ 14,572
                     Adjustments:
     Operating Revenues of Divested Connecticut Wireline Properties                                                                                                                                                                                                                                                  275              272           67    
-------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
  Adjusted Operating Revenues                                                                                                                                                                                                                                                            $     14,441                        $     14,343                        $ 14,505    
-------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
        Year-over-year growth - Adjusted                                                                                                                                                                                                                                                                                0.4 %                     
-------------------- -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- ------ -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     (1)The period ended 12/31/14 includes the revenues of
                     Connecticut Wireline Properties through the date of divestiture on
                     October 24, 2014.
                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     Adjusted Revenues by Customer Type Excluding Connecticut Wireline
                     Properties(1)
                     Wireline
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                Three Months Ended
                                               3/31/13                                      6/30/13                             9/30/13                                    12/31/13                                      3/31/14                             6/30/14                             9/30/14                                    12/31/14                      
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------------------------
                     Adjusted Operating Revenues
                      Consumer Markets                                                                                                      $  5,315                                                                                   $      5,410                                                              $      5,398                                                              $  5,469                                                                                   $      5,541                                                              $      5,575                                                              $      5,565                                                              $  5,600
                      AT&T Business Solutions                                                                                                  8,796                                                                                          8,812                                                                     8,736                                                                 8,729                                                                                          8,566                                                                     8,569                                                                     8,565                                                                 8,569
                      National Mass Markets                                                                                                      176                                                                                            161                                                                       153                                                                   145                                                                                            138                                                                       131                                                                       126                                                                   119
   Other                                           95                109              104           98                 81               88               87          217    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
     Total Adjusted Operating Revenues                          $ 14,382                          $     14,492                        $     14,391                        $ 14,441                          $     14,326                        $     14,363                        $     14,343                        $ 14,505    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     Connecticut Wireline Properties Revenues by Customer Type(1)
                     Wireline
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                Three Months Ended
                                               3/31/13                                      6/30/13                             9/30/13                                    12/31/13                                      3/31/14                             6/30/14                             9/30/14                                    12/31/14                      
-------------------- ------------------------------------ -------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------------------------
                     Operating Revenues
                      Consumer Markets                                                                                                      $    165                                                                                   $        169                                                              $        169                                                              $    169                                                                                   $        174                                                              $        173                                                              $        170                                                              $     43
                      AT&T Business Solutions                                                                                                    110                                                                                            111                                                                       109                                                                   107                                                                                            101                                                                        99                                                                       101                                                                    24
                      National Mass Markets                                                                                                        -                                                                                              -                                                                         -                                                                     -                                                                                              -                                                                         -                                                                         -                                                                     -
   Other                                           (2 )                                   1                1           (1 )                                   -                2                1            -    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
     Operating Revenues                                         $    273                          $        281                        $        279                        $    275                          $        275                        $        274                        $        272                        $     67    
-------------------- ------------------------------------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ------ -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     (1)Prior-period amounts restated to conform to
                     current-period reporting methodology and divestiture of Connecticut
                     Wireline Properties.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                     Adjusted Operating Revenues is a non-GAAP financial measure
                     calculated by excluding the operating revenues of Connecticut
                     wireline properties sold in October 2014. Management believes that
                     this measures provides relevant and useful information to
                     investors and other users of our financial data in evaluating the
                     effectiveness of our operations and underlying business trends.
                      
                     Adjusted Operating Revenues should be considered in addition to,
                     but not as a substitute for, other measures of financial
                     performance reported in accordance with GAAP. Our calculations of
                     Adjusted Operating Revenues may differ from similarly titled
                     measures reported by other companies.
                      
                                                                                                                                                                              
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- ----------------------------------------------------
  Financial Data
                                                                                                                                                                                                                                                                                                                                          
                     AT&T Inc.
  Non-GAAP Wireline Reconciliation
-------------------- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                     Adjusted AT&T Business Solutions Revenues Excluding Connecticut
                     Wireline Properties(1)
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                               Three Months Ended
                                                      3/31/13                             6/30/13                             9/30/13                            12/31/13                             3/31/14                             6/30/14                             9/30/14                            12/31/14             
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Adjusted Operating Revenues
                        Global Business Solutions(2)                                                                                                       $      3,390                                                              $      3,405                                                              $      3,361                                                              $      3,397                                                              $      3,377                                                              $      3,379                                                              $      3,420                                                              $      3,417
                        Small Business & Alternate Channels                                                                                                       1,703                                                                     1,704                                                                     1,669                                                                     1,656                                                                     1,654                                                                     1,648                                                                     1,631                                                                     1,605
     Wholesale & GEM Solutions(3)                                  3,702            3,702            3,707            3,676            3,535            3,542            3,514            3,547  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
  Adjusted AT&T Business Solutions Operating Revenues                          $      8,796                        $      8,812                        $      8,736                        $      8,729                        $      8,566                        $      8,569                        $      8,565                        $      8,569  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Adjusted AT&T Business Solutions Data Revenues Excluding
                     Connecticut Wireline Properties(1)
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                               Three Months Ended
                                                      3/31/13                             6/30/13                             9/30/13                            12/31/13                    3/31/14                   6/30/14                             9/30/14                            12/31/14             
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- -------------------- ---------- -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  --------------------
                     Data Revenues
                        Transport (excluding Ethernet)                                                                                                     $      2,110                                                              $      2,058                                                              $      1,998                                                              $      1,926                                                              $      1,854                                                              $      1,779                                                              $      1,759                                                              $      1,700
                        Packet Switched                                                                                                                             137                                                                       127                                                                       110                                                                       100                                                                        85                                                                        84                                                                        71                                                                        55
                        Strategic Business Services(4)                                                                                                            1,970                                                                     2,090                                                                     2,148                                                                     2,238                                                                     2,285                                                                     2,371                                                                     2,452                                                                     2,557
     IP Data (non-Strategic)                                         502              484              473              432              455              441              424              430  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
     Total Data Revenues                                                       $      4,719                        $      4,758                        $      4,730                        $      4,695                        $      4,679                        $      4,674                        $      4,706                        $      4,742  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Connecticut Wireline Properties Business Solutions Revenues(1)
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                               Three Months Ended
                                                      3/31/13                             6/30/13                             9/30/13                            12/31/13                             3/31/14                             6/30/14                             9/30/14                            12/31/14             
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Operating Revenues
                        Global Business Solutions(2)                                                                                                       $         19                                                              $         20                                                              $         19                                                              $         21                                                              $         20                                                              $         19                                                              $         18                                                              $          5
                        Small Business & Alternate Channels                                                                                                          33                                                                        32                                                                        31                                                                        31                                                                        29                                                                        29                                                                        28                                                                         8
     Wholesale & GEM Solutions(3)                                     59               60               58               55               52               51               55               11  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
  Connecticut Wireline Properties Operating Revenues                           $        110                        $        111                        $        109                        $        107                        $        101                        $         99                        $        101                        $         24  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Connecticut Wireline Properties Business Solutions Data Revenues(1)
                     Dollars in millions
                     Unaudited                                                                                                                                                                                                                                                                                                                                               Three Months Ended
                                                      3/31/13                             6/30/13                             9/30/13                            12/31/13                             3/31/14                             6/30/14                             9/30/14                            12/31/14             
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  -------------------- -------------------- ------------------------------  --------------------
                     Data Revenues
                        Transport (excluding Ethernet)                                                                                                     $         38                                                              $         38                                                              $         37                                                              $         38                                                              $         31                                                              $         31                                                              $         32                                                              $         10
                        Packet Switched                                                                                                                               2                                                                         2                                                                         3                                                                         2                                                                         2                                                                         2                                                                         2                                                                         -
                        Strategic Business Services(4)                                                                                                                8                                                                         9                                                                         9                                                                        10                                                                        11                                                                        11                                                                        13                                                                         2
     IP Data (non-Strategic)                                           5                5                5                3                3                3                3                1  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
     Total Data Revenues                                                       $         53                        $         55                        $         53                        $         54                        $         47                        $         48                        $         50                        $         13  
-------------------- --------------------------------------------------- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     (1)Prior-period amounts restated to conform to
                     current-period reporting methodology and divestiture of
                     Connecticut Wireline Properties. Sum of segments’ revenues
                     within a quarter might not tie to total revenues due to rounding.
                     (2)Global Business Solutions was previously reported as
                     "Global Enterprise Solutions."
                     (3)GEM = Government, Education & Medical
                     (4)Strategic business services are AT&T’s most advanced
                     business solutions, including VPNs, Ethernet, cloud, hosting, IP
                     conferencing, VoIP, MIS over Ethernet, U-verse and security
                     services.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
                     Adjusted Operating Revenues is a non-GAAP financial measure
                     calculated by excluding the operating revenues of Connecticut
                     wireline properties sold in October 2014. Management believes that
                     this measure provides relevant and useful information to investors
                     and other users of our financial data in evaluating the
                     effectiveness of our operations and underlying business trends.
                      
                     Adjusted Operating Revenues should be considered in addition to,
                     but not as a substitute for, other measures of financial
                     performance reported in accordance with GAAP. Our calculations of
                     Adjusted Operating Revenues may differ from similarly titled
                     measures reported by other companies.
                      

EBITDA DISCUSSION

For AT&T, EBITDA is defined as operating income before depreciation and amortization. EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA differs from Segment Operating Income (Loss), as calculated in accordance with U.S. generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies.

We believe these measures are relevant and useful information to our investors as they are part of AT&T’s internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of its wireless operations. These measures are used by management as a gauge of our success in acquiring, retaining and servicing wireless subscribers because we believe these measures reflect AT&T’s ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing our Wireless segment’s performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which AT&T Mobility’s operating managers are responsible and upon which we evaluate their performance.

EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA excludes other income (expense) - net, net income attributable to noncontrolling interest and equity in net income (loss) of affiliates, as these do not reflect the operating results of our wireless subscriber base and national footprint that we utilize to obtain and service our customers. Equity in net income (loss) of affiliates represents AT&T Mobility’s proportionate share of the net income (loss) of affiliates in which it exercises significant influence, but does not control. As AT&T Mobility does not control these entities, our management excludes these results when evaluating the performance of our primary operations. EBITDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, EBITDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.

We believe EBITDA as a percentage of service revenues to be a more relevant measure of our Wireless segment operating margin than EBITDA as a percentage of total revenue. We generally subsidize a portion of our wireless handset sales, all of which are recognized in the period in which we sell the handset. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect our Wireless segment income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

FREE CASH FLOW DISCUSSION

Free cash flow is defined as cash from operations minus construction and capital expenditures. Free cash flow after dividends is defined as cash from operations minus construction, capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less construction and capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter. Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding. We believe these metrics provide useful information to our investors because management reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

NET DEBT TO EBITDA DISCUSSION

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. The Net Debt to EBITDA ratio is calculated by dividing the Net Debt by annualized EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized EBITDA is calculated by annualizing the year-to-date EBITDA.

Adjusted EBITDA excludes costs which are non-recurring in nature. Adjusted EBITDA also excludes net actuarial gains or losses associated with our pension and postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, the Adjusted EBITDA reflects an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income. This measure is consistent with metrics under our existing credit agreements.

ADJUSTING ITEMS DISCUSSION

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. Our calculations of Adjusted diluted EPS, as presented, may differ from similarly titled measures reported by other companies.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20150127006413r1&sid=cmtx6&distro=nx&lang=en

SOURCE: AT&T Inc.

AT&T Inc. 
McCall Butler, 917-209-5792 
mb8191@att.com


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