Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Operations and support expenses decreased in the second quarter and for the first six months of 2022, primarily due to our continued efforts to drive efficiencies in our network operations through automation and reductions in customer support expenses through digitization. Expense declines were also driven by lower amortization of deferred fulfillment costs, including our first-quarter 2022 updates to the estimated economic lives of subscribers, which decreased expense approximately $40 and $75 in the first quarter and for the first six months of 2022. The declines were partially offset by higher wholesale access network costs. As part of our transformation activities, we expect operations and support expense improvements in the second half of 2022 as we size our operations consistent with the strategic direction of the business.

Depreciation expense increased in the second quarter and for the first six months of 2022, primarily due to ongoing capital spending for network upgrades and expansion, partially offset by updates to extend the estimated lives of our fiber assets.

Operating income decreased in the second quarter and for the first six months of 2022. Our Business Wireline operating income margin in the second quarter decreased from 17.7% in 2021 to 12.7% in 2022 and for the first six months decreased from 17.8% in 2021 to 14.0% in 2022. Our Business Wireline EBITDA margin in the second quarter decreased from 39.0% in 2021 to 36.2% in 2022 and for the first six months decreased from 39.0% in 2021 to 37.2% in 2022.

Consumer Wireline Results
						Second Quarter																		Six-Month Period
																		Percent																		Percent
						2022						2021						Change						2022						2021						Change
Operating revenues
Broadband						$	2,393					$	2,266					5.6		%				$	4,748					$	4,471					6.2		%
Legacy voice and data services						445						504						(11.7)						905						1,023						(11.5)
Other service and equipment						336						370						(9.2)						682						744						(8.3)
Total Operating Revenues						3,174						3,140						1.1						6,335						6,238						1.6
Operating expenses
Operations and support						2,085						2,063						1.1						4,163						4,092						1.7
Depreciation and amortization						785						769						2.1						1,551						1,531						1.3
Total Operating Expenses						2,870						2,832						1.3						5,714						5,623						1.6
Operating Income						$	304					$	308					(1.3)		%				$	621					$	615					1.0		%

The following tables highlight other key measures of performance for Consumer Wireline:

Connections
																								June 30,												Percent
(in 000s)																								2022						2021						Change
Broadband Connections
Total Broadband and DSL Connections																								14,105						14,174						(0.5)		%
Broadband																								13,825						13,818						0.1
Fiber Broadband Connections																								6,597						5,432						21.4
Voice Connections
Retail Consumer Switched Access Lines																								2,228						2,631						(15.3)
U-verse Consumer VoIP Connections																								2,521						2,965						(15.0)
Total Retail Consumer Voice Connections																								4,749						5,596						(15.1)		%

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Net Additions
						Second Quarter																		Six-Month Period
																		Percent																		Percent
(in 000s)						2022						2021						Change						2022						2021						Change
Broadband Net Additions
Total Broadband and DSL Net Additions						(43)						28						—		%				(55)						74						—		%
Broadband Net Additions						(25)						51						—						(20)						125						—
Fiber Broadband Net Additions						316						246						28.5		%				605						481						25.8		%

Broadband revenues increased in the second quarter and for the first six months of 2022, driven by an increase in fiber customers, which we expect to continue for the foreseeable future as we invest further in building our fiber footprint.

Legacy voice and data service revenues decreased in the second quarter and for the first six months of 2022, reflecting the continued decline in the number of customers, which we expect to continue.

Other service and equipment revenues decreased in the second quarter and for the first six months of 2022, reflecting the continued decline in the number of VoIP customers, which we expect to continue.

Operations and support expenses increased in the second quarter and for the first six months of 2022, primarily driven by higher network and technology costs, the elimination of CAF II government credits and higher advertising costs and bad debt expense. Partially offsetting these increases was our first-quarter 2022 updates to the estimated economic lives of broadband/fiber subscribers, which decreased expense approximately $40 in the second quarter and $80 for the first six months of 2022.

Depreciation expense increased in the second quarter and for the first six months of 2022, primarily due to ongoing capital spending for network upgrades and expansion, partially offset by updates to extend the estimated lives of our fiber assets.

Operating income decreased in the second quarter and increased for the first six months of 2022. Our Consumer Wireline operating income margin in the second quarter decreased from 9.8% in 2021 to 9.6% in 2022 and for the first six months decreased from 9.9% in 2021 to 9.8% in 2022. Our Consumer Wireline EBITDA margin in the second quarter was 34.3% in 2021 and 2022 and for the first six months decreased from 34.4% in 2021 to 34.3% in 2022.

LATIN AMERICA SEGMENT						Second Quarter																		Six-Month Period
						2022						2021						Percent Change						2022						2021						Percent Change
Segment Operating revenues
Service						$	534					$	447					19.5		%				$	1,024					$	886					15.6		%
Equipment						274						241						13.7						474						433						9.5
Total Segment Operating Revenues						808						688						17.4						1,498						1,319						13.6
Segment Operating expenses
Operations and support						721						667						8.1						1,352						1,287						5.1
Depreciation and amortization						169						150						12.7						330						295						11.9
Total Segment Operating Expenses						890						817						8.9						1,682						1,582						6.3
Operating Income (Loss)						(82)						(129)						36.4		%				(184)						(263)						30.0		%

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

The following tables highlight other key measures of performance for Mexico:

																								June 30,												Percent
(in 000s)																								2022						2021						Change
Mexico Wireless Subscribers
Postpaid																								4,835						4,745						1.9		%
Prepaid																								15,422						13,810						11.7
Reseller																								443						491						(9.8)
Total Mexico Wireless Subscribers																								20,700						19,046						8.7		%
						Second Quarter																		Six-Month Period
																		Percent																		Percent
(in 000s)						2022						2021						Change						2022						2021						Change
Mexico Wireless Net Additions
Postpaid						25						20						25.0		%				28						49						(42.9)		%
Prepaid						187						54						—						365						52						—
Reseller						(15)						(9)						(66.7)						(55)						2						—
Total Mexico Wireless Net Additions						197						65						—		%				338						103						—		%

Service revenues increased in the second quarter and for the first six months of 2022 reflecting improvements in subscriber growth and growth in other services.

Equipment revenues increased in the second quarter and for the first six months of 2022 due to higher equipment sales price.

Operations and support expenses increased in the second quarter and for the first six months of 2022 driven by equipment costs from customer growth and higher bad debt expense. Approximately 7% of Mexico expenses are U.S. dollar based, with the remainder in the local currency.

Depreciation and amortization expense increased in the second quarter and for the first six months of 2022, reflecting higher in-service assets and spectrum amortization.

Operating income improved in the second quarter and for the first six months of 2022. Our Mexico operating income margin in the second quarter increased from (18.8)% in 2021 to (10.1)% in 2022 and for the first six months increased from (19.9)% in 2021 to (12.3)% in 2022. Our Mexico EBITDA margin in the second quarter increased from 3.1% in 2021 to 10.8% in 2022 and for the first six months increased from 2.4% in 2021 to 9.7% in 2022.

OTHER BUSINESS MATTERS

Spectrum Auction On January 14, 2022, the Federal Communications Commission (FCC) announced that we were the winning bidder for 1,624 3.45 GHz licenses in Auction 110. We provided the FCC with an upfront deposit of $123 in the third quarter of 2021 and paid the remaining $8,956 in the first quarter of 2022, for a total of $9,079. We funded the purchase price using cash and short-term investments. We received the licenses in May 2022, and classified the auction deposits and related capitalized interest as “Licenses - Net” on our June 30, 2022 consolidated balance sheet. (See Note 8)

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

WarnerMedia On April 8, 2022, we completed the separation and distribution of our WarnerMedia business, and merger of Magallanes, Inc. (Spinco), an AT&T subsidiary formed to hold the WarnerMedia business, with a subsidiary of Discovery, Inc., which was renamed Warner Bros. Discovery Inc. (WBD). Each AT&T shareholder was entitled to receive 0.241917 shares of WBD common stock for each share of AT&T common stock held as of the record date, which represented approximately 71% of WBD. In connection with and in accordance with the terms of the Separation and Distribution Agreement (SDA), prior to the distribution and merger, AT&T received approximately $40,400, which includes $38,800 of Spinco cash and $1,600 of debt retained by WarnerMedia. During the second quarter, assets of approximately $121,100 and liabilities of $70,600 were removed from our balance sheet as well as $45,041 of retained earnings and $5,632 of additional paid-in capital associated with the transaction. Additionally, in August 2022, we and WBD finalized the post-closing adjustment, pursuant to section 1.3 of the SDA, which will result in a $1,200 payment to WBD in the third quarter and is reflected in the accompanying June 30, 2022 balance sheet as an adjustment to additional paid in capital. The payment will be accounted for as cash used in financing activities in our statement of cash flows in third quarter of 2022. (See Notes 8 and 13)

AT&T, Spinco and Discovery entered into a Tax Matters Agreement, which governs the parties’ rights, responsibilities and obligations with respect to tax liabilities and benefits, the preservation of the expected tax-free status of the transactions contemplated by the SDA, and other matters regarding taxes.

Additionally, we entered into an adjusted HBO Max agreement with WBD that provides us with expanded distribution rights and additional flexibility to market and sell the service in a cost-efficient manner. Under the terms of the agreement, beginning June 1, 2022, we will be permitted to include HBO MAX in our customer offerings in exchange for a licensing fee. Furthermore, AT&T has the right, but not the obligation, to market and distribute HBO Max to its customers in plans, bundles, and promotional offers.

Xandr On June 6, 2022, we completed the sale of the marketplace component of Xandr to Microsoft Corporation. Xandr was reflected in our historical financial statements as discontinued operations. (See Notes 8 and 13)

COMPETITIVE AND REGULATORY ENVIRONMENT

Overview AT&T subsidiaries operating within the United States are subject to federal and state regulatory authorities. AT&T subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulatory authorities in the markets where service is provided.

In the Telecommunications Act of 1996 (Telecom Act), Congress established a national policy framework intended to bring the benefits of competition and investment in advanced telecommunications facilities and services to all Americans by opening all telecommunications markets to competition and reducing or eliminating regulatory burdens that harm consumer welfare. Nonetheless, over the ensuing two decades, the FCC and some state regulatory commissions have maintained or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies. More recently, the FCC has pursued a more deregulatory agenda, eliminating a variety of antiquated and unnecessary regulations and streamlining its processes in a number of areas. We continue to support regulatory and legislative measures and efforts, at both the state and federal levels, to reduce inappropriate regulatory burdens that inhibit our ability to compete effectively and offer needed services to our customers, including initiatives to transition services from traditional networks to all IP-based networks. At the same time, we also seek to ensure that legacy regulations are not further extended to broadband or wireless services, which are subject to vigorous competition.

Communications Segment

Internet The FCC currently classifies fixed and mobile consumer broadband services as information services, subject to light-touch regulation. The D.C. Circuit upheld the FCC’s current classification, although it remanded three discrete issues to the FCC for further consideration. These issues related to the effect of the FCC’s decision to classify broadband services as information services on public safety, the regulation of pole attachments, and universal service support for low-income consumers through the Lifeline program. Because no party sought Supreme Court review of the D.C. Circuit’s decision to uphold the FCC’s classification of broadband as an information service, that decision is final.

In October 2020, the FCC adopted an order addressing the three issues remanded by the D.C. Circuit for further consideration. After considering those issues, the FCC concluded they provided no grounds to depart from its determination that fixed and mobile consumer broadband services should be classified as information services. An appeal of the FCC’s remand decision is pending.

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

Some states have adopted legislation or issued executive orders, including California, that would reimpose net neutrality rules repealed by the FCC. The California statute is now in effect, and challenges regarding other states’ net neutrality laws are pending. We expect that going forward additional states may seek to impose net neutrality requirements.

On November 15, 2021, President Biden signed the Infrastructure Investment and Jobs Act (IIJA) into law. The legislation appropriates $65,000 to support broadband deployment and adoption. The National Telecommunications and Information Agency (NTIA) is responsible for distributing more than $48,000 of this funding, including $42,500 in state grants for broadband deployment projects in unserved and underserved areas, $1,000 for middle mile broadband infrastructure, and $1,500 for digital equity programs. On May 13, 2022 NTIA issued three Notices of Funding Opportunity for these initiatives – the Broadband Equity, Access, and Deployment Program, the Enabling Middle Mile Broadband Infrastructure Program, and the State Digital Equity Program. NTIA will continue to administer and implement these programs. The IIJA also appropriated $14,200 for establishment of the Affordable Connectivity Program (ACP), an FCC-administered monthly, low-income broadband benefit program, replacing the Emergency Broadband Benefit program (established in December 2020 by the Consolidated Appropriations Act 2021). Qualifying customers can receive up to thirty dollars per month (or seventy-five dollars per month for those on Tribal lands) to assist with their internet bill. AT&T is a participating provider in the ACP program and will consider participating in the deployment program where appropriate. The IIJA includes various provisions that have resulted in FCC proceedings regarding ACP program administration and consumer protection, reform of the existing universal support program, and broadband labeling and equal access.

Privacy-related legislation continues to be adopted or considered in a number of jurisdictions, including at the federal level. Legislative, regulatory and litigation actions could result in increased costs of compliance, further regulation or claims against broadband internet access service providers and others, and increased uncertainty in the value and availability of data.

Wireless Industry-wide network densification and 5G technology expansion efforts, which are needed to satisfy extensive demand for video and internet access, will involve significant deployment of “small cell” equipment. This increases the importance of local permitting processes that allow for the placement of small cell equipment in the public right-of-way on reasonable timelines and terms. Between 2018 and 2020, the FCC adopted multiple Orders streamlining federal, state, and local wireless structure review processes that had the tendency to delay and impede deployment of small cell and related infrastructure used to provide telecommunications and broadband services. The key elements of these orders have been affirmed on judicial review. During 2020-2021, we have also deployed 5G nationwide on “low band” spectrum on macro towers. Executing on the recent spectrum purchase, we announced on-going construction and continuing deployment of 5G on C-band spectrum in 2022 and beyond.

LIQUIDITY AND CAPITAL RESOURCES

Continuing operations for six months ended June 30,			2022						2021
Cash provided by operating activities			$	15,370					$	19,783
Cash used in investing activities			(17,311)						(30,329)
Cash (used in) provided by financing activities			(49,464)						12,103

			June 30,						December 31,
			2022						2021
Cash and cash equivalents			$	4,018					$	19,223
Total debt			135,957						175,631

We had $4,018 in cash and cash equivalents available at June 30, 2022. Cash and cash equivalents included cash of $1,040 and money market funds and other cash equivalents of $2,978. Approximately $1,054 of our cash and cash equivalents were held by our foreign entities in accounts predominantly outside of the U.S. and may be subject to restrictions on repatriation.

Cash and cash equivalents decreased $15,205 since December 31, 2021. With the close of the WarnerMedia/Discovery transaction, we expect our cash balances to return to historical thresholds. In the first six months of 2022, cash inflows were

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, cash received in connection with the separation and distribution of the WarnerMedia business, issuance of commercial paper and long-term debt and distributions from DIRECTV. These inflows were exceeded by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, spectrum acquisitions, funding capital expenditures and vendor financing payments, repayment of short-term borrowings and long-term debt and dividends to stockholders. We maintain availability under our credit facilities and our commercial paper program to meet our short-term liquidity requirements.

Cash Provided by Operating Activities from Continuing Operations

During the first six months of 2022, cash provided by operating activities was $15,370, compared to $19,783 for the first six months of 2021, reflecting working capital impacts including higher payments for wireless devices tied to accelerated subscriber growth and timing of customer collections in the second quarter of 2022. Although our credit policies have been stable over the last few years, customer collections were lower than expected in the latter half of the second quarter of 2022, as customers returned to pre-pandemic payment trends. Stimulus payments during the pandemic contributed to better collection and bad debt expense trends than historical levels. Specifically, while bad debt expense was slightly higher than 2021, partially due to growth in our account base, it was relatively consistent with 2019 (pre-pandemic) levels.

We actively manage the timing of our supplier payments for operating items to optimize the use of our cash. Among other things, we seek to make payments on 90-day or greater terms, while providing the suppliers with access to bank facilities that permit earlier payments at their cost. In addition, for payments to a key supplier, as part of our working capital initiatives, we have arrangements that allow us to extend the stated payment terms by up to 90 days at an additional cost to us (referred to as supplier financing). The net impact of supplier financing was to decrease cash from operating activities $916 and $1,256 for the six months ended June 30, 2022 and 2021, respectively. All supplier financing payments are due within one year.

Cash Used in or Provided by Investing Activities from Continuing Operations

For the first six months of 2022, cash used in investing activities totaled $17,311, and consisted primarily of $9,476 (including interest during construction) for capital expenditures and $9,570 for acquisitions of spectrum licenses won in Auction 110 and associated capitalized interest. During the first six months of 2022, we received a return of investment of $1,638 from DIRECTV representing distributions in excess of cumulative equity in earnings from DIRECTV (see Note 11).

For capital improvements, we have negotiated favorable vendor payment terms of 120 days or more (referred to as vendor financing) with some of our vendors, which are excluded from capital expenditures and reported as financing activities. For the first six months of 2022, vendor financing payments were $3,337, compared to $2,994 for the first six months of 2021. Capital expenditures in the first six months of 2022 were $9,476, and when including $3,337 cash paid for vendor financing, capital investment was $12,813 ($2,238 higher than the prior-year comparable period).

The vast majority of our capital expenditures are spent on our networks, including product development and related support systems. During the first six months of 2022, we placed $2,012 of equipment in service under vendor financing arrangements (compared to $1,778 in the prior-year comparable period) and approximately $170 of assets related to the FirstNet build (compared to $450 in the prior-year comparable period). The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements.

Cash Provided by or Used in Financing Activities from Continuing Operations

For the first six months of 2022, cash used in financing activities totaled $49,464 and was comprised of debt issuances and repayments, payments of dividends, vendor financing payments, and stock repurchases. During the first six months of 2022, we also paid approximately $722 in cash on the note payable to DIRECTV, with $619 remaining due as of June 30, 2022.

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

A tabular summary of our debt activities for the six months ended June 30, 2022 is as follows:

			First Quarter			Second Quarter			Six months ended June 30, 2022
Net commercial paper borrowings			$	1,471		$	(5,219)		$	(3,748)
Issuance of Notes and Debentures:
Other			$	479		$	—		$	479
Debt Issuances			$	479		$	—		$	479
Repayments:
2021 Syndicated Term Loan			$	—		$	(7,350)		$	(7,350)
BAML Bilateral Term Loan - Tranche A			—			(1,000)			(1,000)
Private financing			—			(750)			(750)
Repayment of other short-term borrowings			$	—		$	(9,100)		$	(9,100)
USD notes1, 2, 3			$	(123)		$	(18,957)		$	(19,080)
Euro notes			—			(3,343)			(3,343)
BAML Bilateral Term Loan - Tranche B			—			(1,000)			(1,000)
Other			(667)			(123)			(790)
Repayments of long-term debt			$	(790)		$	(23,423)		$	(24,213)
1On March 31, 2022, we issued a notice for the redemption in full of all of the outstanding $1,962 aggregate principal amount of 3.000% Global Notes due June 30, 2022. We redeemed the notes on April 30, 2022 at 100% of the principal amount.
2On April 11, 2022, we issued notices for the redemption in full of all of the outstanding approximately $9,042 aggregate principal amount of various global notes due 2022 to 2026 with coupon rates ranging from 2.625% to 4.450% (Make-Whole Notes). The Make-Whole Notes were redeemed on the redemption dates set forth in the notices of redemption, at “make whole” redemption prices calculated as set forth in the respective redemption notices in the second quarter.
3Includes $7,954 of cash paid toward the $8,822 aggregate principal amount of various notes that were tendered for cash in May 2022. The notes had interest rates ranging between 3.100% and 8.750% and original maturities ranging from 2026 to 2061.

The weighted average interest rate of our entire long-term debt portfolio including credit agreement borrowings and the impact of derivatives, was approximately 4.0% as of June 30, 2022 and 3.8% as of December 31, 2021. We had $131,419 of total notes and debentures outstanding at June 30, 2022. This also included Euro, British pound sterling, Canadian dollar, Mexican peso, Australian dollar, and Swiss franc denominated debt that totaled approximately $35,189.

At June 30, 2022, we had $6,210 of debt maturing within one year, consisting of $2,860 of commercial paper borrowings and $3,350 of long-term debt issuances.

For the first six months of 2022, we paid $3,337 of cash under our vendor financing program, compared to $2,994 in the prior-year comparable period. Total vendor financing payables included in our June 30, 2022 consolidated balance sheet were $3,547, with $1,981 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

At June 30, 2022, we had approximately 144 million shares remaining from our share repurchase authorizations approved by the Board of Directors in 2014. During the first six months of 2022, we repurchased approximately 34 million shares under the December 2014 authorization.

We paid dividends on common and preferred shares of $5,835 during the first six months of 2022, compared with $7,571 for the first six months of 2021.

Dividends on common stock declared by our Board of Directors totaled $0.5550 per share in the first six months of 2022 and $1.04 per share in the first six months of 2021. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities. On February 1, 2022, we announced

AT&T INC.

JUNE 30, 2022

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations- Continued

Dollars in millions except per share amounts

that our Board of Directors approved an expected annual dividend level of $1.11 per common share, or approximately $8,000 per year, following the close of the WarnerMedia/Discovery transaction.

Credit Facilities

The following summary of our various credit and loan agreements does not purport to be complete and is qualified in its entirety by reference to each agreement filed as exhibits to our Annual Report on Form 10-K.

We use credit facilities as a tool in managing our liquidity status. In November 2020, we amended one of our $7,500 revolving credit agreements by extending the termination date. In total, we have two $7,500 revolving credit agreements, totaling $15,000, with one terminating on December 11, 2023 and the other terminating on November 17, 2025. No amounts were outstanding under either agreement as of June 30, 2022.

On January 29, 2021, we entered into a $14,700 Term Loan Credit Agreement (2021 Syndicated Term Loan), with Bank of America, N.A., as agent. On March 23, 2021, we borrowed $7,350 under the 2021 Syndicated Term Loan and the remaining $7,350 of lenders’ commitments were terminated. In the first quarter of 2022, the maturity date of the 2021 Syndicated Term Loan was extended to December 31, 2022. On April 13, 2022, the 2021 Syndicated Term Loan was paid off and terminated.

In March 2021, we entered into and drew on a $2,000 term loan credit agreement (BAML Bilateral Term Loan) consisting of (i) a $1,000 facility originally due December 31, 2021 (BAML Tranche A Facility) and subsequently extended to December 31, 2022 in the fourth quarter of 2021, and (ii) a $1,000 facility due December 31, 2022 (BAML Tranche B Facility), with Bank of America, N.A., as agent. On April 13, 2022, the BAML Bilateral Term Loan was paid off and terminated.

We also utilize other external financing sources, which include various credit arrangements supported by government agencies to support network equipment purchases as well as a commercial paper program.

Each of our credit and loan agreements contains covenants that are customary for an issuer with an investment grade senior debt credit rating as well as a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter through June 30, 2023, a ratio of not more than 4.0-to-1, and a ratio of not more than 3.5-to-1 for any fiscal quarter thereafter. As of June 30, 2022, we were in compliance with the covenants for our credit facilities.

Collateral Arrangements

Most of our counterparty collateral arrangements require cash collateral posting by AT&T only when derivative market values exceed certain thresholds. Under these arrangements, which cover over 98% of our approximate $38,800 derivative portfolio, counterparties are still required to post collateral. During the first six months of 2022, we posted approximately $550 of cash collateral, on a net basis. Cash postings under these arrangements vary with changes in credit ratings and netting agreements. (See Note 7)

Other

Our total capital consists of debt (long-term debt and debt maturing within one year) and stockholders’ equity. Our capital structure does not include debt issued by our equity method investments. At June 30, 2022, our debt ratio was 50.1%, compared to 49.7% at June 30, 2021 and 48.9% at December 31, 2021. The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances and repayments.