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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

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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). Upon acquisition, we sought an equity partner to co-invest in Forged Fiber and have since agreed to sell a controlling interest in the 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.

Third QuarterNine-Month Period
PercentPercent
20262025Change20262025Change
Operating Revenues
Service$26,301$25,3363.8%$77,756$75,7662.6%
Equipment6,0215,37312.117,63016,4167.4
Total Operating Revenues32,32230,7095.395,38692,1823.5
Operating Expenses
Operations and support23,24919,27320.662,68558,0508.0
Depreciation and amortization4,9785,317(6.4)14,91015,758(5.4)
Total Operating Expenses28,22724,59014.877,59573,8085.1
Operating Income4,0956,119(33.1)17,79118,374(3.2)
Interest expense1,9791,70016.45,6755,01313.2
Equity in net income (loss) of affiliates(10)(20)50.0(80)1,905—
Other income (expense) — net5906,254(90.6)1,8807,476(74.9)
Income from Continuing Operations Before Income Taxes2,69610,653(74.7)13,91622,742(38.8)
Income from Continuing Operations1,3069,677(86.5)%10,56319,230(45.1)%

Operating revenues increased in the third quarter and for the first nine months of 2026, reflecting higher Advanced Connectivity wireless service, fiber and equipment revenues, with fiber revenues including the impact of acquiring Lumen’s mass markets fiber business. Operating revenues in Mexico were also higher due to growth in postpaid revenues and favorable foreign exchange impacts. 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 third quarter and for the first nine months of 2026, primarily due to a noncash impairment charge associated with our held-for-sale Mexico wireless business, employee separation charges, higher wireless equipment sales which drove higher equipment and bad debt expenses, and incremental customer costs related to our acquired mass markets fiber business. These cost increases were partially offset by cost reductions from transformation initiatives and apportioned legal settlements in 2025. The increase for the first nine months also included an asset abandonment

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

charge associated with the reprioritization of our spectrum strategy in the second quarter of 2026, which was partially offset by lower content licensing fees and higher gains on tower transactions.

Depreciation and amortization expense decreased in the third quarter and for the first nine months 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.

Operating income decreased in the third quarter and for the first nine months of 2026. Our operating income margin in the third quarter decreased from 19.9% in 2025 to 12.7% in 2026 and for the first nine months decreased from 19.9% in 2025 to 18.7% in 2026.

Interest expense increased in the third quarter and for the first nine months of 2026, primarily due to higher debt balances and interest rates on long-term borrowings. Interest expense is expected to remain elevated as a result of debt issued to fund our recent spectrum acquisition, partially offset by capitalized interest related to those spectrum assets not yet placed into service (see Note 8).

Equity in net income (loss) of affiliates increased in the third quarter and decreased for the first nine months of 2026. The increase in the third quarter was not meaningful and did not contain any individually material changes. The decrease for the first nine months was primarily due to the sale of our interest in DIRECTV Entertainment Holdings, LLC (DIRECTV) to TPG Capital on July 2, 2025.

Other income (expense) – net decreased in the third quarter and for the first nine months of 2026, primarily due to a gain recognized in the third quarter of 2025 associated with the sale of our interest in DIRECTV. The decrease for the first nine months was partially offset by higher interest income from higher cash balances in anticipation of our recent spectrum acquisition (see Note 8).

Income tax expense increased in the third quarter and decreased for the first nine months of 2026. The increase in the third quarter was primarily due to tax expense associated with the held-for-sale accounting of our Mexico wireless business and a lower effective tax rate in 2025 resulting from a tax-free gain on the sale of DIRECTV. The decrease for the first nine months was primarily due to lower income from continuing operations before income taxes and the resolution of certain Internal Revenue Service (IRS) examinations, partially offset by tax expense associated with the held-for-sale accounting of our Mexico wireless business and a lower effective tax rate in 2025 resulting from a tax-free gain on the sale of DIRECTV.

Our effective tax rate was 51.6% in the third quarter and 24.1% for the first nine months of 2026, versus 9.2% and 15.4% in the comparable periods in the prior year. The higher effective tax rate in the third quarter of 2026 was primarily due to the held-for-sale accounting of our Mexico wireless business and the nonrecognition of income taxes on the DIRECTV gain in 2025. The higher effective tax rate for the first nine months of 2026 was primarily due to the held-for-sale accounting of our Mexico wireless business, partially offset by the resolution of certain IRS examinations and a lower effective tax rate in 2025 resulting from a tax-free gain on the sale of DIRECTV.

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

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

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.

ADVANCED CONNECTIVITY SEGMENT
Third QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Segment Operating Revenues
Wireless service$17,764$16,9265.0%$52,118$50,4303.3%
Advanced home internet2,9752,41123.48,7006,90825.9
Business fiber and advanced connectivity1,9921,8328.75,8205,3568.7
Business transitional and other1,0231,198(14.6)3,1483,741(15.9)
Other service148162(8.6)457488(6.4)
Total Service Revenues23,90222,5296.170,24366,9235.0
Equipment5,5794,97412.216,32415,2696.9
Total Segment Operating Revenues29,48127,5037.286,56782,1925.3
Segment Operating Expenses
Operations and support17,15116,0107.150,64748,6134.2
Depreciation and amortization4,7025,076(7.4)14,09415,084(6.6)
Total Segment Operating Expenses21,85321,0863.664,74163,6971.6
Operating Income$7,628$6,41718.9%$21,826$18,49518.0%

AT&T INC.

SEPTEMBER 30, 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 Advanced Connectivity:

Wireless
September 30,
(in 000s)20262025Percent Change
Retail Wireless Subscribers****1110,237108,7991.3%
Phone91,73690,7551.1
Postpaid phone75,28373,8012.0
Prepaid phone16,45316,954(3.0)
Other18,50118,0442.5%
Third QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Retail Wireless Net Adds****1, 2537161—%1,24474467.2%
Phone35832211.21,0169932.3
Postpaid phone379405(6.4)1,1051,130(2.2)
Prepaid phone(21)(83)74.7(89)(137)35.0
Other179(161)—%228(249)—%
Phone churn31.19%1.24%(5)BP1.17%1.18%(1)BP
Postpaid phone churn30.92%0.92%—BP0.89%0.87%2BP
Prepaid phone churn32.41%2.63%(22)BP2.44%2.53%(9)BP
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.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

Internet
September 30,
(in 000s)20262025Percent Change
Internet Connections16,24812,56529.3%
Fiber13,31010,78923.4
AT&T Fiber12,56010,12324.1
AT&T Business Fiber175066612.6
Fixed Wireless2,9381,77665.4
AT&T Internet Air (AIA)2,2311,27674.8
Business Fixed Wireless270750041.4%
Third QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Internet Net Adds****376961325.4%1,9991,63822.0%
Fiber44230943.01,10186127.9
AT&T Fiber41628844.41,03379230.4
AT&T Business Fiber1262123.86869(1.4)
Fixed Wireless3273047.689877715.6
AT&T Internet Air (AIA)2802703.773465412.2
Business Fixed Wireless2473438.2%16412333.3%
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 third quarter and for the first nine months of 2026 driven by growth in retail wireless subscribers in underpenetrated categories and converged accounts, and pricing actions that were partially offset by promotional discounts on wireless subscriber additions. The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Phone churn was lower in the third quarter and for the first nine months of 2026.

Advanced home internet revenue increased in the third quarter and for the first nine months of 2026 driven by an increase in fiber and AIA revenues. Fiber revenues increased 18.7% in the third quarter and 20.4% for the first nine months 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.

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

Business transitional and other revenues decreased in the third quarter and for the first nine months 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 third quarter and for the first nine months of 2026, reflecting the continued decline in the number of consumer VoIP customers.

Equipment revenue increased in the third quarter and for the first nine months of 2026, primarily due to higher wireless device sales driven by higher device prices, partially offset by lower hardware sales to business customers.

Operations and support expenses increased in the third quarter and for the first nine months of 2026. The increase for the third quarter was primarily driven by growth in wireless retail subscribers which drove higher equipment and bad debt

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

expenses, higher advertising expenses and incremental customer costs related to our acquired mass markets fiber business. These increases were partially offset by cost reductions from transformation initiatives.

The increase for the first nine months was primarily due to higher wireless revenue, which drove higher equipment and bad debt expenses and higher advertising 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, which were partially offset by cost reductions from transformation initiatives, lower content licensing fees and higher gains on tower transactions.

Depreciation expense decreased in the third quarter and for the first nine months 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 third quarter and for the first nine months of 2026. Our Advanced Connectivity operating income margin in the third quarter increased from 23.3% in 2025 to 25.9% in 2026 and for the first nine months increased from 22.5% in 2025 to 25.2% in 2026. Our Advanced Connectivity EBITDA margin in the third quarter remained consistent at 41.8% in 2025 and 2026 and for the first nine months increased from 40.9% in 2025 to 41.5% in 2026.

LEGACY SEGMENTThird QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Segment Operating Revenues$1,519$2,013(24.5)%$4,919$6,583(25.3)%
Segment Operating Expenses
Operations and support1,0211,334(23.5)3,2863,926(16.3)
Depreciation and amortization——————
Total Segment Operating Expenses1,0211,334(23.5)3,2863,926(16.3)
Operating Income$498$679(26.7)%$1,633$2,657(38.5)%

Operating revenues decreased in the third quarter and for the first nine months 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 third quarter and for the first nine months 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 settlements.

Operating income decreased in the third quarter and for the first nine months of 2026. Our Legacy operating income and EBITDA margins in the third quarter decreased from 33.7% in 2025 to 32.8% in 2026 and for the first nine months decreased from 40.4% in 2025 to 33.2% in 2026.

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

LATIN AMERICA SEGMENTThird QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Segment Operating Revenues
Service$798$69614.7%$2,331$1,97318.1%
Equipment44239910.81,3061,14713.9
Total Segment Operating Revenues1,2401,09513.23,6373,12016.6
Segment Operating Expenses
Operations and support1,00489612.12,9542,52716.9
Depreciation and amortization1911777.958048220.3
Total Segment Operating Expenses1,1951,07311.43,5343,00917.4
Operating Income$45$22—%$103$111(7.2)%

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

Subscribers
September 30,
(in 000s)20262025Percent Change
Postpaid7,9396,42323.6%
Prepaid15,31717,508(12.5)
Reseller77218(64.7)
Total Mexico Wireless Subscribers23,33324,149(3.4)%
Mexico Wireless Net Additions
Third QuarterNine-Month Period
(in 000s)20262025Percent Change20262025Percent Change
Postpaid48224398.4%1,188586—%
Prepaid(512)68—(2,413)22—
Reseller(72)(5)—(122)(35)—
Total Mexico Wireless Net Additions(102)306—%(1,347)573—%

On October 13, 2026, we entered into an agreement to sell our Mexico wireless business, which is the entirety of our Latin America segment (see Note 8). We applied held-for-sale accounting in continuing operations as of September 30, 2026, and continue to present results within the Latin America segment.

Service revenues increased in the third quarter and for the first nine months of 2026, primarily due to favorable foreign exchange impacts and growth in postpaid subscribers and total ARPU.

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

Operations and support expenses increased in the third quarter and for the first nine months of 2026, driven by unfavorable foreign exchange rates, higher bad debt expenses and higher equipment costs.

Depreciation and amortization expense increased in the third quarter and for the first nine months of 2026, driven by unfavorable foreign exchange rates. For the first nine months of 2026, expenses also increased due to spectrum renewal fees, with accelerated depreciation impacting the first three months of the year, partially offset by lower in-service assets. Beginning

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

in the fourth quarter, due to classification of our Mexico wireless business as held-for-sale, all depreciation and amortization expense will cease.

Operating income increased in the third quarter and decreased for the first nine months of 2026. Our Mexico operating income margin in the third quarter increased from 2.0% in 2025 to 3.6% in 2026 and for the first nine months decreased from 3.6% in 2025 to 2.8% in 2026. Our Mexico EBITDA margin in the third quarter increased from 18.2% in 2025 to 19.0% in 2026 and for the first nine months decreased from 19.0% in 2025 to 18.8% in 2026.

SUPPLEMENTAL INFORMATION

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

Advanced Connectivity Consumer
Third QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Operating revenues
Wireless service$15,283$14,5944.7%$44,859$43,5233.1%
Advanced home internet2,9752,41123.48,7006,90825.9
Other service148162(8.6)457488(6.4)
Total Service Revenues18,40617,1677.254,01650,9196.1
Equipment4,6424,10713.013,51312,6267.0
Total Operating Revenues23,04821,2748.367,52963,5456.3
Operating expenses
Operations and support12,73511,57310.037,55835,2406.6
Depreciation and amortization2,9733,069(3.1)8,9719,136(1.8)
Total Operating Expenses15,70814,6427.346,52944,3764.9
Operating Income$7,340$6,63210.7%$21,000$19,1699.6%

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

Advanced Connectivity Business
Third QuarterNine-Month Period
20262025Percent Change20262025Percent Change
Operating revenues
Wireless service$2,481$2,3326.4%$7,259$6,9075.1%
Fiber and advanced connectivity1,9921,8328.75,8205,3568.7
Transitional and other service1,0231,198(14.6)3,1483,741(15.9)
Total Service Revenues5,4965,3622.516,22716,0041.4
Equipment9378678.12,8112,6436.4
Total Operating Revenues6,4336,2293.319,03818,6472.1
Operating expenses
Operations and support4,4164,437(0.5)13,08913,373(2.1)
Depreciation and amortization1,7292,007(13.9)5,1235,948(13.9)
Total Operating Expenses6,1456,444(4.6)18,21219,321(5.7)
Operating Income (Loss)$288$(215)—%$826$(674)—%

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 and “Management’s Discussion and Analysis of Financial Condition and Results of Operation—Competitive and Regulatory Environment” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2026.

LIQUIDITY AND CAPITAL RESOURCES

Continuing operations for the nine months ended September 30,20262025
Cash provided by operating activities$28,915$28,964
Cash used in investing activities(41,520)(14,433)
Cash provided by financing activities9,6692,391
September 30,December 31,
20262025
Cash and cash equivalents$10,767$18,234
Total debt159,627136,100

We had $10,767 in cash and cash equivalents available at September 30, 2026, decreasing $7,467 since December 31, 2025, reflecting the completion of our spectrum acquisition. Cash and cash equivalents included cash of $3,523 and money market funds and other cash equivalents of $7,244. Approximately $1,387 of our cash and cash equivalents, including $297 related to our held-for-sale Mexico wireless business, were held in accounts outside of the U.S. and may be subject to restrictions on repatriation.

AT&T INC.

SEPTEMBER 30, 2026

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 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 exceeded cash used to meet the needs of the business, including, but not limited to, payment of operating expenses. The cash generated from operating activities was primarily used to fund capital improvements and business acquisitions, repay long-term debt, 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 nine months of 2026, cash provided by operating activities was $28,915, compared to $28,964 for the first nine months of 2025, with the prior year benefiting from $1,675 of cash received from DIRECTV, net of related tax payments. Cash from operations in 2026 includes increases resulting from lower cash tax payments and the timing of working capital payments, which were partially offset by $100 of voluntary contributions to our pension plans.

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 supplier financing and direct supplier financing, including principal and interest payments, was to decrease cash from operating activities approximately $1,784 and $2,430 for the nine months ended September 30, 2026 and 2025, respectively. All supplier financing payments are due within one year. (See Note 10)

Cash Provided by or Used in Investing Activities from Continuing Operations

For the first nine months of 2026, cash used in investing activities totaled $41,520 and consisted primarily of $15,638 (including interest during construction) for capital expenditures, and $22,650 related to the July acquisition of Federal Communications Commission (FCC) licenses from EchoStar Corporation (see Note 8). During the first nine months of 2026, investing activities also included $615 of FirstNet sustainability payments, net of reinvestment, and approximately $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 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 nine months of 2026, vendor financing payments were $1,148, compared to $823 for the first nine months of 2025. Capital expenditures for the first nine months of 2026 were $15,638, and when including $1,148 cash paid for vendor financing, capital investment was $16,786 ($1,902 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 nine months of 2026, we placed $1,839 of productive assets in service under vendor financing arrangements (compared to $1,014 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 2026, cash provided by financing activities totaled $9,669 and was comprised of issuances of long-term debt, partially offset by debt repayments, common stock repurchases, dividend payments, and vendor financing payments.

AT&T INC.

SEPTEMBER 30, 2026

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 nine months ended September 30, 2026 is as follows:

First QuarterSecond QuarterThird QuarterNine months ended September 30, 2026
Issuance of Notes and Debentures:
364-Day Term Loan Facility$—$—$3,000$3,000
Issuance of other short-term borrowings$—$—$3,000$3,000
USD notes$6,465$5,939$1,098$13,502
CAD notes1,633——1,633
EUR notes——6,0256,025
GBP notes——727727
Two-Year Term Loan Facility——11,48611,486
Private Financing——2,4972,497
Issuance of long-term debt$8,098$5,939$21,833$35,870
Repayments:
364-Day Term Loan Facility$—$—$(3,000)$(3,000)
Repayment of other short-term borrowings$—$—$(3,000)$(3,000)
USD notes$(3,741)$—$(408)$(4,149)
EUR notes(1,103)(32)(1,677)(2,812)
AUD notes(216)——(216)
Two-Year Term Loan Facility——(2,500)(2,500)
Other(187)(119)(189)(495)
Repayment of long-term debt$(5,247)$(151)$(4,774)$(10,172)

The weighted average interest rate of our long-term debt portfolio, including credit agreement borrowings and the impact of derivatives, was approximately 4.5% as of September 30, 2026 and 4.2% as of December 31, 2025. We had $159,464 of total notes and debentures outstanding at September 30, 2026. This also included Euro, British pound sterling, Canadian dollar, Australian dollar, and Swiss franc denominated debt that totaled approximately $39,468.

At September 30, 2026, we had $9,483 of long-term debt maturing within one year. We had no outstanding commercial paper or other short-term borrowings on September 30, 2026.

For the first nine months of 2026, we paid $1,148 of cash under our vendor financing program, compared to $823 in the prior-year comparable period. Total vendor financing payables included in our September 30, 2026 consolidated balance sheet were $2,465, with $1,653 due within one year (in “Accounts payable and accrued liabilities”) and the remainder predominantly due within five years (in “Other noncurrent liabilities”).

We exhausted the $10,000 common stock repurchase authorization approved by the Board of Directors in December 2024 (the “2024 Authorization”) during the third quarter of 2026 and subsequently began repurchases under an additional $10,000 common stock repurchase authorization approved by the Board of Directors in January 2026 (the “2026 Authorization”). During the first nine months of 2026, we repurchased approximately 232 million shares totaling $5,731 under the 2024 Authorization and approximately 59 million shares totaling $1,504 under the 2026 Authorization, excluding brokerage fees and the one percent excise tax imposed by the Inflation Reduction Act of 2022. At September 30, 2026, approximately $8,496 remained available for repurchases under the 2026 Authorization.

We paid dividends on common and preferred shares of $5,923 during the first nine months of 2026, compared with $6,168 for the first nine months of 2025.

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

Dividends on common stock declared by our Board of Directors totaled $0.8325 per share in the first nine 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. The summaries of the Revolving Credit Agreement and Term Loan (each as defined below) are qualified in their 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 September 30, 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). On July 28, 2026, we borrowed $11,500 under the Two-Year Term Loan Facility and $3,000 under the 364-Day Term Loan Facility to fund the acquisition of FCC licenses from EchoStar. In August 2026, the 364-Day Term Loan Facility was repaid in full and terminated. We also repaid $2,500 of borrowings under the Two-Year Term Loan Facility. As of September 30, 2026, $9,000 was outstanding under the Two-Year Term Loan Facility.

In March 2026, we entered into two bilateral term loan facilities totaling $1,500. In July 2026, we drew $500 under one facility maturing in 2031 and $1,000 under one facility maturing in 2033. Borrowings under these facilities bear interest at a variable rate based on the secured overnight financing rate (SOFR) plus a margin. As of September 30, 2026, $1,500 was outstanding under these facilities.

In May 2026, we entered into a $1,000 bilateral term loan facility and subsequently drew $1,000 under the facility during July 2026. The borrowing bears interest at a variable rate based on SOFR plus a margin. As of September 30, 2026, $1,000 was outstanding and is due on July 28, 2029.

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 September 30, 2026, we were in compliance with the covenants for our credit facilities.

Collateral Arrangements

Most of our counterparty collateral arrangements require AT&T to post cash collateral only when net derivative exposures are unfavorable to AT&T and exceed specified exposure thresholds or upon certain credit rating downgrades. In contrast, counterparties are generally required to post collateral when net derivative positions are in AT&T's favor, with no minimum exposure threshold. These arrangements cover the majority of our approximate $41,144 derivative portfolio. During the first nine months of 2026, we received $144 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 September 30, 2026, our debt ratio was 56.1%, compared to 52.0% at September 30, 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.

On October 13, 2026, we entered into an agreement to sell our wireless business in Mexico. In the third quarter of 2026, we classified our Mexico wireless business as held-for-sale (See Note 8). The transaction is expected to close in the first quarter of

AT&T INC.

SEPTEMBER 30, 2026

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

Dollars in millions except per share amounts

2027, pending customary closing conditions and regulatory approvals. We expect to receive approximately $2,000 in cash at closing, subject to adjustments, plus additional contractual and contingent benefits.

AT&T INC.

SEPTEMBER 30, 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.

Third QuarterNine-Month Period
PercentPercent
20262025Change20262025Change
Advanced Connectivity Segment
Operating income$7,628$6,41718.9%$21,826$18,49518.0%
Add: Depreciation and amortization4,7025,076(7.4)14,09415,084(6.6)
EBITDA$12,330$11,4937.3%$35,920$33,5797.0%
Operating income margin25.9%23.3%25.2%22.5%
EBITDA margin41.8%41.8%41.5%40.9%
Legacy Segment
Operating income$498$679(26.7)%$1,633$2,657(38.5)%
Add: Depreciation and amortization——————
EBITDA$498$679(26.7)%$1,633$2,657(38.5)%
Operating income margin32.8%33.7%33.2%40.4%
EBITDA margin32.8%33.7%33.2%40.4%
Latin America Segment
Operating income$45$22—%$103$111(7.2)%
Add: Depreciation and amortization1911777.958048220.3
EBITDA$236$19918.6%$683$59315.2%
Operating income margin3.6%2.0%2.8%3.6%
EBITDA margin19.0%18.2%18.8%19.0%

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