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 Mobility:

Subscribers
						September 30,												Percent
(in 000s)						2023						2022						Change
Postpaid						86,365						83,614						3.3		%
Postpaid phone						70,757						68,969						2.6
Prepaid						19,391						19,215						0.9
Reseller						7,101						5,854						21.3
Connected devices1						122,728						101,995						20.3
Total Mobility Subscribers2						235,585						210,678						11.8		%
1Includes data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems.
2Wireless subscribers at September 30, 2023 includes an increase of 295 subscribers and connections (206 postpaid, including 74 phone, and 89 connected devices) resulting from our 3G network shutdown.

Mobility Net Additions
						Third Quarter																		Nine-Month Period
																		Percent																		Percent
(in 000s)						2023						2022						Change						2023						2022						Change
Postpaid Phone Net Additions						468						708						(33.9)		%				1,218						2,212						(44.9)		%
Total Phone Net Additions						494						816						(39.5)						1,407						2,629						(46.5)
Postpaid2						550						964						(42.9)						1,556						2,987						(47.9)
Prepaid						56						141						(60.3)						263						488						(46.1)
Reseller						401						308						30.2						941						312						—
Connected devices3						5,547						5,716						(3.0)						15,133						15,476						(2.2)
Mobility Net Subscriber Additions1						6,554						7,129						(8.1)		%				17,893						19,263						(7.1)		%
Postpaid Churn4						0.95		%				1.01		%				(6)		BP				0.97		%				0.96		%				1		BP
Postpaid Phone-Only Churn4						0.79		%				0.84		%				(5)		BP				0.80		%				0.79		%				1		BP
1Excludes migrations and acquisition-related activities during the period.
2In addition to postpaid phones, includes tablets and wearables and other. Tablet net adds (losses) were (36) and 33 for the quarters ended September 30, 2023 and 2022 and (85) and 118 for the first nine months of September 30, 2023 and 2022. Wearables and other net adds were 118 and 223 for the quarters ended September 30, 2023 and 2022 and 423 and 657 for the first nine months ended September 30, 2023 and 2022.
3Includes data-centric devices such as session-based tablets, monitoring devices and primarily wholesale automobile systems. Excludes postpaid tablets and other postpaid data devices. Wholesale connected car net adds were approximately 2,800 and 2,600 for the quarters ended September 30, 2023 and 2022 and 8,400 and 7,400 for the first nine months ended September 30, 2023 and 2022.
4Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month by the total number of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period.

Service revenue increased in the third quarter and for the first nine months of 2023. The increases are largely due to growth from subscriber gains and postpaid phone average revenue per subscriber (ARPU) growth.

ARPU

ARPU increased in the third quarter and for the first nine months of 2023. ARPU during 2023 reflects pricing actions, improved international roaming and customers shifting to higher priced unlimited plans, partially offset by the impact of higher promotional discount amortization (see Note 5).

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

Churn

The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Postpaid churn and postpaid phone-only churn were lower in the third quarter and slightly higher for the first nine months of 2023.

Equipment revenue decreased in the third quarter and for the first nine months of 2023, primarily driven by a lower volume of devices sold.

Operations and support expenses decreased in the third quarter and for the first nine months of 2023 largely due to lower equipment costs and associated selling costs driven by lower device sales. These decreases were offset by increased network and customer support expenses and higher amortization of deferred customer acquisition costs. Expense decrease for the first nine months was also driven by the absence of first-quarter 2022 3G network shutdown costs, partially offset by higher marketing and bad debt expenses.

Depreciation expense increased in the third quarter and for the first nine months of 2023, primarily due to ongoing capital spending for network upgrades and expansion.

Operating income increased in the third quarter and for the first nine months of 2023. Our Mobility operating income margin in the third quarter increased from 30.7% in 2022 to 32.7% in 2023 and for the first nine months increased from 29.8% in 2022 to 31.9% in 2023. Our Mobility EBITDA margin in the third quarter increased from 40.8% in 2022 to 43.0% in 2023 and for the nine months increased from 39.9% in 2022 to 42.2% in 2023. EBITDA is defined as operating income excluding depreciation and amortization.

Business Wireline Results
						Third Quarter																		Nine-Month Period
																		Percent																		Percent
						2023						2022						Change						2023						2022						Change
Operating revenues
Service						$	5,087					$	5,524					(7.9)		%				$	15,401					$	16,418					(6.2)		%
Equipment						134						144						(6.9)						430						485						(11.3)
Total Operating Revenues						5,221						5,668						(7.9)						15,831						16,903						(6.3)
Operating expenses
Operations and support						3,526						3,705						(4.8)						10,699						11,199						(4.5)
Depreciation and amortization						1,345						1,342						0.2						4,008						3,954						1.4
Total Operating Expenses						4,871						5,047						(3.5)						14,707						15,153						(2.9)
Operating Income						$	350					$	621					(43.6)		%				$	1,124					$	1,750					(35.8)		%

Service revenues decreased in the third quarter and for the first nine months of 2023, driven by lower demand for legacy voice, data and network services along with product simplification, partially offset by growth in connectivity services. We expect these trends to continue.

Equipment revenues decreased in the third quarter and for the first nine months of 2023, driven by declines in legacy and non-core services, which we expect to continue.

Operations and support expenses decreased in the third quarter and for the first nine months of 2023, primarily due to our continued efforts to drive efficiencies in our network operations through automation, reductions in customer support expenses through digitization and proactive rationalization of low profit margin products. Expense declines were also driven by lower personnel costs associated with ongoing transformation initiatives, lower network access, customer support and marketing expenses. The decrease for the first nine months also included approximately $75 of benefit related to settlement of a dispute in the second quarter of 2023, partially offset by favorable compensation true-ups in the first quarter of 2022. As part of our

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

transformation activities, we expect operations and support expense improvements through the remainder of 2023, as we further right size our operations in alignment with the strategic direction of the business.

Depreciation expense increased in the third quarter and for the first nine months of 2023, primarily due to ongoing capital investment for strategic initiatives such as fiber.

Operating income decreased in the third quarter and for the first nine months of 2023. Our Business Wireline operating income margin in the third quarter decreased from 11.0% in 2022 to 6.7% in 2023 and for the first nine months decreased from 10.4% in 2022 to 7.1% in 2023. Our Business Wireline EBITDA margin in the third quarter decreased from 34.6% in 2022 to 32.5% in 2023 and for the first nine months decreased from 33.7% in 2022 to 32.4% in 2023.

Consumer Wireline Results
						Third Quarter																		Nine-Month Period
																		Percent																		Percent
						2023						2022						Change						2023						2022						Change
Operating revenues
Broadband						$	2,667					$	2,429					9.8		%				$	7,755					$	7,177					8.1		%
Legacy voice and data services						368						427						(13.8)						1,147						1,332						(13.9)
Other service and equipment						296						329						(10.0)						919						1,011						(9.1)
Total Operating Revenues						3,331						3,185						4.6						9,821						9,520						3.2
Operating expenses
Operations and support						2,300						2,243						2.5						6,810						6,723						1.3
Depreciation and amortization						871						800						8.9						2,589						2,351						10.1
Total Operating Expenses						3,171						3,043						4.2						9,399						9,074						3.6
Operating Income						$	160					$	142					12.7		%				$	422					$	446					(5.4)		%

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

Connections
																								September 30,												Percent
(in 000s)																								2023						2022						Change
Broadband Connections
Total Broadband and DSL Connections																								13,887						14,055						(1.2)		%
Broadband1																								13,710						13,796						(0.6)
Fiber Broadband Connections																								8,034						6,935						15.8
Voice Connections
Retail Consumer Switched Access Lines																								1,737						2,123						(18.2)
Consumer VoIP Connections																								2,035						2,409						(15.5)
Total Retail Consumer Voice Connections																								3,772						4,532						(16.8)		%
1Includes AT&T Internet Air.

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

Broadband Net Additions
						Third Quarter																		Nine-Month Period
																		Percent																		Percent
(in 000s)						2023						2022						Change						2023						2022						Change
Total Broadband and DSL Net Additions						(8)						(50)						84.0		%				(104)						(105)						1.0		%
Broadband Net Additions1						15						(29)						—						(43)						(49)						12.2
Fiber Broadband Net Additions						296						338						(12.4)		%				819						943						(13.1)		%
1Includes AT&T Internet Air.

Broadband revenues increased in the third quarter and for the first nine months of 2023, driven by an increase in fiber customers, which we expect to continue as we invest further in building our fiber footprint, and higher ARPU due to prior-year promotional pricing, partially offset by declines in copper-based broadband services.

Legacy voice and data service revenues decreased in the third quarter and for the first nine months of 2023, reflecting the continued decline in the number of customers.

Other service and equipment revenues decreased in the third quarter and for the first nine months of 2023, reflecting the continued decline in the number of VoIP customers.

Operations and support expenses increased in the third quarter and for the first nine months of 2023. Expense increases were primarily due to higher network-related costs as our fiber build scales, partially offset by lower customer support costs. The increase for the first nine months was also partially offset by lower Max licensing fees in the first half of 2023, approximately $35 of benefit from a vendor dispute resolution in the second quarter of 2023 and favorable compensation true-ups in the first quarter of 2022.

Depreciation expense increased in the third quarter and for the first nine months of 2023, primarily due to ongoing capital spending for strategic initiatives such as fiber and network upgrades and expansion.

Operating income increased in the third quarter and decreased for the first nine months of 2023. Our Consumer Wireline operating income margin in the third quarter increased from 4.5% in 2022 to 4.8% in 2023 and for the first nine months decreased from 4.7% in 2022 to 4.3% in 2023. Our Consumer Wireline EBITDA margin in the third quarter increased from 29.6% in 2022 to 31.0% in 2023 and for the first nine months increased from 29.4% in 2022 to 30.7% in 2023.

LATIN AMERICA SEGMENT						Third Quarter																		Nine-Month Period
						2023						2022						Percent Change						2023						2022						Percent Change
Segment Operating Revenues
Service						$	672					$	559					20.2		%				$	1,898					$	1,583					19.9		%
Equipment						320						226						41.6						944						700						34.9
Total Segment Operating Revenues						992						785						26.4						2,842						2,283						24.5
Segment Operating Expenses
Operations and support						837						684						22.4						2,396						2,036						17.7
Depreciation and amortization						184						164						12.2						544						494						10.1
Total Segment Operating Expenses						1,021						848						20.4						2,940						2,530						16.2
Operating Income (Loss)						$	(29)					$	(63)					54.0		%				$	(98)					$	(247)					60.3		%

AT&T INC.

SEPTEMBER 30, 2023

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:

Subscribers
																								September 30,												Percent
(in 000s)																								2023						2022						Change
Mexico Wireless Subscribers
Postpaid																								5,085						4,854						4.8		%
Prepaid																								16,213						15,689						3.3
Reseller																								456						455						0.2
Total Mexico Wireless Subscribers																								21,754						20,998						3.6		%
Mexico Wireless Net Additions
						Third Quarter																		Nine-Month Period
																		Percent																		Percent
(in 000s)						2023						2022						Change						2023						2022						Change
Mexico Wireless Net Additions
Postpaid						55						19						—		%				160						47						—		%
Prepaid						17						267						(93.6)						9						632						(98.6)
Reseller						(7)						12						—						(18)						(43)						58.1
Total Mexico Wireless Net Additions						65						298						(78.2)		%				151						636						(76.3)		%

Service revenues increased in the third quarter and for the first nine months of 2023 reflecting favorable foreign exchange impacts and growth in subscribers. The increase for the first nine months of 2023 also reflects higher wholesale revenues.

Equipment revenues increased in the third quarter and for the first nine months of 2023 driven by favorable foreign exchange impacts and higher equipment sales.

Operations and support expenses increased in the third quarter and for the first nine months of 2023 driven by unfavorable impact of foreign exchange and increased equipment costs resulting from higher sales. Approximately 5% of Mexico expenses are U.S. dollar based, with the remainder in the local currency.

Depreciation and amortization expense increased in the third quarter and for the first nine months of 2023, driven by unfavorable impact of foreign exchange partially offset by lower in-service assets.

Operating income improved in the third quarter and for the first nine months of 2023. Our Mexico operating income margin in the third quarter increased from (8.0)% in 2022 to (2.9)% in 2023 and for the first nine months increased from (10.8)% in 2022 to (3.4)% in 2023. Our Mexico EBITDA margin in the third quarter increased from 12.9% in 2022 to 15.6% in 2023 and for the first nine months increased from 10.8% in 2022 to 15.7% in 2023.

OTHER BUSINESS MATTERS

Gigapower, LLC On May 11, 2023, we closed the transaction with BlackRock, through a fund managed by its Diversified Infrastructure business, related to Gigapower, LLC (Gigapower). The joint venture will provide a fiber network to Internet service providers and other businesses across the U.S. that serve customers outside of our traditional wireline service area. We have agreed to contribute incremental funding of up to approximately $700, which will be funded as the network is constructed. We deconsolidated Gigapower’s operations in the second quarter of 2023.

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

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.

On September 28, 2023, the FCC released a draft Notice of Proposed Rulemaking (NPRM) that was adopted at the FCC’s open meeting on October 19, 2023. The NPRM proposes to reclassify broadband internet access service as a telecommunications service under Title II of the Communications Act of 1934 and reestablish conduct rules for internet service providers.

In the interim, some states have adopted legislation or issued executive orders, including California, that would reimpose net neutrality rules similar to those repealed by the FCC. The California statute is now in effect, and challenges regarding other states’ net neutrality laws are pending. It is unclear whether additional states may seek to impose net neutrality requirements now that the FCC has announced its intent to reimpose net neutrality rules and whether existing state net neutrality laws will continue to apply if the FCC does so.

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, including $42,500 administered by the National Telecommunications and Information Agency (NTIA) in state grants for broadband deployment projects, $1,000 for middle mile broadband infrastructure, and $1,500 for digital equity programs. The IIJA also appropriated $14,200 for establishment of the Affordable Connectivity Program (ACP), an FCC-administered monthly, low-income broadband benefit program. The ACP provides qualifying customers up to thirty dollars per month (or seventy-five dollars per month for those on Tribal lands) to assist with their internet bill. These funds are in addition to or replacements for other significant pandemic-related funds designated or that could be used for broadband deployment and subscription. AT&T is a participating provider in the ACP program and is participating in deployment programs where appropriate. Absent additional funding, at present pace the ACP fund will likely exhaust in 2024.

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.

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

Wireless During 2020-2021, we 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 and 3.45 GHz spectrum in 2022 and beyond. Additional spectrum will be needed industrywide for 5G and future services. The federal government is developing a national spectrum strategy but its ability and intent to make sufficient spectrum available to the industry in needed timeframes remains uncertain.

LIQUIDITY AND CAPITAL RESOURCES

Continuing operations for nine months ended September 30,			2023						2022
Cash provided by operating activities			$	26,936					$	25,464
Cash used in investing activities			(13,786)						(23,011)
Cash used in financing activities			(9,284)						(54,403)

			September 30,						December 31,
			2023						2022
Cash and cash equivalents			$	7,540					$	3,701
Total debt			138,003						135,890

We had $7,540 in cash and cash equivalents available at September 30, 2023, increasing $3,839 since December 31, 2022. Cash and cash equivalents included cash of $1,423 and money market funds and other cash equivalents of $6,117. Approximately $1,297 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.

For the first nine months of 2023, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties, issuance of commercial paper, long-term debt and cumulative preferred interests in subsidiaries and distributions from DIRECTV. These inflows exceeded cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, funding capital expenditures and vendor financing payments, repayment of short-term borrowings and long-term debt, repurchase of the Series A Cumulative Perpetual Preferred Membership Interests in AT&T Mobility II LLC (Mobility preferred interests) and dividend payments 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 nine months of 2023, cash provided by operating activities was $26,936, compared to $25,464 for the first nine months of 2022, reflecting operational growth and a focus to lower working capital programs, which resulted in lower device payments partially offset by lower receivable sales, net of remittances (see Note 8).

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 (referred to as supplier financing program). In addition, for payments to suppliers of handset inventory, 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 direct supplier financing). The net impact of direct supplier financing was to decrease cash from operating activities $3,054 and $1,653 for the nine months ended September 30, 2023 and 2022, respectively. All direct supplier financing payments are due within one year. (See Note 11)

Cash Used in or Provided by Investing Activities from Continuing Operations

For the first nine months of 2023, cash used in investing activities totaled $13,786 and consisted primarily of $13,252 (including interest during construction) for capital expenditures. During the first nine months of 2023, we received a return of investment of $1,447 from DIRECTV representing distributions in excess of cumulative equity in earnings from DIRECTV (see Note 10). We paid $297 of spectrum relocation and clearing costs during the first nine months of 2023 and $1,923 in

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

October 2023, respectively, which we report as “Acquisitions, net of cash acquired” on our consolidated statements of cash flows.

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 nine months of 2023, vendor financing payments were $4,736, compared to $4,237 for the first nine months of 2022. Capital expenditures for the first nine months of 2023 were $13,252, and when including $4,736 cash paid for vendor financing, capital investment was $17,988 ($1,646 lower 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 nine months of 2023, we placed $2,128 of equipment in service under vendor financing arrangements (compared to $3,916 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 nine months of 2023, cash used in financing activities totaled $9,284 and was comprised of debt issuances and repayments, issuances and repurchase of preferred interests in subsidiaries, payments of dividends and vendor financing payments.

A tabular summary of our debt activities for the nine months ended September 30, 2023 is as follows:

			First Quarter			Second Quarter			Third Quarter			Nine months ended September 30, 2023
Net commercial paper borrowings			$	2,341		$	1,284		$	(112)		$	3,513
Issuance of Notes and Debentures:
USD notes			$	1,747		$	2,730		$	—		$	4,477
EUR notes			1,319			3,537			—			4,856
Other			1,050			—			—			1,050
Debt Issuances			$	4,116		$	6,267		$	—		$	10,383
Repayments:
Private financing			$	—		$	(750)		$	—		$	(750)
Repayment of other short-term borrowings			$	—		$	(750)		$	—		$	(750)
USD notes			$	(376)		$	(750)		$	—		$	(1,126)
EUR notes			(1,626)			(473)			(3,503)			(5,602)
AUD notes			—			—			(450)			(450)
2025 Term Loan			(2,500)			—			—			(2,500)
Other			(1,443)			(441)			(327)			(2,211)
Repayments of long-term debt			$	(5,945)		$	(1,664)		$	(4,280)		$	(11,889)

The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.2% as of September 30, 2023 and 4.1% as of December 31, 2022. We had $131,587 of total notes and debentures outstanding at September 30, 2023. This also included Euro, British pound sterling, Canadian dollar, Swiss franc, and Australian dollar denominated debt that totaled approximately $33,340.

At September 30, 2023, we had $11,302 of debt maturing within one year, consisting of $4,575 of commercial paper borrowings and $6,727 of long-term debt issuances. The weighted average interest rate on our outstanding short-term borrowings was approximately 5.9% as of September 30, 2023 and 4.8% as of December 31, 2022.

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

For the first nine months of 2023, we paid $4,736 of cash under our vendor financing program, compared to $4,237 in the prior-year comparable period. Total vendor financing payables included in our September 30, 2023 consolidated balance sheet were $3,336, with $2,092 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

At September 30, 2023, we had approximately 144 million shares remaining from our share repurchase authorizations approved by the Board of Directors in 2014.

We paid dividends on common and preferred shares of $6,116 during the first nine months of 2023, compared with $7,845 for the first nine months of 2022.

Dividends on common stock declared by our Board of Directors totaled $0.8325 per share in the first nine months of 2023 and 2022. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities.

In April 2023, we expanded our September 2020 sale of Telco LLC cumulative preferred interests and issued an additional $5,250 of nonconvertible cumulative preferred interests (April preferreds). The April preferreds pay an initial preferred distribution of 6.85% annually, subject to declaration, and subject to reset on November 1, 2027, and every seven years thereafter. (See Note 12)

In April 2023, we also accepted the December 2022 put option notice from the AT&T pension trust and repurchased the remaining 213 million Mobility preferred interests for a purchase price, including accrued and unpaid distributions, of $5,414. The Mobility preferred interests had a redemption value of $5,320, with approximately $2,650 removed from “Accounts payable and accrued liabilities” and $2,670 removed from “Other noncurrent liabilities.” The repurchase was primarily funded with proceeds from the April 2023 issuances of Telco LLC preferred interests. (See Note 12)

In June 2023, we issued $2,000 of Series B Cumulative Perpetual Preferred Membership Interests in Mobility II LLC (Mobility noncontrolling interests), which pay cash distributions of 6.8% per annum, subject to declaration. The Mobility noncontrolling interests are included in “Redeemable Noncontrolling Interest” on the consolidated balance sheets. (See Note 12)

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. We currently have one $12,000 revolving credit agreement that terminates on November 18, 2027 (Revolving Credit Agreement). No amount was outstanding under the Revolving Credit Agreement as of September 30, 2023.

In November 2022, we entered into and drew on a $2,500 term loan agreement due February 16, 2025 (2025 Term Loan), with Mizuho Bank, Ltd., as agent. On March 30, 2023, the 2025 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, a ratio of not more than 3.75-to-1. As of September 30, 2023, 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 the majority of our approximate $39,400 derivative portfolio, counterparties are still required to post collateral. During the first nine months of 2023, we received approximately $200 of cash collateral, on a net basis. Cash postings under these arrangements vary with changes in credit ratings and netting agreements. (See Note 7)

AT&T INC.

SEPTEMBER 30, 2023

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

Dollars in millions except per share amounts

Other

Our total capital consists of debt (long-term debt and debt maturing within one year), redeemable noncontrolling interest and stockholders’ equity. Our capital structure does not include debt issued by our equity method investments. At September 30, 2023, our debt ratio was 53.5%, compared to 48.8% at September 30, 2022 and 56.1% at December 31, 2022. The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances, repayments and reclassifications related to redemption of noncontrolling interests.

CRITICAL ACCOUNTING ESTIMATES

Asset Valuations and Impairments As discussed in Note 1 of our 2022 Annual Report on Form 10-K, goodwill and other indefinite-lived assets are tested for impairment at least annually as of October 1, generally utilizing a quantitative approach. While an interim quantitative impairment was not warranted in the third quarter of 2023, because of possible sustained higher discount rates and declines in the value of AT&T’s common stock, it is possible that the book values of one or more of our reporting units will exceed their respective fair values, which may result in the recognition of a noncash impairment of goodwill and/or indefinite-lived intangible assets in the fourth quarter of 2023 that could be material.