Form 8-K AT&T INC. For: Jul 22

July 22, 2021 6:34 AM EDT

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AT&T Reports Second-Quarter Results

Updates full-year guidance for consolidated revenue,
wireless service revenue, adjusted EPS and free cash flow

Continued wireless, fiber and HBO Max subscriber gains and strong cash flows

Second-Quarter Consolidated Results
Consolidated revenues of $44.0 billion, up 7.6%
Diluted EPS of $0.21 compared to $0.17 in the year-ago quarter, up 23.5%
Adjusted EPS of $0.89 compared to $0.83 in the year-ago quarter, up 7.2%
Cash from operations of $10.9 billion
Capital expenditures of $4.0 billion; gross capital investment1 of $5.3 billion and cash content spend of $5.3 billion
Free cash flow2 of $7.0 billion; total dividend payout ratio of 55%3

Note: AT&T’s second-quarter earnings conference call will be webcast at 8:30 a.m. ET on Thursday, July 22, 2021. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com/.

DALLAS, July 22, 2021 AT&T Inc. (NYSE:T) reported second-quarter results that showed continuing customer growth in wireless, fiber and HBO Max. The company also reported strong cash flows.

“We’re pleased with our performance and our momentum is strong,” said John Stankey, AT&T CEO. “For the fourth consecutive quarter, we saw good subscriber growth across wireless, fiber and HBO Max. Mobility delivered strong service revenue, EBITDA and postpaid phone growth. Our fiber business, which leads on customer satisfaction, grew subscribers and penetration. HBO Max had another strong quarter and is ahead of plan to be a leading direct-to-consumer streaming platform, with both subscriber- and ad-supported choices. As a result, we’re raising our global HBO Max year-end forecast to 70 million to 73 million subscribers. Also, we’re updating full-year guidance for consolidated revenue, wireless service revenue, adjusted EPS and free cash flow.”





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Second-Quarter Highlights

Communications
Mobility:
789,000 postpaid phone net adds
1,156,000 postpaid net adds
174,000 prepaid phone net adds
Postpaid phone churn of 0.69%, equaling lowest churn ever
Revenues up 10.4%; service revenues up 5.0%; equipment revenues up 31.9%
Operating income of $6.0 billion, up 3.4% year over year; EBITDA4 up 2.7%
Operating income margin of 31.7%; EBITDA service margin5 55.9%

Consumer Wireline:
246,000 AT&T Fiber net adds; penetration more than 36%
Revenues up 2.9%; broadband revenues up 8.3% with ARPU growth of 6.1%

WarnerMedia
2.8 million total domestic HBO Max and HBO subscriber6 net adds; total domestic subscribers of 47.0 million, up 10.7 million in past year; and 67.5 million7 globally, up 12.0 million in past year
Launched ad-supported HBO Max and international offerings
Domestic HBO Max and HBO ARPU8 of $11.90
Direct-to-Consumer subscription revenues up nearly 40%
Now expect 70-73 million global HBO Max/HBO subscribers by end of year

Consolidated Financial Results
(Video results are now included in Corporate & Other. Additional information about the Video business is provided as part of the earnings material on the company’s Investor Relations website.)

Consolidated revenues for the second quarter totaled $44.0 billion versus $41.0 billion in the year-ago quarter, up 7.6% reflecting partial recovery from the prior-year impacts of COVID-19. Higher WarnerMedia, Mobility, Mexico, and Consumer Wireline revenues more than offset declines in domestic video and Business Wireline. Additionally, consolidated revenues were impacted by divestitures of previously held-for-sale businesses, including the fourth-quarter 2020 sale of our wireless and wireline operations in Puerto Rico and the U.S. Virgin Islands.





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Operating expenses were $40.8 billion versus $37.4 billion in the year-ago quarter. Expenses increased due to $4.6 billion in impairments at Vrio compared to $2.2 billion in the prior year, higher domestic wireless equipment costs, higher sports-related programming costs, and higher direct-to-consumer programming and marketing costs. These increases were partially offset by severance charges in the prior year quarter and lower video costs in the current year. Additionally, depreciation and amortization expense was $1.5 billion lower year over year, largely due to the impairments of long-lived assets taken in the fourth quarter of 2020 and ceasing depreciation and amortization on the held-for-sale video assets.

Operating income was $3.3 billion versus $3.5 billion in the year-ago quarter due to higher impairments at Vrio and higher programming costs from the return of sports, partially offset by the impacts of higher revenues, lower depreciation and amortization expense, and prior-year severance charges. When adjusting for the non-cash Vrio impairments, merger-amortization costs and other items, operating income was $8.9 billion versus $9.0 billion in the year-ago quarter.

Second-quarter net income attributable to common stock was $1.5 billion, or $0.21 per diluted common share, versus $1.2 billion, or $0.17 per diluted common share in the year-ago quarter. Adjusting for $0.68, which includes the non-cash Vrio impairments, merger-amortization costs, an actuarial loss on benefit plans and other items, earnings per diluted common share was $0.89. This compares to an adjusted earnings per diluted common share of $0.83 in the year-ago quarter. Items affecting year over year comparability include about $200 million of pretax gains, principally from mark-to-market gains on benefit-plan investments.

Cash from operating activities was $10.9 billion, down $1.1 billion year over year, with capital expenditures of $4.0 billion and content spend of $5.3 billion. Gross capital investment totaled $5.3 billion, which includes $1.3 billion of cash payments for vendor financing. Free cash flow was $7.0 billion for the quarter. Net debt decreased by $0.9 billion sequentially, and net debt-to-adjusted EBITDA at the end of the second quarter was 3.15x.9

Communications Operational Highlights
Second-quarter revenues were $28.1 billion, up 6.1% year over year due to increases in Mobility and Consumer Wireline more than offsetting a decline in Business Wireline. Operating contribution was $7.3 billion, down 2.0% year over year, with operating income margin of 26.1%, compared to 28.3% in the year-ago quarter.

Mobility
Revenues were up 10.4% year over year to $18.9 billion due to higher equipment and service revenues. Service revenues were $14.3 billion, up 5.0% year over year due to subscriber gains and the lapping of COVID-19 impacts on international roaming revenues and waived fees. Equipment revenues were $4.6 billion, up 31.9% year over year, driven by smartphone sales and a mix of higher priced postpaid smartphones and higher sales of postpaid data devices. Prior year equipment revenues included the impact of COVID-19 related store closures.



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Operating expenses were $12.9 billion, up 14.0% year over year due to higher equipment costs, higher network costs, higher content costs associated with bundling HBO Max and higher commission expense, partially offset by lower sales and support costs.
Operating income was $6.0 billion, up 3.4% year over year. Operating income margin was 31.7%, compared to 33.9% in the year-ago quarter.
EBITDA was $8.0 billion, up 2.7% year over year with EBITDA margin of 42.4%, down from 45.6% from a year ago. EBITDA service margin was 55.9%, compared to 57.2% in the year-ago quarter.
Total net adds were 5.5 million including:
1,156,000 postpaid net adds, with,
789,000 postpaid phone net adds
22,000 postpaid tablet and other branded computing device net losses
389,000 other net adds
174,000 prepaid phone net adds
Postpaid churn was 0.87% versus 1.05% in the year-ago quarter and postpaid phone churn was 0.69% versus 0.84% in the year-ago quarter, equaling our lowest quarter ever. Prepaid churn was a record low of less than 3%.
Postpaid phone-only ARPU was $54.24, down 0.4% versus the year-ago quarter, mostly due to the impacts of promotional discount amortization, but were up sequentially.

Business Wireline
Revenues were $6.1 billion, down 4.0% year over year from lower service revenues, primarily due to lower demand for legacy voice and data services in the current year and higher demand for pandemic-related connectivity in the prior-year.
Operating expenses were $5.0 billion, essentially flat year over year due to ongoing operational cost efficiencies.
Operating income was $1.1 billion, down 18.6% with operating income margin of 17.3%, compared to 20.5% in the year-ago quarter. EBITDA was $2.3 billion, down 9.6% year over year with EBITDA margin of 38.7%, compared to 41.1% in the year-ago quarter.
More than 650,000 U.S. business buildings are lit with fiber from AT&T, enabling high-speed fiber connections to more than 2.5 million U.S. business customer locations. Nationwide, more than 9.0 million business customer locations are on or within 1,000 feet of our fiber.10

Consumer Wireline
Revenues were $3.1 billion, up 2.9% year over year due to gains in broadband more than offsetting declines in legacy voice and data services and other services. Broadband revenues increased 8.3%, which reflects fiber subscriber growth and higher ARPU resulting from increases in fiber customers and pricing.
Operating expenses were $2.9 billion, up 7.3% year over year largely driven by higher HBO Max bundling costs, customer support costs and depreciation. These increases were partially offset by lower amortization of deferred customer acquisition costs.



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Operating income was $288 million, down 26.7% year over year due to higher operating expenses. Operating income margin was 9.2%, compared to 12.9% in the year-ago quarter.
EBITDA was $1.1 billion, down 5.9% year over year due to declines in higher-margin legacy voice and data services with EBITDA margin of 33.7%, compared to 36.8% in the year-ago quarter.
Total broadband and DSL subscriber net adds were 28,000, reflecting growth in fiber subscribers offsetting losses in slower-speed services. AT&T Fiber net adds were 246,000. AT&T Fiber is marketed to nearly 15 million customer locations.

WarnerMedia Operational Highlights

Revenues for the second quarter were $8.8 billion, up 30.7% versus the year-ago quarter, reflecting the partial recovery from prior-year impacts of the pandemic and driven by higher content and other, subscription, and advertising revenues. Subscription revenues were $4.0 billion, up 21.3%, primarily reflecting 38.5% growth of Direct-to-Consumer HBO Max and HBO subscription revenues following the launch of HBO Max in the year-ago quarter. Advertising revenues were $1.7 billion, up 48.5% when compared to the prior year due to the return of the NBA and strength in news. Content and Other revenues were $3.1 billion, up 34.9%, driven by higher third-party TV production and theatrical.
Operating expenses totaled $7.1 billion, up 47.3% when compared to the second quarter of 2020, driven by higher film and programming costs, including sports costs, and marketing.
Operating contribution was $1.7 billion, down 9.0%. Operating income was $1.7 billion, down 11.3% year over year, as higher revenues were more than offset by continued HBO Max investment and higher sports costs. Operating income margin was 19.2%, compared to 28.4% in the year-ago quarter.
At the end of the quarter, there were 47.0 million domestic HBO Max and HBO subscribers, up from 44.2 million at the end of the first quarter of 2021. Domestic HBO Max and HBO subscribers increased 10.7 million year over year, driven by HBO Max retail subscriber growth. Domestic subscriber ARPU8 was $11.90.

Latin America Operational Highlights

Revenues were $1.4 billion, up 16.6% year over year due to growth in Mexico. Operating contribution was ($152) million compared to ($201) million in the year-ago quarter, with operating income margin of (10.7)%, compared to (17.0)% in the prior year.

Vrio
Revenues were $749 million, essentially stable year over year reflecting pandemic pressures. Operating loss was ($25) million compared to ($36) million in the year-ago quarter, with operating income margin of (3.3)%, compared to (4.8)% in the prior year.
Vrio subscriber net losses of 239,000 were driven primarily by economic pressures and pandemic restrictions in Brazil, and pandemic impacts in other parts of the region and were partly offset by growth in over-the-top subscribers.





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Mexico
Revenues were $688 million, up 43.3% year over year due to increased growth in equipment and service revenues. Service revenues were $447 million, up 29.6% year over year, driven by favorable foreign exchange impact, growing subscriber base and growth in other services. Equipment revenues were $241 million, up 78.5% year over year, driven by higher equipment sales and foreign exchange benefits. Operating loss was ($129) million versus ($173) million in the year-ago quarter.
Total wireless net adds were 65,000 including 54,000 prepaid net adds and 20,000 postpaid net adds, partly offset by 9,000 reseller net losses.

2021 Outlook
The company has updated its 2021 guidance. On a comparative basis (excluding the impact of the DIRECTV/TPG transaction), the company now expects:
Consolidated revenue growth in the 2% to 3% range
Adjusted EPS11 to grow in the low- to mid-single digits
Gross capital investment in the $22 billion range, with capital expenditures in the $17 billion range
Free cash flow12 in the $27 billion range, with a full-year total dividend payout ratio3 in the high 50’s% range.

The company expects the DIRECTV/TPG transaction to close in the next few weeks, which will impact certain aspects of guidance. Assuming that time frame, the expected impact of the deal on the remainder of 2021 is:
Revenues to be lower by $9 billion
EBITDA to be lower by $1 billion
Free cash flow12 to be lower by about $1 billion, equating to $26 billion for the year

No change is expected to updated adjusted EPS and capital investment guidance. The company also expects adjusted equity income13 from $1.0 to $1.2 billion for the last 5 months of 2021 as a result of its 70% ownership of the new DIRECTV entity and reimbursements from transition services agreements.

The company expects proceeds of about $7.8 billion at close of the transaction, and annual cash distributions of more than $1 billion.

Post-close, the cash generated by DIRECTV will be used, among other things, for DIRECTV’s capital expenditures and working capital needs, debt financing obligations, cash coupon on TPG senior preferred, and tax distributions to AT&T and TPG. Excess cash will be used for debt repayment and dividend distributions.





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The post-close dividend distribution waterfall is as follows:
1.TPG senior preferred equity ($1.8 billion)
2.AT&T junior preferred equity ($4.25 billion + accrued payment-in-kind)
3.AT&T common catch-up equity ($4.2 billion)
4.Remaining dividends split 70/30 to AT&T/TPG
5.Proceeds from any future exit flow through the capital structure, including debt and dividend distribution waterfall

1Gross capital investment includes capital expenditures and cash payments for vendor financing and excludes FirstNet reimbursements. In 2Q21, gross capital investment included $1.3 billion in vendor financing payments. In 2021, vendor financing payments are expected to be in the $4 billion range and FirstNet reimbursements are expected to be about $1 billion.
2 Free cash flow is a non-GAAP financial measure that is frequently used by investors and credit rating agencies to provide relevant and useful information. Free cash flow is cash from operating activities minus capital expenditures.
3 Free cash flow total dividend payout ratio is total dividends paid divided by free cash flow. In 2Q21, total dividends paid were $3.83 billion.
4EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues.
5EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.
6Domestic HBO Max and HBO subscribers consist of U.S. accounts with access to HBO Max (including wholesale subscribers that may not have signed in) and HBO accounts, and exclude free trials and Cinemax subscribers.
7Global HBO Max and HBO subscribers consist of domestic and international HBO Max and HBO subscribers, and exclude free trials, basic and Cinemax subscribers.
8Domestic subscriber ARPU is defined as U.S. HBO Max and HBO subscriber revenues during the period divided by average domestic HBO Max and HBO subscribers during the period, excluding HBO commercial revenues and subscribers.
9 Net Debt to adjusted EBITDA ratios are non-GAAP financial measures that are frequently used by investors and credit rating agencies to provide relevant and useful information. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt of $167.9 billion (Total Debt of $179.8 billion at June 30, 2021 less Cash and Cash Equivalents of $11.9 billion) by the sum of the most recent four quarters of Adjusted EBITDA of $53.4 billion ($13.3 billion for September 30, 2020; $12.9 billion for December 31, 2020; $13.6 billion for March 31, 2021; and $13.6 billion for June 30, 2021).
10 The more than 2.5 million U.S. business customer locations are included within the 9.0+ million U.S. business customer locations on or within 1,000 feet of our fiber.
11 The company expects adjustments to 2021 reported diluted EPS to include merger-related amortization in the range of $4.3 billion and other adjustments, a non-cash mark-to-market benefit plan gain/loss, and other items. The company expects the mark-to-market adjustment, which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our 2021 EPS depends on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between these projected non-GAAP metrics and the reported GAAP metrics without unreasonable effort.
12Free cash flow is cash from operating activities minus capital expenditures. Due to high variability and difficulty in predicting items that impact cash from operating activities and capital expenditures, the company is not able to provide a reconciliation between projected free cash flow and the most comparable GAAP metric without unreasonable effort.
13Adjusted equity income is calculated by excluding from equity in net income (loss) of affiliates, AT&T’s proportionate share of the noncash depreciation and amortization of fair value accretion expected to result from DIRECTV’s revaluation of assets and purchase price allocation.






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*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. Consumers and businesses have more than 225 million monthly subscriptions to our services. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across mobile and broadband. Plus, it serves high-speed, highly secure connectivity and smart solutions to nearly 3 million business customers. WarnerMedia is a leading media and entertainment company that creates and distributes premium and popular content to global audiences through its consumer brands, including: HBO, HBO Max, Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line, Cartoon Network, Adult Swim and Turner Classic Movies. Xandr, now part of WarnerMedia, provides marketers with innovative and relevant advertising solutions for consumers around premium video content and digital advertising through its platform. AT&T Latin America provides pay-TV services across 10 countries and territories in Latin America and the Caribbean and wireless services to consumers and businesses in Mexico.

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 is available at about.att.com. © 2021 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.

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.



For more information, contact:
Fletcher Cook
AT&T Inc.
Phone: (214) 912-8541
Email: fletcher.cook@att.com

Daphne Avila
AT&T Inc.
Phone: (972) 266-3866
Email: daphne.avila@att.com


AT&T Inc.   
Financial Data   
Consolidated Statements of Income
Dollars in millions except per share amounts
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Service$38,956 $37,051 5.1 %$77,460 $75,934 2.0 %
Equipment5,089 3,899 30.5 %10,524 7,795 35.0 %
Total Operating Revenues44,045 40,950 7.6 %87,984 83,729 5.1 %
Operating Expenses
Cost of revenues
Equipment5,341 3,978 34.3 %10,897 8,070 35.0 %
Broadcast, programming and operations7,603 5,889 29.1 %15,141 12,643 19.8 %
Other cost of revenues (exclusive of
depreciation and amortization shown
separately below)
8,155 8,116 0.5 %16,148 16,458 (1.9)%
Selling, general and administrative9,361 9,831 (4.8)%18,743 18,591 0.8 %
Asset impairments and abandonments4,555 2,319 96.4 %4,555 2,442 86.5 %
Depreciation and amortization5,761 7,285 (20.9)%11,570 14,507 (20.2)%
Total Operating Expenses40,776 37,418 9.0 %77,054 72,711 6.0 %
Operating Income3,269 3,532 (7.4)%10,930 11,018 (0.8)%
Interest Expense1,684 2,041 (17.5)%3,554 4,059 (12.4)%
Equity in Net Income (Loss) of Affiliates41 (10)— %93 (16)— %
Other Income (Expense) — Net999 1,017 (1.8)%5,220 1,820 — %
Income Before Income Taxes2,625 2,498 5.1 %12,689 8,763 44.8 %
Income Tax Expense751 935 (19.7)%2,873 2,237 28.4 %
Net Income1,874 1,563 19.9 %9,816 6,526 50.4 %
Less: Net Income Attributable to
   Noncontrolling Interest
(304)(282)(7.8)%(696)(635)(9.6)%
Net Income Attributable to AT&T$1,570 $1,281 22.6 %$9,120 $5,891 54.8 %
Less: Preferred Stock Dividends(56)(52)(7.7)%(106)(84)(26.2)%
Net Income Attributable
   to Common Stock
$1,514 $1,229 23.2 %$9,014 $5,807 55.2 %
Basic Earnings Per Share Attributable
   to Common Stock
$0.21 $0.17 23.5 %$1.25 $0.81 54.3 %
Weighted Average Common
   Shares Outstanding (000,000)
7,168 7,145 0.3 %7,165 7,166 — %
Diluted Earnings Per Share Attributable
   to Common Stock
$0.21 $0.17 23.5 %$1.25 $0.81 54.3 %
Weighted Average Common
   Shares Outstanding with Dilution (000,000)
7,200 7,170 0.4 %7,194 7,192 — %
1


AT&T Inc.  
Financial Data  
Consolidated Balance Sheets
Dollars in millions
UnauditedJun. 30,Dec. 31,
20212020
Assets
Current Assets
Cash and cash equivalents$11,869 $9,740 
Accounts receivable – net of related allowances for credit loss of $843 and $1,22115,771 20,215 
Inventories2,810 3,695 
Prepaid and other current assets32,419 18,358 
Total current assets62,869 52,008 
Noncurrent Inventories and Theatrical Film and Television Production Costs16,271 14,752 
Property, Plant and Equipment – Net123,591 127,315 
Goodwill134,626 135,259 
Licenses – Net87,962 93,840 
Trademarks and Trade Names – Net22,276 23,297 
Distribution Networks – Net12,875 13,793 
Other Intangible Assets – Net12,736 15,386 
Investments in and Advances to Equity Affiliates1,853 1,780 
Operating Lease Right-Of-Use Assets24,390 24,714 
Deposits on Wireless Licenses23,663 — 
Other Assets21,598 23,617 
Total Assets$544,710 $525,761 
Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year$24,016 $3,470 
Accounts payable and accrued liabilities49,429 50,051 
Advanced billings and customer deposits4,932 6,176 
Dividends payable3,749 3,741 
Total current liabilities82,126 63,438 
Long-Term Debt155,767 153,775 
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes61,732 60,472 
Postemployment benefit obligation14,876 18,276 
Operating lease liabilities21,637 22,202 
Other noncurrent liabilities28,726 28,358 
Total deferred credits and other noncurrent liabilities126,971 129,308 
Stockholders’ Equity
Preferred stock — 
Common stock7,621 7,621 
Additional paid-in capital129,941 130,175 
Retained earnings38,947 37,457 
Treasury stock(17,332)(17,910)
Accumulated other comprehensive income3,119 4,330 
Noncontrolling interest17,550 17,567 
Total stockholders’ equity179,846 179,240 
Total Liabilities and Stockholders’ Equity$544,710 $525,761 
2


AT&T Inc.  
Financial Data  
Consolidated Statements of Cash Flows
Dollars in millions
UnauditedSix-Month Period
20212020
Operating Activities
Net income$9,816 $6,526 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization11,570 14,507 
Amortization of film and television costs6,256 3,985 
Undistributed earnings from investments in equity affiliates15 64 
Provision for uncollectible accounts596 1,199 
Deferred income tax expense1,772 653 
Net (gain) loss on investments, net of impairments(237)(705)
Pension and postretirement benefit expense (credit)(1,899)(1,495)
Actuarial (gain) loss on pension and postretirement benefits(2,647)— 
Asset impairments and abandonments4,555 2,442 
Changes in operating assets and liabilities:
Receivables1,415 2,522 
Other current assets, inventories and theatrical film and television production costs(6,985)(5,592)
Accounts payable and other accrued liabilities(4,298)(3,847)
Equipment installment receivables and related sales811 226 
Deferred customer contract acquisition and fulfillment costs410 322 
Postretirement claims and contributions(207)(228)
Other - net(106)346 
Total adjustments11,021 14,399 
Net Cash Provided by Operating Activities20,837 20,925 
Investing Activities
Capital expenditures(7,992)(9,432)
Acquisitions, net of cash acquired(23,169)(1,174)
Dispositions635 347 
Other - net(105)(19)
Net Cash Used in Investing Activities(30,631)(10,278)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less76 498 
Issuance of other short-term borrowings16,440 8,440 
Repayment of other short-term borrowings(857)(5,975)
Issuance of long-term debt9,097 21,060 
Repayment of long-term debt(1,155)(17,284)
Payment of vendor financing(2,994)(1,354)
Issuance of preferred stock 3,869 
Purchase of treasury stock(185)(5,480)
Issuance of treasury stock85 84 
Dividends paid(7,571)(7,474)
Other - net(1,036)(2,295)
Net Cash Provided by (Used in) Financing Activities11,900 (5,911)
Net increase in cash and cash equivalents and restricted cash2,106 4,736 
Cash and cash equivalents and restricted cash beginning of year9,870 12,295 
Cash and Cash Equivalents and Restricted Cash End of Period$11,976 $17,031 

3


AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Capital expenditures
Purchase of property and equipment$3,926 $4,434 (11.5)%$7,898 $9,372 (15.7)%
Interest during construction - capital expenditures33 32 3.1 %94 60 56.7 %
Total Capital Expenditures$3,959 $4,466 (11.4)%$7,992 $9,432 (15.3)%
Acquisition, net of cash acquired
Business acquisitions$18 $125 (85.6)%$26 $128 (79.7)%
Spectrum acquisitions10 949 (98.9)%22,886 1,046 — %
Interest during construction - spectrum257 — — %257 — — %
Total Acquisitions$285 $1,074 (73.5)%$23,169 $1,174 — %
Cash Paid for Programming and Produced Film/TV Content$5,261 $2,897 81.6 %$9,769 $7,219 35.3 %
Dividends Declared per Common Share$0.52 $0.52 — %$1.04 $1.04 — %
End of Period Common Shares Outstanding
  (000,000)
7,140 7,125 0.2 %
Debt Ratio50.0 %46.6 %340  BP
Total Employees226,840 243,350 (6.8)%
4


COMMUNICATIONS SEGMENT

The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S. and businesses globally. The Communications segment contains three reporting units: Mobility, Business Wireline, and Consumer Wireline.

Results have been recast to remove the Video business, instead reporting those results in Corporate and Other.
Segment Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Segment Operating Revenues
Mobility$18,936 $17,149 10.4 %$37,970 $34,551 9.9 %
Business Wireline6,052 6,305 (4.0)%12,098 12,571 (3.8)%
Consumer Wireline3,140 3,051 2.9 %6,238 6,162 1.2 %
Total Segment Operating Revenues28,128 26,505 6.1 %56,306 53,284 5.7 %
Segment Operating Contribution
Mobility6,002 5,805 3.4 %12,004 11,593 3.5 %
Business Wireline1,050 1,290 (18.6)%2,108 2,383 (11.5)%
Consumer Wireline288 393 (26.7)%593 913 (35.0)%
Total Segment Operating Contribution$7,340 $7,488 (2.0)%$14,705 $14,889 (1.2)%


Supplementary Operating Data
Subscribers and connections in thousands
UnauditedJune 30,Percent
20212020Change
Broadband Connections
IP14,988 14,548 3.0 %
DSL493 653 (24.5)%
Total Broadband Connections15,481 15,201 1.8 %
Voice Connections
Network Access Lines6,691 7,878 (15.1)%
U-verse VoIP Connections3,559 4,058 (12.3)%
Total Retail Voice Connections10,250 11,936 (14.1)%
Second QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Broadband Net Additions
IP80 (79)— %170 (111)— %
DSL(34)(35)2.9 %(73)(77)5.2 %
Total Broadband Net Additions46 (114)— %97 (188)— %
5



Mobility

Mobility provides nationwide wireless service and equipment.
Mobility Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Service$14,346 $13,669 5.0 %$28,394 $27,637 2.7 %
Equipment4,590 3,480 31.9 %9,576 6,914 38.5 %
Total Operating Revenues18,936 17,149 10.4 %37,970 34,551 9.9 %
Operating Expenses
Operations and support10,911 9,332 16.9 %21,929 18,901 16.0 %
Depreciation and amortization2,023 2,012 0.5 %4,037 4,057 (0.5)%
Total Operating Expenses12,934 11,344 14.0 %25,966 22,958 13.1 %
Operating Income6,002 5,805 3.4 %12,004 11,593 3.5 %
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$6,002 $5,805 3.4 %$12,004 $11,593 3.5 %
Operating Income Margin31.7 %33.9 %(220) BP31.6 %33.6 %(200) BP
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedJune 30,Percent
20212020Change
Mobility Subscribers
Postpaid79,059 74,919 5.5 %
Postpaid phone65,503 62,882 4.2 %
Prepaid18,681 18,008 3.7 %
Reseller6,406 6,718 (4.6)%
Connected Devices87,500 71,762 21.9 %
Total Mobility Subscribers191,646 171,407 11.8 %
Second QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Mobility Net Additions
Postpaid Phone Net Additions789 (151)— %1,384 12 — %
Total Phone Net Additions963 (16)— %1,765 104 — %
Postpaid1,156 (154)— %1,979 (127)— %
Prepaid297 165 80.0 %576 120 — %
Reseller(125)(58)— %(193)(248)22.2 %
Connected Devices4,209 2,255 86.7 %6,726 5,773 16.5 %
Total Mobility Net Additions5,537 2,208 — %9,088 5,518 64.7 %
Postpaid Churn0.87 %1.05 %(18)BP0.90 %1.06 %(16) BP
Postpaid Phone-Only Churn0.69 %0.84 %(15)BP0.73 %0.85 %(12) BP





6



Business Wireline

Business Wireline provides advanced IP-based services, as well as traditional data services to business customers.

Results have been recast to characterize revenues as either service or equipment, consistent with the way we are managing the business unit.
Business Wireline Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Service$5,860 $6,101 (4.0)%$11,732 $12,192 (3.8)%
Equipment192 204 (5.9)%366 379 (3.4)%
Total Operating Revenues6,052 6,305 (4.0)%12,098 12,571 (3.8)%
Operating Expenses    
Operations and support3,709 3,714 (0.1)%7,419 7,601 (2.4)%
Depreciation and amortization1,293 1,301 (0.6)%2,571 2,587 (0.6)%
Total Operating Expenses5,002 5,015 (0.3)%9,990 10,188 (1.9)%
Operating Income1,050 1,290 (18.6)%2,108 2,383 (11.5)%
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$1,050 $1,290 (18.6)%$2,108 $2,383 (11.5)%
Operating Income Margin17.3 %20.5 %(320) BP17.4 %19.0 %(160) BP

7


Consumer Wireline

Consumer Wireline provides broadband, including fiber, and voice communication services primarily to residential customers.

Results have been recast to refine the allocation of shared infrastructure and deferred customer acquisition costs between Consumer Wireline and Video.
Consumer Wireline Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Broadband$2,266 $2,092 8.3 %$4,471 $4,201 6.4 %
Legacy voice and data services504 560 (10.0)%1,023 1,141 (10.3)%
Other service and equipment370 399 (7.3)%744 820 (9.3)%
Total Operating Revenues3,140 3,051 2.9 %6,238 6,162 1.2 %
Operating Expenses
Operations and support2,083 1,928 8.0 %4,114 3,807 8.1 %
Depreciation and amortization769 730 5.3 %1,531 1,442 6.2 %
Total Operating Expenses2,852 2,658 7.3 %5,645 5,249 7.5 %
Operating Income288 393 (26.7)%593 913 (35.0)%
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$288 $393 (26.7)%$593 $913 (35.0)%
Operating Income Margin9.2 %12.9 %(370) BP9.5 %14.8 %(530) BP
    
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedJune 30,Percent
20212020Change
Broadband Connections
Total Broadband and DSL Connections14,174 13,944 1.6 %
Fiber Broadband Connections5,432 4,321 25.7 %
Voice Connections
Retail Consumer Switched Access Lines2,631 3,096 (15.0)%
U-verse Consumer VoIP Connections2,965 3,480 (14.8)%
Total Retail Consumer Voice Connections5,596 6,576 (14.9)%
Second QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Broadband Net Additions
Total Broadband and DSL Net Additions28 (102)— %74 (175)— %
Fiber Broadband Net Additions246 225 9.3 %481 434 10.8 %
8


Business Solutions

As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers.

Results have been recast to conform to the current period's classification of revenues.
Business Solutions Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Wireless service$2,025 $1,885 7.4 %$3,994 $3,834 4.2 %
Wireline service5,860 6,101 (4.0)%11,732 12,192 (3.8)%
Wireless equipment781 585 33.5 %1,571 1,295 21.3 %
Wireline equipment192 204 (5.9)%366 379 (3.4)%
Total Operating Revenues8,858 8,775 0.9 %17,663 17,700 (0.2)%
    
Operating Expenses    
Operations and support5,663 5,360 5.7 %11,212 11,006 1.9 %
Depreciation and amortization1,638 1,621 1.0 %3,252 3,230 0.7 %
Total Operating Expenses7,301 6,981 4.6 %14,464 14,236 1.6 %
Operating Income1,557 1,794 (13.2)%3,199 3,464 (7.7)%
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$1,557 $1,794 (13.2)%$3,199 $3,464 (7.7)%
Operating Income Margin17.6 %20.4 %(280) BP18.1 %19.6 %(150) BP



9


WARNERMEDIA SEGMENT

The WarnerMedia segment develops, produces and distributes feature films, television, gaming and other content in various physical and digital formats globally. WarnerMedia content is distributed through basic networks, Direct-to-Consumer (DTC) or theatrical, TV content and games licensing. Segment results also include Xandr advertising and Otter Media Holdings. Additional information is provided as part of the earnings material on the company’s Investor Relations website.
Segment Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Segment Operating Revenues
Subscription$3,961 $3,265 21.3 %$7,791 $6,665 16.9 %
Content and other3,091 2,292 34.9 %6,050 5,192 16.5 %
Advertising1,739 1,171 48.5 %3,476 2,636 31.9 %
Total Segment Operating Revenues8,791 6,728 30.7 %17,317 14,493 19.5 %
Direct Costs
Programming4,154 2,375 74.9 %7,928 5,457 45.3 %
Marketing983 545 80.4 %1,833 1,095 67.4 %
Other854 820 4.1 %1,667 1,595 4.5 %
General and administrative943 916 2.9 %1,909 2,114 (9.7)%
Depreciation and amortization165 164 0.6 %328 325 0.9 %
Total Operating Expenses7,099 4,820 47.3 %13,665 10,586 29.1 %
Operating Income1,692 1,908 (11.3)%3,652 3,907 (6.5)%
Equity in Net Income (Loss) of Affiliates47 — %117 19 — %
Total Segment Operating Contribution$1,739 $1,912 (9.0)%$3,769 $3,926 (4.0)%

10



LATIN AMERICA SEGMENT

The Latin America segment provides entertainment and wireless service outside of the U.S. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. The Latin America segment contains two business units: Vrio and Mexico.
Segment Results
Dollars in millions  
UnauditedSecond QuarterPercentSix-Month PeriodPercent
 20212020Change20212020Change
Segment Operating Revenues   
Vrio$749 $752 (0.4)%$1,492 $1,639 (9.0)%
Mexico688 480 43.3 %1,319 1,183 11.5 %
Total Segment Operating Revenues1,437 1,232 16.6 %2,811 2,822 (0.4)%
Segment Operating Contribution
Vrio(23)(28)17.9 %(62)(67)7.5 %
Mexico(129)(173)25.4 %(263)(318)17.3 %
Total Segment Operating Contribution$(152)$(201)24.4 %$(325)$(385)15.6 %

Vrio

Vrio provides entertainment services to customers utilizing satellite technology in Latin America and the Caribbean.
Vrio Results
Dollars in millions  
UnauditedSecond QuarterPercentSix-Month PeriodPercent
 20212020Change20212020Change
Operating Revenues$749 $752 (0.4)%$1,492 $1,639 (9.0)%
Operating Expenses
Operations and support660 661 (0.2)%1,321 1,444 (8.5)%
Depreciation and amortization114 127 (10.2)%231 274 (15.7)%
Total Operating Expenses774 788 (1.8)%1,552 1,718 (9.7)%
Operating Income (Loss)(25)(36)30.6 %(60)(79)24.1 %
Equity in Net Income (Loss) of Affiliates2 (75.0)%(2)12 — %
Operating Contribution$(23)$(28)17.9 %$(62)$(67)7.5 %
Operating Income Margin(3.3)%(4.8)%150  BP(4.0)%(4.8)%80  BP
Supplementary Operating Data
Subscribers and connections in thousands  
UnauditedJune 30,Percent
 20212020Change
Vrio Video Subscribers10,320 10,664 (3.2)%
 Second QuarterPercentSix-Month PeriodPercent
 20212020Change20212020Change
Vrio Video Net Additions(239)(312)23.4 %(622)(426)(46.0)%


11


Mexico

Mexico provides wireless services and equipment to customers in Mexico.
Mexico Results
Dollars in millions  
UnauditedSecond QuarterPercentSix-Month PeriodPercent
 20212020Change20212020Change
Operating Revenues    
Wireless service$447 $345 29.6 %$886 $812 9.1 %
Wireless equipment241 135 78.5 %433 371 16.7 %
Total Operating Revenues688 480 43.3 %1,319 1,183 11.5 %
Operating Expenses
Operations and support667 538 24.0 %1,287 1,252 2.8 %
Depreciation and amortization150 115 30.4 %295 249 18.5 %
Total Operating Expenses817 653 25.1 %1,582 1,501 5.4 %
Operating Income (Loss)(129)(173)25.4 %(263)(318)17.3 %
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$(129)$(173)25.4 %$(263)$(318)17.3 %
Operating Income Margin(18.8)%(36.0)%1,720  BP(19.9)%(26.9)%700  BP
Supplementary Operating Data
Subscribers and connections in thousands  
UnauditedJune 30,Percent
 20212020Change
Mexico Wireless Subscribers
Postpaid4,745 4,771 (0.5)%
Prepaid13,810 12,777 8.1 %
Reseller491 425 15.5 %
Total Mexico Wireless Subscribers19,046 17,973 6.0 %
 Second QuarterPercentSix-Month PeriodPercent
 20212020Change20212020Change
Mexico Wireless Net Additions
Postpaid20 (191)— %49 (332)— %
Prepaid54 (915)— %52 (807)— %
Reseller(9)21 — %2 53 (96.2)%
Total Mexico Wireless Net Additions65 (1,085)— %103 (1,086)— %
   

12


Video

As a supplemental presentation, we are providing a view of our Video business that is included in Corporate and Other. Video provides video, including over-the-top (OTT) services and also sells advertising on video distribution platforms.

Results have been recast to refine the allocation of shared infrastructure and deferred customer acquisition costs between Video and Consumer Wireline.
Video Results
Dollars in millions
UnauditedSecond QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Operating Revenues
Service$6,607 $6,979 (5.3)%$13,291 $14,376 (7.5)%
Equipment32 42 (23.8)%73 52 40.4 %
Total Operating Revenues6,639 7,021 (5.4)%13,364 14,428 (7.4)%
Operating Expenses 
Operations and support5,275 5,809 (9.2)%10,935 11,829 (7.6)%
Depreciation and amortization1
148 593 (75.0)%312 1,184 (73.6)%
Total Operating Expenses5,423 6,402 (15.3)%11,247 13,013 (13.6)%
Operating Income1,216 619 96.4 %2,117 1,415 49.6 %
Equity in Net Income (Loss) of Affiliates — — % — — %
Operating Contribution$1,216 $619 96.4 %$2,117 $1,415 49.6 %
Operating Income Margin18.3 %8.8 %950  BP15.8 %9.8 %600  BP
1Includes depreciation on assets that support AT&T U-verse products that provide both video and broadband services to customers over a shared network infrastructure.
Supplementary Operating Data
Subscribers and connections in thousands
UnauditedJune 30,Percent
20212020Change
Premium TV Connections15,412 17,712 (13.0)%
Second QuarterPercentSix-Month PeriodPercent
20212020Change20212020Change
Premium TV Net Additions(473)(887)46.7 %(1,093)(1,784)38.7 %
13


SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
Dollars in millions
Unaudited
June 30, 2021
RevenuesOperations
and Support
Expenses
EBITDADepreciation
and
Amortization
Operating
Income (Loss)
Equity in Net
Income (Loss) of
Affiliates
Segment
Contribution
Communications
Mobility$18,936 $10,911 $8,025 $2,023 $6,002 $ $6,002 
Business Wireline6,052 3,709 2,343 1,293 1,050  1,050 
Consumer Wireline3,140 2,083 1,057 769 288  288 
Total Communications28,128 16,703 11,425 4,085 7,340  7,340 
WarnerMedia8,791 6,934 1,857 165 1,692 47 1,739 
Latin America
Vrio749 660 89 114 (25)2 (23)
Mexico688 667 21 150 (129) (129)
Total Latin America1,437 1,327 110 264 (154)2 (152)
Segment Total38,356 24,964 13,392 4,514 8,878 $49 $8,927 
Corporate and Other
Corporate361 1,160 (799)30 (829)
Video6,639 5,275 1,364 148 1,216 
Acquisition-related items   1,069 (1,069)
Certain significant items 4,555 (4,555) (4,555)
Eliminations and
consolidations
(1,311)(939)(372) (372)
AT&T Inc.$44,045 $35,015 $9,030 $5,761 $3,269 
14


Three Months Ended
Dollars in millions
Unaudited
June 30, 2020
RevenuesOperations and Support ExpensesEBITDADepreciation and AmortizationOperating Income (Loss)Equity in Net
Income (Loss) of
Affiliates
Segment Contribution
Communications
Mobility$17,149 $9,332 $7,817 $2,012 $5,805 $— $5,805 
Business Wireline6,305 3,714 2,591 1,301 1,290 — 1,290 
Consumer Wireline3,051 1,928 1,123 730 393 — 393 
Total Communications26,505 14,974 11,531 4,043 7,488 — 7,488 
WarnerMedia6,728 4,656 2,072 164 1,908 1,912 
Latin America
Vrio752 661 91 127 (36)(28)
Mexico480 538 (58)115 (173)— (173)
Total Latin America1,232 1,199 33 242 (209)(201)
Segment Total34,465 20,829 13,636 4,449 9,187 $12 $