AT&T T · USD

NOTE 4. SEGMENT INFORMATIONOur 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. We have two reportable segments: Communications and Latin America.Our chief operating decision maker (CODM) is our Chief Executive Officer and President. Our CODM uses operating income to evaluate performance and allocate resources, including capital allocations, when managing the business. Our CODM manages operations through the review of actual and forecasted “Operations and Support Expenses” information at a segment and business unit level, with Communications and Latin America segments primarily evaluated on a direct cost basis and comprised of equipment, compensation, network and technology, sales, advertising and other costs. Additionally, business unit expenses within the Communications segment include direct and shared costs. Direct costs are incurred in support of products and services offered by the business units, such as equipment costs (predominantly wireless devices), network access, rents, leases, sales support, customer provisioning and commission expenses. Shared costs amongst the business units generally include information technology, network engineering and construction costs, advertising and other general and administrative expense.The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the United States and businesses globally. Our business strategies reflect integrated product offerings that cut across product lines and utilize shared assets. This segment contains the following business units:•Mobility provides nationwide wireless service and equipment.•Business Wireline provides advanced ethernet-based fiber services, fixed wireless services, IP Voice and managed professional services, as well as legacy voice and data services and related equipment, to business customers. •Consumer Wireline provides broadband services, including fiber connections that provide multi-gig services, and our fixed wireless access product (AT&T Internet Air or “AIA”) that provides internet services delivered over our 5G wireless network, to residential customers in select locations. Consumer Wireline also provides legacy telephony voice communication services. The Latin America segment provides wireless service and equipment in Mexico.

NOTE 5. REVENUE RECOGNITIONWe report our revenues net of sales taxes and record certain regulatory fees, primarily Universal Service Fund (USF) fees, on a net basis. No customer accounted for more than 10% of consolidated revenues in 2025, 2024 or 2023.We offer service-only contracts and contracts that bundle equipment used to access the services and/or with other service offerings. Some contracts have fixed terms and others are cancelable on a short-term basis (i.e., month-to-month arrangements).Examples of service revenues include wireless, fiber and other advanced connectivity, transitional and legacy voice and data. These services represent a series of distinct services that is considered a separate performance obligation. Service revenue is recognized when services are provided, based upon either period of time (e.g., monthly service fees) or usage (e.g., bytes of data processed). Some of our services require customer premises equipment that, when combined and integrated with AT&T’s specific network infrastructure, facilitates the delivery of service to the customer. In evaluating whether the equipment is a separate performance obligation, we consider the customer’s ability to benefit from the equipment on its own or together with other readily available resources and if so, whether the service and equipment are separately identifiable (i.e., is the service highly dependent on, or highly interrelated with the equipment). When equipment is a separate performance obligation, we record the sale of equipment when title has passed and the products are accepted by the customer. For devices sold through indirect channels (e.g., national retailers), revenue is recognized when the retailer accepts the device, not upon activation.Our equipment and service revenues are predominantly recognized on a gross basis, as most of our services do not involve a third party and we typically control the equipment that is sold to our customers.Revenue recognized from fixed-term contracts that bundle services and/or equipment is allocated based on the standalone selling price of all required performance obligations of the contract (i.e., each item included in the bundle). Promotional discounts are attributed to each required component of the arrangement, resulting in recognition over the contract term. Standalone selling prices are determined by assessing prices paid for service-only contracts (e.g.

NOTE 11. DEBTLong-term debt of AT&T and its subsidiaries, including interest rates and maturities, is summarized as follows at December 31:20252024Notes and debenturesInterest Rates1Maturities0.00%–2.99%2025–2033$22,240 $21,860 3.00%–4.99%2025–206189,379 83,725 5.00%–6.99%2025–209529,165 22,679 7.00%–8.75%2025–20973,524 3,565 Fair value of interest rate swaps recorded in debt3 6 144,311 131,835 Unamortized (discount) premium – net(9,193)(9,340)Unamortized issuance costs(400)(379)Total notes and debentures134,718 122,116 Finance lease obligations1,382 1,416 Total long-term debt, including current maturities136,100 123,532 Current maturities of long-term debt(9,011)(5,089)Total long-term debt$127,089 $118,443 1Foreign debt includes the impact from hedges, when applicable.We had outstanding Euro, British pound sterling, Canadian dollar, Australian dollar and Swiss franc denominated debt of approximately $35,307 and $30,685 at December 31, 2025 and 2024, respectively.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 December 31, 2025 and 2024.Our long-term debt maturing within one year was $9,011 and $5,089 at December 31, 2025 and 2024, respectively. We had no outstanding commercial paper or other short-term borrowings as of December 31, 2025 and 2024.Financing ActivitiesDuring 2025, we received net proceeds of $14,027 on the issuance of $14,111 in long-term debt, with an average weighted maturity of approximately 12.3 years and a weighted average interest rate of 5.0%. We repaid $5,399 of long-term debt with a weighted average interest rate of 4.7%. Our debt activity during 2025 primarily consisted of the following:FirstQuarterSecond QuarterThirdQuarterFourthQuarterFull Year 2025Issuance of notes and debentures:USD notes$— $3,473 $4,959 $— $8,432 EUR notes2,956 — 2,639 — 5,595 Debt issuances$2,956 $3,473 $7,598 $— $14,027 Repayments:USD notes$— $— $— $(145)$(145)EUR notes(1,321)(32)— (2,441)(3,794)CAD notes— — — (960)(960)Other(205)(62)(229)(133)(629)Repayments of long-term debt$(1,526)$(94)$(229)$(3,679)$(5,528)As of December 31, 2025 and 2024, we were in compliance with all covenants and conditions of instruments governing our debt. Substantially all of our outstanding long-term debt is unsecured.

NOTE 13. INCOME TAXESSignificant components of our deferred tax liabilities (assets) are as follows at December 31:20252024Depreciation and amortization$37,570 $36,531 Licenses and nonamortizable intangibles21,742 20,660 Lease right-of-use assets5,494 5,103 Lease liabilities(5,464)(5,107)Employee benefits(2,585)(3,017)Deferred fulfillment costs1,657 1,788 Equity in partnership14 2,716 Net operating loss and other carryforwards(5,567)(5,619)Other – net1,401 1,466 Subtotal54,262 54,521 Deferred tax assets valuation allowance3,978 4,338 Net deferred tax liabilities$58,240 $58,859 Noncurrent deferred tax liabilities$58,312 $58,939 Less: Noncurrent deferred tax assets(72)(80)Net deferred tax liabilities$58,240 $58,859 At December 31, 2025, we had combined net operating and capital loss carryforwards (tax effected) for federal income tax purposes of $695, state of $545 and foreign of $2,227, expiring through 2045. Additionally, we had federal credit carryforwards of $645 and state credit carryforwards of $1,454, expiring primarily through 2045.We recognize a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion, or all, of a deferred tax asset will not be realized. Our valuation allowances at December 31, 2025 and 2024 related primarily to state and foreign net operating losses and state credit carryforwards.We consider post-1986 unremitted foreign earnings subjected to the one-time transition tax not to be indefinitely reinvested as such earnings can be repatriated without any significant incremental tax costs. We consider other types of unremitted foreign earnings to be indefinitely reinvested. U.S. income and foreign withholding taxes have not been recorded on temporary differences related to investments in certain foreign subsidiaries as such differences are considered indefinitely reinvested. The amount of unrecognized deferred tax liability does not have a material impact on the financial statements.We recognize the financial statement effects of a tax return position when it is more likely than not, based on the technical merits, that the position will ultimately be sustained. For tax positions that meet this recognition threshold, we apply our judgment, taking into account applicable tax laws, our experience in managing tax audits and relevant GAAP, to determine the amount of tax benefits to recognize in our financial statements.

NOTE 15. SHARE-BASED COMPENSATIONUnder our various share-based compensation plans, senior and other management employees and nonemployee directors have received performance stock units and other nonvested stock units.As of December 31, 2025, we were authorized to issue up to approximately 41 million shares of common stock (including shares that may be issued upon exercise of outstanding options or upon vesting of performance stock units or other nonvested stock units) pursuant to these various plans:•Performance stock units, which are nonvested stock units, which are valued based upon the market price of our common stock at the date of grant and performance expectations. These distribute in the form of AT&T common stock and cash at the end of a three-year period, subject to the achievement of certain performance goals. We treat the cash-settled portion of these awards as a liability. •Restricted stock and restricted stock units are valued at the market price of our common stock at the date of grant and do not have any performance conditions. Restricted stock predominantly vests over a three- to ten-year period and restricted stock units predominantly vest over a three-year period.We account for our share-based compensation arrangements based on the fair value of the awards on their respective grant date, which may affect our ability to fully realize the value shown on our consolidated balance sheets of deferred tax assets associated with compensation expense. We record a valuation allowance when our future taxable income is not expected to be sufficient to recover the asset. Accordingly, there can be no assurance that the current stock price of our common shares will rise to levels sufficient to realize the entire tax benefit currently reflected on our consolidated balance sheets. However, to the extent we generate excess tax benefits (i.e., those additional tax benefits in excess of the deferred taxes associated with compensation expense previously recognized) the potential future impact on income would be reduced.Our consolidated statements of income include the share-based compensation cost recognized for the plans described above as “Selling, general and administrative” expense.

NOTE 8. LEASESWe have operating and finance leases for certain facilities and equipment used in our operations. Our leases generally have remaining lease terms of up to 15 years. Some of our operating leases (e.g., for towers and real estate) contain renewal options that may be exercised, and some of our leases include options to terminate the leases within one year.We have recognized a right-of-use asset for both operating and finance leases, and a corresponding lease liability that represents the present value of our obligation to make payments over the lease term. The present value of the lease payments is calculated using the incremental borrowing rate for operating and finance leases, which was determined using a portfolio approach based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. We use the unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate in the currency of the lease, which will be updated on a quarterly basis for measurement of new lease liabilities.The components of lease expense were as follows:202520242023Operating lease cost$5,927$5,776$5,577Finance lease cost:Amortization of leased assets in property, plant and equipment$182$205$232Interest on lease obligation142171184Total finance lease cost$324$376$416The following table provides supplemental cash flows information related to leases:202520242023Cash Flows from Operating ActivitiesCash paid for amounts included in lease obligations:Operating cash flows from operating leases$4,830$4,757$4,588Supplemental Lease Cash Flow DisclosuresOperating lease right-of-use assets obtained in exchange for new operating lease obligations5,5173,7622,693The following tables set forth supplemental balance sheet information related to leases at December 31:20252024Operating LeasesOperating lease right-of-use assets$22,642 $20,909 Accounts payable and accrued liabilities$3,581 $3,533 Operating lease obligation18,943 17,391 Total operating lease obligation$22,524 $20,924 Finance LeasesProperty, plant and equipment, at cost$2,476 $2,449 Accumulated depreciation and amortization(1,484)(1,378)Property, plant and equipment – net$992 $1,071 Current portion of long-term debt$190 $179 Long-term debt1,192 1,237 Total finance lease obligation$1,382 $1,416 20252024Weighted-Average Remaining Lease Term (years)Operating leases7.67.6Finance leases5.36.

NOTE 6. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTSSpectrum Auctions In February 2021, the FCC announced that AT&T was the winning bidder for 1,621 C-Band licenses, comprised of a total of 80 MHz nationwide, including 40 MHz in Phase I. We received the licenses in July 2021 and classified the auction deposits, related capitalized interest and billed relocation costs as “Licenses – Net” on our December 31, 2021 consolidated balance sheet. In December 2021, we paid $955 of Incentive Payments upon clearing of Phase I spectrum and paid $2,112 upon clearing of Phase II spectrum in 2023. Pending AcquisitionsSpectrum On August 25, 2025, we agreed to purchase 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 expected to close in early 2026 and 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.Fiber On May 21, 2025, we agreed to acquire substantially all of Lumen’s Mass Markets fiber business for $5,750 cash, subject to purchase price adjustments. At the time of signing, the pending acquisition covered approximately one million fiber customers, and also included fiber network assets that reached more than four million fiber locations. On February 2, 2026, we completed the transaction and expect to manage the customer relationships in our Consumer Wireline business and place the fiber network assets in a new, wholly owned subsidiary. We plan to sell a controlling interest in the subsidiary to an equity partner that will co-invest in the ongoing business, and, as such, it is expected to meet the criteria for discontinued operations.

ITEM 1C. CYBERSECURITYGovernanceBoard and Audit Committee OversightOur Board of Directors has delegated to the Audit Committee the oversight responsibility to review and discuss with management the Company’s privacy and data security, including cybersecurity, risk exposures, policies and practices, and the steps management has taken to detect, monitor and control such risks and the potential impact of those exposures on our business, financial results, operations and reputation. The full Board and Audit Committee regularly receive reports and presentations on privacy and data security, which address relevant cybersecurity issues and risks and span a wide range of topics. These reports and presentations are provided by officers with responsibility for privacy and data security, who include our Chief Information Security Officer (CISO), Chief Technology Officer (CTO) and AT&T’s Legal team. In addition to regular reports to the Audit Committee, we have protocols by which certain security incidents are escalated within the Company and, where appropriate, reported in a timely manner to the Audit Committee.Chief Security Office/CISOWe maintain a Chief Security Office (CSO), which is charged with management-level responsibility for all aspects of network and information security within the Company. Led by our CISO and comprised of a large team of highly trained security professionals across multiple countries, the CSO is responsible for:a.establishing the policies, standards and requirements for the security of AT&T’s computing and network environments;b.protecting AT&T-owned and -managed assets and resources against unauthorized access by monitoring potential security threats, correlating network events and overseeing the execution of corrective actions; c.promoting compliance with AT&T’s security policies and network and information security program in a consistent manner on network systems and applications; andd.providing security thought leadership in the global security arena. Our CISO plays the key management role in assessing and managing our material risks from cybersecurity threats. The CISO also works closely with AT&T Legal to oversee compliance with legal, regulatory and contractual security requirements. The CISO has extensive technical leadership experience and cybersecurity expertise, gained from over 20 years of experience, including serving as the Chief Information Security Officer and Director of the Office of Cybersecurity at a U.S.