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 AT&T Reports Second-Quarter Results
   Tuesday, July 25, 2017 4:01:02 PM ET

--Operating income of $7.3 billion

--Net income attributable to AT&T of $3.9 billion

--Diluted EPS of $0.63 as reported and $0.79 as adjusted, compared to $0.55 and $0.72 in the year-ago quarter

--Cash from operations of $8.9 billion

--Free cash flow of $3.7 billion

--Company Maintains Full-Year Guidance

--U.S. wireless results: Best-ever postpaid phone churn of 0.79%

--Total postpaid churn, including tablets, of 1.01%

--Growing operating income margin of 30.4% with record-high EBITDA margins including best-ever wireless service margin of 50.4%

--2.8 million wireless net adds 2.3 million U.S., driven by connected devices, prepaid and postpaid

--476,000 Mexico net adds

--Entertainment Group results: 112,000 IP broadband net adds; 8,000 total broadband net adds



--More than 5.5 million AT&T Fiber customer locations passed

--Total video losses of 199,000 with DIRECTV NOW gains helping offset traditional TV subscriber decline; Total video subscribers essentially flat year over year

--International results: Revenues up 10.8% with favorable operating trends

--Continued revenue growth and margin improvement in Mexico

--Note: AT&T’s second-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, July 25, 2017. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com.

AT&T Inc.* (T ) reported strong adjusted earnings growth and margin expansion with lower expenses in the second quarter.

"Once again our team delivered expanded consolidated margins and, as a result, grew adjusted earnings per share by nearly 10% as we executed well against our business priorities," said Randall Stephenson, AT&T chairman and CEO. "And in a quarter where our competitors used promotions aggressively, we added more than 500,000 branded smartphones to our base and more than 100,000 IP broadband subscribers, achieved record EBITDA wireless margins and had the lowest postpaid phone churn in our history. We continue to expect the Time Warner deal to close by year-end and further transform the company."

Consolidated Financial Results

AT&T’s consolidated revenues for the second quarter totaled $39.8 billion versus $40.5 billion in the year-ago quarter, primarily due to declines in legacy wireline services and consumer mobility. Compared with results for the second quarter of 2016, operating expenses were $32.5 billion versus $34.0 billion; operating income was $7.3 billion versus $6.6 billion; and operating income margin was 18.4% versus 16.2%. When adjusting for amortization, merger- and integration-related expenses and other items, operating income was $8.6 billion versus $8.1 billion and operating income margin was 21.6%, up 150 basis points versus the year-ago quarter.

Second-quarter net income attributable to AT&T totaled $3.9 billion, or $0.63 per diluted share, compared with $3.4 billion, or $0.55 per diluted share, in the year-ago quarter. Adjusting for $0.16 of costs for amortization, merger- and integration-related expenses and other items, earnings per diluted share was $0.79 compared with an adjusted $0.72 in the year-ago quarter, up 9.7%.

Cash from operating activities was $8.9 billion in the second quarter and $18.2 billion year to date. Capital expenditures were $5.2 billion in the quarter and $11.2 billion year to date. Free cash flow -- cash from operating activities minus capital expenditures -- was $3.7 billion for the quarter and $6.9 billion year to date.

*About AT&T AT&T Inc. (T ) helps millions around the globe connect with leading entertainment, business, mobile and high speed internet services. We offer the nation’s best data network** and the best global coverage of any U.S. wireless provider. We’re one of the world’s largest providers of pay TV. We have TV customers in the U.S. and 11 Latin American countries. Nearly 3.5 million companies, from small to large businesses around the globe, turn to AT&T for our highly secure smart solutions.

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

(C) 2017 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

**Claim based on the Nielsen Certified Data Network Score. Score includes data reported by wireless consumers in the Nielsen Mobile Insights survey, network measurements from Nielsen Mobile Performance and Nielsen Drive Test Benchmarks for Q4 2016 + Q1 2017 across 121 markets.

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 might 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 and 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 https://investors.att.com.

Discussion and Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to 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 AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.

Free Cash Flow

Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine 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.

 
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                                                                                                                                                                                 Free Cash Flow and Free Cash Flow Dividend Payout Ratio
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                        Three Months Ended                                                                                                                                Six Months Ended
                                                                                                                                                      June 30,                                                                                                                                                                               June 30,
                                                                                    --------------------------------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------------------------------
                                                 2017                                                 2016                                                  2017                                                  2016
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- ---------------------------------------------------------------------- -------------------- --------------------------------------------------
Net cash provided by operating activities                                                              $  8,942                                             $ 10,307                                                                                   $  18,160                                             $  18,207
Less: Capital expenditures                      (5,208 )                          (5,470 )                          (11,223 )                          (10,139 )
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Free Cash Flow                                   3,734          4,837           6,937           8,068  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                       
Less: Dividends paid                            (3,012 )                          (2,952 )                           (6,021 )                           (5,899 )
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Free Cash Flow after Dividends                                   $    722                          $  1,885                          $     916                          $   2,169  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
Free Cash Flow Dividend Payout Ratio              80.7 %                            61.0 %                             86.8 %                             73.1 %
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                    

EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) - net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. 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 U.S. generally accepted accounting principles (GAAP).

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing 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 segment 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 segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. 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, EBITDA margin 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. 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, EBITDA margin 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.

 
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                                                                                                                                                                                     EBITDA, EBITDA Margin and EBITDA Service Margin
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                           Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                         June 30,                                                                                                                                                                              June 30,
                                                                                       --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                                    2017                                                 2016                                                 2017                                                 2016
-------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Net Income                                                                                                $  4,014                                             $  3,515                                                                                   $  7,588                                             $  7,400
Additions:
   Income Tax Expense                                                                                        2,056                                                                                      1,906                                                                                      3,860                                                                                      4,028
   Interest Expense                                                                                          1,395                                                                                      1,258                                                                                      2,688                                                                                      2,465
   Equity in Net (Income) Loss of Affiliates                                                                   (14 )                                                                                      (28 )                                                                                      159                                                                                        (41 )
   Other (Income) Expense - Net                                                                               (128 )                                                                                      (91 )                                                                                     (108 )                                                                                     (161 )
   Depreciation and amortization                    6,147          6,576         12,274         13,139  
-------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                             13,470         13,136         26,461         26,830  
-------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                         
Total Operating Revenues                                                                                    39,837                                                                                     40,520                                                                                     79,202                                                                                     81,055
Service Revenues                                                                                            36,538                                                                                     37,142                                                                                     72,994                                                                                     74,243
                                                                                                                                                                                                                                                                                                                                                                         
EBITDA Margin                                                                                                 33.8 %                                                                                     32.4 %                                                                                     33.4 %                                                                                     33.1 %
EBITDA Service Margin                                36.9 %                            35.4 %                            36.3 %                            36.1 %
-------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                     
 
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                                                                                                                                                                                Segment EBITDA, EBITDA Margin and EBITDA Service Margin
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Dollars in millions                                                                                        Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                      June 30,                                                                                                                                                                              June 30,
                                                                                    --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                                 2017                                                 2016                                                 2017                                                 2016
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Business Solutions Segment                                                                                                                           
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Segment Contribution                                                                                   $  4,459                                             $  4,201                                                                                   $  8,819                                             $  8,500
Additions:
Depreciation and amortization                    2,335          2,521          4,647          5,029  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                           6,794          6,722         13,466         13,529  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                      
Total Segment Operating Revenues                                                                         17,107                                                                                     17,579                                                                                     33,955                                                                                     35,188
                                                                                                                                                                                                                                                                                                                                                                      
Segment Operating Income Margin                                                                            26.1 %                                                                                     23.9 %                                                                                     26.0 %                                                                                     24.2 %
EBITDA Margin                                                                                              39.7 %                                                                                     38.2 %                                                                                     39.7 %                                                                                     38.4 %
                                                                                                                                  
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Entertainment Group Segment                                                                                                                          
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Segment Contribution                                                                                   $  1,655                                                                                   $  1,651                                                                                   $  3,252                                                                                   $  3,246
Additions:
Equity in Net (Income) Loss of Affiliates                                                                    11                                                                                          2                                                                                         17                                                                                         (1 )
Depreciation and amortization                    1,458          1,489          2,877          2,977  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                           3,124          3,142          6,146          6,222  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                      
Total Segment Operating Revenues                                                                         12,682                                                                                     12,711                                                                                     25,305                                                                                     25,369
                                                                                                                                                                                                                                                                                                                                                                      
Segment Operating Income Margin                                                                            13.1 %                                                                                     13.0 %                                                                                     12.9 %                                                                                     12.8 %
EBITDA Margin                                                                                              24.6 %                                                                                     24.7 %                                                                                     24.3 %                                                                                     24.5 %
                                                                                                                                  
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Consumer Mobility Segment                                                                                                                            
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Segment Contribution                                                                                   $  2,400                                                                                   $  2,574                                                                                   $  4,739                                                                                   $  5,068
Additions:
Depreciation and amortization                      871            932          1,744          1,854  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                           3,271          3,506          6,483          6,922  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                      
Total Segment Operating Revenues                                                                          7,791                                                                                      8,186                                                                                     15,531                                                                                     16,514
Service Revenues                                                                                          6,528                                                                                      6,948                                                                                     13,137                                                                                     13,891
                                                                                                                                                                                                                                                                                                                                                                      
Segment Operating Income Margin                                                                            30.8 %                                                                                     31.4 %                                                                                     30.5 %                                                                                     30.7 %
EBITDA Margin                                                                                              42.0 %                                                                                     42.8 %                                                                                     41.7 %                                                                                     41.9 %
EBITDA Service Margin                                                                                      50.1 %                                                                                     50.5 %                                                                                     49.3 %                                                                                     49.8 %
                                                                                                                                  
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
International Segment                                                                                                                                
----------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Segment Contribution                                                                                   $    (32 )                                                                                 $   (184 )                                                                                 $   (132 )                                                                                 $   (368 )
Additions:
Equity in Net (Income) of Affiliates                                                                        (25 )                                                                                       (9 )                                                                                      (45 )                                                                                      (23 )
Depreciation and amortization                      311            298            601            575  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                             254            105            424            184  
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                      
Total Segment Operating Revenues                                                                          2,026                                                                                      1,828                                                                                      3,955                                                                                      3,495
                                                                                                                                                                                                                                                                                                                                                                      
Segment Operating Income Margin                                                                            -2.8 %                                                                                    -10.6 %                                                                                     -4.5 %                                                                                    -11.2 %
EBITDA Margin                                     12.5 %                             5.7 %                            10.7 %                             5.3 %
----------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                  
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                            Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA
                                                                                                                                                                                                  Service Margin
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                    Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                  June 30,                                                                                                                                                                              June 30,
                                                                                --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                             2017                                                 2016                                                 2017                                                 2016
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
AT&T Mobility                                                                                                                                    
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Operating Income                                                                                   $  5,329                                             $  5,342                                                                                   $ 10,501                                             $ 10,616
   Add: Depreciation and amortization        1,992          2,081          3,989          4,137  
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                       7,321          7,423         14,490         14,753  
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                  
Total Operating Revenues                                                                             17,518                                                                                     17,924                                                                                     34,685                                                                                     35,878
Service Revenues                                                                                     14,534                                                                                     14,911                                                                                     29,072                                                                                     29,709
                                                                                                                                                                                                                                                                                                                                                                  
Operating Income Margin                                                                                30.4 %                                                                                     29.8 %                                                                                     30.3 %                                                                                     29.6 %
EBITDA Margin                                                                                          41.8 %                                                                                     41.4 %                                                                                     41.8 %                                                                                     41.1 %
EBITDA Service Margin                         50.4 %                            49.8 %                            49.8 %                            49.7 %
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                  
 
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                                                                                                                                                                                Supplemental Latin America EBITDA and EBITDA Margin
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                    Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                  June 30,                                                                                                                                                                              June 30,
                                                                                --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                             2017                                                 2016                                                 2017                                                 2016
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
International - Latin America                                                                                                                    
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Operating Income                                                                                   $    141                                             $     32                                                                                   $    218                                             $     85
   Add: Depreciation and amortization          222            212            436            408  
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                         363            244            654            493  
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                  
Total Operating Revenues                                                                              1,361                                                                                      1,222                                                                                      2,702                                                                                      2,352
                                                                                                                                                                                                                                                                                                                                                                  
Operating Income Margin                                                                                10.4 %                                                                                      2.6 %                                                                                      8.1 %                                                                                      3.6 %
EBITDA Margin                                 26.7 %                            20.0 %                            24.2 %                            21.0 %
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                              
 
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                                                                                                                                                                                   Supplemental Mexico EBITDA and EBITDA Margin
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                    Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                  June 30,                                                                                                                                                                              June 30,
                                                                                --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                             2017                                                 2016                                                 2017                                                 2016
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
International - Mexico                                                                                                                           
------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Operating Income                                                                                   $   (198 )                                           $   (225 )                                                                                 $   (395 )                                           $   (476 )
   Add: Depreciation and amortization           89             86            165            167  
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
EBITDA                                        (109 )                            (139 )                            (230 )                            (309 )
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                  
Total Operating Revenues                                                                                665                                                                                        606                                                                                      1,253                                                                                      1,143
                                                                                                                                                                                                                                                                                                                                                                  
Operating Income Margin                                                                               -29.8 %                                                                                    -37.1 %                                                                                    -31.5 %                                                                                    -41.6 %
EBITDA Margin                                -16.4 %                           -22.9 %                           -18.4 %                           -27.0 %
------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                              

Adjusting Items

Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38%. Certain foreign operations with losses, where such losses are not realizable for tax purposes, are not tax effected, resulting in no tax impact for Venezuela devaluation. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.

 
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                                                                                                                                                                                                    Adjusting Items
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                                      Three Months Ended                                                                                                                   Six Months Ended
                                                                                                                                                                    June 30,                                                                                                                                                                  June 30,
                                                                                                              ---------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------
                                                                           2017                                     2016                                      2017                                                2016
------------------------------------------------------------------- -------------------- -------------------- -------------------------------------------------------------------- -------------------- ----------------------------------------------- -------------------- -------------------------------------------------------------------- -------------------- ------------------------------------------------
Operating Expenses                                                                                                                                                                                                                                                                        
   DIRECTV and other video merger integration costs                                                                              $   123                                                                                   $   133                                                              $   250                                                                                   $   306
   Mexico merger integration costs                                                                                                    80                                                                                        66                                                                  119                                                                                       147
   Time Warner merger costs                                                                                                           78                                                                                         -                                                                  119                                                                                         -
   Wireless merger integration costs                                                                                                   -                                                                                        33                                                                    -                                                                                        75
   Actuarial (gain) loss                                                                                                            (259 )                                                                                       -                                                                 (259 )                                                                                       -
   Employee separation costs                                                                                                          60                                                                                        29                                                                   60                                                                                        54
   (Gain) loss on transfer of wireless spectrum                                                                                      (63 )                                                                                       -                                                                 (181 )                                                                                    (736 )
   Venezuela devaluation                                                     98             -          98             -  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
Adjustments to Operations and Support Expenses                              117           261         206          (154 )
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
   Amortization of intangible assets                                      1,170         1,316       2,372         2,667  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
Adjustments to Operating Expenses                                         1,287         1,577       2,578         2,513  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
Other
   Merger related interest expense and exchange fees(1)                                                                              158                                                                                         -                                                                  267                                                                                        16
   (Gain) loss on sale of assets, impairments and other adjustments         (36 )                              -         221             4  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
Adjustments to Income Before Income Taxes                                 1,409         1,577       3,066         2,533  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
   Tax impact of adjustments                                                445           550       1,001           881  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
Adjustments to Net Income                                                                  $   964                          $ 1,027                        $ 2,065                          $ 1,652  
------------------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- --------------------
(1)Includes interest expense incurred on the debt issued
prior to the close of merger transactions.
 

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, 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 margin, 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. AT&T’s calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                               Adjusted Operating Income, Adjusted Operating Income Margin,
                                                                                                                                                                                Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA
                                                                                                                                                                                                      Service Margin
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                             Three Months Ended                                                                                                                               Six Months Ended
                                                                                                                                                           June 30,                                                                                                                                                                              June 30,
                                                                                         --------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------
                                                      2017                                                 2016                                                 2017                                                 2016
---------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
Operating Income                                                                                            $  7,323                                             $  6,560                                                                                   $ 14,187                                             $ 13,691
Adjustments to Operating Expenses                     1,287          1,577          2,578          2,513  
---------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
Adjusted Operating Income(1)                          8,610          8,137         16,765         16,204  
---------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                       
---------------------------------------------- -------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- --------------------------------------------------------------------- -------------------- -------------------------------------------------
EBITDA                                                                                                        13,470                                                                                     13,136                                                                                     26,461                                                                                     26,830
Adjustments to Operations and Support Expenses          117            261            206           (154 )
---------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
Adjusted EBITDA(1)                                   13,587         13,397         26,667         26,676  
---------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                           
Total Operating Revenues                                                                                      39,837                                                                                     40,520                                                                                     79,202                                                                                     81,055
Service Revenues                                                                                              36,538                                                                                     37,142                                                                                     72,994                                                                                     74,243
                                                                                                                                                                                                                                                                                                                                                                           
Operating Income Margin                                                                                         18.4 %                                                                                     16.2 %                                                                                     17.9 %                                                                                     16.9 %
Adjusted Operating Income Margin(1)                                                                             21.6 %                                                                                     20.1 %                                                                                     21.2 %                                                                                     20.0 %
Adjusted EBITDA Margin(1)                                                                                       34.1 %                                                                                     33.1 %                                                                                     33.7 %                                                                                     32.9 %
Adjusted EBITDA Service Margin(1)                      37.2 %                            36.1 %                            36.5 %                            35.9 %
---------------------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ --------------------
(1)Adjusted Operating Income, Adjusted EBITDA and
associated margins exclude all actuarial gains or losses ($259
million gain in the second quarter of 2017) associated with our
postemployment benefit plan, 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 $106 million (based on an average expected return on plan
assets of 5.75% for our VEBA trusts), rather than the actual return
on plan assets of $234 million (actual annualized VEBA return of
12.2%), as included in the GAAP measure of income.
 
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                               Adjusted Diluted EPS
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Three Months Ended                                                                                                                     Six Months Ended
                                                                                                                                                            June 30,                                                                                                                                                                    June 30,
                                                                                                   --------------------------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------------------
                                                                2017                                        2016                                        2017                                                2016
-------------------------------------------------------- -------------------- -------------------- -------------------------------------------------------------------- -------------------- ---------------------------------------------------- -------------------- -------------------------------------------------------------------- -------------------- -------------------------------------------------
Diluted Earnings Per Share (EPS)                                                                                      $  0.63                                             $       0.55                                                              $  1.19                                             $   1.17
   Amortization of intangible assets                                                                                     0.13                                                                                           0.14                                                                 0.26                                                                                       0.28
   Merger integration and other items(1)                                                                                 0.05                                                                                           0.03                                                                 0.08                                                                                       0.06
   Asset abandonments, impairments and other adjustments                                                                    -                                                                                              -                                                                 0.03                                                                                          -
   Actuarial (gain) loss                                                                                                (0.03 )                                                                                            -                                                                (0.03 )                                                                                        -
   (Gain) loss on transfer of wireless spectrum                                                                         (0.01 )                                                                                            -                                                                (0.02 )                                                                                    (0.08 )
   Venezuela devaluation                                        0.02                  -        0.02              -  
-------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ --------------------
Adjusted EPS                                                                    $  0.79                          $       0.72                        $  1.53                          $   1.43  
-------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ --------------------
Year-over-year growth - Adjusted                                 9.7 %                                             7.0 %                         
-------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ---------------------------------------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------------------------------------
Weighted Average Common Shares Outstanding                     6,184              6,195       6,185          6,193  
with Dilution (000,000)
-------------------------------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ---------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ --------------------
(1)Includes combined merger integration items,
merger-related interest expense.
 

Net Debt to Adjusted EBITDA

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 Adjusted EBITDA ratio is calculated by dividing the Net Debt by Annualized Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized Adjusted EBITDA is calculated by annualizing the year-to-date Adjusted EBITDA.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                        Net Debt to Adjusted EBITDA
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Dollars in millions                                                                                                                      
                                                                                                                        Three Months Ended
                                                                                       -------------------------------------------------------------------------------------
                                                                                              Mar. 31,                 Jun. 30,                                                                                  YTD 2017
                                       2017                     2017              
-------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- ----------------------------------------- -------------------- -------------------- ------------------------------
Adjusted EBITDA                                                                                 $     13,080                                                $ 13,587                                                                     $     26,667
   Add back severance                                                                                      -                                                     (60 )                                                                            (60 )
Net Debt Adjusted EBITDA                                                                              13,080                                                  13,527                                                                           26,607
Annualized Adjusted EBITDA                                                                                                                                                                                                                     53,214
   End-of-period current debt                                                                                                                                                                                                                  10,831
   End-of-period long-term debt                                                                                                                                                                                                               132,824
Total End-of-Period Debt                                                                                                                                                                                                                      143,655
   Less: Cash and Cash Equivalents                                                                                                                                                                                                             25,617
Net Debt Balance                                                   118,038  
-------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- ----------------------------------------- -------------------- -------------------- ---------- --------------------
Annualized Net Debt to Adjusted EBITDA Ratio                          2.22  
-------------------------------------------- -------------------- -------------------- ------------------------------------------ -------------------- ----------------------------------------- -------------------- -------------------- ---------- --------------------
                                                                                                                                                                                                                                            

Supplemental Operational Measures

We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     Supplemental Operational Measure
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                          Three Months Ended
                                                                                                                                                                                                      June 30, 2017                                                                                                                                                                                                                                                           June 30, 2016
                                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                           Consumer                        Business                               Adjustments(1)                                  AT&T                                                               Consumer                        Business                               Adjustments(1)                                    AT&T
                                                                                    Mobility                                                              Solutions                                                                                                                                                        Mobility                                                             Mobility                                                              Solutions                                                                                                                                                          Mobility
-------------------------------- -------------------- -------------------- -------------------------  -------------------- -------------------- --------------------------  -------------------- -------------------- ----------------------------------------------                                             --------------------------                                            -------------------------  -------------------- -------------------- --------------------------  -------------------- -------------------- ----------------------------------------------                                             ------------------------------
Operating Revenues                                                                                                                                                                                                                                                                                                                                                       
  Wireless service                                                                            $ 6,528                                                              $  8,006                                                              $      -                                                                                   $ 14,534                                                              $ 6,948                                                              $  7,963                                                              $      -                                                                                   $     14,911
  Fixed strategic services                                                                          -                                                                 3,028                                                                (3,028 )                                                                                        -                                                                    -                                                                 2,805                                                                (2,805 )                                                                                            -
  Legacy voice and data services                                                                    -                                                                 3,508                                                                (3,508 )                                                                                        -                                                                    -                                                                 4,162                                                                (4,162 )                                                                                            -
  Other services and equipment                                                                      -                                                                   844                                                                  (844 )                                                                                        -                                                                    -                                                                   874                                                                  (874 )                                                                                            -
   Wireless equipment                  1,263        1,721            -                                                2,984                                             1,238        1,775            -                                                    3,013
-------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ------                                           -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ----------
Total Operating Revenues               7,791       17,107       (7,380 )                                                                17,518                                             8,186       17,579       (7,841 )                                                                    17,924
-------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ------                                           -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
Operating Expenses
   Operations and support                                                                       4,520                                                                10,313                                                                (4,636 )                                                                                   10,197                                                                4,680                                                                10,857                                                                (5,036 )                                                                                       10,501
EBITDA                                                                                          3,271                                                                 6,794                                                                (2,744 )                                                                                    7,321                                                                3,506                                                                 6,722                                                                (2,805 )                                                                                        7,423
   Depreciation and amortization         871        2,335       (1,214 )                                                                 1,992                                               932        2,521       (1,372 )                                                                     2,081
-------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ------                                           -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ----------
Total Operating Expenses               5,391       12,648       (5,850 )                                                                12,189                                             5,612       13,378       (6,408 )                                                                    12,582
-------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ------                                           -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ --------------------                                           -------------------- ----------
Operating Income                                        $ 2,400                        $  4,459                        $ (1,530 )                                           $  5,329                        $ 2,574                        $  4,201                        $ (1,433 )                                           $      5,342
-------------------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------------- ----------
(1)Non-wireless (fixed) operations reported in Business
Solutions segment.
 
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     Supplemental Operational Measure
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                          Six Months Ended
                                                                                                                                                                                                       June 30, 2017                                                                                                                                                                                                                                                             June 30, 2016
                                                                           ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                            Consumer                        Business                                Adjustments(1)                                  AT&T                                                                Consumer                        Business                                Adjustments(1)                                    AT&T
                                                                                     Mobility                                                              Solutions                                                                                                                                                         Mobility                                                              Mobility                                                              Solutions                                                                                                                                                           Mobility
-------------------------------- -------------------- -------------------- --------------------------  -------------------- -------------------- --------------------------  -------------------- -------------------- -----------------------------------------------                                             --------------------------                                            --------------------------  -------------------- -------------------- --------------------------  -------------------- -------------------- -----------------------------------------------                                             ------------------------------
Operating Revenues                                                                                                                                                                                                                                                                                                                                                          
   Wireless service                                                                           $ 13,137                                                              $ 15,935                                                              $       -                                                                                   $ 29,072                                                              $ 13,891                                                              $ 15,818                                                              $       -                                                                                   $     29,709
  Fixed strategic services                                                                           -                                                                 6,002                                                                 (6,002 )                                                                                        -                                                                     -                                                                 5,556                                                                 (5,556 )                                                                                            -
  Legacy voice and data services                                                                     -                                                                 7,138                                                                 (7,138 )                                                                                        -                                                                     -                                                                 8,535                                                                 (8,535 )                                                                                            -
  Other services and equipment                                                                       -                                                                 1,661                                                                 (1,661 )                                                                                        -                                                                     -                                                                 1,733                                                                 (1,733 )                                                                                            -
   Wireless equipment                   2,394        3,219             -                                                5,613                                              2,623        3,546             -                                                    6,169
-------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------                                           -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ----------
Total Operating Revenues               15,531       33,955       (14,801 )                                                                34,685                                             16,514       35,188       (15,824 )                                                                    35,878
-------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------                                           -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Operating Expenses
   Operations and support                                                                        9,048                                                                20,489                                                                 (9,342 )                                                                                   20,195                                                                 9,592                                                                21,659                                                                (10,126 )                                                                                       21,125
EBITDA                                                                                           6,483                                                                13,466                                                                 (5,459 )                                                                                   14,490                                                                 6,922                                                                13,529                                                                 (5,698 )                                                                                       14,753
   Depreciation and amortization        1,744        4,647        (2,402 )                                                                 3,989                                              1,854        5,029        (2,746 )                                                                     4,137
-------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------                                           -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ----------
Total Operating Expenses               10,792       25,136       (11,744 )                                                                24,184                                             11,446       26,688       (12,872 )                                                                    25,262
-------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ------                                           -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- --------------------                                           -------------------- ----------
Operating Income                                        $  4,739                        $  8,819                        $  (3,057 )                                           $ 10,501                        $  5,068                        $  8,500                        $  (2,952 )                                           $     10,616
-------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------------- ----------
(1)Non-wireless (fixed) operations reported in Business
Solutions segment.
 

Supplemental International

We provide a supplemental presentation of the Latin America and Mexico Wireless operations within our International segment. The following table presents a reconciliation of our International segment.

 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     Supplemental International
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                  Three Months Ended
                                                                                                                                                                              June 30, 2017                                                                                                                                                                                                       June 30, 2016
                                                                             ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                            Latin America                               Mexico                                           International                                                                   Latin America                               Mexico                                           International
---------------------------------- -------------------- -------------------- --------------------------  -------------------- -------------------- --------------------------------------------                                             ---------------------------------------------                                             --------------------------  -------------------- -------------------- --------------------------------------------                                             ----------------------------------------------
Operating Revenues                                                                                                                                                                                                                                                                                                             
   Video service                                                                                $  1,361                                                              $    -                                                                                   $ 1,361                                                                                   $  1,222                                                              $    -                                                                                   $  1,222
   Wireless service                                                                                    -                                                                 535                                                                                       535                                                                                          -                                                                 489                                                                                        489
   Wireless equipment                         -        130                                                 130                                                    -        117                                                  117  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
Total Operating Revenues                  1,361        665                                               2,026                                                1,222        606                                                1,828  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Operating Expenses
   Operations and support                                                                            998                                                                 774                                                                                     1,772                                                                                        978                                                                 745                                                                                      1,723
   Depreciation and amortization            222         89                                                 311                                                  212         86                                                  298  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
Total Operating Expenses                  1,220        863                                               2,083                                                1,190        831                                                2,021  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
Operating Income                            141       (198 )                                                                  (57 )                                                                    32       (225 )                                                                  (193 )
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
Equity in Net Income of Affiliates           25          -                                                  25                                                    9          -                                                    9  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ---- --------------------                                           -------------------- ------ --------------------
Segment Contribution                                      $    166                        $ (198 )                                           $   (32 )                                           $     41                        $ (225 )                                           $   (184 )
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ---- -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                     Supplemental International
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                    Six Months Ended
                                                                                                                                                                               June 30, 2017                                                                                                                                                                                                       June 30, 2016
                                                                             ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                            Latin America                                Mexico                                           International                                                                   Latin America                                Mexico                                           International
---------------------------------- -------------------- -------------------- ------------------------------------------------ -------------------- ------------------------------------------------                                          ------------------------------------------------                                          ------------------------------------------------ -------------------- ------------------------------------------------                                          -------------------------------------------------
Operating Revenues                                                                                                                                                                                                                                                                                                              
   Video service                                                                                $  2,702                                                              $     -                                                                                   $ 2,702                                                                                   $  2,352                                                              $     -                                                                                   $  2,352
   Wireless service                                                                                    -                                                                1,010                                                                                     1,010                                                                                          -                                                                  944                                                                                        944
   Wireless equipment                         -         243                                                 243                                                    -         199                                                  199  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
Total Operating Revenues                  2,702       1,253                                               3,955                                                2,352       1,143                                                3,495  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Operating Expenses
   Operations and support                                                                          2,048                                                                1,483                                                                                     3,531                                                                                      1,859                                                                1,452                                                                                      3,311
   Depreciation and amortization            436         165                                                 601                                                  408         167                                                  575  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
Total Operating Expenses                  2,484       1,648                                               4,132                                                2,267       1,619                                                3,886  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
Operating Income                            218        (395 )                                                                 (177 )                                                                    85        (476 )                                                                  (391 )
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
Equity in Net Income of Affiliates           45           -                                                  45                                                   23           -                                                   23  
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ----- --------------------                                           -------------------- ------ -------------------- -------------------- -------------------- ----- --------------------                                           -------------------- ------ --------------------
Segment Contribution                                      $    263                        $  (395 )                                           $  (132 )                                           $    108                        $  (476 )                                           $   (368 )
---------------------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- ----- -------------------- -------------------- -------------------- -------------------- ------ --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170725006428r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170725006428/en/

SOURCE: AT&T Inc.

AT&T Global Media Relations 
Fletcher Cook, 214-757-7629 
fletcher.cook@att.com 
or 
Eric Ryan, 929-273-8434 
eric.ryan.1@att.com


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