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1、UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31,2023orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF
2、 1934For the transition period from toCommission File Number 001-8610AT&T INC.Incorporated under the laws of the State of DelawareI.R.S.Employer Identification Number 43-1301883208 S.Akard St.,Dallas,Texas 75202Telephone Number:(210)821-4105Securities registered pursuant to Section 12(b)of the Act N
3、ame of each exchangeTitle of each classTrading Symbol(s)on which registeredCommon Shares(Par Value$1.00 Per Share)TNew York Stock ExchangeDepositary Shares,each representing a 1/1000th interest in ashare of 5.000%Perpetual Preferred Stock,Series AT PRANew York Stock ExchangeDepositary Shares,each re
4、presenting a 1/1000th interest in ashare of 4.750%Perpetual Preferred Stock,Series CT PRCNew York Stock ExchangeAT&T Inc.2.500%Global Notes due March 15,2023T 23New York Stock ExchangeAT&T Inc.2.750%Global Notes due May 19,2023T 23CNew York Stock ExchangeAT&T Inc.Floating Rate Global Notes due Septe
5、mber 5,2023T 23DNew York Stock ExchangeAT&T Inc.1.050%Global Notes due September 5,2023T 23ENew York Stock ExchangeAT&T Inc.1.300%Global Notes due September 5,2023T 23ANew York Stock ExchangeAT&T Inc.1.950%Global Notes due September 15,2023T 23FNew York Stock ExchangeAT&T Inc.2.400%Global Notes due
6、March 15,2024T 24ANew York Stock ExchangeAT&T Inc.Floating Rate Global Notes due March 6,2025T 25ANew York Stock ExchangeAT&T Inc.3.500%Global Notes due December 17,2025T 25New York Stock ExchangeAT&T Inc.0.250%Global Notes due March 4,2026T 26ENew York Stock ExchangeAT&T Inc.1.800%Global Notes due
7、September 5,2026T 26DNew York Stock ExchangeAT&T Inc.2.900%Global Notes due December 4,2026T 26ANew York Stock ExchangeAT&T Inc.1.600%Global Notes due May 19,2028T 28CNew York Stock Exchange Name of each exchangeTitle of each classTrading Symbol(s)on which registeredAT&T Inc.2.350%Global Notes due S
8、eptember 5,2029T 29DNew York Stock ExchangeAT&T Inc.4.375%Global Notes due September 14,2029T 29BNew York Stock ExchangeAT&T Inc.2.600%Global Notes due December 17,2029T 29ANew York Stock ExchangeAT&T Inc.0.800%Global Notes due March 4,2030T 30BNew York Stock ExchangeAT&T Inc.2.050%Global Notes due
9、May 19,2032T 32ANew York Stock ExchangeAT&T Inc.3.550%Global Notes due December 17,2032T 32New York Stock ExchangeAT&T Inc.5.200%Global Notes due November 18,2033T 33New York Stock ExchangeAT&T Inc.3.375%Global Notes due March 15,2034T 34New York Stock ExchangeAT&T Inc.2.450%Global Notes due March 1
10、5,2035T 35New York Stock ExchangeAT&T Inc.3.150%Global Notes due September 4,2036T 36ANew York Stock ExchangeAT&T Inc.2.600%Global Notes due May 19,2038T 38CNew York Stock ExchangeAT&T Inc.1.800%Global Notes due September 14,2039T 39BNew York Stock ExchangeAT&T Inc.7.000%Global Notes due April 30,20
11、40T 40New York Stock ExchangeAT&T Inc.4.250%Global Notes due June 1,2043T 43New York Stock ExchangeAT&T Inc.4.875%Global Notes due June 1,2044T 44New York Stock ExchangeAT&T Inc.4.000%Global Notes due June 1,2049T 49ANew York Stock ExchangeAT&T Inc.4.250%Global Notes due March 1,2050T 50New York Sto
12、ck ExchangeAT&T Inc.3.750%Global Notes due September 1,2050T 50ANew York Stock ExchangeAT&T Inc.5.350%Global Notes due November 1,2066TBBNew York Stock ExchangeAT&T Inc.5.625%Global Notes due August 1,2067TBCNew York Stock ExchangeIndicate by check mark whether the registrant(1)has filed all reports
13、 required to be filed by Section 13 of 15(d)of the Securities Exchange Act of 1934 duringthe preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements forthe past 90 days.Yes No Indicate by check mark whet
14、her the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check
15、 mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See definition of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”inRule 12b-2 of the Ex
16、change Act.Large Accelerated FilerAccelerated FilerNon-accelerated filerSmaller reporting company Emerging growth companyIf an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial account
17、ing standards provided pursuant to Section 13(a)of the Exchange Act.Yes No Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No At April 25,2023,there were 7,149 million common shares outstanding.PART I-FINANCIAL INFORMATIONItem 1.Fina
18、ncial StatementsAT&T INC.CONSOLIDATED STATEMENTS OF INCOMEDollars in millions except per share amounts(Unaudited)Three months ended March 31,20232022Operating Revenues Service$24,617$23,999 Equipment5,522 5,713 Total operating revenues30,139 29,712 Operating ExpensesCost of revenuesEquipment5,658 6,
19、036 Other cost of revenues(exclusive of depreciation andamortization shown separately below)6,673 6,699 Selling,general and administrative7,175 6,978 Depreciation and amortization4,631 4,462 Total operating expenses24,137 24,175 Operating Income6,002 5,537 Other Income(Expense)Interest expense(1,708
20、)(1,626)Equity in net income of affiliates538 521 Other income(expense)net935 2,157 Total other income(expense)(235)1,052 Income from Continuing Operations Before Income Taxes5,767 6,589 Income tax expense on continuing operations1,314 1,440 Income from Continuing Operations4,453 5,149 Income from d
21、iscontinued operations,net of tax 15 Net Income4,453 5,164 Less:Net Income Attributable to Noncontrolling Interest(225)(354)Net Income Attributable to AT&T$4,228$4,810 Less:Preferred Stock Dividends(52)(48)Net Income Attributable to Common Stock$4,176$4,762 Basic Earnings Per Share from continuing o
22、perations$0.58$0.66 Basic Earnings Per Share from discontinued operations$Basic Earnings Per Share Attributable to Common Stock$0.58$0.66 Diluted Earnings Per Share from continuing operations$0.57$0.65 Diluted Earnings Per Share from discontinued operations$Diluted Earnings Per Share Attributable to
23、 Common Stock$0.57$0.65 Weighted Average Number of Common SharesOutstanding Basic(in millions)7,168 7,184 Weighted Average Number of Common SharesOutstanding with Dilution(in millions)7,474 7,556 See Notes to Consolidated Financial Statements.3AT&T INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
24、 Dollars in millions (Unaudited)Three months ended March 31,20232022Net income$4,453$5,164 Other comprehensive income(loss),net of tax:Foreign currency:Translation adjustment,net of taxes of$52 and$5193 19 Securities:Net unrealized gains(losses),net of taxes of$8 and$(23)23(69)Reclassification adjus
25、tment included in net income,net of taxes of$1 and$13 3 Derivative instruments:Net unrealized gains(losses),net of taxes of$(43)and$69(152)258 Reclassification adjustment included in net income,net of taxes of$3 and$412 15 Defined benefit postretirement plans:Amortization of net prior service credit
26、 included in net income,net of taxes of$(160)and$(152)(491)(465)Other comprehensive income(loss)(412)(239)Total comprehensive income4,041 4,925 Less:Total comprehensive income attributable tononcontrolling interest(225)(354)Total Comprehensive Income Attributable to AT&T$3,816$4,571 See Notes to Con
27、solidated Financial Statements.4AT&T INC.CONSOLIDATED BALANCE SHEETSDollars in millions except per share amounts(Unaudited)March 31,December 31,20232022AssetsCurrent Assets Cash and cash equivalents$2,821$3,701 Accounts receivable net of related allowances for credit loss of$619 and$58810,214 11,466
28、 Inventories2,791 3,123 Prepaid and other current assets14,077 14,818 Total current assets29,903 33,108 Property,plant and equipment330,486 329,630 Less:accumulated depreciation and amortization(202,028)(202,185)Property,Plant and Equipment Net128,458 127,445 Goodwill Net67,895 67,895 Licenses Net12
29、4,502 124,092 Other Intangible Assets Net5,346 5,354 Investments in and Advances to Equity Affiliates2,810 3,533 Operating Lease Right-Of-Use Assets21,619 21,814 Other Assets20,340 19,612 Total Assets$400,873$402,853 Liabilities and Stockholders EquityCurrent LiabilitiesDebt maturing within one year
30、$13,757$7,467 Note payable to DIRECTV 130 Accounts payable and accrued liabilities38,389 42,644 Advanced billings and customer deposits3,922 3,918 Dividends payable2,082 2,014 Total current liabilities58,150 56,173 Long-Term Debt123,727 128,423 Deferred Credits and Other Noncurrent LiabilitiesDeferr
31、ed income taxes57,294 57,032 Postemployment benefit obligation7,060 7,260 Operating lease liabilities18,413 18,659 Other noncurrent liabilities27,883 28,849 Total deferred credits and other noncurrent liabilities110,650 111,800 Stockholders EquityPreferred stock($1 par value,10,000,000 authorized at
32、 March 31,2023 and December 31,2022):Series A(48,000 issued and outstanding at March 31,2023 and December 31,2022)Series B(20,000 issued and outstanding at March 31,2023 and December 31,2022)Series C(70,000 issued and outstanding at March 31,2023 and December 31,2022)Common stock($1 par value,14,000
33、,000,000 authorized at March 31,2023 andDecember 31,2022:issued 7,620,748,598 at March 31,2023 and December 31,2022)7,621 7,621 Additional paid-in capital120,774 123,610 Retained(deficit)earnings(15,187)(19,415)Treasury stock(471,514,050 at March 31,2023 and 493,156,816 at December 31,2022,at cost)(
34、16,166)(17,082)Accumulated other comprehensive income2,354 2,766 Noncontrolling interest8,950 8,957 Total stockholders equity108,346 106,457 Total Liabilities and Stockholders Equity$400,873$402,853 See Notes to Consolidated Financial Statements.5AT&T INC.CONSOLIDATED STATEMENTS OF CASH FLOWSDollars
35、 in millions(Unaudited)Three months ended March 31,20232022Operating Activities Income from continuing operations$4,453$5,149 Adjustments to reconcile income from continuing operations to net cash provided by operating activities from continuing operations:Depreciation and amortization4,631 4,462 Pr
36、ovision for uncollectible accounts477 430 Deferred income tax expense529 1,150 Net(gain)loss on investments,net of impairments(93)87 Pension and postretirement benefit expense(credit)(670)(940)Actuarial(gain)loss on pension and postretirement benefits(1,053)Changes in operating assets and liabilitie
37、s:Receivables620 864 Other current assets364 244 Accounts payable and other accrued liabilities(3,409)(2,651)Equipment installment receivables and related sales(243)541 Deferred customer contract acquisition and fulfillment costs(22)(259)Postretirement claims and contributions(89)(97)Other-net130(29
38、7)Total adjustments2,225 2,481 Net Cash Provided by Operating Activities from Continuing Operations6,678 7,630 Investing ActivitiesCapital expenditures(4,335)(4,568)Acquisitions,net of cash acquired(291)(9,244)Dispositions15 7 Distributions from DIRECTV in excess of cumulative equity in earnings774
39、1,315 Other-net19 32 Net Cash Used in Investing Activities from Continuing Operations(3,818)(12,458)Financing ActivitiesNet change in short-term borrowings with original maturities of three months or less(536)2,285 Issuance of other short-term borrowings3,627 2,593 Repayment of other short-term borr
40、owings(3,407)Issuance of long-term debt3,366 479 Repayment of long-term debt(5,945)(790)Repayment of note payable to DIRECTV(130)(294)Payment of vendor financing(2,113)(1,566)Purchase of treasury stock(188)(197)Issuance of treasury stock3 26 Dividends paid(2,014)(3,749)Other-net219(930)Net Cash Used
41、 in Financing Activities from Continuing Operations(3,711)(5,550)Net decrease in cash and cash equivalents and restricted cash from continuing operations(851)(10,378)Cash flows from Discontinued Operations:Cash(used in)provided by operating activities(1,898)Cash provided by(used in)investing activit
42、ies(193)Cash provided by(used in)financing activities 29,801 Net increase(decrease)in cash and cash equivalents and restricted cash from discontinued operations 27,710 Net(decrease)increase in cash and cash equivalents and restricted cash$(851)$17,332 Cash and cash equivalents and restricted cash be
43、ginning of year3,793 21,316 Cash and Cash Equivalents and Restricted Cash End of Period$2,942$38,648 See Notes to Consolidated Financial Statements.6AT&T INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITYDollars and shares in millions except per share amounts (Unaudited)Three months ended
44、 March 31,2023March 31,2022 SharesAmountSharesAmountPreferred Stock-Series A Balance at beginning of period$Balance at end of period$Preferred Stock-Series BBalance at beginning of period$Balance at end of period$Preferred Stock-Series CBalance at beginning of period$Balance at end of period$Common
45、StockBalance at beginning of period7,621$7,621 7,621$7,621 Balance at end of period7,621$7,621 7,621$7,621 Additional Paid-In CapitalBalance at beginning of period$123,610$130,112 Preferred stock dividends(98)Common stock dividends($0.2775 per share in 2023)(2,002)Issuance of treasury stock(365)(126
46、)Share-based payments(371)(349)Balance at end of period$120,774$129,637 Retained(Deficit)EarningsBalance at beginning of period$(19,415)$42,350 Net income attributable to AT&T4,228 4,810 Preferred stock dividends(99)Common stock dividends($0.2775 per share in 2022)(2,020)Balance at end of period$(15
47、,187)$45,041 See Notes to Consolidated Financial Statements.7AT&T INC.CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY-continuedDollars and shares in millions except per share amounts (Unaudited)Three months ended March 31,2023March 31,2022 SharesAmountSharesAmountTreasury Stock Balance at
48、beginning of period(493)$(17,082)(480)$(17,280)Repurchase and acquisition of common stock(10)(188)(8)(197)Reissuance of treasury stock31 1,104 26 924 Balance at end of period(472)$(16,166)(462)$(16,553)Accumulated Other Comprehensive IncomeAttributable to AT&T,net of taxBalance at beginning of perio
49、d$2,766$3,529 Other comprehensive income attributable to AT&T(412)(239)Balance at end of period$2,354$3,290 Noncontrolling InterestBalance at beginning of period$8,957$17,523 Net income attributable to noncontrolling interest225 354 Redemption of noncontrolling interest(16)Distributions(232)(341)Bal
50、ance at end of period$8,950$17,520 Total Stockholders Equity at beginning of period$106,457$183,855 Total Stockholders Equity at end of period$108,346$186,556 See Notes to Consolidated Financial Statements.8AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)Dollars in million
51、s except per share amountsNOTE 1.PREPARATION OF INTERIM FINANCIAL STATEMENTS Basis of Presentation Throughout this document,AT&T Inc.is referred to as“we,”“AT&T”or the“Company.”The consolidated financial statements includethe accounts of the Company and subsidiaries and affiliates which we control.A
52、T&T is a holding company whose subsidiaries and affiliates operate worldwidein the telecommunications and technology industries.You should read this document in conjunction with the consolidated financial statements andaccompanying notes included in our Annual Report on Form 10-K for the year ended
53、December 31,2022.The results for the interim periods are not necessarilyindicative of those for the full year.These consolidated financial statements include all adjustments that are necessary to present fairly the results for thepresented interim periods,consisting of normal recurring accruals and
54、other items.All significant intercompany transactions are eliminated in the consolidation process.Investments in subsidiaries and partnerships which we do not control buthave significant influence are accounted for under the equity method.Earnings from certain investments accounted for using the equ
55、ity method are included inour results on a one quarter lag.We also record our proportionate share of our equity method investees other comprehensive income(OCI)items,includingtranslation adjustments.The preparation of financial statements in conformity with U.S.generally accepted accounting principl
56、es(GAAP)requires management to make estimates andassumptions,including estimates of fair value,probable losses and expenses,that affect the amounts reported in the financial statements and accompanyingnotes.Actual results could differ from those estimates.Certain prior period amounts have been confo
57、rmed to the current periods presentation.Unlessotherwise noted,the information in Notes 1 through 13 refer only to our continuing operations and do not include discussion of balances or activity ofWarnerMedia,Vrio,Xandr and Playdemic Ltd.,which were part of discontinued operations.Accounting Policie
58、s,Adopted and Pending Accounting Standards and Other ChangesSupplier Finance Obligations As of January 1,2023,we adopted,with retrospective application,the Financial Accounting Standards Boards(FASB)Accounting Standards Update(ASU)No.2022-04,“Liabilities Supplier Finance Programs(Subtopic 405-50):Di
59、sclosure of Supplier Finance ProgramObligations”(ASU 2022-04),which establishes interim and annual reporting disclosure requirements about a companys supplier finance programs for itspurchase of goods and services.Interim and annual requirements include disclosure of outstanding amounts under the ob
60、ligations as of the end of the reportingperiod,and annual requirements include a rollforward of those obligations for the annual reporting period,as well as a description of payment and other keyterms of the programs.The annual rollforward requirement becomes effective for annual periods beginning a
61、fter December 15,2023,with prospectiveapplication.The standard allows early adoption of this requirement.In the year of adoption,the disclosure of payment and other key terms under the programsand outstanding balances under the obligations also applies to interim reporting dates.9AT&T INC.MARCH 31,2
62、023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsNOTE 2.EARNINGS PER SHARE A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months ended March 31,2023 and 2022,is shown inthe table b
63、elow:Three months ended March 31,20232022Numerators Numerator for basic earnings per share:Income from continuing operations,net of tax$4,453$5,149 Net income from continuing operations attributable to noncontrolling interests(225)(354)Preferred Stock Dividends(52)(48)Income from continuing operatio
64、ns attributable to common stock4,176 4,747 Income from discontinued operations attributable to common stock 15 Net Income Attributable to Common Stock$4,176$4,762 Dilutive potential common shares:Mobility preferred interests72 140 Share-based payment4 6 Numerator for diluted earnings per share$4,252
65、$4,908 Denominators(000,000)Denominator for basic earnings per share:Weighted average number of common shares outstanding7,168 7,184 Dilutive potential common shares:Mobility preferred interests(in shares)284 337 Share-based payment(in shares)22 35 Denominator for diluted earnings per share7,474 7,5
66、56 Under ASU No.2020-06,“DebtDebt With Conversion and Other Options(Subtopic 470-20)and Derivatives and HedgingContracts in Entitys OwnEquity(Subtopic 815-40):Accounting for Convertible Instruments and Contracts in an Entitys Own Equity”(ASU 2020-06),the ability to settle our Series ACumulative Perp
67、etual Preferred Membership Interests in AT&T Mobility II LLC(Mobility preferred interests)in stock is reflected in our diluted earnings pershare calculation.While our intent is to settle the Mobility preferred interests in cash,the ability to settle this instrument in AT&T shares will result inaddit
68、ional dilutive impact,the magnitude of which is influenced by the fair value of the Mobility preferred interests and the average AT&T common stock priceduring the reporting period,which could vary from period-to-period.On April 5,2023,we repurchased the remaining Mobility preferred interests and our
69、calculation of diluted earnings per share will not reflect the dilutive potential of these instruments for the quarterly periods after the repurchase.10AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsNOTE 3.OTHER COMPRE
70、HENSIVE INCOME Changes in the balances of each component included in accumulated OCI are presented below.All amounts are net of tax and exclude noncontrolling interest.ForeignCurrencyTranslationAdjustment Net UnrealizedGains(Losses)onSecurities Net UnrealizedGains(Losses)onDerivativeInstruments Defi
71、ned BenefitPostretirementPlans Accumulated OtherComprehensiveIncome(Loss)Balance as of December 31,2022$(1,800)$(90)$(1,998)$6,654$2,766 Other comprehensive income(loss)before reclassifications193 23(152)64 Amounts reclassified fromaccumulated OCI 13 112 2(491)3(476)Net other comprehensiveincome(los
72、s)193 26(140)(491)(412)Balance as of March 31,2023$(1,607)$(64)$(2,138)$6,163$2,354 ForeignCurrencyTranslationAdjustment Net UnrealizedGains(Losses)onSecurities Net UnrealizedGains(Losses)onDerivativeInstruments Defined BenefitPostretirementPlans Accumulated OtherComprehensiveIncome(Loss)Balance as
73、of December 31,2021$(1,964)$45$(1,422)$6,870$3,529 Other comprehensive income(loss)before reclassifications19(69)258 208 Amounts reclassified fromaccumulated OCI 13 115 2(465)3(447)Net other comprehensiveincome(loss)19(66)273(465)(239)Balance as of March 31,2022$(1,945)$(21)$(1,149)$6,405$3,290(Gain
74、s)losses are included in“Other income(expense)-net”in the consolidated statements of income.(Gains)losses are primarily included in“Interest expense”in the consolidated statements of income(see Note 7).The amortization of prior service credits associated with postretirement benefits are included in“
75、Other income(expense)-net”in the consolidated statements of income(seeNote 6).NOTE 4.SEGMENT INFORMATION Our segments are comprised of strategic business units or other operations that offer products and services to different customer segments over varioustechnology platforms and/or in different geo
76、graphies that are managed accordingly.We have two reportable segments:Communications and Latin America.We also evaluate segment and business unit performance based on EBITDA and/or EBITDA margin,which is defined as operating income excludingdepreciation and amortization.EBITDA is used as part of our
77、 management reporting and we believe EBITDA to be a relevant and useful measurement to ourinvestors as it measures the cash generation potential of our business units.EBITDA does not give effect to depreciation and amortization expenses incurred inoperating income nor is it burdened by cash used for
78、 debt service requirements and thus does not reflect available funds for distributions,reinvestment or otherdiscretionary uses.EBITDA margin is EBITDA divided by total revenue.12311AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per sha
79、re amountsEffective for the first quarter of 2023,we no longer record prior service credits to our individual business units or the corresponding charge to Corporate andOther,and segment operating expenses were recast to remove prior service credits from our historical reporting.Prior service credit
80、s are,and will continue tobe,recorded as other income in our consolidated income statement in accordance with GAAP.This recast increased Communications segment operations andsupport expenses by approximately$2,400 for full-year 2022.Correspondingly,this recast lowered administrative expenses within
81、Corporate and Other,withno change on a consolidated basis.The Communications segment provides wireless and wireline telecom and broadband services to consumers located in the U.S.and businesses globally.Ourbusiness strategies reflect bundled product offerings that cut across product lines and utiliz
82、e shared assets.This segment contains the following business units:Mobility provides nationwide wireless service and equipment.Business Wireline provides advanced ethernet-based fiber services,IP Voice and managed professional services,as well as traditional voice and dataservices and related equipm
83、ent to business customers.Consumer Wireline provides broadband services,including fiber connections that now provide our multi-gig services to residential customers in selectlocations.Consumer Wireline also provides legacy telephony voice communication services.The Latin America segment provides wir
84、eless services and equipment in Mexico.Corporate and Other reconciles our segment results to consolidated operating income and income before income taxes.Corporate includes:DTV-related retained costs,which are costs previously allocated to the Video business that were retained after the transaction,
85、net of reimbursements fromDIRECTV under transition service agreements.Parent administration support,which includes costs borne by AT&T where the business units do not influence decision making.Securitization fees associated with our sales of receivables(see Note 8).Value portfolio,which are business
86、es no longer integral to our operations or which we no longer actively market.Other items consist of:Certain significant items,which includes items associated with the merger and integration of acquired or divested businesses,including amortization ofintangible assets,employee separation charges ass
87、ociated with voluntary and/or strategic offers,asset impairments and abandonments,and other items forwhich the segments are not being evaluated.“Interest expense”and“Other income(expense)net”are managed only on a total company basis and are,accordingly,reflected only in consolidated results.12AT&T I
88、NC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsFor the three months ended March 31,2023 RevenuesOperationsand SupportExpensesEBITDADepreciationandAmortizationOperatingIncome(Loss)Communications Mobility$20,582$12,213$8,369$2
89、,098$6,271 Business Wireline5,331 3,623 1,708 1,330 378 Consumer Wireline3,239 2,284 955 861 94 Total Communications29,152 18,120 11,032 4,289 6,743 Latin America-Mexico883 738 145 175(30)Segment Total30,035 18,858 11,177 4,464 6,713 Corporate and Other Corporate:DTV-related retained costs 169(169)1
90、44(313)Parent administration support(9)374(383)1(384)Securitization fees19 121(102)(102)Value portfolio94 28 66 5 61 Total Corporate104 692(588)150(738)Certain significant items(44)44 17 27 Total Corporate and Other104 648(544)167(711)AT&T Inc.$30,139$19,506$10,633$4,631$6,002 For the three months e
91、nded March 31,2022 RevenuesOperations andSupport ExpensesEBITDADepreciation andAmortizationOperating Income(Loss)Communications Mobility$20,075$12,327$7,748$2,059$5,689 Business Wireline5,640 3,702 1,938 1,299 639 Consumer Wireline3,161 2,236 925 766 159 Total Communications28,876 18,265 10,611 4,12
92、4 6,487 Latin America-Mexico690 631 59 161(102)Segment Total29,566 18,896 10,670 4,285 6,385 Corporate and Other Corporate:DTV-related retained costs8 160(152)134(286)Parent administration support(12)347(359)6(365)Securitization fees16 82(66)(66)Value portfolio134 37 97 10 87 Total Corporate146 626(
93、480)150(630)Certain significant items 191(191)27(218)Total Corporate and Other146 817(671)177(848)AT&T Inc.$29,712$19,713$9,999$4,462$5,537 13AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsThe following table is a reco
94、nciliation of Segment Operating Income to“Income from Continuing Operations Before Income Taxes”reported in ourconsolidated statements of income:Three months endedMarch 31,20232022Communications$6,743$6,487 Latin America(30)(102)Segment Operating Income6,713 6,385 Reconciling Items:Corporate(738)(63
95、0)Transaction and other costs(98)Amortization of intangibles acquired(17)(27)Benefit-related gains(losses)44(93)AT&T Operating Income6,002 5,537 Interest expense1,708 1,626 Equity in net income of affiliates538 521 Other income(expense)net935 2,157 Income from Continuing Operations Before Income Tax
96、es$5,767$6,589 NOTE 5.REVENUE RECOGNITIONRevenue CategoriesThe following tables set forth reported revenue by category and by business unit:For the three months ended March 31,2023 Communications MobilityBusinessWirelineConsumerWirelineLatin AmericaCorporate&OtherTotalWireless service$15,483$591$16,
97、074 Business service 5,200 5,200 Broadband 2,527 2,527 Legacy voice and data 396 83 479 Other 316 21 337 Total Service15,483 5,200 3,239 591 104 24,617 Equipment5,099 131 292 5,522 Total$20,582$5,331$3,239$883$104$30,139 14AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-C
98、ontinuedDollars in millions except per share amountsFor the three months ended March 31,2022 Communications MobilityBusinessWirelineConsumerWirelineLatin AmericaCorporate&OtherTotalWireless service$14,724$490$15,214 Business service 5,478 5,478 Broadband 2,355 2,355 Legacy voice and data 460 89 549
99、Other 346 57 403 Total Service14,724 5,478 3,161 490 146 23,999 Equipment5,351 162 200 5,713 Total$20,075$5,640$3,161$690$146$29,712 Deferred Customer Contract Acquisition and Fulfillment CostsCosts to acquire and fulfill customer contracts,including commissions on service activations,for our Mobili
100、ty,Business Wireline,and Consumer Wirelineservices,are deferred and amortized over the contract period or expected customer relationship life,which typically ranges from three years to five years.The following table presents the deferred customer contract acquisition and fulfillment costs included o
101、n our consolidated balance sheets:March 31,December 31,Consolidated Balance Sheets20232022Deferred Acquisition Costs Prepaid and other current assets$2,988$2,893 Other Assets3,962 3,913 Total deferred customer contract acquisition costs$6,950$6,806 Deferred Fulfillment CostsPrepaid and other current
102、 assets$2,433$2,481 Other Assets4,133 4,206 Total deferred customer contract fulfillment costs$6,566$6,687 The following table presents deferred customer contract acquisition and fulfillment cost amortization included in“Other cost of revenue”for the three monthsended:March 31,March 31,Consolidated
103、Statements of Income20232022Deferred acquisition cost amortization$830$663 Deferred fulfillment cost amortization678 664 Contract Assets and LiabilitiesA contract asset is recorded when revenue is recognized in advance of our right to bill and receive consideration.The contract asset will decrease a
104、s servicesare provided and billed.For example,when installment sales include promotional discounts(e.g.,“buy one get one free”),the difference between revenuerecognized and consideration received is recorded as a contract asset to be amortized over the contract term.Our contract assets primarily rel
105、ate to our wireless businesses.Promotional equipment sales where we offer handset credits,which are allocated betweenequipment and service in proportion to their standalone selling prices,when customers commit to a15AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-Continue
106、dDollars in millions except per share amountsspecified service period result in additional contract assets recognized.These contract assets will amortize over the service contract period,resulting in lowerfuture service revenue.When consideration is received in advance of the delivery of goods or se
107、rvices,a contract liability is recorded.Reductions in the contract liability will berecorded as we satisfy the performance obligations.The following table presents contract assets and liabilities on our consolidated balance sheets:March 31,December 31,Consolidated Balance Sheets20232022Contract asse
108、t$5,812$5,512 Current portion in“Prepaid and other current assets”3,058 2,941 Contract liability4,158 4,170 Current portion in“Advanced billings and customer deposits”3,818 3,816 Our contract asset balances for the quarter ended March 31,2023 and December 31,2022 reflect increased promotional equipm
109、ent sales in our wirelessbusiness.Our beginning of period contract liability recorded as customer contract revenue during 2023 was$2,821.Remaining Performance ObligationsRemaining performance obligations represent services we are required to provide to customers under bundled or discounted arrangeme
110、nts,which are satisfiedas services are provided over the contract term.In determining the transaction price allocated,we do not include non-recurring charges and estimates for usage,nor do we consider arrangements with an original expected duration of less than one year,which are primarily prepaid w
111、ireless and residential internetagreements.Remaining performance obligations associated with business contracts reflect recurring charges billed,adjusted to reflect estimates for sales incentives andrevenue adjustments.Performance obligations associated with wireless contracts are estimated using a
112、portfolio approach in which we review all relevantpromotional activities,calculating the remaining performance obligation using the average service component for the portfolio and the average device price.Asof March 31,2023,the aggregate amount of the transaction price allocated to remaining perform
113、ance obligations was$36,722,of which we expect to recognizeapproximately 70%by the end of 2024,with the balance recognized thereafter.NOTE 6.PENSION AND POSTRETIREMENT BENEFITS Many of our employees are covered by one of our noncontributory pension plans.We also provide certain medical,dental,life i
114、nsurance and death benefits tocertain retired employees under various plans and accrue actuarially determined postretirement benefit costs.Our objective in funding these plans,incombination with the standards of the Employee Retirement Income Security Act of 1974,as amended(ERISA),is to accumulate a
115、ssets sufficient to providebenefits described in the plans to employees upon their retirement.We do not have significant funding requirements in 2023.We recognize actuarial gains and losses on pension and postretirement plan assets in our consolidated results as a component of“Other income(expense)n
116、et”at our annual measurement date of December 31,unless earlier remeasurements are required.16AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsThe following table details qualified pension and postretirement benefit cost
117、s included in the accompanying consolidated statements of income.The servicecost component of net periodic pension(credit)cost is recorded in operating expenses in the consolidated statements of income while the remainingcomponents are recorded in“Other income(expense)net.”Three months ended March 3
118、1,20232022Pension cost:Service cost benefits earned during the period$121$183 Interest cost on projected benefit obligation516 320 Expected return on assets(714)(868)Amortization of prior service credit(33)(33)Net pension(credit)cost before remeasurement(110)(398)Actuarial(gain)loss(1,012)Net pensio
119、n(credit)cost$(110)$(1,410)Postretirement cost:Service cost benefits earned during the period$6$9 Interest cost on accumulated postretirement benefit obligation85 63 Expected return on assets(33)(32)Amortization of prior service credit(618)(582)Net postretirement(credit)cost$(560)$(542)Combined net
120、pension and postretirement(credit)cost$(670)$(1,952)We also provide senior-and middle-management employees with nonqualified,unfunded supplemental retirement and savings plans.Net supplemental pensionbenefits costs not included in the table above were$19 and$12 for the first quarter ended 2023 and 2
121、022,respectively,predominantly due to higher interestcosts.NOTE 7.FAIR VALUE MEASUREMENTS AND DISCLOSURE The Fair Value Measurement and Disclosure framework in ASC 820,“Fair Value Measurement,”provides a three-tiered fair value hierarchy based on thereliability of the inputs used to determine fair v
122、alue.Level 1 refers to fair values determined based on quoted prices in active markets for identical assets.Level2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant unobservable inputs.The level of an asset or liabi
123、lity within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.Ourvaluation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.The valuation methodologies described above may produce a fair va
124、lue calculation that may not be indicative of future net realizable value or reflective offuture fair values.We believe our valuation methods are appropriate and consistent with other market participants.The use of different methodologies orassumptions to determine the fair value of certain financia
125、l instruments could result in a different fair value measurement at the reporting date.There have beenno changes in the methodologies used since December 31,2022.17AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsLong-Te
126、rm Debt and Other Financial InstrumentsThe carrying amounts and estimated fair values of our long-term debt,including current maturities,and other financial instruments are summarized as follows:March 31,2023December 31,2022 CarryingFairCarryingFair AmountValueAmountValueNotes and debentures$132,260
127、$126,075$133,207$122,524 Commercial paper3,258 3,258 866 866 Investment securities2,762 2,762 2,692 2,692 Includes credit agreement borrowings.Excludes investments accounted for under the equity method.The carrying amount of debt with an original maturity of less than one year approximates fair valu
128、e.The fair value measurements used for notes anddebentures are considered Level 2 and are determined using various methods,including quoted prices for identical or similar securities in both active andinactive markets.Following is the fair value leveling for investment securities that are measured a
129、t fair value and derivatives as of March 31,2023 and December 31,2022.Derivatives designated as hedging instruments are reflected as“Other Assets,”“Other noncurrent liabilities,”“Prepaid and other current assets”and“Accountspayable and accrued liabilities”on our consolidated balance sheets.March 31,
130、2023 Level 1Level 2Level 3TotalEquity Securities Domestic equities$986$986 International equities184 184 Fixed income equities203 203 Available-for-Sale Debt Securities 1,214 1,214 Asset DerivativesInterest rate swaps 7 7 Cross-currency swaps 45 45 Liability DerivativesCross-currency swaps(5,485)(5,
131、485)Foreign exchange contracts(20)(20)December 31,2022 Level 1Level 2Level 3TotalEquity Securities Domestic equities$995$995 International equities198 198 Fixed income equities189 189 Available-for-Sale Debt Securities 1,132 1,132 Asset DerivativesCross-currency swaps 28 28 Liability DerivativesCros
132、s-currency swaps(6,010)(6,010)Foreign exchange contracts(23)(23)121218AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsInvestment SecuritiesOur investment securities include both equity and debt securities that are measu
133、red at fair value,as well as equity securities without readily determinable fairvalues.A substantial portion of the fair values of our investment securities is estimated based on quoted market prices.Investments in equity securities nottraded on a national securities exchange are valued at cost,less
134、 any impairment,and adjusted for changes resulting from observable,orderly transactions foridentical or similar securities.Investments in debt securities not traded on a national securities exchange are valued using pricing models,quoted prices ofsecurities with similar characteristics or discounted
135、 cash flows.The components comprising total gains and losses in the period on equity securities are as follows:Three months ended March 31,20232022Total gains(losses)recognized on equity securities$83$(95)Gains(losses)recognized on equity securities sold4(7)Unrealized gains(losses)recognized on equi
136、ty securities held at end of period$79$(88)At March 31,2023,available-for-sale debt securities totaling$1,214 have maturities as follows-less than one year:$39;one to three years:$192;three to fiveyears:$167;five or more years:$816.Our cash equivalents(money market securities),short-term investments
137、(certificate and time deposits)and nonrefundable customer deposits are recorded atamortized cost,and the respective carrying amounts approximate fair values.Short-term investments and nonrefundable customer deposits are recorded in“Prepaid and other current assets”and our investment securities are r
138、ecorded in“Other Assets”on the consolidated balance sheets.Derivative Financial InstrumentsWe enter into derivative transactions to manage certain market risks,primarily interest rate risk and foreign currency exchange risk.This includes the use ofinterest rate swaps,interest rate locks,foreign exch
139、ange forward contracts and combined interest rate foreign exchange contracts(cross-currency swaps).Wedo not use derivatives for trading or speculative purposes.We record derivatives on our consolidated balance sheets at fair value that is derived from observablemarket data,including yield curves and
140、 foreign exchange rates(all of our derivatives are Level 2).Cash flows associated with derivative instruments arepresented in the same category on the consolidated statements of cash flows as the item being hedged.Fair Value Hedging Periodically,we enter into and designate fixed-to-floating interest
141、 rate swaps as fair value hedges.The purpose of these swaps is to manageinterest rate risk by managing our mix of fixed-rate and floating-rate debt.These swaps involve the receipt of fixed-rate amounts for floating interest ratepayments over the life of the swaps without exchange of the underlying p
142、rincipal amount.We also designate most of our cross-currency swaps and foreign exchange contracts as fair value hedges.The purpose of these contracts is to hedge foreigncurrency risk associated with changes in spot rates on foreign denominated debt.For cross-currency hedges,we have elected to exclud
143、e the change in fair valueof the swap related to both time value and cross-currency basis spread from the assessment of hedge effectiveness.For foreign exchange contracts,we haveelected to exclude the change in fair value of forward points from the assessment of hedge effectiveness.Unrealized and re
144、alized gains or losses from fair value hedges impact the same category on the consolidated statements of income as the item being hedged,including the earnings impact of excluded components.In instances where we have elected to exclude components from the assessment of hedge effectivenessrelated to
145、fair value hedges,unrealized gains or losses on such excluded components are recorded as a component of accumulated OCI and recognized intoearnings over the life of the hedging instrument.Unrealized gains on derivatives designated as fair value hedges are recorded at fair value as assets,andunrealiz
146、ed losses are recorded at fair market value as liabilities.Except for excluded components,changes in the fair value of derivative instruments designatedas fair value hedges are offset against the change in fair value of the hedged assets or liabilities through earnings.In the three months ended Marc
147、h 31,2023and 2022,no ineffectiveness was measured on fair value hedges.19AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsCash Flow Hedging We designate some of our cross-currency swaps as cash flow hedges to hedge our e
148、xposure to variability in expected future cash flows thatare attributable to foreign currency risk and interest rate risk generated from our foreign-denominated debt.These agreements include initial and finalexchanges of principal from fixed foreign denominated amounts to fixed U.S.dollar denominate
149、d amounts,to be exchanged at a specified rate that is usuallydetermined by the market spot rate upon issuance.They also include an interest rate swap of a fixed or floating foreign denominated interest rate to a fixed U.S.dollar denominated interest rate.On September 30,2022,we de-designated most of
150、 our cross-currency swaps from cash flow hedges and re-designated these swaps as fair value hedges.Theamount remaining in accumulated other comprehensive loss related to cash flow hedges on the de-designation date was$1,857.The amount will be reclassifiedto earnings when the hedged item is recognize
151、d in earnings or when it becomes probable that the forecasted transactions will not occur.The election of fairvalue hedge designation for cross-currency swaps does not have an impact on our financial results.Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as
152、 assets and unrealized losses are recorded at fair value as liabilities.For derivative instruments designated as cash flow hedges,changes in fair value are reported as a component of accumulated OCI and are reclassified into theconsolidated statements of income in the same period the hedged transact
153、ion affects earnings.Periodically,we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmarkinterest rate during the period leading up to the probable issuance of fixed-rate debt.We designate our interest rat
154、e locks as cash flow hedges.Gains and losseswhen we settle our interest rate locks are amortized into income over the life of the related debt.Over the next 12 months,we expect to reclassify$59 fromaccumulated OCI to“Interest expense”due to the amortization of net losses on historical interest rate
155、locks.Collateral and Credit-Risk Contingency We have entered into agreements with our derivative counterparties establishing collateral thresholds based onrespective credit ratings and netting agreements.At March 31,2023,we had posted collateral of$50(a deposit asset)and held collateral of$0(a recei
156、ptliability).Under the agreements,if AT&Ts credit rating had been downgraded two ratings levels by Fitch Ratings,one level by S&P and one level by Moodysbefore the final collateral exchange in March,we would have been required to post additional collateral of$55.If AT&Ts credit rating had been downg
157、radedthree ratings levels by Fitch Ratings,two levels by S&P,and two levels by Moodys,we would have been required to post additional collateral of$5,348.AtDecember 31,2022,we had posted collateral of$886(a deposit asset)and held collateral of$0(a receipt liability).We do not offset the fair value of
158、 collateral,whether the right to reclaim cash collateral(a receivable)or the obligation to return cash collateral(a payable)exists,against the fair value of the derivativeinstruments.Following are the notional amounts of our outstanding derivative positions:March 31,December 31,20232022Interest rate
159、 swaps$1,750$Cross-currency swaps37,908 38,213 Foreign exchange contracts617 617 Total$40,275$38,830 20AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsFollowing are the related hedged items affecting our financial posit
160、ion and performance:Effect of Derivatives on the Consolidated Statements of Income Three months ended March 31,Fair Value Hedging Relationships20232022Interest rate swaps(“Interest expense”):Gain(loss)on interest rate swaps$7$(1)Gain(loss)on long-term debt(7)1 Cross-currency swaps:Gain(loss)on cross
161、-currency swaps380(37)Gain(loss)on long-term debt(380)37 Gain(loss)recognized in accumulated OCI(182)9 Foreign exchange contracts:Gain(loss)on foreign exchange contracts7 Gain(loss)on long-term debt(7)Gain(loss)recognized in accumulated OCI(3)In addition,the net swap settlements that accrued and set
162、tled in the periods above were offset against“Interest expense.”The following table presents information for our cash flow hedging relationships:Three months ended March 31,Cash Flow Hedging Relationships20232022Cross-currency swaps:Gain(loss)recognized in accumulated OCI$(10)$315 Foreign exchange c
163、ontracts:Gain(loss)recognized in accumulated OCI 3 Other income(expense)-net reclassified from accumulated OCI into income 1 Interest rate locks:Interest income(expense)reclassified from accumulated OCI into income(15)(20)NOTE 8.SALES OF RECEIVABLES We have agreements with various third-party financ
164、ial institutions pertaining to the sales of certain types of our accounts receivable.The most significant ofthese programs consists of receivables arising from equipment installment plans,which are sold for cash and a deferred purchase price.Under this program,wetransfer receivables to purchasers in
165、 exchange for cash and additional consideration upon settlement of the receivables.Under the terms of our agreement forthis program,we continue to service the transferred receivables on behalf of the financial institutions.21AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)
166、-ContinuedDollars in millions except per share amountsThe following table sets forth a summary of cash proceeds received,net of remittances paid,from sales of receivables during the three months ended March 31,2023 and 2022 that are included in cash flows from operating activities:Three months ended
167、March 31,20232022Net cash received from equipment installment receivables$10$1,026 Net cash(paid)received from other programs(114)288 Total net cash impact to cash flows from operating activities$(104)$1,314 Net cash from initial sales of$2,529 and$3,316 during the three months ended March 31,2023 a
168、nd 2022,respectively.The sales of receivables did not have a material impact on our consolidated statements of income or to“Total Assets”reported on our consolidated balancesheets.We reflect cash receipts on sold receivables as cash flows from operations in our consolidated statements of cash flows.
169、Cash receipts on the deferredpurchase price are classified as cash flows from investing activities,when applicable.The following table sets forth a summary of the equipment installment receivables and accounts being serviced:March 31,2023December 31,2022Gross receivables:$4,109$4,165 Balance sheet c
170、lassification Accounts receivable Notes receivable1,387 1,789 Trade receivables610 522 Other Assets Noncurrent notes and trade receivables2,112 1,854 Outstanding portfolio of receivables derecognized from our consolidated balance sheets$11,221$11,030 Cash proceeds received,net of remittances8,529 8,
171、519 Represents amounts to which financial institutions remain entitled,excluding the deferred purchase price.We offer our customers the option to purchase certain wireless devices in installments over a specified period of time and,in many cases,once certainconditions are met,they may be eligible to
172、 trade in the original equipment for a new device and have the remaining unpaid balance paid or settled.We maintain a program under which we transfer a portion of these receivables through our bankruptcy-remote subsidiary in exchange for cash and additionalconsideration upon settlement of the receiv
173、ables,referred to as the deferred purchase price.In the event a customer trades in a device prior to the end of theinstallment contract period,we agree to make a payment to the financial institutions equal to any outstanding remaining installment receivable balance.Accordingly,we record a guarantee
174、obligation for this estimated amount at the time the receivables are transferred.111122AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsThe following table sets forth a summary of equipment installment receivables sold u
175、nder this program during the three months ended March 31,2023 and2022:Three months ended March 31,20232022Gross receivables sold$2,560$3,601 Net receivables sold2,438 3,478 Cash proceeds received2,529 3,316 Deferred purchase price recorded 245 Guarantee obligation recorded206 152 Receivables net of
176、promotion credits.Receivables net of allowance,imputed interest and equipment trade-in right guarantees.The deferred purchase price and guarantee obligation are initially recorded at estimated fair value and subsequently adjusted for changes in present value ofexpected cash flows.The estimation of t
177、heir fair values is based on remaining installment payments expected to be collected and the expected timing and valueof device trade-ins.The estimated value of the device trade-ins considers prices offered to us by independent third parties and contemplate changes in valueafter the launch of a devi
178、ce model.The fair value measurements used for the deferred purchase price and the guarantee obligation are considered Level 3 underthe Fair Value Measurement and Disclosure framework(see Note 7).The following table presents the previously transferred equipment installment receivables,which we repurc
179、hased in exchange for the associated deferredpurchase price during the three months ended March 31,2023 and 2022:Three months ended March 31,20232022Fair value of repurchased receivables$541$905 Carrying value of deferred purchase price542 902 Gain(loss)on repurchases$(1)$3 These gains(losses)are in
180、cluded in“Selling,general and administrative”expense in the consolidated statements of income.At March 31,2023 and December 31,2022,our deferred purchase price receivable was$2,451 and$2,318,respectively,of which$1,395 and$1,278 areincluded in“Prepaid and other current assets”on our consolidated bal
181、ance sheets,with the remainder in“Other Assets.”The guarantee obligation at March 31,2023 and December 31,2022 was$399 and$419,respectively,of which$55 and$73 are included in“Accounts payable and accrued liabilities”on ourconsolidated balance sheets,with the remainder in“Other noncurrent liabilities
182、.”Our maximum exposure to loss as a result of selling these equipmentinstallment receivables is limited to the total amount of our deferred purchase price and guarantee obligation.NOTE 9.LEASES We have operating and finance leases for certain facilities and equipment used in operations.Our leases ge
183、nerally have remaining lease terms of up to 15years.Some of our real estate operating leases contain renewal options that may be exercised,and some of our leases include options to terminate the leasewithin one year.We have recognized a right-of-use asset for both operating and finance leases and an
184、 operating lease liability that represents the present value of our obligationto make payments over the lease term.The present value of the lease payments is calculated using the incremental borrowing rate for operating and financeleases,which was determined using a portfolio approach based on the r
185、ate of interest that we would have to pay to borrow an amount equal to the leasepayments on a collateralized basis over a similar term.We use the unsecured borrowing rate and risk-adjust that rate to approximate a collateralized rate in thecurrency of the lease,which will be updated on a quarterly b
186、asis for measurement of new lease liabilities.12121123AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsThe components of lease expense were as follows:Three months ended March 31,20232022Operating lease cost$1,395$1,347
187、Finance lease cost:Amortization of right-of-use assets$57$45 Interest on lease obligation46 37 Total finance lease cost$103$82 The following table provides supplemental cash flows information related to leases:Three months endedMarch 31,20232022Cash Flows from Operating ActivitiesCash paid for amoun
188、ts included in lease obligations:Operating cash flows for operating leases$1,166$1,173 Supplemental Lease Cash Flow DisclosuresOperating lease right-of-use assets obtained in exchange for new operating lease obligations707 689 The following tables set forth supplemental balance sheet information rel
189、ated to leases:March 31,2023December 31,2022Operating LeasesOperating lease right-of-use assets$21,619$21,814 Accounts payable and accrued liabilities$3,530$3,547 Operating lease obligation18,413 18,659 Total operating lease obligation$21,943$22,206 Finance LeasesProperty,plant and equipment,at cost
190、$2,972$2,770 Accumulated depreciation and amortization(1,314)(1,224)Property,plant and equipment,net$1,658$1,546 Current portion of long-term debt$209$170 Long-term debt1,758 1,647 Total finance lease obligation$1,967$1,817 24AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED
191、)-ContinuedDollars in millions except per share amountsMarch 31,20232022Weighted-Average Remaining Lease Term(years)Operating leases8.18.2Finance leases7.38.5Weighted-Average Discount RateOperating leases3.8%3.7%Finance leases7.8%8.1%The following table provides the expected future minimum maturitie
192、s of lease obligations:At March 31,2023OperatingFinanceLeasesLeasesRemainder of 2023$3,537$273 20244,309 364 20253,652 367 20262,942 309 20272,415 306 Thereafter9,427 1,091 Total lease payments26,282 2,710 Less:imputed interest(4,339)(743)Total$21,943$1,967 NOTE 10.TRANSACTIONS WITH DIRECTVWe accoun
193、t for our investment in DIRECTV under the equity method and record our share of DIRECTV earnings as equity in net income of affiliates,withDIRECTV considered a related party.Our share of DIRECTVs earnings included in equity in net income of affiliates was$534 and$522 for the three months ended March
194、 31,2023 and 2022,respectively.Cash distributions from DIRECTV for the first three months of 2023 totaled$1,308,with$534 classified as operating activities and$774classified as investing activities in our consolidated statement of cash flows versus total cash distributions of$1,837($522 operating an
195、d$1,315 investing)inthe comparable prior period.Our investment in DIRECTV at March 31,2023 was$2,142.During the first three months of 2023,we repaid all outstanding notes payable to DIRECTV.We provide DIRECTV with network transport for U-verse products and sales services under commercial arrangement
196、s for up to five years.Under separatetransition services agreements,we provide DIRECTV certain operational support,including servicing of certain of their customer receivables for up to threeyears.For the three months ended March 31,2023,we billed DIRECTV approximately$240 for these costs,which were
197、 recorded as a reduction to theoperations and support expenses incurred and resulted in net retained costs to AT&T of$169 in the first quarter of 2023.At March 31,2023,we had accounts receivable from DIRECTV of$320 and accounts payable to DIRECTV of$80.We are not committed,implicitly or explicitly t
198、o provide financial or other support,other than as noted above,as our involvement with DIRECTV is limited tothe carrying amount of the assets and liabilities recognized on our balance sheet.25AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions exc
199、ept per share amountsNOTE 11.SUPPLIER AND VENDOR FINANCING PROGRAMSSupplier Financing ProgramWe actively manage the timing of our supplier payments for operating items to optimize the use of our cash and seek to make payments on 90-day or greaterterms,while providing suppliers with access to bank fa
200、cilities that permit earlier payment at their cost.Our supplier financing program does not result inchanges to our normal,contracted payment cycles or cash from operations.At the suppliers election,they can receive payment of AT&T obligations prior to the scheduled due dates,at a discounted price to
201、 the third-party financialinstitution.The discounted price paid by participating suppliers is based on a variable rate that is indexed to the overnight borrowing rate.We agree to pay thefinancial institution the stated amount generally within 90 days of receipt of the invoice.We do not have pledged
202、assets or other guarantees under our supplierfinancing program.Based on data from our financial institution partners,suppliers had elected to sell$2,557 of our outstanding payment obligations as of March 31,2023 and$2,869 as of December 31,2022,which are included in“Accounts payable and accrued liab
203、ilities”on our consolidated balance sheets.Our supplier financingprograms are reported as operating or investing(when capitalizable)activities in our statements of cash flows when paid.Direct Supplier FinancingWe also have arrangements with suppliers of handset inventory that allow us to extend the
204、stated payment terms by up to 90 days at an additional cost to us(variable rate extension fee).All payments are due within one year.We had$5,129 of direct supplier financing outstanding at March 31,2023 and$5,486 as ofDecember 31,2022,which are included in“Accounts payable and accrued liabilities”on
205、 our consolidated balance sheets.Our direct supplier financing isreported as operating activities in our statements of cash flows when paid.Vendor FinancingIn connection with capital improvements and the acquisition of other productive assets,we negotiate favorable payment terms of 120 days or more(
206、referred toas vendor financing),which are reported as financing activities in our statements of cash flows when paid.For the three months ended March 31,2023 and2022,we recorded vendor financing commitments related to capital investments of approximately$1,021 and$954,respectively.We had$5,003 vendo
207、rfinancing payables at March 31,2023,with$3,531 included in“Accounts payable and accrued liabilities”and$6,147 vendor financing payables at December31,2022,with$4,592 included in“Accounts payable and accrued liabilities.”NOTE 12.ADDITIONAL FINANCIAL INFORMATION Cash and Cash FlowsWe typically mainta
208、in our restricted cash balances for purchases and sales of certain investment securities and funding of certain deferred compensation benefitpayments.The following table summarizes cash and cash equivalents and restricted cash balances contained on our consolidated balance sheets:March 31,December 3
209、1,2023202220222021Cash and cash equivalents from continuing operations$2,821$17,084$3,701$19,223 Cash and cash equivalents from discontinued operations 21,481 1,946 Restricted cash in Prepaid and other current assets1 2 1 3 Restricted cash in Other Assets120 81 91 144 Cash and Cash Equivalents and R
210、estricted Cash$2,942$38,648$3,793$21,316 26AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsThe following table summarizes cash paid during the periods for interest and income taxes:Three months ended March 31,Cash paid(
211、received)during the period for:20232022Interest$1,971$2,154 Income taxes,net of refunds10 72 The following table summarizes capital expenditures:Three months endedMarch 31,20232022Purchase of property and equipment$4,291$4,532 Interest during construction-capital expenditures44 36 Total Capital Expe
212、nditures$4,335$4,568 The following table summarizes acquisitions,net of cash acquired:Three months endedMarch 31,20232022Business acquisitions$Spectrum acquisitions63 8,956 Interest during construction-spectrum228 288 Total Acquisitions$291$9,244 Total capitalized interest was$272 and$324 for the th
213、ree months ended March 31,2023 and 2022,respectively.NOTE 13.SUBSEQUENT EVENTSTelco LLC Preferred InterestsIn April 2023,we expanded our September 2020 sale of Telco LLC cumulative preferred interests and issued an additional$5,250 of nonconvertiblecumulative preferred interests(Class A-2 and A-3,co
214、llectively the“April preferreds”).Cumulative preferred interests in our Telco LLC total$7,250,collectively the“Telco preferred interests”(see Note 16 to AT&Ts 2022 Annual Report on Form 10-K).The April preferreds pay an initial preferreddistribution of 6.85%annually,subject to declaration and subjec
215、t to reset on November 1,2027,and every seven years thereafter.We can call the Telcopreferred interests at the issue price beginning September 29,2027.The holders of the Telco preferred interests have the option to require redemption upon theoccurrence of certain contingent events,such as the failur
216、e of Telco LLC to pay the preferred distribution for two or more periods or to meet certain otherrequirements,including a minimum credit rating.If notice is given,all other holders of equal or more subordinate classes of members equity are entitled toreceive the same form of consideration payable to
217、 the holders of the preferred interests,resulting in a deemed liquidation for accounting purposes.Mobility II Preferred InterestsIn April 2023,we accepted the December 2022 put option notice from the AT&T pension trust and repurchased the remaining 213 million Series A CumulativePerpetual Preferred
218、Membership Interests in AT&T Mobility II LLC(Mobility preferred interests)for a purchase price,including accrued and unpaiddistributions,of$5,414.At March 31,2023,the Mobility preferred interests had a redemption value of$5,320,with approximately$2,650 recorded in“Accounts payable and accrued liabil
219、ities”and$2,670 recorded in“Other noncurrent liabilities.”The repurchase was funded with proceeds from the Aprilpreferreds.AT&T Pension Benefit PlanOn April 26,2023,AT&T and State Street Global Advisors Trust Company,as independent fiduciary of the AT&T Pension Benefit Plan(Plan),entered into acommi
220、tment agreement with subsidiaries of Athene Holding Ltd.(Athene)under which11127AT&T INC.MARCH 31,2023NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(UNAUDITED)-ContinuedDollars in millions except per share amountsAT&T agreed to purchase nonparticipating single premium group annuity contracts that will t
221、ransfer to Athene approximately$8,050 of the Plans definedbenefit pension obligations related to certain retirees,participants and beneficiaries under the Plan.The purchase of the group annuity contracts is expected to close on May 3,2023.The contracts cover approximately 96,000 AT&T participants an
222、dbeneficiaries(Transferred Participants).Under the group annuity contracts,Athene,through its wholly-owned subsidiaries Athene Annuity and Life Companyand Athene Annuity&Life Assurance Company of New York,has made an irrevocable commitment,and will be solely responsible,to pay the pension benefitsof
223、 each Transferred Participant beginning with their August 2023 pension payments.The transaction will result in no changes to the amount of pension benefitspayable to the Transferred Participants.The purchase of the group annuity contracts will be funded directly by assets of the Plan via the pension
224、 trust underlying the Plan and requires no cash or assetcontributions by AT&T.As a result of the transaction,we expect to recognize a one-time non-cash pre-tax pension settlement gain of approximately$350 in thesecond quarter of 2023.The actual gain will depend on finalization of the actuarial and o
225、ther assumptions.We expect to transfer approximately$8,050 ofbenefit obligation and related plan assets upon close of the transaction and that the funded status of the Plan is not expected to change due to this transaction.28AT&T INC.MARCH 31,2023Item 2.Managements Discussion and Analysis of Financi
226、al Condition and Results of OperationsDollars in millions except per share amountsOVERVIEWAT&T Inc.is referred to as“we,”“AT&T”or the“Company”throughout this document.AT&T products and services are provided or offered by subsidiariesand affiliates of AT&T Inc.under the AT&T brand and not by AT&T Inc
227、.,and the names of the particular subsidiaries and affiliates providing the servicesgenerally have been omitted.AT&T is a holding company whose subsidiaries and affiliates operate worldwide in the telecommunications and technologyindustries.Unless otherwise noted,this discussion refers only to our c
228、ontinuing operations and does not include discussion of balances or activity ofWarnerMedia,Vrio,Xandr and Playdemic Ltd.,which were part of discontinued operations.You should read this discussion in conjunction with theconsolidated financial statements and accompanying notes(Notes).We have two repor
229、table segments:Communications and Latin America.Our segment results presented in Note 4 and discussed below follow our internalmanagement reporting.Percentage increases and decreases that are not considered meaningful are denoted with a dash.First Quarter Percent 20232022ChangeOperating Revenues Com
230、munications$29,152$28,876 1.0%Latin America-Mexico883 690 28.0 Corporate and Other:Corporate104 146(28.8)AT&T Operating Revenues$30,139$29,712 1.4%Operating Income Communications$6,743$6,487 3.9%Latin America-Mexico(30)(102)70.6 Segment Operating Income6,713 6,385 5.1 Corporate(738)(630)(17.1)Certai
231、n significant items27(218)AT&T Operating Income$6,002$5,537 8.4%The Communications segment provides services to businesses and consumers located in the U.S.and businesses globally.Our business strategies reflectbundled product offerings that cut across product lines and utilize shared assets.This se
232、gment contains the following business units:Mobility provides nationwide wireless service and equipment.Business Wireline provides advanced ethernet-based fiber services,IP Voice and managed professional services,as well as traditional voice and dataservices and related equipment to business custome
233、rs.Consumer Wireline provides broadband services,including fiber connections that provide our multi-gig services to residential customers in selectlocations.Consumer Wireline also provides legacy telephony voice communication services.The Latin America segment provides wireless services and equipmen
234、t in Mexico.Effective for the first quarter of 2023,we no longer record prior service credits to our individual business units or the corresponding charge to Corporate andOther,and segment operating expenses were recast to remove prior service credits from our historical reporting.Prior service cred
235、its are,and will continue tobe,recorded as other income in our consolidated income statement in accordance with U.S.generally accepted accounting principles.This recast increasedCommunications segment operations and support expenses by approximately$2,400 for full-year 2022.Correspondingly,this reca
236、st lowered administrativeexpenses within Corporate and Other,with no change on a consolidated basis.29AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsRESULTS OF OPERATIONS Consolid
237、ated Results Our financial results from continuing operations are summarized in the discussions that follow.Additional analysis is discussed in our“Segment Results”section.First Quarter Percent 20232022ChangeOperating Revenues Service$24,617$23,999 2.6%Equipment5,522 5,713(3.3)Total Operating Revenu
238、es30,139 29,712 1.4 Operating expenses Operations and support19,506 19,713(1.1)Depreciation and amortization4,631 4,462 3.8 Total Operating Expenses24,137 24,175(0.2)Operating Income6,002 5,537 8.4 Interest expense1,708 1,626 5.0 Equity in net income of affiliates538 521 3.3 Other income(expense)-ne
239、t935 2,157(56.7)Income from Continuing Operations Before Income Taxes5,767 6,589(12.5)Income from Continuing Operations$4,453$5,149(13.5)%Operating revenues increased in the first quarter of 2023,reflecting growth in Mobility,Mexico and Consumer Wireline revenues,partially offset bycontinued decline
240、s in Business Wireline revenues.Operations and support expenses decreased in the first quarter of 2023,reflecting the benefits of our continued transformation efforts,mostly offset byinflationary increases.In particular,operating expense declines were driven by lower domestic wireless equipment and
241、associated selling costs from lowersales volumes,absence of first-quarter 2022 3G network shutdown costs,lower personnel costs and higher returns on benefit-related assets.Expense decreaseswere partially offset by higher amortization of deferred customer acquisition costs and increased bad debt expe
242、nse.Depreciation and amortization expense increased in the first quarter of 2023.Depreciation expense increased$161,or 3.6%,in the first quarter of 2023 primarily due to ongoing capital spending for strategic initiatives such as fiber andnetwork upgrades.Amortization expense increased$8,or 22.9%,in
243、the first quarter of 2023 primarily due to the amortization of wireless licenses in Mexico offset by loweramortization of intangible assets from previous acquisitions.Operating income increased in the first quarter of 2023.Our operating income margin for the first quarter increased from 18.6%in 2022
244、 to 19.9%in 2023,reflecting lower equipment revenues which have lower margins.Interest expense increased in the first quarter of 2023,primarily due to higher interest rates and lower capitalized interest associated with spectrumacquisitions.Interest expense in 2023 also includes the reclassification
245、 of Mobility preferred interests distributions,previously recorded as noncontrollinginterest.These items were partially offset by lower debt balances.Equity in net income of affiliates increased in the first quarter of 2023,primarily due to the performance of our investment in DIRECTV,which included
246、 again on a sale-leaseback transaction of approximately$100 in the first quarter of 2023(see Note 10).30AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsOther income(expense)net dec
247、reased in the first quarter of 2023.The decrease in the first quarter was primarily driven by the recognition of$1,053actuarial gain in the first quarter of 2022,with no comparative actuarial remeasurement in the first quarter of 2023.Also contributing to the decrease werelower pension and postretir
248、ement benefit credits in 2023,primarily driven by higher interest costs from discount rate increases(see Note 6).Partially offsettingthe decreases were higher returns on other benefit-related investments.Income tax expense decreased in the first quarter of 2023.The decrease in the first quarter was
249、primarily driven by lower income before income tax.Oureffective tax rate was 22.8%in the first quarter of 2023,versus 21.9%in the comparable period in the prior year.COMMUNICATIONS SEGMENTFirst Quarter Percent 20232022ChangeSegment Operating Revenues Mobility$20,582$20,075 2.5%Business Wireline5,331
250、 5,640(5.5)Consumer Wireline3,239 3,161 2.5 Total Segment Operating Revenues$29,152$28,876 1.0%Segment Operating Income Mobility$6,271$5,689 10.2%Business Wireline378 639(40.8)Consumer Wireline94 159(40.9)Total Segment Operating Income$6,743$6,487 3.9%Selected Subscribers and Connections March 31,(0
251、00s)20232022Mobility Subscribers222,839 196,616 Total domestic broadband connections15,345 15,533 Network access lines in service4,938 5,956 U-verse VoIP connections2,835 3,227 Operating revenues increased in the first quarter of 2023,driven by increases in our Mobility and Consumer Wireline busines
252、s units,partially offset bydecreases in our Business Wireline business unit.The increases are primarily driven by wireless service revenue growth and gains in broadband service.Business Wireline continues to reflect lower demand for legacy services and product simplification.Operating income increas
253、ed in the first quarter of 2023,reflecting increases in our Mobility business unit,offset by lower operating income from our BusinessWireline and Consumer Wireline business units in the first quarter.Our Communications segment operating income margin in the first quarter increased from22.5%in 2022 t
254、o 23.1%in 2023.31AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsCommunications Business Unit DiscussionMobility Results First Quarter Percent 20232022ChangeOperating revenues Serv
255、ice$15,483$14,724 5.2%Equipment5,099 5,351(4.7)Total Operating Revenues20,582 20,075 2.5 Operating expenses Operations and support12,213 12,327(0.9)Depreciation and amortization2,098 2,059 1.9 Total Operating Expenses14,311 14,386(0.5)Operating Income$6,271$5,689 10.2%The following tables highlight
256、other key measures of performance for Mobility:Subscribers March 31,Percent(in 000s)20232022ChangePostpaid85,421 81,639 4.6%Postpaid phone70,049 67,518 3.7 Prepaid 19,200 18,859 1.8 Reseller6,192 5,383 15.0 Connected devices112,026 90,735 23.5 Total Mobility Subscribers222,839 196,616 13.3%Includes
257、data-centric devices such as session-based tablets,monitoring devices and primarily wholesale automobile systems.Wireless subscribers at March 31,2023 includes an increase of 295 subscribers and connections(206 postpaid,including 74 phone,and 89 connected devices)resulting fromour 3G network shutdow
258、n.121232AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsMobility Net Additions First Quarter Percent(in 000s)20232022ChangePostpaid Phone Net Additions424 691(38.6)%Total Phone Net
259、 Additions464 804(42.3)Postpaid542 965(43.8)Prepaid40 116(65.5)Reseller108(17)Connected devices4,457 4,468(0.2)Mobility Net Subscriber Additions5,147 5,532(7.0)%Postpaid Churn0.99%0.94%5 BPPostpaid Phone-Only Churn0.81%0.79%2 BPExcludes migrations and acquisition-related activities during the period
260、.In addition to postpaid phones,includes tablets and wearables and other.Tablet net adds(losses)were(18)and 31 for the quarter ended March 31,2023 and 2022.Wearablesand other net adds were 136 and 243 for the quarter ended March 31,2023 and 2022.Includes data-centric devices such as session-based ta
261、blets,monitoring devices and primarily wholesale automobile systems.Excludes postpaid tablets and other postpaiddata devices.Wholesale connected car net adds were approximately 2,700 and 1,900 for the quarter ended March 31,2023 and March 31,2022.Calculated by dividing the aggregate number of wirele
262、ss subscribers who canceled service during a month by the total number of wireless subscribers at the beginning ofthat month.The churn rate for the period is equal to the average of the churn rate for each month of that period.Service revenue increased in the first quarter 2023.The increases are lar
263、gely due to growth from subscriber gains and postpaid average revenue per subscriber(ARPU)growth.ARPUARPU increased in the first quarter of 2023.ARPU during 2023 reflects pricing actions,improved international roaming and customers shifting to higherpriced unlimited plans,partially offset by the imp
264、act of higher promotional discount amortization(see Note 5).ChurnThe effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins.Postpaid churnand postpaid phone-only churn were higher for the first quarter due to a return to pre
265、-pandemic consumer behavior as well as pricing actions and theresulting increase in voluntary disconnects.Equipment revenue decreased in the first quarter of 2023,primarily driven by a lower volume of devices sold.Operations and support expenses decreased in the first quarter of 2023 largely due to
266、lower equipment costs driven by lower device sales,first-quarter 20223G network shutdown costs and lower HBO Max licensing fees.These decreases were offset by higher amortization of deferred customer acquisition costs andincreased network and customer support,marketing and bad debt expenses.Deprecia
267、tion expense increased in the first quarter of 2023,primarily due to ongoing capital spending for network upgrades and expansion.Operating income increased in the first quarter of 2023.Our Mobility operating income margin in the first quarter increased from 28.3%in 2022 to 30.5%in2023.Our Mobility E
268、BITDA margin in the first quarter increased from 38.6%in 2022 to 40.7%in 2023.EBITDA is defined as operating income excludingdepreciation and amortization.23144123433AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in
269、 millions except per share amountsBusiness Wireline Results First Quarter Percent 20232022ChangeOperating revenues Service$5,200$5,478(5.1)%Equipment131 162(19.1)Total Operating Revenues5,331 5,640(5.5)Operating expenses Operations and support3,623 3,702(2.1)Depreciation and amortization1,330 1,299
270、2.4 Total Operating Expenses4,953 5,001(1.0)Operating Income$378$639(40.8)%Service revenues decreased in the first quarter of 2023,driven by lower demand for legacy voice,data and network services along with product simplification,partially offset by growth in connectivity services.We expect these t
271、rends to continue.Equipment revenues decreased in the first quarter of 2023,driven by declines in legacy and non-core services which we expect to continue.Operations and support expenses decreased in the first quarter of 2023,primarily due to our continued efforts to drive efficiencies in our networ
272、k operationsthrough automation,reductions in customer support expenses through digitization and proactive rationalization of low profit margin products.Expense declineswere also driven by lower personnel costs associated with ongoing transformation initiatives,and lower network access costs and mark
273、eting expenses.Thedeclines were partially offset by favorable compensation true-ups in the first quarter of 2022.As part of our transformation activities,we expect operations andsupport expense improvements through the remainder of 2023 as we further right size our operations in alignment with the s
274、trategic direction of the business.Depreciation expense increased in the first quarter of 2023,primarily due to ongoing capital investment for strategic initiatives such as fiber.Operating income decreased in the first quarter of 2023.Our Business Wireline operating income margin in the first quarte
275、r decreased from 11.3%in 2022 to7.1%in 2023.Our Business Wireline EBITDA margin in the first quarter decreased from 34.4%in 2022 to 32.0%in 2023.34AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except pe
276、r share amountsConsumer Wireline Results First Quarter Percent 20232022ChangeOperating revenues Broadband$2,527$2,355 7.3%Legacy voice and data services396 460(13.9)Other service and equipment316 346(8.7)Total Operating Revenues3,239 3,161 2.5 Operating expenses Operations and support2,284 2,236 2.1
277、 Depreciation and amortization861 766 12.4 Total Operating Expenses3,145 3,002 4.8 Operating Income$94$159(40.9)%The following tables highlight other key measures of performance for Consumer Wireline:Connections March 31,Percent(in 000s)20232022ChangeBroadband Connections Total Broadband and DSL Con
278、nections 13,949 14,148(1.4)%Broadband13,730 13,850(0.9)Fiber Broadband Connections7,487 6,281 19.2 Voice ConnectionsRetail Consumer Switched Access Lines 1,921 2,324(17.3)U-verse Consumer VoIP Connections 2,212 2,628(15.8)Total Retail Consumer Voice Connections 4,133 4,952(16.5)%Broadband Net Additi
279、onsFirst QuarterPercent(in 000s)20232022ChangeTotal Broadband and DSL Net Additions(42)(12)%Broadband Net Additions(23)5 Fiber Broadband Net Additions272 289(5.9)%Broadband revenues increased in the first quarter of 2023,driven by an increase in fiber customers,which we expect to continue as we inve
280、st further inbuilding our fiber footprint,partially offset by declines in copper-based broadband services.Legacy voice and data service revenues decreased in the first quarter of 2023,reflecting the continued decline in the number of customers.Other service and equipment revenues decreased in the fi
281、rst quarter of 2023,reflecting the continued decline in the number of VoIP customers.35AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsOperations and support expenses increased in
282、the first quarter,primarily driven by higher network and customer support costs and higher amortization ofdeferred acquisition costs and favorable compensation true-ups in the first quarter of 2022.Expense increases were offset by lower sales and advertising costsand lower HBO Max licensing fees.Dep
283、reciation expense increased in the first quarter of 2023,primarily due to ongoing capital spending for strategic initiatives such as fiber and networkupgrades and expansion.Operating income decreased in the first quarter of 2023.Our Consumer Wireline operating income margin in the first quarter decr
284、eased from 5.0%in 2022 to2.9%in 2023.Our Consumer Wireline EBITDA margin in the first quarter increased from 29.3%in 2022 to 29.5%in 2023.LATIN AMERICA SEGMENTFirst Quarter 20232022Percent ChangeSegment Operating Revenues Service$591$490 20.6%Equipment292 200 46.0 Total Segment Operating Revenues883
285、 690 28.0 Segment Operating ExpensesOperations and support738 631 17.0 Depreciation and amortization175 161 8.7 Total Segment Operating Expenses913 792 15.3 Operating Income(Loss)$(30)$(102)70.6%The following tables highlight other key measures of performance for Mexico:Subscribers March 31,Percent(
286、in 000s)20232022ChangeMexico Wireless Subscribers Postpaid4,973 4,810 3.4%Prepaid16,146 15,235 6.0 Reseller494 458 7.9 Total Mexico Wireless Subscribers21,613 20,503 5.4%Mexico Wireless Net Additions First Quarter Percent(in 000s)20232022ChangeMexico Wireless Net Additions Postpaid49 3%Prepaid(58)17
287、8 Reseller19(40)Total Mexico Wireless Net Additions10 141(92.9)%Service revenues increased in the first quarter of 2023 reflecting favorable foreign exchange,higher wholesale revenues and growth in subscribers.36AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition
288、 and Results of Operations-ContinuedDollars in millions except per share amountsEquipment revenues increased in the first quarter of 2023 driven by higher equipment sales and favorable foreign exchange impacts.Operations and support expenses increased in the first quarter of 2023 driven by unfavorab
289、le impact of foreign exchange,increased equipment costs resultingfrom higher sales,and increased bad debt expense.Approximately 5%of Mexico expenses are U.S.dollar based,with the remainder in the local currency.Depreciation and amortization expense increased in the first quarter of 2023,driven by un
290、favorable impact of foreign exchange.Operating income improved in the first quarter of 2023.Our Mexico operating income margin in the first quarter increased from(14.8)%in 2022 to(3.4)%in2023.Our Mexico EBITDA margin in the first quarter increased from 8.6%in 2022 to 16.4%in 2023.COMPETITIVE AND REG
291、ULATORY ENVIRONMENT Overview AT&T subsidiaries operating within the United States are subject to federal and state regulatory authorities.AT&T subsidiaries operating outside theUnited States are subject to the jurisdiction of national and supranational regulatory authorities in the markets where ser
292、vice is provided.In the Telecommunications Act of 1996(Telecom Act),Congress established a national policy framework intended to bring the benefits of competition andinvestment in advanced telecommunications facilities and services to all Americans by opening all telecommunications markets to compet
293、ition and reducing oreliminating regulatory burdens that harm consumer welfare.Nonetheless,over the ensuing two decades,the FCC and some state regulatory commissions havemaintained or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when
294、 they operated as legalmonopolies.More recently,the FCC has pursued a more deregulatory agenda,eliminating a variety of antiquated and unnecessary regulations and streamliningits processes in a number of areas.We continue to support regulatory and legislative measures and efforts,at both the state a
295、nd federal levels,to reduceinappropriate regulatory burdens that inhibit our ability to compete effectively and offer needed services to our customers,including initiatives to transitionservices from traditional networks to all IP-based networks.At the same time,we also seek to ensure that legacy re
296、gulations are not further extended tobroadband or wireless services,which are subject to vigorous competition.Communications SegmentInternet The FCC currently classifies fixed and mobile consumer broadband services as information services,subject to light-touch regulation.The D.C.Circuit upheld the
297、FCCs current classification,although it remanded three discrete issues to the FCC for further consideration.These issues related to theeffect of the FCCs decision to classify broadband services as information services on public safety,the regulation of pole attachments,and universal servicesupport f
298、or low-income consumers through the Lifeline program.Because no party sought Supreme Court review of the D.C.Circuits decision to uphold theFCCs classification of broadband as an information service,that decision is final.In October 2020,the FCC adopted an order addressing the three issues remanded
299、by the D.C.Circuit for further consideration.After considering those issues,the FCC concluded they provided no grounds to depart from its determination that fixed and mobile consumer broadband services should be classified asinformation services.An appeal of the FCCs remand decision is pending.Some
300、states have adopted legislation or issued executive orders,including California,that would reimpose net neutrality rules similar to those repealed by theFCC.The California statute is now in effect,and challenges regarding other states net neutrality laws are pending.We expect that going forward addi
301、tionalstates may seek to impose net neutrality requirements.On November 15,2021,President Biden signed the Infrastructure Investment and Jobs Act(IIJA)into law.The legislation appropriates$65,000 to supportbroadband deployment and adoption,including$42,500 administered by the National Telecommunicat
302、ions and Information Agency(NTIA)in state grants forbroadband deployment projects,$1,000 for middle mile broadband infrastructure,and$1,500 for digital equity programs.The IIJA also appropriated$14,200for establishment of the Affordable Connectivity Program(ACP),an FCC-administered monthly,low-incom
303、e broadband benefit program.The ACP providesqualifying customers up to thirty dollars per month(or seventy-five dollars per month for those on Tribal lands)to37AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in milli
304、ons except per share amountsassist with their internet bill.These funds are in addition to or replacements for other significant pandemic-related funds designated or that could be used forbroadband deployment and subscription.AT&T is a participating provider in the ACP program and is participating i
305、n deployment programs where appropriate.Absent additional funding,at present pace the ACP fund will likely exhaust in 2024.Privacy-related legislation continues to be adopted or considered in a number of jurisdictions,including at the federal level.Legislative,regulatory andlitigation actions could
306、result in increased costs of compliance,further regulation or claims against broadband internet access service providers and others,andincreased uncertainty in the value and availability of data.Wireless Industry-wide network densification and 5G technology expansion efforts,which are needed to sati
307、sfy extensive demand for video and internet access,will involve significant deployment of“small cell”equipment.This increases the importance of local permitting processes that allow for the placement of smallcell equipment in the public right-of-way on reasonable timelines and terms.Between 2018 and
308、 2020,the FCC adopted multiple Orders streamlining federal,state,and local wireless structure review processes that had the tendency to delay and impede deployment of small cell and related infrastructure used toprovide telecommunications and broadband services.The key elements of these orders have
309、been affirmed on judicial review.During 2020-2021,we deployed5G nationwide on“low band”spectrum on macro towers.Executing on the recent spectrum purchase,we announced on-going construction and continuingdeployment of 5G on C-band spectrum in 2022 and beyond.Additional spectrum will be needed industr
310、ywide for 5G and future services.The federalgovernment is developing a national spectrum strategy but its ability and intent to make sufficient spectrum available to the industry in needed timeframesremains uncertain.LIQUIDITY AND CAPITAL RESOURCES Continuing operations for three months ended March
311、31,20232022Cash provided by operating activities$6,678$7,630 Cash used in investing activities(3,818)(12,458)Cash used in financing activities(3,711)(5,550)March 31,December 31,20232022Cash and cash equivalents$2,821$3,701 Total debt137,484 135,890 We had$2,821 in cash and cash equivalents available
312、 at March 31,2023,decreasing$880 since December 31,2022.Cash and cash equivalents included cashof$1,034 and money market funds and other cash equivalents of$1,787.Approximately$1,078 of our cash and cash equivalents were held by our foreignentities in accounts predominantly outside of the U.S.and ma
313、y be subject to restrictions on repatriation.For the first three months of 2023,cash inflows were primarily provided by cash receipts from operations,including cash from our sale and transfer of ourreceivables to third parties,issuance of commercial paper and long-term debt and distributions from DI
314、RECTV.These inflows were exceeded by cash used tomeet the needs of the business,including,but not limited to,payment of operating expenses,funding capital expenditures and vendor financing payments,repayment of short-term borrowings and long-term debt,and dividend payments to stockholders.We maintai
315、n availability under our credit facilities and ourcommercial paper program to meet our short-term liquidity requirements.Cash Provided by Operating Activities from Continuing OperationsDuring the first three months of 2023,cash provided by operating activities was$6,678,compared to$7,630 for the fir
316、st three months of 2022,reflectingtiming of working capital,including fewer receivable sales.38AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsWe actively manage the timing of our
317、supplier payments for operating items to optimize the use of our cash.Among other things,we seek to make payments on90-day or greater terms,while providing the suppliers with access to bank facilities that permit earlier payments at their cost(referred to as supplier financingprogram).In addition,fo
318、r payments to suppliers of handset inventory,as part of our working capital initiatives,we have arrangements that allow us to extendthe stated payment terms by up to 90 days at an additional cost to us(referred to as direct supplier financing).The net impact of direct supplier financing was todecrea
319、se cash from operating activities$432 and$95 for the three months ended March 31,2023 and 2022,respectively.All direct supplier financing paymentsare due within one year.(See Note 11)Cash Used in or Provided by Investing Activities from Continuing OperationsFor the first three months of 2023,cash us
320、ed in investing activities totaled$3,818 and consisted primarily of$4,335(including interest during construction)forcapital expenditures.During the first three months of 2023,we received a return of investment of$774 from DIRECTV representing distributions in excess ofcumulative equity in earnings f
321、rom DIRECTV(see Note 10).For capital improvements,we have negotiated favorable vendor payment terms of 120 days or more(referred to as vendor financing)with some of our vendors,which are excluded from capital expenditures and reported as financing activities.For the first three months of 2023,vendor
322、 financing payments were$2,113,compared to$1,566 for the first three months of 2022.Capital expenditures for the first three months of 2023 were$4,335,and when including$2,113 cashpaid for vendor financing,capital investment was$6,448($314 higher than the prior-year comparable period).The vast major
323、ity of our capital expenditures are spent on our networks,including product development and related support systems.During the first threemonths of 2023,we placed$1,021 of equipment in service under vendor financing arrangements(compared to$954 in the prior-year comparable period).Theamount of capit
324、al expenditures is influenced by demand for services and products,capacity needs and network enhancements.Cash Provided by or Used in Financing Activities from Continuing OperationsFor the first three months of 2023,cash used in financing activities totaled$3,711 and was comprised of debt issuances
325、and repayments,vendor financingpayments,and payments of dividends.A tabular summary of our debt activities for the three months ended March 31,2023 is as follows:Three months endedMarch 31,2023Net commercial paper borrowings$2,341 Issuance of Notes and Debentures:USD notes$1,750 Euro notes1,321 Othe
326、r1,045 Debt Issuances$4,116 Repayments:USD notes$(376)Euro notes(1,626)2025 Term Loan(2,500)Other(1,443)Repayments of long-term debt$(5,945)The weighted average interest rate of our long-term debt portfolio,including the impact of derivatives,was approximately 4.1%as of March 31,2023 and as ofDecemb
327、er 31,2022.We had$132,260 of total notes and debentures outstanding at March 31,2023.This also included Euro,British pound sterling,Canadiandollar,Australian dollar,and Swiss franc denominated debt that totaled approximately$34,765.39AT&T INC.MARCH 31,2023 Item 2.Managements Discussion and Analysis
328、of Financial Condition and Results of Operations-ContinuedDollars in millions except per share amountsAt March 31,2023,we had$13,757 of debt maturing within one year,consisting of$3,258 of commercial paper borrowings,$750 of credit agreementborrowings and$9,749 of long-term debt issuances.The weight
329、ed average interest rate on our outstanding short-term borrowings was approximately 5.7%asof March 31,2023 and 4.8%as of December 31,2022.For the first three months of 2023,we paid$2,113 of cash under our vendor financing program,compared to$1,566 in the prior-year comparable period.Totalvendor fina
330、ncing payables included in our March 31,2023 consolidated balance sheet were$5,003,with$3,531 due within one year(in“Accounts payable andaccrued liabilities”)and the remainder predominantly due within five years(in“Other noncurrent liabilities”).At March 31,2023,we had approximately 144 million shar
331、es remaining from our share repurchase authorizations approved by the Board of Directors in 2014.We paid dividends on common and preferred shares of$2,014 during the first three months of 2023,compared with$3,749 for the first three months of 2022.Dividends on common stock declared by our Board of D
332、irectors totaled$0.2775 per share in the first three months of 2023 and 2022.Our dividend policyconsiders the expectations and requirements of stockholders,capital funding requirements of AT&T and long-term growth opportunities.In April 2023,we expanded our September 2020 sale of Telco LLC cumulativ
333、e preferred interests and issued an additional$5,250 of nonconvertiblecumulative preferred interests(April preferreds).The April preferreds pay an initial preferred distribution of 6.85%annually,subject to declaration,and subjectto reset on November 1,2027,and every seven years thereafter.(See Note 13)In April 2023,we also accepted the December 2022 put option notice from the AT&T pension trust an