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

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

Dollars in millions except per share amounts

RESULTS OF OPERATIONS

AT&T Inc. is referred to as “we,” “AT&T” or the “Company” throughout this document. 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., and the names of the particular subsidiaries and affiliates providing the services generally have been omitted. AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technology industries. You should read this discussion in conjunction with the consolidated financial statements and accompanying notes (Notes). Percentage increases and decreases that are not considered meaningful are denoted with a dash.

On February 2, 2026, we closed our transaction with Lumen Technologies, Inc. (Lumen) and acquired substantially all of Lumen’s Mass Markets fiber business. The acquisition included customer relationships, which we include with our advanced home internet services and fiber network assets that were placed in a wholly owned subsidiary, Forged Fiber 37 Services, LLC (Forged Fiber). We plan to sell a controlling interest in Forged Fiber to an equity partner that will co-invest in the ongoing business. As such, Forged Fiber met the criteria of held-for-sale and accordingly is reflected as discontinued operations in the accompanying financial statements and are not included in our discussion of continuing operations. (See Notes 8 and 12)

Consolidated Results Our financial results from continuing operations are summarized in the discussions that follow. Additional analysis is discussed in our “Segment Results” section.

First Quarter
Percent
20262025Change
Operating Revenues
Service$25,478$25,1381.4%
Equipment6,0285,4889.8
Total Operating Revenues31,50630,6262.9
Operating Expenses
Operations and support19,88219,6821.0
Depreciation and amortization4,9665,190(4.3)
Total Operating Expenses24,84824,872(0.1)
Operating Income6,6585,75415.7
Interest expense1,8131,6589.3
Equity in net income (loss) of affiliates(41)1,440—
Other income (expense) — net59445530.5
Income from Continuing Operations Before Income Taxes5,3985,991(9.9)
Income from Continuing Operations4,2194,692(10.1)%

Operating revenues increased in the first quarter of 2026, reflecting higher Advanced Connectivity wireless and fiber revenues, including revenues from customers of our acquired mass markets fiber business. Operating revenues in Mexico were also higher due to favorable foreign exchange impacts during the first quarter of 2026. Offsetting the increases were lower Legacy revenues as we continue to work towards the decommissioning of our copper-based legacy network.

Operations and support expenses increased in the first quarter of 2026, primarily due to higher wireless sales volumes, which drove higher equipment, selling and bad debt expenses. The increase was also due to higher network costs that included vendor credits in the prior year, and incremental customer costs related to our acquired mass markets fiber business. The increase was partially offset by higher restructuring charges in the prior year, cost reductions from transformation initiatives and lower content licensing fees.

Depreciation and amortization expense decreased in the first quarter of 2026, primarily due to lower depreciation from fully depreciated legacy assets, partially offset by ongoing capital spending for strategic initiatives such as fiber and network upgrades.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

Operating income increased in the first quarter of 2026. Our operating income margin in the first quarter increased from 18.8% in 2025 to 21.1% in 2026.

Interest expense increased in the first quarter of 2026, primarily due to higher debt balances and interest rates on long-term borrowings.

Equity in net income (loss) of affiliates decreased in the first quarter of 2026, primarily due to the sale of our interest in DIRECTV Entertainment Holdings, LLC to TPG Capital on July 2, 2025.

Other income (expense) – net increased in the first quarter of 2026, primarily due to higher interest income from higher average cash balances and noncash losses on sales of nonstrategic assets in the prior year. These increases were partially offset by lower returns on benefit-related investments.

Income tax expense decreased in the first quarter of 2026. The decrease was primarily due to lower income from continuing operations before income tax. Our effective tax rate was 21.8% in the first quarter of 2026, versus 21.7% in the comparable period in the prior year, reflecting larger discrete state tax benefits in 2025.

Segment Results Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. Effective with our first-quarter 2026 reporting, we realigned our internal management and reporting structure to reflect the evolution of our business model to focus on delivering converged advanced connectivity services across 5G and fiber to consumer and business customers. This new segment reporting structure also provides better visibility into the progress of exiting our copper-based legacy operations.

Our segment results presented in Note 4 and discussed below follow our internal management reporting. We evaluate segment performance based on operating income as well as EBITDA and/or EBITDA margin. See “Discussion and Reconciliation of Non-GAAP Measures” for a reconciliation of EBITDA and EBITDA margin to the most comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP). We have three reportable segments: Advanced Connectivity, Legacy and Latin America.

The Advanced Connectivity segment provides domestic 5G and fiber-based wireless, internet and other advanced connectivity services to consumer and business customers. We also provide supplemental information on our advanced consumer and business customer relationships as the product lifecycles in these customer categories influence the growth trajectories of Advanced Connectivity segment results. The Legacy segment provides domestic legacy voice and data services to consumer and business customers over our copper-based network. Legacy segment results include revenues derived from copper-based services and direct operating costs. The Latin America segment provides wireless service and equipment in Mexico.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

ADVANCED CONNECTIVITY SEGMENT
First Quarter
20262025Percent Change
Segment Operating Revenues
Wireless service$16,941$16,6511.7%
Advanced home internet2,7992,19827.3
Business fiber and advanced connectivity1,8821,7557.2
Business transitional and other1,0831,294(16.3)
Other service158162(2.5)
Total Service Revenues22,86322,0603.6
Equipment5,6085,1329.3
Total Segment Operating Revenues28,47127,1924.7
Segment Operating Expenses
Operations and support16,91316,2474.1
Depreciation and amortization4,7054,973(5.4)
Total Segment Operating Expenses21,61821,2201.9
Operating Income$6,853$5,97214.8%

The following tables highlight other key measures of performance for Advanced Connectivity:

Wireless
March 31,
(in 000s)20262025Percent Change
Retail Wireless Subscribers****1109,292108,4180.8%
Phone91,05790,1931.0
Postpaid phone74,50373,0312.0
Prepaid phone16,55417,162(3.5)
Other18,23518,2250.1
First Quarter
20262025Percent Change
Retail Wireless Net Adds****1, 2158256(38.3)
Phone222304(27.0)
Postpaid phone294324(9.3)
Prepaid phone(72)(20)—
Other(64)(48)(33.3)%
Phone churn31.20%1.16%4BP
Postpaid phone churn30.89%0.83%6BP
Prepaid phone churn32.62%2.55%7BP
1Wireless subscribers and net additions exclude customers with free lines provided under promotional pricing until such lines are converted to paying lines.
2Excludes migrations between wireless subscriber categories, including connected devices, and acquisition-related activity.
3Calculated 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.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

Internet
March 31,
(in 000s)20262025Percent Change
Internet Connections14,83311,44329.6%
Fiber12,50110,21122.4
AT&T Fiber11,8009,59223.0
AT&T Business Fiber170161913.2
Fixed Wireless2,3321,23289.3
AT&T Internet Air (AIA)1,736803—
Business Fixed Wireless259642938.9
First Quarter
20262025Percent Change
Internet Net Adds****358451613.2
Fiber2922833.2
AT&T Fiber2732614.6
AT&T Business Fiber11922(13.6)
Fixed Wireless29223325.3
AT&T Internet Air (AIA)23918132.0
Business Fixed Wireless253521.9%
1Includes fiber broadband internet for businesses and excludes dedicated and ethernet fiber.
2Includes AT&T Internet Air for Business and historical fixed wireless services. Excludes integrated gateway wireless connections used for secondary or back-up connectivity.
3Excludes acquisition-related activity and the impact of customer disconnections resulting from the termination of AIA services in areas with unfavorable regulatory requirements in the first quarter of 2025.

Wireless service revenue increased in the first quarter of 2026 driven by growth in retail wireless subscribers in underpenetrated categories and converged accounts, partially offset by promotional activity. The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Phone churn was slightly higher in the first quarter of 2026, driven by the competitive dynamics of the industry.

Advanced home internet revenue increased in the first quarter of 2026 driven by an increase in fiber and AIA revenues. Fiber revenues increased 21.2% in the first quarter of 2026, due to growth in fiber customers, including customers of our acquired mass markets fiber business. We expect revenue growth to continue as we invest further in building our fiber footprint. AIA revenue increases exceeded 100% as we continue to make these services available in additional markets.

Business fiber and advanced connectivity revenues increased in the first quarter of 2026 driven by higher fiber and fixed wireless revenues.

Business transitional and other revenues decreased in the first quarter of 2026 driven by lower demand for Virtual Private Network (VPN) and wholesale services, both of which we expect to continue.

Other service revenues decreased in the first quarter of 2026, reflecting the continued decline in the number of consumer VoIP customers.

Equipment revenue increased in the first quarter of 2026, primarily due to higher wireless device sales volumes.

Operations and support expenses increased in the first quarter of 2026, primarily due to higher wireless sales volumes, which drove higher equipment, selling and bad debt expenses. The increase was also due to higher network costs that included vendor credits in the prior year, and incremental customer costs related to our acquired mass markets fiber business. These increases were partially offset by cost reductions from transformation initiatives and lower content licensing fees.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

Depreciation expense decreased in the first quarter of 2026, primarily due to lower depreciation from fully depreciated legacy assets, partially offset by ongoing capital spending for strategic initiatives such as fiber and network upgrades. 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.

Operating income increased in the first quarter of 2026. Our Advanced Connectivity operating income margin in the first quarter increased from 22.0% in 2025 to 24.1% in 2026. Our Advanced Connectivity EBITDA margin in the first quarter increased from 40.3% in 2025 to 40.6% in 2026.

LEGACY SEGMENTFirst Quarter
20262025Percent Change
Segment Operating Revenues$1,768$2,368(25.3)%
Segment Operating Expenses
Operations and support1,1561,349(14.3)
Depreciation and amortization———
Total Segment Operating Expenses1,1561,349(14.3)
Operating Income$612$1,019(39.9)%

Operating revenues decreased in the first quarter of 2026, driven by lower demand for legacy services, which we expect to continue as we decommission our copper-based legacy network.

Operations and support represent direct operating costs and decreased in the first quarter of 2026. Expense declines were primarily driven by lower personnel and other costs resulting from the decommissioning of our legacy network and lower fulfillment cost amortization, which we expect to continue. These decreases were partially offset by vendor credits in the prior year.

Operating income decreased in the first quarter of 2026. Our Legacy operating income and EBITDA margins in the first quarter decreased from 43.0% in 2025 to 34.6% in 2026.

LATIN AMERICA SEGMENTFirst Quarter
20262025Percent Change
Segment Operating Revenues
Service$753$61522.4%
Equipment42035618.0
Total Segment Operating Revenues1,17397120.8
Segment Operating Expenses
Operations and support95377822.5
Depreciation and amortization20015033.3
Total Segment Operating Expenses1,15392824.2
Operating Income$20$43(53.5)%

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

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

Subscribers
March 31,
(in 000s)20262025Percent Change
Postpaid7,0885,99718.2%
Prepaid16,83517,376(3.1)
Reseller180235(23.4)
Total Mexico Wireless Subscribers24,10323,6082.1%
Mexico Wireless Net Additions
First Quarter
(in 000s)20262025Percent Change
Postpaid337160—%
Prepaid(895)(110)—
Reseller(19)(18)(5.6)
Total Mexico Wireless Net Additions(577)32—%

Service revenues increased in the first quarter of 2026, primarily due to favorable foreign exchange impacts and growth in subscribers.

Equipment revenues increased in the first quarter of 2026, primarily due to favorable foreign exchange impacts and higher equipment sales.

Operations and support expenses increased in the first quarter of 2026, driven by unfavorable foreign exchange rates and increased sales volume, resulting in higher equipment costs and bad debt expenses.

Depreciation and amortization expense increased in the first quarter of 2026, driven by unfavorable foreign exchange rates, accelerated depreciation on certain assets and higher in-service assets.

Operating income decreased in the first quarter of 2026. Our Mexico operating income margin in the first quarter decreased from 4.4% in 2025 to 1.7% in 2026. Our Mexico EBITDA margin in the first quarter decreased from 19.9% in 2025 to 18.8% in 2026.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

SUPPLEMENTAL INFORMATION

The following tables present supplemental information on the consumer and business relationships within our Advanced Connectivity segment.

Advanced Connectivity Consumer
First Quarter
20262025Percent Change
Operating revenues
Wireless service$14,584$14,3701.5%
Advanced home internet2,7992,19827.3
Other service158162(2.5)
Total Service Revenues17,54116,7304.8
Equipment4,6114,2468.6
Total Operating Revenues22,15220,9765.6
Operating expenses
Operations and support12,58911,8016.7
Depreciation and amortization3,0223,0110.4
Total Operating Expenses15,61114,8125.4
Operating Income$6,541$6,1646.1%
Advanced Connectivity Business
First Quarter
20262025Percent Change
Operating revenues
Wireless service$2,357$2,2813.3%
Fiber and advanced connectivity1,8821,7557.2
Transitional and other service1,0831,294(16.3)
Total Service Revenues5,3225,330(0.2)
Equipment99788612.5
Total Operating Revenues6,3196,2161.7
Operating expenses
Operations and support4,3244,446(2.7)
Depreciation and amortization1,6831,962(14.2)
Total Operating Expenses6,0076,408(6.3)
Operating Income (Loss)$312$(192)—%

AT&T INC.

MARCH 31, 2026

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 regulations. AT&T subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulations in the markets where service is provided. Complying with these regulations may affect our results of operations and cash flow, and compliance may be very costly. For a discussion of these regulations, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Regulatory Landscape” in our Annual Report on Form 10-K for the year-ended December 31, 2025.

LIQUIDITY AND CAPITAL RESOURCES

Continuing operations for three months ended March 31,20262025
Cash provided by operating activities$7,595$9,049
Cash used in investing activities(7,484)(4,958)
Cash used in financing activities(2,097)(553)
March 31,December 31,
20262025
Cash and cash equivalents$11,964$18,234
Total debt138,407136,100

We had $11,964 in cash and cash equivalents available at March 31, 2026, decreasing $6,270 since December 31, 2025. Cash and cash equivalents included cash of $3,490 and money market funds and other cash equivalents of $8,474. Approximately $1,077 of our cash and cash equivalents were held in accounts outside of the U.S. and may be subject to restrictions on repatriation.

For the first three months of 2026, cash inflows were primarily provided by cash receipts from operations, including cash from our sale and transfer of our receivables to third parties. These inflows were exceeded by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, including higher device payments from higher sales volumes. The cash generated from operating activities was primarily used to repay long-term debt, fund capital improvements and business acquisitions, repurchase common stock, and make 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 three months of 2026, cash provided by operating activities was $7,595, compared to $9,049 for the first three months of 2025, with prior-year operating cash flows including $1,423 of distributions from DIRECTV.

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 approximately 120 days, with an average of 85 days outstanding, at an additional cost to us (referred to as direct supplier financing). The net impact of direct supplier financing, including principal and interest payments, was to decrease cash from operating activities approximately $1,136 and $2,042 for the three months ended March 31, 2026 and 2025, respectively. All supplier financing payments are due within one year. (See Note 10)

Cash Used in Investing Activities from Continuing Operations

For the first three months of 2026, cash used in investing activities totaled $7,484 and consisted primarily of $4,877 (including interest during construction) for capital expenditures. During the first three months of 2026, investing activities also included $413 of FirstNet sustainability payments, net of reinvestment, and $574 related to the note receivable payment from DIRECTV. In addition, we paid $1,018 in connection with our January 2026 acquisition of select spectrum licenses from United States Cellular Corporation (UScellular) and $5,756 in connection with our February 2026 acquisition of Lumen’s Mass Markets fiber

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

business, of which $1,656 was included in investing activities from continuing operations and $4,100 was included as investing activities from discontinued operations (see Notes 1, 8 and 12).

We enter into multi-year software licensing arrangements, which are typically paid over the license terms of two to five years and referred to as vendor financing. Additionally, for capital improvements, we have negotiated favorable vendor payment terms of 120 days or more with some of our vendors, which are also referred to as vendor financing. Vendor financing is excluded from capital expenditures and reported as financing activities. For the first three months of 2026, vendor financing payments were $212, compared to $203 for the first three months of 2025. Capital expenditures for the first three months of 2026 were $4,877, and when including $212 cash paid for vendor financing, capital investment was $5,089 ($609 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 three months of 2026, we placed $732 of productive assets in service under vendor financing arrangements (compared to $378 in the prior-year comparable period). The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements.

On August 25, 2025, we agreed to purchase Federal Communications Commission (FCC) licenses in the 600 MHz and 3.45 GHz bands from EchoStar Corporation for approximately $23,000, subject to certain adjustments. The transaction is subject to regulatory approval and other closing conditions. The FCC licenses will be used to expand our 5G network, meet future capacity demands and support future wireless communications services. We signed a short-term spectrum manager lease on the 3.45 GHz spectrum, which was deployed in cell sites covering nearly two-thirds of the U.S. population.

Cash Provided by or Used in Financing Activities from Continuing Operations

For the first three months of 2026, cash used in financing activities totaled $2,097 and was comprised of debt repayments, common stock repurchases, dividend payments, and vendor financing payments, partially offset by issuances of long-term debt.

A tabular summary of our debt activities for the three months ended March 31, 2026 is as follows:

Three months ended March 31, 2026
Issuance of Notes and Debentures:
USD notes$6,465
CAD notes1,633
Debt Issuances$8,098
Repayments
USD notes$(3,741)
EUR notes(1,103)
AUD notes(216)
Other(187)
Repayments of long-term debt$(5,247)

The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.3% as of March 31, 2026 and 4.2% as of December 31, 2025. We had $137,017 of total notes and debentures outstanding at March 31, 2026. This also included Euro, British pound sterling, Canadian dollar, Australian dollar, and Swiss franc denominated debt that totaled approximately $34,994.

At March 31, 2026, we had $6,818 of long-term debt maturing within one year. We had no outstanding commercial paper or other short-term borrowings on March 31, 2026.

For the first three months of 2026, we paid $212 of cash under our vendor financing program, compared to $203 in the prior-year comparable period. Total vendor financing payables included in our March 31, 2026 consolidated balance sheet were $2,437, with $1,474 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

During the first three months of 2026, we repurchased approximately 88 million shares totaling $2,279 under our $10,000 common stock repurchase authorization approved by the Board of Directors in December 2024 (the “2024 Authorization”), excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022. On January 27, 2026, the Board approved an authorization to repurchase an additional $10,000 of common stock (the “2026 Authorization”). At March 31, 2026, we had approximately $3,452 remaining under the 2024 Authorization, and $10,000 remaining under the 2026 Authorization.

We paid dividends on common and preferred shares of $1,997 during the first three months of 2026, compared with $2,091 for the first three months of 2025.

Dividends on common stock declared by our Board of Directors totaled $0.2775 per share in the first three months of 2026 and 2025. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities.

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 3, 2030 (Revolving Credit Agreement). No amount was outstanding under the Revolving Credit Agreement as of March 31, 2026.

In November 2025, we entered into a $17,500 Delayed Draw Term Loan Credit Agreement (Term Loan), with Bank of America, N.A., as agent. The Term Loan is comprised of (i) a $6,000 364-day delayed draw term loan facility (364-Day Term Loan Facility) and (ii) a $11,500 two-year delayed draw term loan facility (Two-Year Term Loan Facility). Each of the 364-Day Term Loan Facility and Two-Year Term Loan Facility is available for a single draw at any time before November 3, 2026. No amount was outstanding under the Term Loan as of March 31, 2026.

In March 2026, we entered into two bilateral term loan facilities totaling $1,500, that will allow us to borrow funds during the second quarter. When drawn, $500 will be due in 2031 and $1,000 will be due in 2033. Advances will bear interest at a variable rate based on the secured overnight financing rate (SOFR) plus a margin. No amounts were outstanding under these facilities as of March 31, 2026.

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.

The Revolving Credit Agreement and the Term Loan contain covenants that are customary for an issuer with investment grade senior debt credit ratings, including a net debt-to-EBITDA financial ratio covenant requiring us to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.75-to-1. As of March 31, 2026, 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 $36,069 derivative portfolio, counterparties are still required to post collateral. During the first three months of 2026, we received $354 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), redeemable noncontrolling interest and stockholders’ equity. Our capital structure does not include debt issued by our equity method investments. At March 31, 2026, our debt ratio was 52.0%, compared to 50.9% at March 31, 2025 and 51.4% at December 31, 2025. 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.

AT&T INC.

MARCH 31, 2026

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

Dollars in millions except per share amounts

DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURES

We also evaluate segment performance based on EBITDA, which is defined as operating income excluding depreciation and amortization, and/or EBITDA margin, which is defined as EBITDA divided by total revenue. EBITDA is used as part of our management reporting, and we believe EBITDA to be a relevant and useful measurement to our investors as it measures the cash generation potential of our operations. EBITDA does not give effect to depreciation and amortization expenses incurred in operating income nor is it burdened by cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. There are material limitations to using these non-GAAP financial measures. EBITDA and EBITDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies.

First Quarter
Percent
20262025Change
Advanced Connectivity Segment
Operating income$6,853$5,97214.8%
Add: Depreciation and amortization4,7054,973(5.4)
EBITDA$11,558$10,9455.6%
Operating income margin24.1%22.0%
EBITDA margin40.6%40.3%
Legacy Segment
Operating income$612$1,019(39.9)%
Add: Depreciation and amortization———
EBITDA$612$1,019(39.9)%
Operating income margin34.6%43.0%
EBITDA margin34.6%43.0%
Latin America Segment
Operating income$20$43(53.5)%
Add: Depreciation and amortization20015033.3
EBITDA$220$19314.0%
Operating income margin1.7%4.4%
EBITDA margin18.8%19.9%

AT&T INC.

MARCH 31, 2026

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