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1、AT&T Inc.2022 Annual Report Connecting changes everythingAT&T Inc.2022 Annual ReportOur purpose Connecting people to greater possibility with expertise,simplicity and inspiration.1To our shareholders 2022 was a year of major change for AT&T,and we are proud to have ended the year in a stronger posit
2、ion.The realities of our industry,changing consumer expectations and an evolving macroeconomic environment dictated our need for a simplified operating model and sharp execution.Thats why we made the structural moves we did to reposition our company,including successfully completing the separation o
3、f WarnerMedia.We have confidence there is a bright future for an AT&T that delivers the best in connectivity.Connectivity is ingrained in our legacy going back nearly 150 years.We have the assets,talent and experience to connect people to greater possibility with simplicity,expertise and inspiration
4、.In 2022,we worked to fulfill this purpose in 3 ways:1.We grew customer relationships at a near record-setting pace,taking full advantage of all-time-high levels of demand for strong,reliable connectivity.2.We were effective and efficient in our operations,reaching more than$5 billion of our 3-year,
5、$6 billion-plus run-rate cost transformation target.3.Our deliberate capital allocation strategy enabled us to invest in 5G and fiber at historic levels,reduce our net debt by about$24 billion and set up a structure we believe will drive better returns for you,our shareholders.1 This includes contin
6、uing to provide an attractive dividend.Consistency in operational excellence Describing our go-to-market strategy is as simple as the strategy itself.Be consistent with our offers to our customers,and make it easy for them to do business with us.WirelessIn U.S.wireless,we attracted nearly 2.9 millio
7、n postpaid phone net additions in 2022,marking our second-best annual results in more than a decade,behind only 2021.We also grew wireless service revenues by more than 5%year over year,representing a multi-year high.And we did this while continuing to concentrate on profitability,increasing wireles
8、s EBITDA by nearly 4%and achieving our most profitable year on record.2 We are also a leader in the Internet of Things(IoT).We added more than 12 million connected devices in 2022,becoming the first U.S.carrier to exceed 100 million connected devices.John Stankey Chief Executive OfficerAT&T Inc.2022
9、 Annual Report2Our wireless momentum was a direct result of our simplified value proposition,lower acquisition costs,distribution efficiencies and our ability to meet customers on their terms.The strength of our wireless network played a large role in our success,with our recent spectrum investments
10、 performing even better than expected.In fact,we were efficient enough with our deployment of mid-band 5G spectrum that we reached more than 150 million people,more than double our original year-end coverage target.And we expect to hit 200 million people by the end of 2023.As a result,our already co
11、nsistent download speeds increased materially,as recently recognized in the Root Metrics second-half 2022 results.This increased speed provided another significant benefit to our customers.Our wireless network is also the heart of FirstNet,public safetys dedicated,nationwide communications platform.
12、The AT&T and FirstNet networks cover more than 99%of the population today,3 and FirstNet covers more first responders than any other network in America.4 Its an honor to serve and support them with prioritized connectivity and capacity plus dedicated spectrum.We ended the year with about 4.4 million
13、 FirstNet connections across more than 24,000 agencies.FiberWe delivered strong full-year results in AT&T Fiber as well.Fiber is a durable,sustainable technology that connects people and businesses with each other and to the world.Fiber investments have a multi-decade lifespan,and were investing hea
14、vily to build out our network.We believe that AT&T offers the best wired internet available.Quite simply,where we build fiber,we win.2022 marked our fifth straight year with 1 million or more net additions,raising our AT&T Fiber subscriber base to more than 7 million.We led the industry in bringing
15、fiber to homes5 and closed the year with the ability to serve more than 19 million consumer locations.We also have the ability to serve more than 3 million business locations.We are on track to reach our previously announced goal of 30 million-plus total locations,including consumer and business,by
16、the end of 2025.Our recently announced agreement to form a joint venture with BlackRock Alternatives Gigapower is an innovative new business model we are testing to dramatically increase the pace of fiber installation outside of our traditional wireline markets.We believe agile ventures like this op
17、en up new possibilities to connect underserved markets with fiber and can compete more effectively for the chance to co-invest with the U.S.government on our shared objectives of a better,connected America.AT&T has the ability to serve more than 22 million consumer and business locations with fiber.
18、3These results illustrate our approach has delivered,and while well remain agile as the industry and economy shift,were confident in our ability to continue executing at a high level.Corporate responsibilityThis drive to connect people to greater possibility includes doing our part to create a more
19、connected society and provide underserved communities with the resources they need for education,employment,health care and economic opportunity.Despite the growing availability of high-quality connectivity,one-fifth of the U.S.population is still impacted by the digital divide.6 Were passionate abo
20、ut addressing this issue because our country has a once-in-a-generation opportunity to close the broadband gap.Achieving this will give more Americans better opportunities to further their education and access online training to develop workforce skills,all of which helps foster greater economic equ
21、ity.Thats why we made a 3-year,$2 billion commitment in 2021 to help bridge the digital divide.With this commitment and AT&Ts technology platforms for 5G and fiber deployment that are affordable,sustainable and durable,we have the expertise and scale to make a long-term difference.Were working to ad
22、dress 3 key components to the digital divide:1.Access.This primarily impacts areas of the country where deployment can be difficult or slow,but its starting to pick up thanks to the more than$48 billion allocated by Congress and the Biden administration to expand broadband infrastructure.Decisions o
23、n where to invest in that infrastructure have largely been vested in states,tribal governments and municipalities,and were working diligently to find the right opportunities for public-private partnerships that enable AT&T to help fund,build and maintain these networks.2.Affordability.AT&T is a volu
24、ntary participant in the FCCs Affordable Connectivity Program that subsidizes the cost of wireless or internet service for eligible households.When paired with our low-cost Access from AT&T offering,qualified customers can receive internet speeds up to 100 Mbps for free.3.Adoption.Were providing com
25、munities,students and parents with free digital literacy,online safety and digital learning tools so they understand and feel comfortable with connectivity and can get the most out of their internet connections.These include our Connected Learning Centers housed within local community organizations.
26、The centers provide students and families with computers,high-speed internet access and digital learning and literacy resources.We have 20 of these centers today and plan to reach 50 total locations by 2024.We have a once-in-a-generation opportunity to close the broadband gap.AT&T Inc.2022 Annual Re
27、port4Sincerely,John StankeyChief Executive Officer,AT&T Inc.February 13,2023Finally,AT&T is taking action to address climate change in ways relevant to our business and to prepare for its impacts on our operations,customers and communities.Weve set meaningful goals for 2035,including to be carbon ne
28、utral across our global operations.Well also help our business customers save a gigaton of greenhouse gas emissions through AT&T connectivity solutions.Were currently using cutting-edge climate projections to build a more climate resilient network,and were sharing the modeled data publicly to help c
29、ommunities better prepare for extreme weather events.Thank youAT&Ts resilience and strong performance are attributable to the perseverance of the people we have guiding and operating the business and serving our customers every day.To our inspired employees:Thank you for working tirelessly to keep o
30、ur customers connected,sometimes in the toughest conditions imaginable.Your deep expertise across the entire business serves and delights everyone from consumers to business customers to our government partners.Together,were creating a“big tent”that nurtures and respects a broad spectrum of beliefs,
31、identities and cultures.The strength of our diversity,equity and inclusion practices also informs how we,as a company,approach the big social issues facing us today.We start with you in mind as we support public policies that foster growth in our business and help you,your families,neighbors and fri
32、ends to achieve your greatest possibilities.To our customers:Youre the reason were here.Were committed to delivering a more connected future one full of possibility that improves your lives for the better.Thank you for the trust you place in us.In return,we work tirelessly to serve you and give our
33、best every day.And to our shareholders:Thank you for your confidence in AT&T.We believe weve made steady,consistent progress toward proving our strategy is the right one,and were committed to continuing our focus on improving our returns to you.By 2035,AT&T will be carbon neutral.5AT&T Inc.Financial
34、 Review 2022Managements Discussion and Analysisof Financial Condition and Results of Operations.6Consolidated Financial Statements.34Notes to Consolidated Financial Statements.40Report of Management.80Report of Independent Registered Public Accounting Firm.81References.84Board of Directors.85Officer
35、s of AT&T Inc.86OVERVIEWAT&T Inc.is referred to as“we,”“AT&T”or the“Company”throughout this document.AT&T products and servicesare provided or offered by subsidiaries and affiliates ofAT&T Inc.under the AT&T brand and not by AT&T Inc.,andthe names of the particular subsidiaries and affiliatesprovidi
36、ng the services generally have been omitted.AT&Tis a holding company whose subsidiaries and affiliatesoperate worldwide in the telecommunications andtechnology industries.You should read this discussion inconjunction with the consolidated financial statementsand accompanying notes(Notes).Unless othe
37、rwise noted,this discussion refers only to our continuing operationsand does not include discussion of balances or activity ofWarnerMedia,Vrio,Xandr and Playdemic Ltd.(Playdemic),which are part of discontinued operations.Our Managements Discussion and Analysis of FinancialCondition and Results of Op
38、erations included in thisdocument generally discusses 2022 and 2021 items andyear-to-year comparisons between 2022 and 2021.Discussions of 2020 items and year-to-year comparisonsbetween 2021 and 2020 that are not included in thisdocument can be found in“Managements Discussion andAnalysis of Financia
39、l Condition and Results of Operations”in Part II,Item 7 of our Annual Report on Form 10-K for thefiscal year ended December 31,2021.On April 8,2022,we closed our transaction to combinesubstantially all of our WarnerMedia segment(WarnerMedia)with a subsidiary of Discovery,Inc(Discovery).Upon the sepa
40、ration and distribution ofWarnerMedia,the WarnerMedia business met the criteriafor discontinued operations.For discontinued operations,we also evaluated transactions that were components ofAT&Ts single plan of a strategic shift,includingdispositions that did not individually meet the criteria dueto
41、materiality,and have determined discontinuedoperations to be comprised of WarnerMedia,Vrio,Xandrand Playdemic.These businesses are reflected in theaccompanying financial statements as discontinuedoperations,including for periods prior to theconsummation of the WarnerMedia/Discoverytransaction.(See N
42、otes 6 and 23)On July 31,2021,we closed our transaction with TPGCapital(TPG)to form a new company named DIRECTVEntertainment Holdings,LLC(DIRECTV).With the close ofthe transaction,we separated our Video business,comprised of our U.S.video operations,and beganaccounting for our investment in DIRECTV
43、under theequity method.(See Note 6)We have two reportable segments:Communications andLatin America.Our segment results presented in Note 4and discussed below follow our internal managementreporting.Each segments percentage calculation of totalsegment operating revenue is derived from our segmentresu
44、lts table in Note 4.Segment operating income isattributable to our Communications segment due tooperating losses in Latin America.Percentage increasesand decreases that are not considered meaningful aredenoted with a dash.Percent Change2022202120202022 vs.20212021 vs.2020Operating RevenuesCommunicat
45、ions$117,067$114,730$109,9652.0%4.3%Latin America3,1442,7472,56214.57.2Corporate and Other:Corporate530731766(27.5)(4.6)Video15,51328,610(45.8)Held-for-sale and other reclassifications4531,414(68.0)Eliminations and consolidation(136)(267)49.1AT&T Operating Revenues$120,741$134,038$143,050(9.9)%(6.3)
46、%Operating IncomeCommunications$29,107$28,393$29,0622.5%(2.3)%Latin America(326)(510)(587)36.113.1Segment Operating Income28,78127,88328,4753.2(2.1)Corporate(2,570)(1,644)(1,398)(56.3)(17.6)Video2,4912,17414.6Held-for-sale and other reclassifications143681(79.0)Reclassification of prior service cred
47、its(2,691)(2,680)(2,442)(0.4)(9.7)Certain significant items(28,107)(296)(19,118)98.5AT&T Operating Income(Loss)$(4,587)$25,897$8,372%Managements Discussion and Analysis of Financial Condition and Results of OperationsDollars in millions except per share amounts;The Communications segment accounted f
48、orapproximately 97%of our 2022 total segment operatingrevenues compared to 98%in 2021 and accounted for allsegment operating income in 2022 and 2021.This segmentprovides services to businesses and consumers located inthe U.S.and businesses globally.Our business strategiesreflect bundled product offe
49、rings that cut across productlines and utilize shared assets.This segment contains thefollowing business units:Mobility provides nationwide wireless service andequipment.Business Wireline provides advanced ethernet-basedfiber services,IP Voice and managed professionalservices,as well as traditional
50、voice and data servicesand related equipment to business customers.Consumer Wireline provides broadband services,including fiber connections that provide our multi-gigservices to residential customers in select locations.Consumer Wireline also provides legacy telephonyvoice communication services.Th
51、e Latin America segment accounted for approximately3%of our 2022 total segment operating revenuescompared to 2%in 2021.This segment provides wirelessservices and equipment in Mexico.RESULTS OF OPERATIONSConsolidated Results Our financial results fromcontinuing operations are summarized in the follow
52、ingtable.We then discuss factors affecting our overall resultsfrom continuing operations.Additional analysis isdiscussed in our“Segment Results”section.We alsodiscuss our expected revenue and expense trends for2023 in the“Operating Environment and Trends of theBusiness”section.Certain prior-period a
53、mounts havebeen reclassified to conform to the current periodspresentation.Percent Change2022202120202022 vs.20212021 vs.2020Operating revenuesService$97,831$111,565$124,057(12.3)%(10.1)%Equipment22,91022,47318,9931.918.3Total Operating Revenues120,741134,038143,050(9.9)(6.3)Operating expensesOperat
54、ions and support79,80990,07696,468(11.4)(6.6)Asset impairments and abandonmentsand restructuring27,49821315,687(98.6)Depreciation and amortization18,02117,85222,5230.9(20.7)Total Operating Expenses125,328108,141134,67815.9(19.7)Operating Income(Loss)(4,587)25,8978,372Interest expense6,1086,7167,727(
55、9.1)(13.1)Equity in net income of affiliates1,79160389Other income(expense)net5,8109,387(1,088)(38.1)Income(Loss)from Continuing OperationsBefore Income Taxes(3,094)29,171(354)Income(Loss)from Continuing Operations$(6,874)$23,776$(1,522)%?OVERVIEWOperating revenues decreased in 2022 and 2021.The2022
56、 decline reflects the July 31,2021 separation of the U.S.video business,other business divestitures that were notincluded in discontinued operations and lower BusinessWireline revenues driven by lower demand for legacyservices and product simplification.Partially offsettingdeclines were higher Mobil
57、ity service and equipmentrevenues and,to a lesser extent,gains in broadbandservice in our Communications segment and growth inMexico wireless operations.The 2021 decline reflects the 2021 separation of the U.S.video business and the October 2020 sale of wireless andwireline operations in Puerto Rico
58、 and the U.S.VirginIslands.Also contributing to revenue declines was lowerBusiness Wireline revenues due in part to higher demandfor pandemic-related connectivity in the prior year.Partially offsetting declines were higher Mobilityequipment and service revenues and gains in broadbandservice,and grow
59、th in Mexico wireless operationsincluding favorable foreign exchange impacts.Operations and support expenses decreased in 2022 and2021.The 2022 decline reflects the separation of U.S.videoand lower personnel costs associated with ongoingtransformation initiatives,partially offset by higher baddebt e
60、xpense,the elimination of Connect America FundPhase II(CAF II)government credits and increasedwholesale network access charges.Wireless equipmentcosts were up slightly,with higher sales volumes and thesale of higher-priced smartphones largely offset by lower3G shutdown costs in 2022.In the first qua
61、rter of 2022,weupdated the expected economic lives of customerrelationships,which extended the amortization period ofdeferred acquisition and fulfillment costs and reducedexpenses approximately$395,with$150 recorded toMobility,$115 to Business Wireline and$130 to ConsumerWireline.The 2021 decline re
62、flects our 2021 business divestitures,lower bad debt expense and lower personnel costsassociated with our transformation initiatives.Declineswere mostly offset by increased domestic wirelessequipment expense from higher volumes.Asset impairments and abandonments andrestructuring increased in 2022 an
63、d decreased in 2021.The increase in 2022 was primarily due to$24,812 ofnoncash goodwill impairments associated with ourBusiness Wireline,Consumer Wireline and Mexicoreporting units and were driven by higher interest ratesconsistent with the macroeconomic environment,withsecular declines also impacti
64、ng Business Wireline growthrates(see Note 9).The increase in 2022 also included$1,413 of wireline conduit asset abandonments(see Note7)and$1,273 of restructuring and other impairmentcharges due to updated network build plans stemmingfrom spectrum acquired in recent auctions,severancecharges associat
65、ed with transformation initiatives andimpairment of personal protective equipment inventory.Impairment charges in 2021 were lower than 2020,reflecting a fourth-quarter 2020 impairment charge of$15,508 resulting from our assessment of therecoverability of the long-lived assets and goodwillassociated
66、with our U.S.video business.Depreciation and amortization expense increased in2022 and decreased in 2021.Depreciation expense increased$218,or 1.2%,in 2022.The increase was primarily due to ongoing capitalinvestment for strategic initiatives such as fiber andnetwork upgrades and expansion,partially
67、offset byhigher estimated lives of our fiber assets(see Note 7).Depreciation expense decreased$1,394,or 7.3%,in 2021,primarily due to ceasing depreciation on U.S.video held-for-sale assets.Amortization expense decreased$49,or 22.5%,in 2022and$3,277,or 93.8%,in 2021.Lower amortizationreflects our acc
68、elerated method of amortization ofintangible assets from previous acquisitions and ceasingamortization on U.S.video held-for-sale assets in 2021.Operating income decreased in 2022 and increased in2021.Our operating margin was(3.8)%in 2022,comparedto 19.3%in 2021 and 5.9%in 2020.Interest expense decr
69、eased in 2022 primarily due tolower debt balances and higher capitalized interestassociated with spectrum acquisitions,partially offset byhigher interest rates.Interest expense decreased in 2021primarily due to lower interest rates and higher capitalizedinterest associated with spectrum acquisitions
70、,partiallyoffset by higher debt balances.Equity in net income of affiliates increased in 2022 and2021,primarily due to the close of our transaction withTPG related to the U.S.video business,which resulted inour accounting for our investment in DIRECTV under theequity method of accounting beginning A
71、ugust 1,2021(see Notes 6,10 and 19).Other income(expense)net decreased in 2022primarily due to lower actuarial gains($1,999 in 2022compared to$4,140 in 2021),lower pension andpostretirement benefit credits and lower returns on otherbenefit-related investments.Pension and postretirementbenefit credit
72、s decreased as a result of higher assumeddiscount rates and lower returns on benefit plan assets.Our 2022 benefit expense also includes approximately$280 favorable impact from a retirement benefit planchange,with$230 resulting from prior service credits(approximately$100 for Business Wireline,$80 fo
73、rConsumer Wireline and$40 for Mobility)(see Note 14).The increase in 2021 was primarily due to the recognitionof$4,140 in actuarial gains,compared to losses of$4,169in 2020,and the recognition of$1,405 of debt redemptioncosts in 2020.Also contributing to increased income in2021 were higher net pensi
74、on and postretirement benefitcredits from higher prior service credit amortization(seeNote 14).Managements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts!Income tax expense decreased in 2022 and increased in2021.The 202
75、2 decrease was primarily driven by lowerincome before income tax offset by impairments ofgoodwill(see Note 9),which are not deductible for taxpurposes.The increase in 2021 was primarily due to increasedincome before income taxes,offset primarily by theCoronavirus Aid,Relief,and Economic Security Act
76、(CARESAct)benefit of U.S.federal Net Operating Loss(NOL)carryback and benefits of divestitures in 2021.Our effective tax rate was(122.2)%in 2022,18.5%in 2021,and(329.9)%in 2020.The effective tax rate was impactedby our goodwill impairments associated with our BusinessWireline,Consumer Wireline and M
77、exico reporting units in2022,and Video goodwill impairment in 2020,which arenot deductible for tax purposes.Segment Results Our segments are strategic businessunits that offer different products and services overvarious technology platforms and/or in differentgeographies that are managed accordingly
78、.We alsoevaluate segment performance based on EBITDA and/orEBITDA margin,which is defined as operating incomeexcluding depreciation and amortization.EBITDA is usedas part of our management reporting and we believeEBITDA to be a relevant and useful measurement to ourinvestors as it measures the cash
79、generation potential ofour business units.EBITDA does not give effect todepreciation and amortization expenses incurred inoperating income nor is it burdened by cash used for debtservice requirements and thus does not reflect availablefunds for distributions,reinvestment or otherdiscretionary uses.E
80、BITDA margin is EBITDA divided bytotal revenues.In the first quarter of 2022,we reclassified into“Corporate”certain administrative costs borne by AT&T where thebusiness units do not influence decision making toconform with the current period presentation.This recastincreased Corporate operations and
81、 support expenses byapproximately$270 and$1,310 for full-year 2021 and 2020,respectively.Correspondingly,this recast loweredadministrative expenses for the Communicationssegment,with no change on a consolidated basis.COMMUNICATIONS SEGMENTPercent Change2022202120202022 vs.20212021 vs.2020Segment Ope
82、rating RevenuesMobility$81,780$78,254$72,5644.5%7.8%Business Wireline22,53823,93725,083(5.8)(4.6)Consumer Wireline12,74912,53912,3181.71.8Total Segment Operating Revenues$117,067$114,730$109,9652.0%4.3%Segment Operating IncomeMobility$24,528$23,370$22,8015.0%2.5%Business Wireline3,2524,0274,799(19.2
83、)(16.1)Consumer Wireline1,3279961,46233.2(31.9)Total Segment Operating Income$29,107$28,393$29,0622.5%(2.3)%Selected Subscribers and ConnectionsDecember 31,(000s)202220212020Mobility subscribers217,397201,791182,558Total domestic broadband connections15,38615,50415,384Network access lines in service
84、5,2136,1777,263U-verse VoIP connections2,9303,3333,816Operating revenues increased in 2022,driven byincreases in our Mobility and Consumer Wireline businessunits,partially offset by a decrease in our BusinessWireline business unit.The increases are primarily drivenby wireless service and equipment r
85、evenue growth andgains in broadband service.Business Wireline continues toreflect lower demand for legacy services and productsimplification.Operating income increased in 2022 and decreased in2021.The 2022 operating income reflects an increase inoperating income from our Mobility and ConsumerWirelin
86、e business units,partially offset by declines in ourBusiness Wireline business unit.Our Communicationssegment operating income margin was 24.9%in 2022,24.7%in 2021 and 26.4%in 2020.Communications Business Unit DiscussionMobility ResultsPercent Change2022202120202022 vs.20212021 vs.2020Operating reve
87、nuesService$60,499$57,590$55,5425.1%3.7%Equipment21,28120,66417,0223.021.4Total Operating Revenues81,78078,25472,5644.57.8Operating expensesOperations and support49,05446,76241,6774.912.2Depreciation and amortization8,1988,1228,0860.90.4Total Operating Expenses57,25254,88449,7634.310.3Operating Inco
88、me$24,528$23,370$22,8015.0%2.5%The following tables highlight other key measures of performance for Mobility:SubscribersPercent Change(in 000s)2022202120202022 vs.20212021 vs.2020Postpaid84,70081,53477,1543.9%5.7%Postpaid phone69,59667,26064,2163.54.7Prepaid19,17619,02818,1020.85.1Reseller6,0436,113
89、6,535(1.1)(6.5)Connected devices1107,47895,11680,76713.017.8Total Mobility Subscribers2217,397201,791182,5587.7%10.5%1Includes data-centric devices such as session-based tablets,monitoring devices and primarily wholesale automobile systems.2Wireless subscribers at December 31,2022 excludes the impac
90、t of 10,176 subscriber and connected device disconnections resulting from our 3G network shutdown inFebruary 2022.Postpaid disconnections were 897,including 437 phone,234 prepaid,749 reseller subscribers,and 8,296 connected devices.Mobility Net AdditionsPercent Change(in 000s)2022202120202022 vs.202
91、12021 vs.2020Postpaid Phone Net Additions2,8683,1961,457(10.3)%Total Phone Net Additions3,2723,8501,640(15.0)Postpaid24,0914,4822,183(8.7)Prepaid479956379(49.9)Reseller462(534)(449)(18.9)Connected devices320,59414,32814,78543.7(3.1)Mobility Net Subscriber Additions125,62619,23216,89833.2%13.8%Postpa
92、id Churn40.97%0.94%0.98%3 BP(4)BPPostpaid Phone-Only Churn40.81%0.76%0.79%5 BP(3)BP1Excludes migrations and acquisition-related additions during the period.2In addition to postpaid phones,includes tablets and wearables and other.Tablet net adds(losses)were 203,28 and(512)for the years ended December
93、 31,2022,2021 and2020,respectively.Wearables and other net adds were 1,020,1,258 and 1,238 for the years ended December 31,2022,2021 and 2020,respectively.3Includes data-centric devices such as session-based tablets,monitoring devices and primarily wholesale automobile systems.Excludes postpaid tabl
94、ets and otherpostpaid data devices.Wholesale connected car net adds were approximately 9,980,7,875 and 9,890 for the years ended December 31,2022,2021 and 2020,respectively.4Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month by the total number of
95、 wireless subscribers at the beginningof that month.The churn rate for the period is equal to the average of the churn rate for each month of that period,excluding the impact of disconnections resultingfrom our 3G network shutdown in February 2022.Managements Discussion and Analysis of Financial Con
96、dition and Results of Operations(continued)Dollars in millions except per share amountsService revenue increased during 2022,largely due togrowth from subscriber gains and postpaid averagerevenue per subscriber(ARPU)growth.ARPUARPU increased in 2022 and reflects pricing actions,improved internationa
97、l roaming and customers shiftingto higher priced unlimited plans,partially offset by theimpact of higher promotional discount amortization(see Note 5).ChurnThe effective management of subscriber churn is criticalto our ability to maximize revenue growth and tomaintain and improve margins.Postpaid ch
98、urn andpostpaid phone-only churn were higher in 2022 due to areturn to pre-pandemic customer behavior,as well aspricing actions and the resulting increase in bothvoluntary and involuntary disconnects.Equipment revenue increased in 2022,primarily driven bya higher volume of devices sold and a mix of
99、higher-pricedpostpaid smartphones.Operations and support expenses increased in 2022,largely driven by growth in equipment sales andassociated expenses,bad debt expense,higher networkcosts,the elimination of CAF II government credits,andhigher HBO Max licensing fees and FirstNet costs.In thefirst qua
100、rter of 2022,we updated our analysis of economiclives of customer relationships and extended theamortization period of Mobility deferred customercontract costs,which decreased expense approximately$150.Depreciation expense increased in 2022,primarily due toongoing capital spending for network upgrad
101、es andexpansion,partially offset by ceasing use of 3G networkassets.Operating income increased in 2022 and 2021.OurMobility operating income margin was 30.0%in 2022,29.9%in 2021 and 31.4%in 2020.Our Mobility EBITDAmargin was 40.0%in 2022,40.2%in 2021 and 42.6%in2020.Subscriber RelationshipsAs the wi
102、reless industry has matured,with nearly fullpenetration of smartphones in the U.S.population,futurewireless growth will depend on our ability to offerinnovative services,plans and devices that bundle productofferings and take advantage of our 5G wireless network.We believe 5G opens up vast possibili
103、ties of connectingsensors,devices,and autonomous things,commonlyreferred to as the Internet of Things(IoT).More and more,these devices are performing use cases that require highbandwidth,ultra-reliability and low latency that only 5Gand edge computing can bring.To support higher mobiledata usage,our
104、 priority is to best utilize a wirelessnetwork that has sufficient spectrum and capacity tosupport these innovations on as broad a geographic basisas possible.Business Wireline ResultsPercent Change2022202120202022 vs.20212021 vs.2020Operating revenuesService$21,891$23,224$24,313(5.7)%(4.5)%Equipmen
105、t647713770(9.3)(7.4)Total Operating Revenues22,53823,93725,083(5.8)(4.6)Operating expensesOperations and support13,97214,71815,068(5.1)(2.3)Depreciation and amortization5,3145,1925,2162.3(0.5)Total Operating Expenses19,28619,91020,284(3.1)(1.8)Operating Income$3,252$4,027$4,799(19.2)%(16.1)%Service
106、revenues decreased in 2022,driven by lowerdemand for legacy voice and data services and productsimplification.Also contributing to the decline was lowerrevenues from the government sector.We expect thesetrends to continue.Partially offsetting revenue declineswas growth in connectivity services and r
107、evenues ofapproximately$200 from intellectual property sales in2022.Equipment revenues decreased in 2022,driven by declinesin legacy and non-core services which we expect tocontinue.Operations and support expenses decreased in 2022,primarily due to our continued efforts to drive efficienciesin our n
108、etwork operations through automation,reductions in customer support expenses throughdigitization and proactive rationalization of low profitmargin products,and lower personnel costs associatedwith ongoing transformation initiatives.Expense declineswere also driven by credits from a third-quarter 202
109、2retirement benefit plan change and lower amortization ofdeferred fulfillment costs,including our first-quarter 2022updates to the estimated economic lives of subscribers,which decreased expense approximately$115 in 2022.Thedeclines were partially offset by higher wholesale accessnetwork costs.As pa
110、rt of our transformation activities,weexpect continued operations and support expenseimprovements into 2023 as we further size our operationsin alignment with the strategic direction of the business.Depreciation expense increased in 2022,primarily due toongoing capital investment for strategic initi
111、atives such asfiber and network upgrades and expansion,partially offsetby updates to extend the estimated lives of our fiberassets(see Note 7).Operating income decreased in 2022 and 2021.OurBusiness Wireline operating income margin was 14.4%in2022,16.8%in 2021 and 19.1%in 2020.Our BusinessWireline E
112、BITDA margin was 38.0%in 2022,38.5%in 2021and 39.9%in 2020.Consumer Wireline ResultsPercent Change2022202120202022 vs.20212021 vs.2020Operating revenuesBroadband$9,669$9,085$8,5346.4%6.5%Legacy voice and data services1,7461,9772,213(11.7)(10.7)Other service and equipment1,3341,4771,571(9.7)(6.0)Tota
113、l Operating Revenues12,74912,53912,3181.71.8Operating expensesOperations and support8,2538,4487,942(2.3)6.4Depreciation and amortization3,1693,0952,9142.46.2Total Operating Expenses11,42211,54310,856(1.0)6.3Operating Income$1,327$996$1,46233.2%(31.9)%The following tables highlight other key measures
114、 of performance for Consumer Wireline:ConnectionsPercent Change(in 000s)2022202120202022 vs.20212021 vs.2020Broadband ConnectionsTotal Broadband and DSL Connections13,99114,16014,100(1.2)%0.4%Broadband13,75313,84513,693(0.7)1.1Fiber Broadband Connections7,2155,9924,95120.421.0Voice ConnectionsRetail
115、 Consumer Switched Access Lines2,0282,4232,862(16.3)(15.3)U-verse Consumer VoIP Connections2,3112,7363,231(15.5)(15.3)Total Retail Consumer Voice Connections4,3395,1596,093(15.9)%(15.3)%Broadband Net AdditionsPercent Change(in 000s)2022202120202022 vs.20212021 vs.2020Total Broadband and DSL Net Addi
116、tions(169)60(19)%Broadband Net Additions(92)1529560.0Fiber Broadband Net Additions1,2231,0411,06417.5%(2.2)%Managements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts Broadband revenues increased in 2022,driven by aninc
117、rease in fiber customers,which we expect to continuefor the foreseeable future as we invest further in buildingour fiber footprint,partially offset by declines in copper-based broadband services.Legacy voice and data service revenues decreased in2022,reflecting the continued decline in the number of
118、customers,which we expect to continue.Other service and equipment revenues decreased in2022,reflecting the continued decline in the number ofVoIP customers,which we expect to continue.Operations and support expenses decreased in 2022,primarily driven by lower network and customer supportcosts,credit
119、s from a third-quarter 2022 retirement benefitplan change and lower HBO Max licensing fees.Alsocontributing to the decline was lower amortization ofdeferred fulfillment costs,including our first-quarter 2022updates to the estimated economic lives of broadband/fiber subscribers,which decreased expens
120、esapproximately$130 in 2022.These declines were partiallyoffset by the elimination of CAF II government credits,higher bad debt expense and advertising costs.Depreciation expense increased in 2022,primarily due toongoing capital investment for strategic initiatives such asfiber and network upgrades
121、and expansion,partially offsetby updates to the estimated lives of our fiber assets(seeNote 7).Operating income increased in 2022 and decreased in2021.Our Consumer Wireline operating income marginwas 10.4%in 2022,7.9%in 2021 and 11.9%in 2020.OurConsumer Wireline EBITDA margin was 35.3%in 2022,32.6%i
122、n 2021 and 35.5%in 2020.LATIN AMERICA SEGMENTPercent Change2022202120202022 vs.20212021 vs.2020Operating revenuesService$2,162$1,834$1,65617.9%10.7%Equipment9829139067.60.8Total Operating Revenues3,1442,7472,56214.57.2Operating expensesOperations and support2,8122,6522,6366.00.6Depreciation and amor
123、tization6586055138.817.9Total Operating Expenses3,4703,2573,1496.53.4Operating Income(Loss)$(326)$(510)$(587)36.1%13.1%The following tables highlight other key measures of performance for Mexico:SubscribersPercent Change(in 000s)2022202120202022 vs.20212021 vs.2020Postpaid4,9254,8074,6962.5%2.4%Prep
124、aid16,20415,05713,7587.69.4Reseller474498489(4.8)1.8Mexico Wireless Subscribers21,60320,36218,9436.1%7.5%Mexico Wireless Net AdditionsPercent Change(in 000s)2022202120202022 vs.20212021 vs.2020Postpaid118111(407)6.3%Prepaid1,1471,299174(11.7)Reseller(24)9118(92.4)Mexico Wireless Net Additions1,2411,
125、419(115)(12.5)%Service revenues increased in 2022,reflecting growth inwholesale services,subscribers and ARPU.Equipment revenues increased in 2022,due to higherequipment sales.Operations and support expenses increased in 2022,dueto higher acquisition costs,bad debt and networkexpenses.Approximately
126、5%of Mexico expenses are U.S.dollar-based,with the remainder in the local currency.Depreciation expense increased in 2022,reflecting higherin-service assets.Operating income improved in 2022 and 2021.Our Mexicooperating income margin was(10.4)%in 2022,(18.6)%in2021 and(22.9)%in 2020.Our Mexico EBITD
127、A margin was10.6%in 2022,3.5%in 2021 and(2.9)%in 2020.OPERATING ENVIRONMENT AND TRENDS OF THEBUSINESS2023 Revenue Trends We expect revenue growth in ourwireless and broadband businesses as customers demandinstant connectivity and higher speeds made possible bywireless network enhancements through 5G
128、 deploymentand our fiber network expansion.We believe that oursimplified go-to-market strategy for 5G inunderpenetrated markets will continue to contribute towireless subscriber and service revenue growth and thatexpansion of our fiber footprint and our multi-gigofferings will drive greater demand f
129、or broadbandservices on our fast-growing fiber network.As we expand our fiber reach,we will be orienting ourbusiness portfolio to leverage this opportunity to offsetcontinuing declines in legacy Business Wireline productsby growing connectivity with small to mid-sizedbusinesses.We plan to use our st
130、rong fiber and wirelessassets,broad distribution and converged product offersto strengthen our overall market position.We willcontinue to rationalize our product portfolio with alonger-term shift of the business to fiber and mobileconnectivity,and growth in value-added services.2023 Expense Trends W
131、e expect the spending required tosupport growth initiatives,primarily our continueddeployment of fiber and 5G to pressure expense trends in2023.To the extent customers further upgrade theirhandsets in 2023,the expenses associated with thosedevice sales are expected to contribute to higher costs.Duri
132、ng 2023,we will also continue to prioritize efficiency,led by our cost transformation initiative.Theseinvestments will help prepare us to meet increasedcustomer demand for enhanced wireless and broadbandservices,including video streaming,augmented reality and“smart”technologies.The software benefits
133、 of our 5Gwireless technology should result in a more efficient useof capital and lower network-related expenses in thecoming years.We continue to transform our operations to be moreefficient and effective.We are restructuring businesses,sunsetting legacy networks,improving customer serviceand order
134、ing functions through digital transformation,sizing our support costs and staffing with current activitylevels,and reassessing overall benefit costs.Cost savingsand asset sales align with our focus on debt reduction.Market Conditions The U.S.stock market experiencedvolatility and contraction in 2022
135、.Several factors,includingthe continued impact from the global pandemic,haveresulted in changes in demand in business communicationservices.The global pandemic has caused,and could againcause,delays in the development,manufacturing(including the sourcing of key components)and shipmentof products,as
136、well as continued tight labor market andactual or perceived inflation.Most of our products andservices are not directly affected by the imposition oftariffs on Chinese goods.However,we expect ongoingpressure on pricing during 2023 as we respond to thegeopolitical and macroeconomic environment and ou
137、rcompetitive marketplace,especially in wireless services.Included on our consolidated balance sheets are assetsheld by benefit plans for the payment of future benefits.Our pension plans are subject to funding requirements ofthe Employee Retirement Income Security Act of 1974,asamended(ERISA).We expe
138、ct only minimal ERISAcontribution requirements to our pension plans for 2023.Investment returns on these assets depend largely ontrends in the economy,and a weakness in the equity,fixedincome and real asset markets could require us to makefuture contributions to the pension plans.In addition,ourpoli
139、cy of recognizing actuarial gains and losses related toour pension and other postretirement plans in the periodin which they arise subjects us to earnings volatilitycaused by changes in market conditions;however,theseactuarial gains and losses do not impact segmentperformance as they are required to
140、 be recorded in“Otherincome(expense)net.”Changes in our discount rate,which are tied to changes in the bond market,andchanges in the performance of equity markets,may havesignificant impacts on the valuation of our pension andother postretirement obligations at the end of 2023(see“Critical Accountin
141、g Policies and Estimates”).Managements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts:OPERATING ENVIRONMENT OVERVIEWAT&T subsidiaries operating within the United States aresubject to federal and state regulatory authori
142、ties.AT&Tsubsidiaries operating outside the United States aresubject to the jurisdiction of national and supranationalregulatory authorities in the markets where service isprovided.In the Telecommunications Act of 1996(Telecom Act),Congress established a national policy frameworkintended to bring th
143、e benefits of competition andinvestment in advanced telecommunications facilities andservices to all Americans by opening alltelecommunications markets to competition andreducing or eliminating regulatory burdens that harmconsumer welfare.Nonetheless,over the ensuing twodecades,the Federal Communica
144、tions Commission(FCC)and some state regulatory commissions have maintainedor expanded certain regulatory requirements that wereimposed decades ago on our traditional wirelinesubsidiaries when they operated as legal monopolies.More recently,the FCC has pursued a more deregulatoryagenda,eliminating a
145、variety of antiquated andunnecessary regulations and streamlining its processes ina number of areas.We continue to support regulatory andlegislative measures and efforts,at both the state andfederal levels,to reduce inappropriate regulatory burdensthat inhibit our ability to compete effectively and
146、offerneeded services to our customers,including initiatives totransition services from traditional networks to all IP-based networks.At the same time,we also seek to ensurethat legacy regulations are not further extended tobroadband or wireless services,which are subject tovigorous competition.Inter
147、net The FCC currently classifies fixed and mobileconsumer broadband services as information services,subject to light-touch regulation.However,some stateshave adopted legislation or issued executive orders thatwould reimpose net neutrality rules repealed by the FCC.Suits were filed concerning such l
148、aws in California andVermont.The California suit was dismissed withoutprejudice on May 4,2022,and the California statute is nowin effect.The litigation challenging the Vermont statutehas been stayed pending the Second Circuits dispositionof an appeal by the State of New York of an orderenjoining enf
149、orcement of a New York statute regulatingbroadband rates on the ground that such statute ispreempted by federal law.We expect additional statesmay seek to impose net neutrality requirements in thefuture.On November 15,2021,the Infrastructure Investment andJobs Act(IIJA)was signed into law.The legisl
150、ationappropriates$65,000 to support broadband deploymentand adoption.The National Telecommunications andInformation Agency(NTIA)is responsible for distributingmore than$48,000 of this funding,including$42,500 instate grants for broadband deployment projects inunserved and underserved areas.NTIA esta
151、blished initialrequirements for this program in May 2022 and isexpected to announce state grant allocations in 2023.The IIJA also appropriated$14,200 for establishment ofthe Affordable Connectivity Program(ACP),an FCC-administered monthly,low-income broadband benefitprogram,replacing the Emergency B
152、roadband Benefitprogram(established in December 2020 by theConsolidated Appropriations Act,2021).Qualifyingcustomers can receive up to thirty dollars per month(orseventy-five dollars per month for those on Tribal lands)to assist with their internet bill.AT&T is a participatingprovider in the ACP pro
153、gram and will considerparticipating in the deployment program whereappropriate.The IIJA includes various provisions that haveresulted in FCC proceedings regarding ACP programadministration and consumer protection,reform of theexisting universal support program,and broadbandlabeling and equal access.
154、Privacy-related legislation continues to be adopted orconsidered in a number of jurisdictions.Legislative,regulatory and litigation actions could result in increasedcosts of compliance,further regulation or claims againstbroadband internet access service providers and others,and increased uncertaint
155、y in the value and availability ofdata.Wireless Industry-wide network densification and 5Gtechnology expansion efforts,which are needed to satisfyextensive demand for video and internet access,willinvolve significant deployment of“small cell”equipment.This increases the importance of local permittin
156、gprocesses that allow for the placement of small cellequipment in the public right-of-way on reasonabletimelines and terms.The FCC has adopted multiple Ordersstreamlining federal,state,and local wireless structurereview processes that had the tendency to delay andimpede deployment of small cell and
157、relatedinfrastructure used to provide telecommunications andbroadband services.During 2020-2021,we have alsodeployed 5G nationwide on“low band”spectrum onmacro towers.Executing on the recent spectrumpurchase,we announced ongoing construction andcontinuing deployment of 5G on C-band spectrum in 2022a
158、nd beyond.EXPECTED GROWTH AREASOver the next few years,we expect our growth to comefrom wireless and IP-based fiber broadband services.Weprovide integrated services to diverse groups ofcustomers in the U.S.on an integratedtelecommunications network utilizing differenttechnological platforms.In 2023,
159、our key initiatives include:Continuing our wireless subscriber momentum and5G deployment,with expansion of 5G service,including to underpenetrated markets.Improving fiber penetration,accelerating subscribergrowth and increasing broadband revenues.Continuing to drive efficiencies and a competitiveadv
160、antage through cost transformation initiativesand product simplification.,Wireless We expect to continue to deliver revenuegrowth in the coming years.We are in a period of rapidgrowth in wireless video usage and believe that there aresubstantial opportunities available for next-generationconverged s
161、ervices that combine technologies andservices.As of December 31,2022,we served 239 millionwireless subscribers in North America,with more than 217million in the United States.Our LTE technology covers over 441 million people inNorth America,and in the United States,we cover allmajor metropolitan are
162、as and over 337 million people.Wealso provide 4G coverage using another technology(HSPA+),and when combined with our upgraded backhaulnetwork,we provide enhanced network capabilities andsuperior mobile broadband speeds for data and videoservices.In December 2018,we introduced the nationsfirst commer
163、cial mobile 5G service and expanded thatdeployment nationwide in July 2020.At December 31,2022,our network covers more than 285 million peoplewith 5G technology in the United States and NorthAmerica.Our networks covering both the U.S.and Mexico haveenabled our customers to use wireless services with
164、outroaming on other companies networks.We believe thisseamless access will prove attractive to customers andprovide a significant growth opportunity.At December 31,2022,we provided LTE coverage to over 104 million peoplein Mexico.Integration of Data and Broadband Services As thecommunications indust
165、ry has evolved into internet-basedtechnologies capable of blending wireline and wirelessservices,we plan to focus on expanding our wirelessnetwork capabilities and provide broadband offerings thatallow customers to integrate their home or business fixedservices with their mobile service.In January 2
166、022,welaunched our multi-gig rollout,which brings the fastestinternet to AT&T Fiber customers with symmetrical 2 gigand 5 gig tiers.We will continue to develop and provideunique integrated mobile and broadband/fiber solutions.REGULATORY DEVELOPMENTSSet forth below is a summary of the most significan
167、tregulatory proceedings that directly affected ouroperations during 2022.Industry-wide regulatorydevelopments are discussed above in OperatingEnvironment Overview.While these issues may apply onlyto certain subsidiaries,the words“we,”“AT&T”and“our”are used to simplify the discussion.The followingdis
168、cussions are intended as a condensed summary of theissues rather than as a comprehensive legal analysis anddescription of all of these specific issues.International Regulation Our subsidiaries operatingoutside the United States are subject to the jurisdiction ofregulatory authorities in the territor
169、ies in which thesubsidiaries operate.Our licensing,compliance andadvocacy initiatives in foreign countries primarily enablethe provision of enterprise(i.e.,large business)servicesglobally and wireless services in Mexico.The General Data Protection Regulation went into effectin Europe in May of 2018.
170、AT&T processes and handlespersonal data of its customers and subscribers,employees of its enterprise customers and its employees.This regulation created a range of new complianceobligations and significantly increased financial penaltiesfor noncompliance.Federal Regulation We have organized our foll
171、owingdiscussion by service impacted.Internet The FCC currently classifies fixed and mobileconsumer broadband services as information services,subject to light-touch regulation.The D.C.Circuit upheldthe FCCs current classification,although it remandedthree discrete issues to the FCC for further consi
172、deration.These issues related to the effect of the FCCs decision toclassify broadband services as information services onpublic safety,the regulation of pole attachments,anduniversal service support for low-income consumersthrough the Lifeline program.Because no party soughtSupreme Court review of t
173、he D.C.Circuits decision touphold the FCCs classification of broadband as aninformation service,that decision is final.In October 2020,the FCC adopted an order addressing thethree issues remanded by the D.C.Circuit for furtherconsideration.After considering those issues,the FCCconcluded there were n
174、o grounds to depart from itsdetermination that fixed and mobile consumer broadbandservices should be classified as information services.Anappeal of the FCCs remand decision is pending.Some states have adopted legislation or issued executiveorders that would reimpose net neutrality rules repealedby t
175、he FCC.Suits were filed concerning such laws inCalifornia and Vermont.The California suit was dismissedwithout prejudice on May 4,2022,and the Californiastatute is now in effect.The litigation challenging theVermont statute has been stayed pending the SecondCircuits disposition of an appeal by the S
176、tate of New Yorkof an order enjoining enforcement of a New York statuteregulating broadband rates on the ground that suchstatute is preempted by federal law.We expect additionalstates may seek to impose net neutrality requirements inthe future.On November 15,2021,President Biden signed the IIJA into
177、law.The legislation appropriates funds to supportbroadband deployment and adoption.The NTIA isresponsible for distributing the majority of these fundsprimarily through state grants for broadband deploymentprojects in unserved and underserved areas,and to alesser extent for middle mile broadband infr
178、astructure,and digital equity programs.On May 13,2022,NTIA issuedthree Notices of Funding Opportunity for these initiatives the Broadband Equity,Access,and Deployment Program,the Enabling Middle Mile Broadband InfrastructureProgram,and the State Digital Equity Program.NTIA willcontinue to administer
179、 and implement these programs.The IIJA also appropriated funds for establishment of theACP,an FCC-administered monthly,low-incomeManagements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts;broadband benefit program,repla
180、cing the EmergencyBroadband Benefit program.Qualifying customers canreceive reimbursements to assist with their internet bill.AT&T is a participating provider in the ACP program andwill consider participating in the deployment programwhere appropriate.The IIJA includes various provisionsthat have re
181、sulted in FCC proceedings regarding ACPprogram administration and consumer protection,reformof the existing universal support program,and broadbandlabeling and equal access.Privacy-related legislation continues to be adopted orconsidered in a number of jurisdictions.Legislative,regulatory and litiga
182、tion actions could result in increasedcosts of compliance,further regulation or claims againstbroadband internet access service providers and others,and increased uncertainty in the value and availability ofdata.Wireless and Broadband In June and November 2020,theFCC issued a Declaratory Ruling clar
183、ifying the limits onstate and local authority to deny applications to modifyexisting structures to accommodate wireless facilities.Appeals of the November 2020 order remain pending inthe Ninth Circuit Court of Appeals,following multiplerequests by the FCC to hold the appeal in abeyance untilthe Sena
184、te confirms a fifth FCC Commissioner.Ifsustained on appeal,these FCC decisions will removestate and local regulatory barriers and reduce the costs ofthe infrastructure needed for 5G and FirstNetdeployments,which will enhance our ability to place smallcell facilities on utility poles,expand existing
185、facilities toaccommodate public safety services,and replace legacyfacilities and services with advanced broadbandinfrastructure and services.During 2022,we have alsodeployed 5G nationwide on“low band”spectrum onmacro towers.Executing on the recent spectrumpurchase,we continued deploying 5G nationwid
186、e on“lowband”spectrum.In March 2020,the FCC released its order setting rules forcertain spectrum bands(C-band)for 5G operations.Inthat order,the FCC concluded that C-band 5G servicesthat met the agencys technical limits on power andemissions would not cause harmful interference withaircraft operatio
187、ns.In reliance on that order,AT&T bid atotal of$23,406 and was awarded 1,621 C-band licenses,including 40 MHz available for deployment in December2021,with the remainder available for deployment no laterthan December 2023.In late 2021,the Federal AviationAdministration(FAA)questioned whether the C-b
188、andlaunch could impact radio altimeter equipment onairplanes,which operate on spectrum bands over 400 MHzaway from the spectrum AT&T launched in 2022 and 220MHz away from spectrum AT&T plans to launch in 2023.Inresponse,to allow the FAA more time to evaluate,AT&Tand Verizon delayed their planned Dec
189、ember 2021 5G C-band launch by six weeks and voluntarily committed to aseries of temporary,precautionary measures,in additionto deferring turning on a limited number of towers aroundcertain airports.These measures have been subsequentlymodified from time to time.We continue to work with theFAA to re
190、duce the temporary measures with C-banddeployments as aircraft equipment is upgraded.In recent years,the FCC took several actions to makespectrum available for 5G services,including the auctionof 280 MHz of mid-band spectrum previously used forsatellite service(the“C Band”auction)and 39 GHz bandspec
191、trum.AT&T obtained spectrum in these auctions(see“Other Business Matters”).The FCC also made 150 MHz ofmid-band CBRS spectrum available,to be shared withFederal incumbents,which enjoy priority.In addition,theFCC recently completed Auction 110,in which AT&T won40 MHz of 3.45 GHz spectrum nationwide a
192、t a cost of$9,079.COMPETITIONCompetition continues to increase for communicationsand digital services from traditional and nontraditionalcompetitors.Technological advances have expanded thetypes and uses of services and products available.Inaddition,lack of or a reduced level of regulation ofcompara
193、ble legacy services has lowered costs foralternative communications service providers.As a result,we face continuing competition as well as some newopportunities in significant portions of our business.Wireless We face substantial competition in our wirelessbusinesses.Under current FCC rules,multipl
194、e licensees,who provide wireless services on the cellular,PCS,Advanced Wireless Services,700 MHz and other spectrumbands,may operate in each of our U.S.service areas.Ourcompetitors include two national wireless providers;alarger number of regional providers and resellers of thoseservices;and certain
195、 cable companies.In addition,we facecompetition from providers who offer voice,textmessaging and other services as applications on datanetworks.We are one of three facilities-based providers inMexico(retail and wholesale),with the most significantmarket share controlled by Amrica Mvil.We mayexperien
196、ce significant competition from companies thatprovide similar services using other communicationstechnologies and services.While some of thesetechnologies and services are now operational,others arebeing developed or may be developed.We compete forcustomers based principally on service/device offeri
197、ngs,price,network quality,coverage area and customerservice.Broadband The desire for high-speed data on demand,including video,is continuing to lead customers toterminate their traditional wired or linear services and useour fiber services or competitors wireless,satellite andinternet-based services
198、.In most U.S.markets,we competefor customers with large cable companies for high-speedinternet and voice services,wireless broadband providers,and other smaller telecommunications companies forboth long-distance and local services.?Legacy Voice and Data We continue to lose legacy voiceand data subsc
199、ribers due to competitors(e.g.,wireless,cable and VoIP providers)who can provide comparableservices at lower prices because they are not subject totraditional telephone industry regulation(or the extent ofregulation they are subject to is in dispute),utilizedifferent technologies or promote a differ
200、ent businessmodel(such as advertising-based).Additionally,we provide local and interstate telephoneand switched services to other service providers,primarilylarge internet service providers using the largest class ofnationwide internet networks(internet backbone),wireless carriers,other telephone co
201、mpanies,cablecompanies and systems integrators.These services aresubject to additional competitive pressures from thedevelopment of new technologies,the introduction ofinnovative offerings and increasing satellite,wireless,fiber-optic and cable transmission capacity for services.ACCOUNTING POLICIES
202、AND STANDARDSCritical Accounting Policies and Estimates Because ofthe size of the financial statement line items they relate toor the extent of judgment required by our management,some of our accounting policies and estimates have amore significant impact on our consolidated financialstatements than
203、 others.Pension and Postretirement Benefits Our actuarialestimates of retiree benefit expense and the associatedsignificant weighted-average assumptions are discussedin Note 14.Our assumed weighted-average discount ratesfor both pension and postretirement benefits of 5.20%,atDecember 31,2022,reflect
204、 the hypothetical rate at whichthe projected benefit obligations could be effectivelysettled or paid out to participants.We determined ourdiscount rate based on a range of factors,including a yieldcurve composed of the rates of return on several hundredhigh-quality,fixed income corporate bonds avail
205、able atthe measurement date and corresponding to the relatedexpected durations of future cash outflows for theobligations.These bonds had an average rating of at leastAa3 or AA-by the nationally recognized statistical ratingorganizations,denominated in U.S.dollars,and generallynot callable,convertib
206、le or index linked.For the yearended December 31,2022,when compared to the yearended December 31,2021,we increased our pensiondiscount rate by 2.20%,resulting in a decrease in ourpension plan benefit obligation of$11,738,and increasedour postretirement discount rate by 2.40%,resulting in adecrease i
207、n our postretirement benefit obligation of$2,102.Our expected long-term rate of return was 6.75%onpension plan assets and 4.50%on postretirement planassets for 2022.We have increased our expected return onplan assets to 7.50%on pension plan assets and 6.50%onpostretirement plan assets for 2023,refle
208、cting higherlong-term capital market expectations for equities andhigher yields for bonds.Our expected return on planassets is calculated using the actual fair value of planassets.If all other factors were to remain unchanged,weexpect that a 0.50%decrease in the expected long-termrate of return woul
209、d cause 2023 combined pension andpostretirement cost to increase$201,which under ouraccounting policy would be adjusted to actual returns inthe current year upon remeasurement of our retireebenefit plans.We recognize gains and losses on pension andpostretirement plan assets and obligations immediate
210、ly in“Other income(expense)net”in our consolidatedstatements of income.These gains and losses aregenerally measured annually as of December 31,andaccordingly,will normally be recorded during the fourthquarter,unless an earlier remeasurement is required.Should actual experience differ from actuariala
211、ssumptions,the projected pension benefit obligation andnet pension cost and accumulated postretirement benefitobligation and postretirement benefit cost would beaffected in future years.See Note 14 for additionaldiscussions regarding our assumptions.Depreciation Our depreciation of assets,including
212、use ofcomposite group depreciation for certain subsidiaries andestimates of useful lives,is described in Notes 1 and 7.If all other factors were to remain unchanged,we expectthat a one-year increase in the useful lives of our plant inservice would have resulted in a decrease ofapproximately$2,653 in
213、 our 2022 depreciation expenseand that a one-year decrease would have resulted in anincrease of approximately$3,778 in our 2022 depreciationexpense.See Notes 7 and 8 for depreciation andamortization expense applicable to property,plant andequipment,including our finance lease right-of-use assets.Ass
214、et Valuations and ImpairmentsGoodwill and other indefinite-lived intangible assets arenot amortized but tested at least annually on October 1for impairment.For impairment testing,we estimate fairvalues using models that predominantly rely on theexpected cash flows to be derived from the reporting un
215、itor use of the asset.Long-lived assets are reviewed forimpairment whenever events or circumstances indicatethat the book value may not be recoverable over theremaining life.Inputs underlying the expected cash flowsinclude,but are not limited to,subscriber counts,revenueper user,capital investment a
216、nd acquisition costs persubscriber,and ongoing operating costs.We based ourassumptions on a combination of our historical results,trends,business plans and marketplace participant data.Annual Goodwill TestingGoodwill is tested on a reporting unit basis by comparingthe estimated fair value of each re
217、porting unit to its bookvalue.If the fair value exceeds the book value,then noimpairment is measured.We estimate fair values using anincome approach(also known as a discounted cash flowmodel)and a market multiple approach.The incomeapproach utilizes our future cash flow projections with aperpetuity
218、value discounted at an appropriate weightedManagements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts!average cost of capital.The market multiple approachuses the multiples of publicly traded companies whoseservices are
219、 comparable to those offered by the reportingunits.As of October 1,2022,the calculated fair value of theMobility reporting unit exceeded its book value and noadditional testing was necessary.If either the projectedrate of long-term growth of Mobility cash flows orrevenues declined by 0.5%,or if the
220、weighted averagecost of capital increased by 0.5%,the fair value would stillbe higher than the book value of the goodwill.In the eventof a 10%drop in the fair value of the Mobility reportingunit,the fair value still would have exceeded the bookvalue of the reporting unit.Our 2022 annual goodwill imp
221、airment analysis resulted innoncash impairment charges related to our BusinessWireline,Consumer Wireline and Mexico reporting units.The decline in fair values was primarily due to changes inthe macroeconomic environment,namely increasedweighted-average cost of capital.Also,inflation pressureand lowe
222、r projected cash flows driven by secular declines,predominantly at Business Wireline,impacted the fairvalues.Future sustained declines in macroeconomic orbusiness conditions,or higher discount rates or declines inthe value of AT&T stock could result in goodwillimpairment charges in future periods.A
223、summary ofbusiness unit goodwill impairment by segment andsensitivity analysis is as follows:CommunicationsLatinAmericaBusinessWirelineConsumerWirelineMexicoGoodwill as ofOctober 1,2022:$17,903$30,155$826Impairment charge(13,478)(10,508)(826)Remaining Goodwill atDecember 31,2022$4,425$19,647$Sensiti
224、vity analysis,approximate hypotheticalimpairment charge:Weighted-average cost ofcapital increase of 25 BP$1,200$2,200$Projected terminal growthrate decline of 25 BP7001,400Projected long-term EBITDAmargin decline of 100 BP1,5001,300U.S.Wireless LicensesThe fair value of U.S.wireless licenses is asse
225、ssed using adiscounted cash flow model(the Greenfield Approach)and a qualitative corroborative market approach based onauction prices,depending upon auction activity.TheGreenfield Approach assumes a company initially ownsonly the wireless licenses and makes investments requiredto build an operation
226、comparable to current use.Theselicenses are tested annually for impairment on anaggregated basis,consistent with their use on a nationalscope for the United States.For impairment testing,weassume subscriber and revenue growth will trend up toprojected levels,with a long-term growth rate reflectingex
227、pected long-term inflation trends.We assume churnrates will initially exceed our current experience butdecline to rates that are in line with industry-leadingchurn.We used a discount rate of 9.50%,based on theoptimal long-term capital structure of a marketparticipant and its associated cost of debt
228、and equity forthe licenses,to calculate the present value of theprojected cash flows.If either the projected rate of long-term growth of cash flows or revenues declined by 0.5%,or if the discount rate increased by 0.5%,the fair values ofthese wireless licenses would still be higher than the bookvalu
229、e of the licenses.The fair value of these wirelesslicenses exceeded their book values by more than 10%.Other Finite-Lived IntangiblesCustomer relationships,licenses in Mexico and otherfinite-lived intangible assets are reviewed for impairmentwhenever events or circumstances indicate that the bookval
230、ue may not be recoverable over their remaining life.Forthis analysis,we compare the expected undiscountedfuture cash flows attributable to the asset to its bookvalue.When the assets book value exceeds undiscountedfuture cash flows,an impairment is recorded to reducethe book value of the asset to its
231、 estimated fair value(seeNotes 7 and 9).Income Taxes Our estimates of income taxes and thesignificant items giving rise to the deferred assets andliabilities are shown in Note 13 and reflect our assessmentof actual future taxes to be paid on items reflected in thefinancial statements,giving consider
232、ation to both timingand probability of these estimates.Actual income taxescould vary from these estimates due to future changes inincome tax law or the final review of our tax returns byfederal,state or foreign tax authorities.We use our judgment to determine whether it is morelikely than not that w
233、e will sustain positions that we havetaken on tax returns and,if so,the amount of benefit toinitially recognize within our financial statements.Weregularly review our uncertain tax positions and adjust ourunrecognized tax benefits(UTBs)in light of changes infacts and circumstances,such as changes in
234、 tax law,interactions with taxing authorities and developments incase law.These adjustments to our UTBs may affect ourincome tax expense.Settlement of uncertain tax positionsmay require use of our cash.New Accounting StandardsSee Note 1 for discussion of recently issued or adoptedaccounting standard
235、s.OTHER BUSINESS MATTERSSpectrum Auctions On January 14,2022,the FCCannounced that we were the winning bidder for 1,624 3.45GHz licenses in Auction 110.We provided the FCC anupfront deposit of$123 in the third quarter of 2021 andpaid the remaining$8,956 in the first quarter of 2022,for atotal of$9,0
236、79.We received the licenses in May 2022,andclassified the auction deposits and related capitalizedinterest as“Licenses Net”on our December 31,2022consolidated balance sheet.On February 24,2021,the FCC announced that AT&T wasthe winning bidder for 1,621 C-Band licenses,comprised ofa total of 80 MHz n
237、ationwide,including 40 MHz in Phase I.We provided to the FCC an upfront deposit of$550 in 2020and cash payments totaling$22,856 in the first quarter of2021,for a total of$23,406.We received the licenses in July2021 and classified the auction deposits,relatedcapitalized interest and billed relocation
238、 costs as“Licenses Net”on our December 31,2021 consolidated balancesheet.In December 2021,we paid$955 of IncentivePayments for the clearing of Phase I spectrum andestimate that we will be responsible for an additional$2,112 upon clearing of Phase II spectrum,expected by theend of 2023.Additionally,w
239、e are responsible forapproximately$1,100 of compensable relocation costsover the next several years as the spectrum is beingcleared by satellite operators,of which we paid$650 inthe fourth quarter of 2021 and$98 in the third quarter of2022.WarnerMedia On April 8,2022,we completed theseparation and d
240、istribution of our WarnerMedia business,and merger of Magallanes,Inc.(Spinco),an AT&Tsubsidiary formed to hold the WarnerMedia business,witha subsidiary of Discovery,Inc.,which was renamed WarnerBros.Discovery,Inc.(WBD).Each AT&T shareholder wasentitled to receive 0.241917 shares of WBD common stock
241、for each share of AT&T common stock held as of therecord date,which represented approximately 71%ofWBD.In connection with and in accordance with the termsof the Separation and Distribution Agreement(SDA),priorto the distribution and merger,AT&T receivedapproximately$40,400,which includes$38,800 of S
242、pincocash and$1,600 of debt retained by WarnerMedia.Duringthe second quarter of 2022,assets of approximately$121,100 and liabilities of$70,600 were removed from ourbalance sheet as well as$45,041 of retained earnings and$5,632 of additional paid-in capital associated with thetransaction.Additionally
243、,in August 2022,we and WBDfinalized the post-closing adjustment,pursuant to Section1.3 of the SDA,which resulted in a$1,200 payment to WBDin the third quarter of 2022 and was reflected in theDecember 31,2022 balance sheet as an adjustment toadditional paid-in capital.The payment is accounted for asc
244、ash used in financing activities in our statement of cashflows in third quarter of 2022.(See Note 6)AT&T,Spinco and Discovery entered into a Tax MattersAgreement,which governs the parties rights,responsibilities and obligations with respect to taxliabilities and benefits,the preservation of the expe
245、ctedtax-free status of the transactions contemplated by theSDA,and other matters regarding taxes.Additionally,we entered into an adjusted HBO Maxagreement with WBD that provides us with expandeddistribution rights and additional flexibility to market andsell the service in a cost-efficient manner.Un
246、der theterms of the agreement,beginning June 1,2022,we arepermitted to include HBO Max in our customer offeringsin exchange for a licensing fee.Furthermore,AT&T has theright,but not the obligation,to market and distribute HBOMax to its customers in plans,bundles,and promotionaloffers.Xandr On June 6
247、,2022,we completed the sale of themarketplace component of Xandr to MicrosoftCorporation.Xandr was reflected in our historical financialstatements as discontinued operations.(See Note 6)Gigapower,LLC On December 22,2022,we agreed toform Gigapower,LLC(Gigapower),a joint venture withBlackRock Alternat
248、ives,to provide a fiber network toInternet service providers and other businesses across theU.S.that serve customers outside of our traditional 21-state wireline footprint.The transaction is subject tocustomary closing conditions,including regulatoryapprovals.Upon closing the joint venture,we expect
249、 todeconsolidate Gigapowers operations.Labor Contracts As of January 31,2023,we employedapproximately 160,700 persons.Approximately 42%of ouremployees are represented by the CommunicationsWorkers of America(CWA),the International Brotherhoodof Electrical Workers(IBEW)or other unions.Afterexpiration
250、of the collective bargaining agreements,workstoppages or labor disruptions may occur in the absenceof new contracts or other agreements being reached.Themain contracts included the following:A contract covering approximately 7,000 Mobilityemployees in nine states,for which we reachedtentative agreem
251、ent in February 2023.A contract covering approximately 400 employeessupporting internet-based products is set to expire inJuly 2023.A contract covering approximately 200 Mobilityemployees in Illinois is set to expire in May 2023.Inflation Reduction Act The Inflation Reduction Act of2022(Inflation Re
252、duction Act)was enacted on August 16,2022.The Inflation Reduction Act imposes a new 15%corporate alternative minimum tax(CAMT)on“applicablecorporations”for taxable years beginning after December31,2022.The CAMT is imposed to the extent thealternative minimum tax exceeds a companys regular taxliabili
253、ty.A corporation that pays alternative minimum taxis eligible for a credit against income tax in future years.Subject to future regulatory guidance,we currently do notbelieve the CAMT will have a material impact on our 2023tax liability.Managements Discussion and Analysis of Financial Condition and
254、Results of Operations(continued)Dollars in millions except per share amounts OECD On October 8,2021,the Organization for EconomicCo-operation and Development(OECD)announced theOECD/G20 Inclusive Framework on Base Erosion andProfit Shifting which agreed to a two-pillar solution toaddress tax challeng
255、es arising from digitalization of theeconomy.On December 20,2021,the OECD released PillarTwo Model Rules defining the global minimum tax,whichcalls for the taxation of large corporations at a minimumrate of 15%.The OECD continues to release additionalguidance on the two-pillar framework with widespr
256、eadimplementation anticipated by 2024.There can be noassurance that these new rules will not increase our taxesin these countries and have an adverse impact on ourprovision for income taxes,when enacted or enforced byparticipating countries in which we do business.Environmental We are subject from t
257、ime to time tojudicial and administrative proceedings brought by variousgovernmental authorities under federal,state or localenvironmental laws.We reference in our Forms 10-Q and10-K certain environmental proceedings that could resultin monetary sanctions(exclusive of interest and costs)ofthree hund
258、red thousand dollars or more.However,we donot believe that any of those currently pending will have amaterial adverse effect on our results of operations.LIQUIDITY AND CAPITAL RESOURCESContinuing operations for theyears ended December 31,202220212020Cash provided by operatingactivities$35,812$37,170
259、$37,484Cash used in investingactivities(26,899)(32,489)(13,447)Cash(used in)provided byfinancing activities(59,564)1,894(31,031)At December 31,20222021Cash and cash equivalents$3,701$19,223Total debt135,890175,631We had$3,701 in cash and cash equivalents available atDecember 31,2022,decreasing$15,52
260、2 since December 31,2021 and returning to historical levels with the close of theWarnerMedia/Discovery transaction.Cash and cashequivalents included cash of$866 and money marketfunds and other cash equivalents of$2,835.Approximately$1,045 of our cash and cash equivalents were held by ourforeign enti
261、ties in accounts predominantly outside of theU.S.and may be subject to restrictions on repatriation.In 2022,cash inflows were primarily provided by cashreceipts from operations,including cash from our sale andtransfer of our receivables to third parties,cash receivedin connection with the separation
262、 and distribution of theWarnerMedia business,issuance of commercial paper andlong-term debt and distributions from DIRECTV.Theseinflows were exceeded by cash used to meet the needs ofthe business,including,but not limited to,payment ofoperating expenses,spectrum acquisitions,funding capitalexpenditu
263、res and vendor financing payments,repaymentof short-term borrowings and long-term debt,anddividend payments to stockholders.We maintainavailability under our credit facilities and our commercialpaper program to meet our short-term liquidityrequirements.Refer to“Contractual Obligations”discussion bel
264、ow foradditional information regarding our cash requirements.Cash Provided by Operating Activities from ContinuingOperationsDuring 2022,cash provided by operating activities was$35,812 compared to$37,170 in 2021,reflecting theseparation of DIRECTV and working capital impacts,including higher payment
265、s for wireless devices tied toaccelerated subscriber growth.We actively manage the timing of our supplier paymentsfor 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 withaccess to bank facilities tha
266、t permit earlier payments attheir cost.In addition,for payments to a key supplier,aspart of our working capital initiatives,we havearrangements that allow us to extend the stated paymentterms by up to 90 days at an additional cost to us(referred to as supplier financing).The net impact ofsupplier fi
267、nancing was to improve cash from operatingactivities$851 in 2022 and$25 in 2021.All supplierfinancing payments are due within one year.Cash Used in or Provided by Investing Activities fromContinuing OperationsDuring 2022,cash used in investing activities totaled$26,899,consisting primarily of$19,626
268、(including interestduring construction)for capital expenditures,and$10,200for acquisitions of licenses won in Auction 110 andassociated capitalized interest.In 2022,we received areturn of investment of$2,649 from DIRECTVrepresenting distributions in excess of cumulative equityin earnings from DIRECT
269、V(see Note 10).For capital improvements,we have negotiated favorablevendor payment terms of 120 days or more(referred to asvendor financing)with some of our vendors,which areexcluded from capital expenditures and reported asfinancing activities.Vendor financing payments were$4,697 in 2022,compared t
270、o$4,596 in 2021.Capitalexpenditures in 2022 were$19,626,and when including$4,697 cash paid for vendor financing,capital investmentwas$24,323($4,182 higher than the prior year).The vast majority of our capital expenditures are spent onour networks,including product development and relatedsupport syst
271、ems.In 2022,we placed$5,817 of equipmentin service under vendor financing arrangements(compared to$5,282 in 2021)and approximately$320 ofassets related to the FirstNet build(compared to$750 in2021).Total reimbursements from the government forFirstNet were approximately$260 for 2022 and$865 for2021.T
272、he amount of our capital expenditures is influenced bydemand for services and products,capacity needs andnetwork enhancements.Our capital expenditures andvendor financing payments were elevated in 2022,reflecting strategic investments.In 2023,we expect thatour capital investment,which includes capit
273、alexpenditures and cash paid for vendor financing,will beconsistent with 2022 levels.Cash Used in or Provided by Financing Activities fromContinuing OperationsIn 2022,cash used in financing activities totaled$59,564and was comprised of debt issuances and repayments,payments of dividends,and vendor f
274、inancing payments.We also paid approximately$1,211 in cash on the notepayable to DIRECTV,with$130 due as of December 31,2022(see Note 19).A tabular summary of our debt activity during 2022 is as follows:FirstQuarterSecondQuarterThirdQuarterFourthQuarterFull Year2022Net commercial paper borrowings$1,
275、471$(5,219)$(724)$(1,337)$(5,809)Issuance of Notes and Debentures:Private Financing$750$7502025 Term Loan2,5002,500Other479479Debt Issuances$479$750$2,500$3,729Repayments:2021 Syndicated Term Loan$(7,350)$(7,350)BAML Bilateral Term Loan-Tranche A(1,000)(1,000)Private financing(750)(750)(1,500)Repaym
276、ents of other short-term borrowings$(9,100)$(750)$(9,850)USD notes1,2,3$(123)$(18,957)$(287)$(19,367)Euro notes(3,343)(3,343)BAML Bilateral Term Loan-Tranche B(1,000)(1,000)Other(667)(123)(199)(419)(1,408)Repayments of long-term debt$(790)$(23,423)$(199)$(706)$(25,118)1On April 11,2022,we issued not
277、ices for the redemption in full of all of the outstanding approximately$9,042 aggregate principal amount of various global notes due 2022to 2026 with coupon rates ranging from 2.625%to 4.450%(Make-Whole Notes).The Make-Whole Notes were redeemed on the redemption dates set forth in the noticesof rede
278、mption,at“make whole”redemption prices calculated as set forth in the respective redemption notices in the secondquarter.2Includes$7,954 of cash paid toward the$8,822 aggregate principal amount of various notes that were tendered for cash in May 2022.The notes had interest ratesranging between 3.100
279、%and 8.750%and original maturities ranging from 2026 to 2061.3Includes$287 of principal repayment on a$592 zero coupon note that matured in November 2022.The other$305 was applied to operating cash flows related to interestexpense that accreted to the note over its life.The weighted average interest
280、 rate of our long-term debtportfolio,including credit agreement borrowings and theimpact of derivatives,was approximately 4.1%as ofDecember 31,2022 and 3.8%as of December 31,2021.Wehad$133,207 of total notes and debentures outstanding atDecember 31,2022,which included Euro,British poundsterling,Cana
281、dian dollar,Mexican peso,Australian dollar,and Swiss franc denominated debt that totaledapproximately$35,525.At December 31,2022,we had$7,467 of debt maturingwithin one year,consisting of$866 of commercial paperborrowings and$6,601 of long-term debt issuances.During 2022,we paid$4,697 of cash under
282、our vendorfinancing program,compared to$4,596 in 2021.Totalvendor financing payables included in our December 31,2022 consolidated balance sheet were$6,147,with$4,592due within one year(in“Accounts payable and accruedliabilities”)and the remainder predominantly due withinfive years(in“Other noncurre
283、nt liabilities”).At December 31,2022,we had approximately 144 millionshares remaining from our share repurchaseauthorizations approved by the Board of Directors in 2014.During 2022,we repurchased approximately 34 millionshares under the March 2014 authorization.We paid dividends on common shares and
284、 preferredshares of$9,859 in 2022,compared with$15,068 in 2021.Dividends on common stock declared by our Board ofDirectors,on a quarterly basis,totaled$1.11 per share in2022 and$2.08 per share in 2021.Our dividend policyconsiders the expectations and requirements ofstockholders,capital funding requi
285、rements of AT&T andlong-term growth opportunities.On February 1,2022,weannounced that our Board of Directors approved anexpected annual dividend level of$1.11 per common share,or approximately$8,000 per year,following the close ofthe WarnerMedia/Discovery transaction.In the fourth quarter of 2022,al
286、l outstanding AT&TMobility II LLC(Mobility preferred interests)were put to us(approximately$8,000),with approximately one-thirdManagements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts redeemed in the fourth quarter;ap
287、proximately 107 millioninterests are expected to be redeemed primarily inOctober 2023 and 107 million redeemed in October 2024,per the terms of the agreement,unless the interests arecalled or the puts are accepted by AT&T prior to thosedates.With the certainty of redemption,the remainingMobility pre
288、ferred interests were reclassified from equityto a liability at fair value,with approximately$2,670recorded in current as“Accounts payable and accruedliabilities”and$2,670 recorded in“Other noncurrentliabilities.”In the fourth quarter of 2022,we paidapproximately$2,600 cash to redeem the Mobilitypre
289、ferred interests put to us on October 24,2022.(SeeNote 16)Our 2023 financing activities will focus on managing ourdebt level and paying dividends,subject to approval by ourBoard of Directors.We plan to fund our financing uses ofcash through a combination of cash from operations,issuance of debt,and
290、asset sales.The timing and mix ofany debt issuance and/or refinancing will be guided bycredit market conditions and interest rate trends.Credit FacilitiesThe following summary of our various credit and loanagreements does not purport to be complete and isqualified in its entirety by reference to eac
291、h agreementfiled as exhibits to our Annual Report on Form 10-K.We use credit facilities as a tool in managing our liquiditystatus.In November 2022,we terminated one of ourrevolving credit agreements and amended and restatedthe other.We currently have one$12,000 revolving creditagreement that termina
292、tes on November 18,2027(Revolving Credit Agreement).No amounts wereoutstanding as of December 31,2022.On January 29,2021,we entered into a$14,700 Term LoanCredit Agreement(2021 Syndicated Term Loan),with Bankof America,N.A.,as agent.On March 23,2021,we borrowed$7,350 under the 2021 Syndicated Term L
293、oan and theremaining$7,350 of lenders commitments wereterminated.In the first quarter of 2022,the maturity dateof the 2021 Syndicated Term Loan was extended toDecember 31,2022.On April 13,2022,the 2021 SyndicatedTerm Loan was paid off and terminated.In March 2021,we entered into and drew on a$2,000
294、termloan credit agreement(BAML Bilateral Term Loan)consisting of(i)a$1,000 facility originally due December31,2021(BAML Tranche A Facility)and subsequentlyextended to December 31,2022 in the fourth quarter of2021,and(ii)a$1,000 facility due December 31,2022(BAMLTranche B Facility),with Bank of Ameri
295、ca,N.A.,as agent.On April 13,2022,the BAML Bilateral Term Loan was paidoff and terminated.In November 2022,we entered into and drew on a$2,500term loan agreement due February 16,2025(2025 TermLoan),with Mizuho Bank,Ltd.,as agent.As of December 31,2022,$2,500 was outstanding under this agreement.We a
296、lso utilize other external financing sources,whichinclude various credit arrangements supported bygovernment agencies to support network equipmentpurchases as well as a commercial paper program.Each of our credit and loan agreements containscovenants that are customary for an issuer with aninvestmen
297、t grade senior debt credit rating.Our RevolvingCredit Agreement and 2025 Term Loan include a net debt-to-EBITDA financial ratio covenant requiring AT&T tomaintain,as of the last day of each fiscal quarter,a ratio ofnot more than 3.75-to-1.Other loan agreements include anet debt-to-EBITDA financial r
298、atio covenant requiringAT&T to maintain,as of the last day of each fiscal quarterthrough June 30,2023 a ratio of not more than 4.0-to-1,and a ratio of not more than 3.5-to-1 for any fiscal quarterthereafter.As of December 31,2022,we were incompliance with the covenants for our credit facilities.Coll
299、ateral ArrangementsMost of our counterparty collateral arrangements requirecash collateral posting by AT&T only when derivativemarket values exceed certain thresholds.Under thesearrangements,which cover the majority of ourapproximately$38,800 derivative portfolio,counterparties are still required to
300、 post collateral.During2022,we posted approximately$760 of cash collateral,ona net basis.Cash postings under these arrangements varywith changes in credit ratings and netting agreements.(See Note 12)OtherOur total capital consists of debt(long-term debt anddebt maturing within one year)and stockhold
301、ers equity.Our capital structure does not include debt issued by ourequity method investments.At December 31,2022,ourdebt ratio was 56.1%,compared to 48.9%at December 31,2021 and 46.4%at December 31,2020.The debt ratio isaffected by the same factors that affect total capital,andreflects our recent d
302、ebt issuances,repayments andreclassifications related to redemption of noncontrollinginterests.A significant amount of our cash outflows for continuingoperations is related to tax items,acquisition of spectrumthrough FCC auctions and benefits paid for current andformer employees:Total taxes incurred
303、,collected and remitted by AT&Tduring 2022 and 2021,were$16,630 and$17,119.Thesetaxes include income,franchise,property,sales,excise,payroll,gross receipts and various other taxesand fees.Total domestic spectrum acquired primarily throughFCC auctions,including cash,exchanged spectrumand auction depo
304、sits was approximately$10,200 in2022,$25,400 in 2021 and$2,800 in 2020.Total health and welfare benefits provided to certainactive and retired employees and their dependentstotaled approximately$3,200 in 2022 and$3,390 in2021,with$788 paid from plan assets in 2022compared to$1,163 in 2021.Of those b
305、enefits,approximately$2,840 related to medical andprescription drug benefits in 2022 compared to$2,990in 2021.In addition,in 2022,we prefunded$500 forfuture benefit payments versus$685 in 2021.We paid$5,854 of pension benefits out of plan assets in 2022compared to$5,942 in 2021.Contractual Obligatio
306、nsOur contractual obligations as of December 31,2022,and the estimated timing of payment,are in the following table:Payments Due By PeriodTotalLess than1 Year1-3Years3-5YearsMore than 5YearsLong-term debt obligations1$147,673$6,929$14,898$14,897$110,949Interest payments on long-term debt2101,5596,06
307、210,9109,81874,769Purchase obligations327,01512,31311,4242,457821Operating lease obligations426,4684,6577,7465,1328,933FirstNet sustainability payments517,2051953903,25513,365Unrecognized tax benefits68,3234867,837Other finance obligations713,7885,3912,8301,7873,780Mobility preferred interests85,340
308、2,6702,670Total Contractual Obligations$347,371$38,703$50,868$37,346$220,4541Represents principal or payoff amounts of notes,debentures and credit agreement borrowings at maturity(see Note 11).Foreign debt includes the impact from hedges,when applicable.2Includes credit agreement borrowings.3We expe
309、ct to fund the purchase obligations with cash provided by operations or through incremental borrowings.Consists of commitments primarily related tospectrum acquisitions and other commercial commitments.The minimum commitment for certain obligations is based on termination penalties that could be pai
310、d toexit the contracts.(See Note 21)4Represents operating lease payments(see Note 8).5Represents contractual commitment to make sustainability payments over the 25-year contract.These sustainability payments represent our commitment to fundFirstNets operating expenses and future reinvestment in the
311、network,which we own and operate.FirstNet has a statutory requirement to reinvest funds that exceedthe agencys operating expenses,which we anticipate to be$15,000.(See Note 20)6The noncurrent portion of the UTBs is included in the“More than 5 Years”column,as we cannot reasonably estimate the timing
312、or amounts of additional cash payments,if any,at this time(see Note 13).7Represents future minimum payments under the Crown Castle and other arrangements(see Note 18),payables subject to extended payment terms(see Note 22),finance lease payments(see Note 8)and note payable to DIRECTV(see Note 19).8S
313、ee Note 16.Certain items were excluded from this table because the year of payment is unknown and could not be reliablyestimated,we believe the obligations are immaterial,or the settlement of the obligation will not require the use of cash.These items include:deferred income tax liability of$57,032(
314、see Note 13);net postemployment benefit obligations of$8,433(including current portion);and other noncurrent liabilities of$11,035.Managements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts:MARKET RISKWe are exposed to
315、market risks primarily from changes ininterest rates and foreign currency exchange rates.Theserisks,along with other business risks,impact our cost ofcapital.It is our policy to manage our debt structure andforeign exchange exposure in order to manage capitalcosts,control financial risks and maintai
316、n financialflexibility over the long term.In managing market risks,weemploy derivatives according to documented policies andprocedures,including interest rate swaps,interest ratelocks,foreign currency exchange contracts and combinedinterest rate foreign currency contracts(cross-currencyswaps).We do
317、not use derivatives for trading orspeculative purposes.We do not foresee significantchanges in the strategies we use to manage market risk inthe near future.One of the most significant assumptions used inestimating our postretirement benefit obligations is theassumed weighted-average discount rate,w
318、hich is thehypothetical rate at which the projected benefitobligations could be effectively settled or paid out toparticipants.We determined our discount rate based on arange of factors,including a yield curve composed of therates of return on several hundred high-quality,fixedincome corporate bonds
319、 available at the measurementdate and corresponding to the related expected durationsof future cash outflows for the obligations.In recentyears,the discount rates have been increasingly volatile,and on average have been lower than in historical periods.Lower discount rates used to measure our pensio
320、n andpostretirement plans result in higher obligations.Futureincreases in these rates could result in lower obligations,improved funded status and actuarial gains.Interest Rate RiskThe majority of our financial instruments are medium-and long-term fixed-rate notes and debentures.Changesin interest r
321、ates can lead to significant fluctuations in thefair value of these instruments.The principal amounts byexpected maturity,average interest rate and fair value ofour liabilities that are exposed to interest rate risk aredescribed in Notes 11 and 12.In managing interestexpense,we control our mix of fi
322、xed and floating ratedebt through term loans,floating rate notes,and interestrate swaps.We have established interest rate risk limitsthat we closely monitor by measuring interest ratesensitivities in our debt and interest rate derivativesportfolios.Most of our foreign-denominated long-term debt hasb
323、een swapped from fixed-rate or floating-rate foreigncurrencies to fixed-rate U.S.dollars at issuance throughcross-currency swaps,removing interest rate risk andforeign currency exchange risk associated with theunderlying interest and principal payments.Likewise,periodically we enter into interest ra
324、te locks to partiallyhedge the risk of increases in the benchmark interest rateduring the period leading up to the probable issuance offixed-rate debt.We expect gains or losses in our cross-currency swaps and interest rate locks to offset the lossesand gains in the financial instruments they hedge.W
325、e had no interest rate swaps and no interest rate locksat December 31,2022.Foreign Exchange RiskWe principally use foreign exchange contracts to hedgecosts and debt denominated in foreign currencies.We arealso exposed to foreign currency exchange risk throughour foreign affiliates and equity investm
326、ents in foreigncompanies.Through cross-currency swaps,most of our foreign-denominated debt has been swapped from fixed-rate orfloating-rate foreign currencies to fixed-rate U.S.dollarsat issuance,removing interest rate and foreign currencyexchange risk associated with the underlying interest andprin
327、cipal payments.We expect gains or losses in ourcross-currency swaps to offset the gains and losses in thefinancial instruments they hedge.We had cross-currencyswaps with a notional value of$38,213 and a fair value of$(5,982)outstanding at December 31,2022.For the purpose of assessing specific risks,
328、we use asensitivity analysis to determine the effects that marketrisk exposures may have on the fair value of our financialinstruments and results of operations.We had foreignexchange forward contracts with a notional value of$617and a fair value of$(23)outstanding at December 31,2022.,STOCK PERFORM
329、ANCE GRAPHComparison of Five Year Cumulative ReturnAT&T Inc.,S&P 500 Index and S&P 500 Communication Services IndexThe comparison above assumes$100 invested on December 31,2017,in AT&T common stock and the following Standard&Poors(S&P)Indices:S&P 500 Index and S&P 500 Communication Services Index.To
330、tal return equals stock priceappreciation plus reinvestment of dividends.Managements Discussion and Analysis of Financial Condition and Results of Operations(continued)Dollars in millions except per share amounts;00960875AT&T Inc.S&P 500 IndexS&P 500 Communication Se
331、rvices Index12/1712/1812/1912/2012/2112/226080014RISK FACTORSIn addition to the other information set forth in thisdocument,including the matters contained under thecaption“Cautionary Language Concerning Forward-Looking Statements,”you should carefully read thematters described
332、 below.We believe that each of thesematters could materially affect our business.Werecognize that most of these factors are beyond ourability to control and therefore we cannot predict anoutcome.Macro-economic Factors:Adverse changes in the U.S.securities markets,interest rates,rising inflation and
333、medical costs couldmaterially increase our benefit plan costs and futurefunding requirements.Our costs to provide current benefits and funding forfuture benefits are subject to increases,primarily due tocontinuing increases in medical and prescription drugcosts,in part due to inflation,and can be affected by lowerreturns on assets held by our pension and other benefitplans,which are reflected in o