AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 18/10/2026
Moat56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · Exclusive spectrum rights and established domestic renewal practices demonstrate a legal entry barrier. Multiple competing providers limit its breadth; shared assets and the lowest-cost strategy do not prove comparative cost superiority.
durability · 3/4 · Generally 10-year licenses with routine nominal-cost domestic renewals support strong persistence of the underlying rights. The accounting useful-life assessment is management judgment, and alternative technologies can erode economic value despite continued ownership.
customer dependency · 1/4 · Service commitments attached to handset credits provide temporary friction, but month-to-month arrangements and increased churn when financing periods ended demonstrate fragile customer captivity. Connectivity demand does not establish dependence on AT&T specifically.
erosion resilience · 2/4 · Wireless and fiber growth and stronger Advanced Connectivity results show adaptation. Promotional concessions, mixed churn and substantial realized legacy losses demonstrate continuing erosion elsewhere; acquired customers contribute to fiber growth.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Pricing actions raised ARPU in 2024 and contributed to 2025 ARPU and 2026 wireless revenue. Promotional activity largely offset 2025 pricing benefits and continued to offset gains in 2026, demonstrating limited rather than strong pricing power.
retention · 2/4 · Churn improved in 2024, worsened in 2025, and was lower in the second quarter but slightly higher over the first half of 2026. Subscriber additions provide indirect evidence of demand, not retention rates; financing expirations reveal temporary switching friction.
margin resilience · 2/4 · Advanced Connectivity operating and EBITDA margins improved in first-half 2026, but Legacy margins contracted sharply and Latin America weakened. Higher-than-planned acquisition costs also pressured 2025 margins. Shared depreciation allocation limits segment interpretation; margin gains alone do not demonstrate pricing power.
contractual freedom · 2/4 · Repeated implemented pricing actions demonstrate some practical ability to change prices. Fixed-term commitments coexist with cancellable monthly arrangements, while promotional commitments constrain realized consideration. Full repricing clauses and regulatory pricing restrictions are not supplied.
Predictability82
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 50.00
- Revenue growth volatility (pp)
- 12.96
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.06
Financial strength13
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 14.28
- netDebtEbitGrade
- 2.44
- interestCoverageGrade
- 23.19
- currentRatioGrade
- 12.49
- Debt / FCF (x)
- 7.00
- Net debt / operating income (x)
- 4.88
- Interest coverage (x)
- 3.55
- Current ratio (x)
- 0.91
Capital allocation84
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 9.16
- 3-year average dilution (%)
- 0.01
- 3-year average SBC / revenue (%)
- 0.41
- cashConversionGrade
- 100.00
Management56
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 2/4 · 2025 capital investment was essentially stable including vendor financing. First-half 2026 operating cash generation remained substantial, but declined while capital spending, acquisitions, buybacks and net debt issuance increased. This demonstrates active deployment with financing trade-offs; superior acquisition returns are not established.
incentive alignment · 2/4 · Actual short-term payouts incorporate operating income and cash flow; long-term awards emphasize performance shares and use EPS, ROIC and relative TSR. Alignment is mixed because the completed period paid 124% despite 0.6% adjusted EPS CAGR and third-quartile relative TSR. Ownership exposure and all metric adjustments are not supplied.
execution · 2/4 · Repeated fiber additions, wireless customer gains and improved 2026 Advanced Connectivity results demonstrate execution through operating outcomes. Growth cost more than planned in 2025, legacy results deteriorated, and acquisition effects qualify recent fiber growth. This assessment uses operating evidence rather than management's self-evaluation.
governance · 3/4 · Actual independent committee membership, private auditor sessions and an unqualified internal-control audit support strong oversight practices. Combined chairman and CEO roles concentrate authority, and the passages do not establish exceptional governance outcomes or complete shareholder protections.
Evidence
Wireless licenses provide us with the exclusive right to utilize certain radio frequency spectrum to provide wireless communications services.
Financial statement notes: exclusive wireless spectrum rights · Filed 09/02/2026
While wireless licenses are issued for a fixed period of time (generally 10 years), renewals of domestic wireless licenses have occurred routinely and at nominal cost.
Financial statement notes: domestic license terms and renewal history · Filed 09/02/2026
We have determined that there are currently no legal, regulatory, contractual, competitive, economic or other factors that limit the useful lives of our FCC wireless licenses.
Financial statement notes: management assessment of FCC license useful lives · Filed 09/02/2026
service areas. Our competitors include two national wireless providers; a larger number of regional providers and resellers of each of those providers’ services; and certain cable companies.
Business competition: national providers, regional providers, resellers and cable companies · Filed 09/02/2026
Broadband The desire for high-speed data on demand, including data-intensive activities, is continuing to lead customers to terminate their traditional wired or copper-based services and use our fiber or fixed wireless services or competitors’ fixed wireless, satellite and internet-based services.
Business competition: broadband substitution and alternative technologies · Filed 09/02/2026
We are one of three facilities-based providers in Mexico (retail and wholesale), with the most significant market share controlled by América Móvil.
Business competition: Mexico market structure and América Móvil · Filed 09/02/2026
Wireless service revenue increased in the second quarter and for the first six months of 2026 driven by growth in retail wireless subscribers in underpenetrated categories and converged accounts, and pricing actions that were partially offset by promotional discounts on wireless subscriber additions.
MD&A: 2026 wireless revenue growth, pricing actions and promotional discounts · Filed 22/07/2026
Postpaid churn and postpaid phone churn were higher in 2025, partially driven by an increase in our customer base that reached the end of device financing periods, which normalized in the second half of 2025.
MD&A: 2025 churn and expiration of device financing periods · Filed 09/02/2026
Phone churn was lower in the second quarter and slightly higher for the first six months of 2026, reflecting the competitive dynamics of the industry.
MD&A: second-quarter and first-half 2026 phone churn · Filed 22/07/2026
Depreciation and amortization expense increased in the second quarter and for the first six months of 2026, driven by unfavorable foreign exchange rates and spectrum renewal fees, with accelerated depreciation impacting the first three months of the year.
MD&A: Mexico depreciation and spectrum renewal fees · Filed 22/07/2026
Legacy Voice and Data We continue to lose legacy voice and data customers due to industry-wide secular declines and competitors (e.g., wireless, cable and VoIP providers) who can provide comparable services at lower prices because they are not subject to traditional telephone industry regulation (or the extent of regulation they are subject to is in dispute), utilize different technologies or promote a different business model.
Business competition: realized legacy customer losses and lower-priced comparable services · Filed 09/02/2026
Postpaid ARPU increased in 2025 reflecting pricing actions that were largely offset by increased promotional activity, growth in our converged customer relationships, and our success in attracting customers in underpenetrated segments with lower ARPUs but attractive lifetime values, such as age 55-plus in our “value customers.”
MD&A: 2025 postpaid ARPU, pricing and promotional offsets · Filed 09/02/2026
ARPU increased in 2024 and reflects pricing actions.
MD&A: 2024 ARPU increase reflecting pricing actions · Filed 12/02/2025
Postpaid churn and postpaid phone-only churn were lower in 2024.
MD&A: lower postpaid churn in 2024 · Filed 12/02/2025
Fiber revenues increased 21.4% and 21.3% in the second quarter of 2026 and for the first six months, due to growth in fiber customers, including customers of our acquired mass markets fiber business.
MD&A: 2026 fiber revenue growth including acquired customers · Filed 22/07/2026
Second Quarter Six-Month Period Percent Percent 2026 2025 Change 2026 2025 Change Advanced Connectivity Segment Operating income $ 7,345 $ 6,106 20.3 % $ 14,198 $ 12,078 17.6 % Add: Depreciation and amortization 4,687 5,035 (6.9) 9,392 10,008 (6.2) EBITDA $ 12,032 $ 11,141 8.0 % $ 23,590 $ 22,086 6.8 % Operating income margin 25.7 % 22.2 % 24.9 % 22.1 % EBITDA margin 42.0 % 40.5 % 41.3 % 40.4 % Legacy Segment Operating income $ 523 $ 959 (45.5) % $ 1,135 $ 1,978 (42.6) % Add: Depreciation and amortization — — — — — — EBITDA $ 523 $ 959 (45.5) % $ 1,135 $ 1,978 (42.6) % Operating income margin 32.0 % 43.6 % 33.4 % 43.3 % EBITDA margin 32.0 % 43.6 % 33.4 % 43.3 % Latin America Segment Operating income $ 38 $ 46 (17.4) % $ 58 $ 89 (34.8) % Add: Depreciation and amortization 189 155 21.9 389 305 27.5 EBITDA $ 227 $ 201 12.9 % $ 447 $ 394 13.5 % Operating income margin 3.1 % 4.4 % 2.4 % 4.4 % EBITDA margin 18.5 % 19.1 % 18.6 % 19.5 % 36 AT&T INC.
MD&A: Advanced Connectivity, Legacy and Latin America operating and EBITDA results · Filed 22/07/2026
LEGACY SEGMENT Second Quarter Six-Month Period 2026 2025 Percent Change 2026 2025 Percent Change Segment Operating Revenues $ 1,632 $ 2,202 (25.9) % $ 3,400 $ 4,570 (25.6) % Segment Operating Expenses Operations and support 1,109 1,243 (10.8) 2,265 2,592 (12.6) Depreciation and amortization — — — — — — Total Segment Operating Expenses 1,109 1,243 (10.8) 2,265 2,592 (12.6) Operating Income $ 523 $ 959 (45.5) % $ 1,135 $ 1,978 (42.6) % Operating revenues decreased in the second quarter and for the first six months of 2026, driven by lower demand for legacy services, which we expect to continue as we decommission our copper-based legacy network.
MD&A: realized Legacy revenue and operating income declines · Filed 22/07/2026
Some contracts have fixed terms and others are cancelable on a short-term basis (i.e., month-to-month arrangements).
Revenue recognition: fixed-term and month-to-month customer contracts · Filed 09/02/2026
Promotional equipment sales where we offer handset credits, which are allocated between equipment and service in proportion to their standalone selling prices, when customers commit to a specified service period result in additional contract assets recognized.
Revenue recognition: promotional handset credits tied to service commitments · Filed 09/02/2026
CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in millions (Unaudited) Six months ended June 30, 2026 2025 Operating Activities Income from continuing operations $ 9,257 $ 9,553 Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations: Depreciation and amortization 9,932 10,441 Provision for uncollectible accounts 1,149 1,037 Asset impairments and abandonments and restructuring 286 504 Pension and postretirement benefit expense (credit) (791) (794) Net (gain) loss on investments (170) (31) Changes in operating assets and liabilities: Receivables (418) (247) Equipment installment receivables and related sales (176) 1,115 Contract asset and cost deferral (464) (299) Inventories, prepaid and other current assets 320 (317) Accounts payable and other accrued liabilities (2,565) (4,440) Changes in income taxes 1,829 1,663 Postretirement claims and contributions (264) (103) Other - net 471 730 Total adjustments 9,139 9,259 Net Cash Provided by Operating Activities from Continuing Operations 18,396 18,812 Investing Activities Capital expenditures (10,577) (9,174) Acquisitions, net of cash acquired (2,725) (48) Dispositions 747 40 (Purchases), sales and settlements of securities - net (24) (1,084) Other - net (654) (778) Net Cash Used in Investing Activities from Continuing Operations (13,233) (11,044) Financing Activities Issuance of long-term debt 14,037 6,429 Repayment of long-term debt (5,398) (1,620) Payment of vendor financing (643) (423) Redemption of preferred stock — (2,075) Purchase of treasury stock (4,669) (1,179) Issuance of treasury stock 1 17 Issuance of preferred interests in subsidiary — 2,221 Dividends paid (3,973) (4,135) Other - net (772) 167 Net Cash Used in Financing Activities from Continuing Operations (1,417) (598) Net increase in cash and cash equivalents and restricted cash from continuing operations 3,746 7,170 Cash Flows from Discontinued Operations: Cash provided by operating activities 31 — Cash used in investing activities (4,363) — Cash used in financing activities — — Net increase (decrease) in cash and cash equivalents and restricted cash from discontinued operations (4,332) — Net increase (decrease) in cash and cash equivalents and restricted cash $ (586) $ 7,170 Cash and cash equivalents and restricted cash beginning of year 18,527 3,406 Cash and Cash Equivalents and Restricted Cash End of Period $ 17,941 $ 10,576 See Notes to Consolidated Financial Statements.
Consolidated cash flows: first-half cash generation, investment, debt issuance and shareholder distributions · Filed 22/07/2026
Capital expenditures in 2025 were $20,842, and when including $1,181 cash paid for vendor financing, capital investment was $22,023 ($32 lower than the prior year).
MD&A: 2025 capital investment including vendor financing · Filed 09/02/2026
2025 Short-Term Award Results Metric Metric Weight Attainment Payout % Compensation Adjusted Operating Income (Adj OI) 60% 104% 118% Free Cash Flow (FCF) 20% 100% 101% Strategic Component 20% N/A 105% Weighted Average Payout 112% See additional details in the section How NEOs Were Paid for Performance in 2025.
Compensation discussion: actual 2025 short-term incentive metrics and payouts · Filed 23/03/2026
Long-Term Award – Performance Share Component Results for 2023-2025 Performance Period Metric Metric Weight Attainment Payout% 3-Year Compensation Adjusted Earnings Per Share (Adj EPS) Compound Annual Growth Rate (CAGR) 50% 0.6% 128% 3-Year Average Return on Invested Capital (ROIC) 50% 9.7% 120% 3-Year Relative Total Stockholder Return (TSR) Payout Modifier +20%, 0% or -20% Quartile 3 0% Final Long-Term Payout 124% See additional detail in sections 2023-2025 Long-Term Incentive Adj EPS Growth and ROIC – Actual Performance, Attainment and Payout and Long-Term Incentive Awards with Performance or Restriction Periods Ending in 2025 or early 2026 below.
Compensation discussion: actual 2023–2025 performance-share results and payouts · Filed 23/03/2026
The target long-term values are comprised of 75% Performance Shares and 25% Restricted Stock Units (RSUs).
Compensation discussion: 2025 long-term award mix · Filed 23/03/2026
Mayer Luis A. Ubiñas Michael B. McCallister In addition, each member of the Audit Committee, the Governance and Policy Committee, and the Human Resources Committee is independent.
Corporate governance: actual committee independence determination · Filed 23/03/2026
The Audit Committee’s oversight of EY includes regular private sessions with EY, discussions about audit scope and business imperatives, and - as described above - a comprehensive annual evaluation to determine whether to re-engage EY.
Auditor oversight: private sessions and annual evaluation · Filed 23/03/2026
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 9, 2026 expressed an unqualified opinion thereon.
Independent auditor report: unqualified internal-control opinion dated February 9, 2026 · Filed 09/02/2026
John T. Stankey Pascal Desroches Chairman of the Board, Chief Executive Officer and President Senior Executive Vice President and Chief Financial Officer 38 AT&T Inc.
Annual report signatures: combined chairman, CEO and president roles · Filed 09/02/2026
Mobility: While we continued to grow our high-quality subscriber base, adding over 1.5 million postpaid phone net additions, we saw elevated churn and increased switching between carriers across the industry.
Compensation discussion: actual 2025 postpaid phone additions and elevated switching · Filed 23/03/2026
As a result, growth came at a higher cost than planned, resulting in pressure on margins and ARPU.
Compensation discussion: growth costs exceeded plans and pressured margins and ARPU · Filed 23/03/2026
Consumer Wireline: Expanded leadership in fiber broadband adding over 1 million fiber customers for the eighth consecutive year and delivering $8.6 billion in fiber revenue—a 17.0% year-over-year increase.
Compensation discussion: eight consecutive years of more than one million fiber customer additions · Filed 23/03/2026
Our concentration is to aggregate the most traffic on the largest, lowest marginal cost, converged network through efficient spectrum deployment and construction of the largest high-capacity broadband solutions in the United States, while also working with regulators and customers to decommission high-cost legacy technologies over the next several years.
Business strategy: intended lowest-marginal-cost converged network · Filed 09/02/2026
Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets.
Segment information: integrated offerings and shared assets · Filed 09/02/2026
Depreciation of our shared network, including copper-based assets prior to decommissioning, is managed in our Advanced Connectivity segment, consistent with our composite group depreciation methodology.
MD&A: shared-network depreciation assigned to Advanced Connectivity · Filed 22/07/2026
