10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One) x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
o	For the quarterly period ended September 30, 2014 or  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number 1-8610

AT&T INC.

Incorporated under the laws of the State of Delaware

I.R.S. Employer Identification Number 43-1301883

208 S. Akard St., Dallas, Texas 75202

Telephone Number: (210) 821-4105

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 for the past 90 days.

                                                                                                                                                                        Yes [X]    No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

                                                                                                                                                               Yes [X]   No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	[X]		Accelerated filer	[   ]
Non-accelerated filer	[   ]	(Do not check if a smaller reporting company)	Smaller reporting company	[   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                                                                                                                                                            Yes [   ]   No [X]

At October 31, 2014, there were 5,187 million common shares outstanding.

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

AT&T INC.
CONSOLIDATED STATEMENTS OF INCOME
Dollars in millions except per share amounts
(Unaudited)
	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Operating Revenues	$	32,957		$	32,158		$	98,008		$	95,589
Operating Expenses
Cost of services and sales (exclusive of depreciation
and amortization shown separately below)		14,541			13,403			42,074			39,227
Selling, general and administrative		8,475			7,952			24,932			24,406
Depreciation and amortization		4,539			4,615			13,706			13,715
Total operating expenses		27,555			25,970			80,712			77,348
Operating Income		5,402			6,188			17,296			18,241
Other Income (Expense)
Interest expense		(1,016	)		(829	)		(2,757	)		(2,481	)
Equity in net income (loss) of affiliates		(2	)		91			188			494
Other income (expense) – net		42			50			1,456			370
Total other income (expense)		(976	)		(688	)		(1,113	)		(1,617	)
Income Before Income Taxes		4,426			5,500			16,183			16,624
Income tax expense		1,367			1,595			5,769			5,066
Net Income		3,059			3,905			10,414			11,558
Less: Net Income Attributable to Noncontrolling Interest		(57	)		(91	)		(213	)		(222	)
Net Income Attributable to AT&T	$	3,002		$	3,814		$	10,201		$	11,336
Basic Earnings Per Share Attributable to AT&T	$	0.58		$	0.72		$	1.96		$	2.10
Diluted Earnings Per Share Attributable to AT&T	$	0.58		$	0.72		$	1.95		$	2.09
Weighted Average Number of Common Shares
Outstanding – Basic (in millions)		5,198			5,315			5,208			5,402
Weighted Average Number of Common Shares
Outstanding – with Dilution (in millions)		5,214			5,331			5,224			5,419
Dividends Declared Per Common Share	$	0.46		$	0.45		$	1.38		$	1.35
See Notes to Consolidated Financial Statements.

2

AT&T INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(Unaudited)
	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income	$	3,059		$	3,905		$	10,414		$	11,558
Other comprehensive income, net of tax:
Foreign Currency:
Translation adjustments (includes $(1), $(1), $0            and $(2) attributable to noncontrolling interest), net of taxes of            $(22), $(21), $(17) and $(86)		(35	)		(37	)		(29	)		(155	)
Reclassification adjustment included in net income,             net of taxes of $0, $0, $224 and $19		-			-			416			34
Available-for-sale securities:
Net unrealized gains (losses), net of taxes of $(15), $38,            $19 and $84		(29	)		69			30			155
Reclassification adjustment realized in net income, net of            taxes of $(1), $(2), $(9) and $(7)		(1	)		(3	)		(15	)		(13	)
Cash flow hedges:
Net unrealized gains, net of taxes of $201, $171,            $148 and $286		370			316			272			526
Reclassification adjustment included in net income,            net of taxes of $3, $4, $14 and $12		8			7			29			22
Defined benefit postretirement plans:
Reclassification adjustment included in net income, net of            taxes $0, $0, $33 and $5		-			-			61			8
Amortization of net prior service credit included in            net income, net of taxes of $(146), $(109), $(435)            and $(327)		(239	)		(178	)		(718	)		(533	)
Other comprehensive income		74			174			46			44
Total comprehensive income		3,133			4,079			10,460			11,602
Less: Total comprehensive income attributable to      noncontrolling interest		(56	)		(90	)		(213	)		(220	)
Total Comprehensive Income Attributable to AT&T	$	3,077		$	3,989		$	10,247		$	11,382
See Notes to Consolidated Financial Statements.

3

AT&T INC.
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
	September 30,			December 31,
	2014			2013
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	2,458		$	3,339
Accounts receivable - net of allowances for doubtful accounts of $482 and $483		13,445			12,918
Prepaid expenses		869			960
Deferred income taxes		1,030			1,199
Other current assets		8,033			4,780
Total current assets		25,835			23,196
Property, plant and equipment		286,987			274,798
Less: accumulated depreciation and amortization		(171,853	)		(163,830	)
Property, Plant and Equipment – Net		115,134			110,968
Goodwill		70,131			69,273
Licenses		60,784			56,433
Other Intangible Assets – Net		6,252			5,779
Investments in Equity Affiliates		166			3,860
Other Assets		9,637			8,278
Total Assets	$	287,939		$	277,787
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	5,109		$	5,498
Accounts payable and accrued liabilities		24,119			21,107
Advanced billing and customer deposits		4,038			4,212
Accrued taxes		4,328			1,774
Dividends payable		2,385			2,404
Total current liabilities		39,979			34,995
Long-Term Debt		70,516			69,290
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		37,393			36,308
Postemployment benefit obligation		29,918			29,946
Other noncurrent liabilities		17,014			15,766
Total deferred credits and other noncurrent liabilities		84,325			82,020
Stockholders' Equity
Common stock ($1 par value, 14,000,000,000 authorized at September 30, 2014 and
December 31, 2013: issued 6,495,231,088 at September 30, 2014 and December 31, 2013)		6,495			6,495
Additional paid-in capital		91,064			91,091
Retained earnings		34,165			31,141
Treasury stock (1,310,226,392 at September 30, 2014 and 1,268,914,913
at December 31, 2013, at cost)		(47,037	)		(45,619	)
Accumulated other comprehensive income		7,926			7,880
Noncontrolling interest		506			494
Total stockholders' equity		93,119			91,482
Total Liabilities and Stockholders' Equity	$	287,939		$	277,787
See Notes to Consolidated Financial Statements.

4

AT&T INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(Unaudited)
	Nine months ended
	September 30,
	2014			2013
Operating Activities
Net income	$	10,414		$	11,558
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		13,706			13,715
Undistributed earnings from investments in equity affiliates		(45	)		(232	)
Provision for uncollectible accounts		692			653
Deferred income tax expense		1,304			2,505
Net gain from sale of investments, net of impairments		(1,374	)		(272	)
Changes in operating assets and liabilities:
Accounts receivable		(1,269	)		(440	)
Other current assets		(813	)		520
Accounts payable and accrued liabilities		4,763			(420	)
Retirement benefit funding		(420	)		(175	)
Other - net		(1,365	)		(533	)
Total adjustments		15,179			15,321
Net Cash Provided by Operating Activities		25,593			26,879
Investing Activities
Construction and capital expenditures:
Capital expenditures		(16,829	)		(15,565	)
Interest during construction		(178	)		(213	)
Acquisitions, net of cash acquired		(2,053	)		(4,025	)
Dispositions		6,074			846
Purchases of securities		(1,996	)		-
Return of advances to and investments in equity affiliates		3			301
Other		(1	)		(4	)
Net Cash Used in Investing Activities		(14,980	)		(18,660	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(16	)		1,851
Issuance of other short-term borrowings		-			1,476
Repayment of other short-term borrowings		-			(1,476	)
Issuance of long-term debt		8,564			6,416
Repayment of long-term debt		(10,376	)		(2,131	)
Purchase of treasury stock		(1,617	)		(11,134	)
Issuance of treasury stock		34			108
Dividends paid		(7,170	)		(7,325	)
Other		(913	)		499
Net Cash Used in Financing Activities		(11,494	)		(11,716	)
Net decrease in cash and cash equivalents		(881	)		(3,497	)
Cash and cash equivalents beginning of year		3,339			4,868
Cash and Cash Equivalents End of Period	$	2,458		$	1,371
Cash paid during the nine months ended September 30 for:
Interest	$	3,351		$	2,980
Income taxes, net of refunds	$	1,337		$	1,573
See Notes to Consolidated Financial Statements.

5

AT&T INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Dollars and shares in millions except per share amounts
(Unaudited)
	September 30, 2014
	Shares			Amount
Common Stock
Balance at beginning of year		6,495		$	6,495
Issuance of stock		-			-
Balance at end of period		6,495		$	6,495
Additional Paid-In Capital
Balance at beginning of year				$	91,091
Issuance of treasury stock					3
Share-based payments					3
Change related to acquisition of interests held by noncontrolling owners					(33	)
Balance at end of period				$	91,064
Retained Earnings
Balance at beginning of year				$	31,141
Net income attributable to AT&T ($1.95 per diluted share)					10,201
Dividends to stockholders ($1.38 per share)					(7,177	)
Balance at end of period				$	34,165
Treasury Stock
Balance at beginning of year		(1,269	)	$	(45,619	)
Repurchase of common stock		(48	)		(1,617	)
Issuance of treasury stock		7			199
Balance at end of period		(1,310	)	$	(47,037	)
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax
Balance at beginning of year				$	7,880
Other comprehensive income attributable to AT&T					46
Balance at end of period				$	7,926
Noncontrolling Interest
Balance at beginning of year				$	494
Net income attributable to noncontrolling interest					213
Distributions					(200	)
Acquisitions of noncontrolling interests					69
Acquisition of interests held by noncontrolling owners					(70	)
Balance at end of period				$	506
Total Stockholders' Equity at beginning of year				$	91,482
Total Stockholders' Equity at end of period				$	93,119
See Notes to Consolidated Financial Statements.

6

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Dollars in millions except per share amounts

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation  Throughout this document, AT&T Inc. is referred to as "AT&T," "we" or the "Company." We believe that these consolidated financial statements include all adjustments, consisting only of normal recurring accruals, that are necessary to present fairly the results for the presented interim periods. The results for the interim periods are not necessarily indicative of those for the full year. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013.

The consolidated financial statements include the accounts of the Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the communications services industry both domestically and internationally, providing wireless communications services, traditional wireline voice services, data/broadband and Internet services, video services, telecommunications equipment, managed networking and wholesale services. On March 13, 2014, we closed our acquisition of Leap Wireless International, Inc. (Leap) (see Note 7), and we incorporated Leap into our wireless operations following the date of acquisition.

All significant intercompany transactions are eliminated in the consolidation process. Investments in less than majority-owned subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain foreign equity investments accounted for using the equity method are included for periods ended within up to one month of our period end. We also recorded our proportionate share of our equity method investees' other comprehensive income (OCI) items, including actuarial gains and losses on pension and other postretirement benefit obligations. On June 30, 2014, we completed the sale of our investment in América Móvil, S.A.B. de C.V. (América Móvil) to an unrelated third party (see Note 7).

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of probable losses and expenses. Actual results could differ from those estimates. Certain amounts have been reclassified to conform to the current period's presentation.

During the fourth-quarter we conduct our annual impairment testing of intangible assets, remeasure the plan assets and obligations of our benefit plans and, due to our continued access line losses and technology changes, we are assessing certain network assets for under-utilization and/or abandonment.

Stock Repurchase Program  During the first nine months of 2014, we repurchased approximately 48 million shares for $1,617 under a repurchase authorization that was approved by our Board of Directors in March 2013. In March 2014, our Board of Directors approved a fourth authorization to repurchase 300 million shares of our common stock. As of September 30, 2014, we had approximately 415 million shares remaining from these authorizations. The repurchase authorizations have no expiration date, and we expect to make future repurchases opportunistically.

Software Costs  During 2014, we completed studies evaluating the periods that we were utilizing our software assets. As of April 1 and July 1, 2014, we extended our estimated useful lives for capitalized non-network and network software, respectively, to five years to better reflect the estimated periods during which these assets will remain in service and to align with the estimated useful lives used in the industry. This change in accounting estimate increased net income $198, or $0.04 per diluted share, in the third quarter and $330, or $0.06 per diluted share, for the first nine months of 2014.

New Accounting Standards  In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASU 2014-09), which replaces existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. Upon initial evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of contract revenues between service and equipment, and the timing in which those revenues are recognized. ASU 2014-09 also specifies that incremental costs of obtaining or fulfilling our contracts with customers should be deferred. ASU 2014-09 becomes effective for annual reporting periods beginning after December 15, 2016.

7

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The FASB will allow two adoption methods under ASU 2014-09. Under one method, a company will apply the rules to contracts in all reporting periods presented, subject to certain allowable exceptions. Under the other method, a company will apply the rules to all contracts existing as of January 1, 2017, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and provide additional disclosures comparing results to previous rules. We continue to evaluate the impact of the new standard and available adoption methods.

NOTE 2. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic earnings per share and diluted earnings for the three and nine months ended September 30, 2014 and 2013, is shown in the table below:

	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Numerators
Numerator for basic earnings per share:
Net Income	$	3,059		$	3,905		$	10,414		$	11,558
Less:  Net income attributable to noncontrolling interest		(57	)		(91	)		(213	)		(222	)
Net Income attributable to AT&T		3,002			3,814			10,201			11,336
Dilutive potential common shares:
Share-based payment		3			3			10			9
Numerator for diluted earnings per share	$	3,005		$	3,817		$	10,211		$	11,345
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		5,198			5,315			5,208			5,402
Dilutive potential common shares:
Share-based payment (in shares)		16			16			16			17
Denominator for diluted earnings per share		5,214			5,331			5,224			5,419
Basic earnings per share attributable to AT&T	$	0.58		$	0.72		$	1.96		$	2.10
Diluted earnings per share attributable to AT&T	$	0.58		$	0.72		$	1.95		$	2.09

At September 30, 2014 and 2013, we had issued and outstanding options to purchase approximately 11 million and 12 million shares of AT&T common stock. For the quarter ended September 30, 2014 and 2013, the exercise prices of 3 million shares were above the market price of AT&T stock for the respective periods. Accordingly, we did not include these amounts in determining the dilutive potential common shares.

8

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 3. OTHER COMPREHENSIVE INCOME

Changes in the balances of each component included in accumulated other comprehensive income (accumulated OCI) for the nine months ended September 30, 2014 and 2013, are presented below. For the period ended September 30, 2014, the amounts reclassified from accumulated OCI include the adjustments resulting from our change in accounting for América Móvil (see Note 7). All amounts are net of tax and exclude noncontrolling interest.

At September 30, 2014 and for the period ended:
	Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available- for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2013	$	(367	)	$	450		$	445		$	7,352			$	7,880
Other comprehensive income    (loss) before reclassifications		(29	)		30			272			-				273
Amounts reclassified    from accumulated OCI		416	1		(15	)2		29	3		(657	)4			(227	)
Net other comprehensive    income (loss)		387			15			301			(657	)			46
Balance as of September 30, 2014	$	20		$	465		$	746		$	6,695			$	7,926
At September 30, 2013 and for the period ended:
	Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available- for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2012	$	(284	)	$	272		$	(110	)	$	5,358			$	5,236
Other comprehensive income    (loss) before reclassifications		(153	)		155			526			-				528
Amounts reclassified    from accumulated OCI		34	1		(13	)2		22	3		(525	)4			(482	)
Net other comprehensive    income (loss)		(119	)		142			548			(525	)			46
Balance as of September 30, 2013	$	(403	)	$	414		$	438		$	4,833			$	5,282

¹ Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income.

² Pre-tax gains are included in Other income (expense) - net in the consolidated statements of income.

³ (Gains) losses are included in interest expense in the consolidated statements of income. See Note 6 for additional information.

⁴ The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income (see Note 5).

  Actuarial loss reclassifications related to our equity method investees are included in Other income (expense) - net in the consolidated statements of income.

9

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our operating segments based on segment income before income taxes. We make our capital allocation decisions based on our strategic direction of the business, needs of the network (wireless or wireline) providing services and demands to provide emerging services to our customers. Actuarial gains and losses from pension and other postretirement benefits, interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in each segment's reportable results. The customers and long-lived assets of our reportable segments are predominantly in the United States. We have two reportable segments: (1) Wireless and (2) Wireline.

The Wireless segment uses our nationwide network to provide consumer and business customers with wireless data and voice communications services. This segment includes our portion of the results from our Softcard^TM mobile wallet joint venture which is accounted for as an equity investment.

The Wireline segment uses our regional, national and global network to provide consumer and business customers with data and voice communications services, AT&T U-verse^® high speed Internet, video and VoIP services and managed networking to business customers.

The Corporate and Other column includes unallocated corporate expenses, which includes costs to support corporate-driven activities and operations, impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit plans as well as our actuarial gains and losses on our pension and postretirement plan valuations. Results from equity method investments in América Móvil (prior to the June 2014 disposal of our investment), YP Holdings LLC, and Otter Media (our joint venture with The Chernin Group), are also excluded from our segment results as those results are not considered in our assessment of segment performance. We have revised our prior-period presentation to conform to our current reporting.

10

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

In the following tables, we show how our segment results are reconciled to our consolidated results reported.

For the three months ended September 30, 2014
	Wireless			Wireline		Corporate and Other			Consolidated  Results
Service	$	15,423		$	14,368	$	-		$	29,791
Equipment		2,914			247		5			3,166
Total segment operating revenues		18,337			14,615		5			32,957
Operations and support expenses		11,855			10,761		400			23,016
Depreciation and amortization expenses		1,965			2,571		3			4,539
Total segment operating expenses		13,820			13,332		403			27,555
Segment operating income (loss)		4,517			1,283		(398	)		5,402
Interest expense		-			-		1,016			1,016
Equity in net income (loss) of affiliates		(26	)		1		23			(2	)
Other income (expense) – net		-			-		42			42
Segment income (loss) before income taxes	$	4,491		$	1,284	$	(1,349	)	$	4,426
For the nine months ended September 30, 2014									Consolidated   Results
	Wireless			Wireline		Corporate and Other
Service	$	45,958		$	43,165	$	-		$	89,123
Equipment		8,175			688		22			8,885
Total segment operating revenues		54,133			43,853		22			98,008
Operations and support expenses		34,305			31,918		783			67,006
Depreciation and amortization expenses		5,931			7,769		6			13,706
Total segment operating expenses		40,236			39,687		789			80,712
Segment operating income (loss)		13,897			4,166		(767	)		17,296
Interest expense		-			-		2,757			2,757
Equity in net income (loss) of affiliates		(75	)		2		261			188
Other income (expense) – net		-			-		1,456			1,456
Segment income (loss) before income taxes	$	13,822		$	4,168	$	(1,807	)	$	16,183

11

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended September 30, 2013
	Wireless			Wireline		Corporate and Other			Consolidated  Results
Service	$	15,460		$	14,403	$	-		$	29,863
Equipment		2,020			267		8			2,295
Total segment operating revenues		17,480			14,670		8			32,158
Operations and support expenses		10,982			10,385		(12	)		21,355
Depreciation and amortization expenses		1,875			2,736		4			4,615
Total segment operating expenses		12,857			13,121		(8	)		25,970
Segment operating income		4,623			1,549		16			6,188
Interest expense		-			-		829			829
Equity in net income (loss) of affiliates		(18	)		-		109			91
Other income (expense) – net		-			-		50			50
Segment income (loss) before income taxes	$	4,605		$	1,549	$	(654	)	$	5,500
For the nine months ended September 30, 2013									Consolidated  Results
	Wireless			Wireline		Corporate and Other
Service	$	45,892		$	43,266	$	-		$	89,158
Equipment		5,570			832		29			6,431
Total segment operating revenues		51,462			44,098		29			95,589
Operations and support expenses		31,932			31,137		564			63,633
Depreciation and amortization expenses		5,553			8,146		16			13,715
Total segment operating expenses		37,485			39,283		580			77,348
Segment operating income (loss)		13,977			4,815		(551	)		18,241
Interest expense		-			-		2,481			2,481
Equity in net income (loss) of affiliates		(55	)		1		548			494
Other income (expense) – net		-			-		370			370
Segment income (loss) before income taxes	$	13,922		$	4,816	$	(2,114	)	$	16,624

NOTE 5. PENSION AND POSTRETIREMENT BENEFITS

Substantially all of our employees are covered by one of our noncontributory pension plans. We also provide certain medical, dental, life insurance, and death benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to meet the plans' obligations to provide benefits to employees upon their retirement.

In July 2014, the U.S. Department of Labor (DOL) published in the Federal Register their final retroactive approval of our September 9, 2013 voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the primary holding company for our wireless business, to the trust used to pay pension benefits under our qualified pension plans. The preferred equity interest had a value of $9,114 at September 30, 2014. The trust is entitled to receive cumulative cash distributions of $560 per annum, which will be distributed quarterly in equal amounts and will be accounted for as contributions. We distributed $420 to the trust during the nine months ended September 30, 2014. So long as we make the distributions, the terms of the preferred interest will impose no limitations on our ability to declare a dividend, or repurchase shares. This preferred equity interest is a plan asset under ERISA and is recognized as such in the plan's separate financial statements. However, because the preferred equity interest is not unconditionally transferable to an unrelated party, it is not reflected in plan assets in our consolidated financial statements and instead has been eliminated in consolidation.

12

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

We recognize actuarial gains and losses on pension and postretirement plan assets in our operating results at our annual measurement date of December 31, unless earlier remeasurements are required. The following table details pension and postretirement benefit costs included in operating expenses in the accompanying consolidated statements of income, expense credits are denoted with parentheses. A portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net expense recorded.

	Three months ended						Nine months ended
	September 30,						September 30,
	2014			2013			2014			2013
Pension cost:
Service cost – benefits earned during the period	$	282		$	331		$	846		$	991
Interest cost on projected benefit obligation		661			608			1,984			1,822
Expected return on assets		(849	)		(828	)		(2,549	)		(2,484	)
Amortization of prior service credit		(24	)		(25	)		(71	)		(71	)
Net pension cost	$	70		$	86		$	210		$	258
Postretirement cost:
Service cost – benefits earned during the period	$	59		$	95		$	175		$	286
Interest cost on accumulated postretirement benefit obligation		365			389			1,094			1,168
Expected return on assets		(165	)		(177	)		(491	)		(533	)
Amortization of prior service credit		(362	)		(263	)		(1,086	)		(788	)
Net postretirement (credit) cost	$	(103	)	$	44		$	(308	)	$	133
Combined net pension and postretirement (credit) cost	$	(33	)	$	130		$	(98	)	$	391

Our combined net pension and postretirement cost decreased $163 in the third quarter and $489 for the first nine months of 2014. The decrease reflects higher amortization of prior service credits due to plan changes, including changes to future costs for continued retiree healthcare coverage. The decrease also reflects increasing corporate bond rates, which contributed to lower service cost and higher interest costs.

Our fourth-quarter 2014 results will include the effects of settlement accounting for a portion of our pension plan. Due in part to our 2013 enhanced retirement offer and other distributions, lump sum distributions from the plan during 2014 exceeded service and interest costs in early October.

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. Net supplemental retirement pension benefits cost, which is not included in the table above, was $29 in the third quarter of 2014, of which $27 was interest cost, and $87 for the first nine months, of which $82 was interest cost. In 2013, net supplemental retirement pension benefits cost was $27 in the third quarter, of which $25 was interest cost, and $82 for the first nine months, of which $76 was interest cost.

13

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 6. FAIR VALUE MEASUREMENTS AND DISCLOSURE

The Fair Value Measurement and Disclosure framework provides a three-tiered fair value hierarchy that gives highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

Level 2 Inputs to the valuation methodology include:

· Quoted prices for similar assets and liabilities in active markets.

· Quoted prices for identical or similar assets or liabilities in inactive markets.

· Inputs other than quoted market prices that are observable for the asset or liability.

· Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

· Fair value is often based on developed models in which there are few, if any, external observations.

The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. We believe our valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used since December 31, 2013.

Long-Term Debt and Other Financial Instruments

The carrying amounts and estimated fair values of our long-term debt, including current maturities and other financial instruments, are summarized as follows:

	September 30, 2014					December 31, 2013
	Carrying		Fair			Carrying			Fair
	Amount		Value			Amount			Value
Notes and debentures	$	75,226		$	82,938		$	74,484		$	79,309
Commercial paper		-			-			20			20
Bank borrowings		5			5			1			1
Investment securities		2,643			2,643			2,450			2,450

The carrying value of debt with an original maturity of less than one year approximates market value. The fair value measurements used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets.

14

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

Following is the fair value leveling for available-for-sale securities and derivatives as of September 30, 2014 and December 31, 2013:

	September 30, 2014
	Level 1		Level 2				Level 3			Total
Available-for-Sale Securities
Domestic equities	$	1,108		$	-			$	-		$	1,108
International equities		541			-				-			541
Fixed income bonds		-			913				-			913
Asset Derivatives1
Interest rate swaps		-			131				-			131
Cross-currency swaps		-			1,536				-			1,536
Liability Derivatives1
Interest rate swaps		-			(10	)			-			(10	)
Cross-currency swaps		-			(901	)			-			(901	)
	December 31, 2013
	Level 1		Level 2				Level 3			Total
Available-for-Sale Securities
Domestic equities	$	1,049		$	-			$	-		$	1,049
International equities		563			-				-			563
Fixed income bonds		-			759				-			759
Asset Derivatives1
Interest rate swaps		-			191				-			191
Cross-currency swaps		-			1,951				-			1,951
Liability Derivatives1
Interest rate swaps		-			(7	)			-			(7	)
Cross-currency swaps		-			(519	)			-			(519	)
1 Derivatives designated as hedging instruments are reflected as Other assets, Other noncurrent liabilities and, for a portion of interest rate swaps, Other current assets.

Investment Securities

Our investment securities include equities, fixed income bonds and other securities. A substantial portion of the fair values of our available-for-sale securities was estimated based on quoted market prices. Investments in securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Realized gains and losses on securities are included in "Other income (expense) – net" in the consolidated statements of income using the specific identification method. Unrealized gains and losses, net of tax, on available-for-sale securities are recorded in accumulated OCI. Unrealized losses that are considered other than temporary are recorded in "Other income (expense) – net" with the corresponding reduction to the carrying basis of the investment. Fixed income investments of $91 have maturities of less than one year, $277 within one to three years, $292 within three to five years, and $253 for five or more years.

Our cash equivalent (money market securities) short-term investments (certificate and time deposits) and customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our short-term investments of $1,890 are recorded in "Other current assets" and our investment securities are recorded in "Other Assets" on the consolidated balance sheets.

Derivative Financial Instruments

We employ derivatives to manage certain market risks, primarily interest rate risk and foreign currency exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest rate foreign exchange contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We record derivatives on our consolidated balance sheets at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2). Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the item being hedged.

15

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The majority of our derivatives are designated either as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), or as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).

Fair Value Hedging We designate our fixed-to-floating interest rate swaps as fair value hedges. The purpose of these swaps is to manage interest 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 rate payments over the life of the swaps without exchange of the underlying principal amount. Accrued and realized gains or losses from interest rate swaps impact interest expense in the consolidated statements of income. Unrealized gains on interest rate swaps are recorded at fair market value as assets, and unrealized losses on interest rate swaps are recorded at fair market value as liabilities. Changes in the fair values of the interest rate swaps are exactly offset by changes in the fair value of the underlying debt. Gains or losses realized upon early termination of our fair value hedges are recognized in interest expense. In the nine months ended September 30, 2014 and September 30, 2013, no ineffectiveness was measured on interest rate swaps designated as fair value hedges.

Cash Flow Hedging  We designate our cross-currency swaps as cash flow hedges. We have entered into multiple cross-currency swaps to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency risk generated from the issuance of our Euro, British pound sterling and Canadian dollar denominated debt. These agreements include initial and final exchanges of principal from fixed foreign denominations to fixed U.S. denominated amounts, to be exchanged at a specified rate, which was determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed foreign-denominated rate to a fixed U.S. denominated interest rate.

Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as liabilities, both for the period they are outstanding. For derivative instruments designated as cash flow hedges, the effective portion is reported as a component of accumulated OCI until reclassified into interest expense in the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is recognized as "Other income (expense) – net" in the consolidated statements of income in each period. We evaluate the effectiveness of our cross-currency swaps each quarter. In the nine months ended September 30, 2014 and September 30, 2013, no ineffectiveness was measured on cross-currency swaps designated as cash flow hedges.

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to "Other income (expense) – net" in the consolidated statements of income. Over the next 12 months, we expect to reclassify $42 from accumulated OCI to interest expense due to the amortization of net losses on historical interest rate locks.

We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated transactions. In anticipation of these transactions, we often enter into foreign exchange contracts to provide currency at a fixed rate. Some of these instruments are designated as cash flow hedges while others remain nondesignated, largely based on size and duration. Gains and losses at the time we settle or take delivery on our designated foreign exchange contracts are amortized into income in the same period the hedged transaction affects earnings, except where an amount is deemed to be ineffective, which would be immediately reclassified to "Other income (expense) – net" in the consolidated statements of income. In the nine months ended September 30, 2014 and September 30, 2013, no ineffectiveness was measured on foreign exchange contracts designated as cash flow hedges.

Collateral and Credit-Risk Contingency  We have entered into agreements with our derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. At September 30, 2014, we had posted collateral of $58 (a deposit asset) and held collateral of $1,396 (a receipt liability). Under the agreements, if our credit rating had been downgraded one rating level by Moody's Investors Service and Standard & Poor's Rating Services and two rating levels by Fitch Ratings, before the final collateral exchange in September, we would have been required to post additional collateral of $71. At December 31, 2013, we had posted collateral of $8 (a deposit asset) and held collateral of $1,600 (a receipt liability). We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable), against the fair value of the derivative instruments.

16

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

Following is the notional amount of our outstanding derivative positions:

	September 30,			December 31,
	2014			2013
Interest rate swaps		$	6,550		$	4,750
Cross-currency swaps			20,650			17,787
Total		$	27,200		$	22,537

Following is the related hedged items affecting our financial position and performance:
Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships	Three months ended							Nine months ended
	September 30, 2014			September 30, 2013				September 30, 2014				September 30, 2013
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	(70	)		$	9			$	(59	)		$	(78	)
Gain (Loss) on long-term debt		70				(9	)			59				78

In addition, the net swap settlements that accrued and settled in the quarter ended September 30 were offset against interest expense.

	Three months ended						Nine months ended
Cash Flow Hedging Relationships	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	567		$	482		$	418		$	807
Interest rate locks:
Interest income (expense) reclassified from         accumulated OCI into income		(11	)		(11	)		(33	)		(34	)
Foreign exchange contracts:
Gain (Loss) recognized in accumulated OCI		-			5			(2	)		5

17

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 7. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS

Acquisitions

Leap  On March 13, 2014, we acquired Leap, a provider of prepaid wireless service, for fifteen dollars per outstanding share of Leap's common stock, or $1,248 (excluding Leap's cash on hand), plus one nontransferable contingent value right (CVR) per share. The CVR will entitle each Leap stockholder to a pro rata share of the net proceeds of the future sale of the Chicago 700 MHz A-band Federal Communications Commission (FCC) license held by Leap.

The preliminary values of assets acquired under the terms of the agreement were: $3,000 in licenses, $510 in property, plant and equipment, $520 of customer lists, $340 for trade names and $744 of goodwill. The estimated fair value of debt associated with the acquisition of Leap was $3,889, all of which was redeemed or matured by July 31, 2014.

Pending Acquisition

DIRECTV  In May 2014, we announced a merger agreement to acquire DIRECTV in a stock-and-cash transaction for ninety-five dollars per share of DIRECTV's common stock, or approximately $48,500 at the date of announcement. As of September 30, 2014, DIRECTV had approximately $16,852 in net debt based on DIRECTV's financial statements included in the Form 10-Q for the third quarter of 2014. Each DIRECTV shareholder will receive cash of $28.50 per share and $66.50 per share in our stock. The stock portion will be subject to a collar such that DIRECTV shareholders will receive 1.905 AT&T shares if our stock price is below $34.90 per share at closing and 1.724 AT&T shares if our stock price is above $38.58 at closing. If our average stock price (calculated in accordance with the merger agreement with DIRECTV) is between $34.90 and $38.58 at closing, then DIRECTV shareholders will receive a number of shares between 1.724 and 1.905, equal to $66.50 in value. DIRECTV is a premier pay TV provider in the United States and Latin America, with a high-quality customer base, the best selection of programming, the best technology for delivering and viewing high-quality video on any device and the best customer satisfaction among major U.S. cable and satellite TV providers.

The merger agreement was adopted by DIRECTV's stockholders on September 25, 2014 and remains subject to review by the FCC and the Department of Justice and to other closing conditions. It is also a condition that all necessary consents by certain foreign governmental entities have been obtained and are in full force and effect. The transaction is expected to close in the first half of 2015. The merger agreement provides certain mutual termination rights for us and DIRECTV, including the right of either party to terminate the agreement if the merger is not consummated by May 18, 2015, subject to extension in certain cases to a date no later than November 13, 2015. Either party may also terminate the agreement if an order permanently restraining, enjoining, or otherwise prohibiting consummation of the merger becomes final and nonappealable. In October 2014, DIRECTV and the National Football League renewed their agreement for the "NFL Sunday Ticket" service substantially on the terms discussed between AT&T and DIRECTV, satisfying one of the conditions to closing the merger. Under certain circumstances relating to a competing transaction, DIRECTV may be required to pay a termination fee to us in connection with or following a termination of the agreement.

Dispositions

América Móvil  In May 2014, in conjunction with the announcement of our intention to dispose of our investment in América Móvil and the resignation of our board members from the board of América Móvil, we discontinued accounting for this investment under the equity method due to our lack of significant influence. On June 30, 2014, we sold our remaining stake in América Móvil for approximately $5,566 and recorded a pre-tax gain of $1,243. At closing, we received $4,565 cash and we received the remaining cash in the third quarter.

18

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

Connecticut Wireline  In December 2013, we agreed to sell our incumbent local exchange operations in Connecticut to Frontier Communications Corporation for $2,000 in cash. The transaction was approved by the FCC in July 2014 and was approved by the Connecticut Public Utilities Regulatory Authority on October 15, 2014. The transaction closed on October 24, 2014.

We applied held-for-sale treatment to the assets and liabilities of the Connecticut operations, and, accordingly, included the assets in "Other current assets," and the related liabilities in "Accounts payable and accrued liabilities," on our consolidated balance sheets. However, the business does not qualify as discontinued operations as we expect significant continuing direct cash flows related to the disposed operations. Assets and liabilities of the Connecticut operations included the following:

	September 30,		December 31,
	2014		2013
Assets held for sale:
Current assets	$	138	$	155
Property, plant and equipment - net		1,436		1,289
Goodwill		799		799
Other assets		18		17
Total assets	$	2,391	$	2,260
Liabilities related to assets held for sale:
Current liabilities	$	122	$	128
Noncurrent liabilities		537		480
Total liabilities	$	659	$	608

19

AT&T INC.

SEPTEMBER 30, 2014

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 8. SALES OF EQUIPMENT INSTALLMENT RECEIVABLES

We offer our customers the option to purchase certain wireless devices in installments over a period of up to 24 months, with the right to trade in the original equipment for a new device and have the remaining unpaid balance satisfied. As of September 30, 2014, gross equipment installment receivables of $3,002 were included on our consolidated balance sheets, of which $1,861 are notes receivable that are included in "Accounts receivable, net."

On June 27, 2014, we entered into uncommitted agreements pertaining to the sale of equipment installment receivables and related security with Citibank, N.A. and various other relationship banks as purchasers (collectively, the Purchasers) with a funding amount not expected to exceed $2,000 at any given time. Under the agreement, we may transfer the receivables to the Purchasers for cash and additional consideration upon settlement of the receivables. Under the terms of the arrangement, we continue to bill and collect on behalf of our customers for the receivables sold.

The following table sets forth a summary of equipment installment receivables sold during the three months and nine months ended September 30, 2014:

	Three months		Nine months
Net receivables sold1	$	885	$	2,276
Cash proceeds received		556		1,375
Deferred purchase price recorded		324		889
1 Gross receivables sold were $1,028 and $2,665 for the third quarter and the first nine months of 2014, respectively, before deducting the allowance, imputed interest and trade-in right guarantees.

The deferred purchase price was initially recorded at estimated fair value, which was based on remaining installment payments expected to be collected, adjusted by the expected timing and value of the device trade-ins, and is subsequently carried at the lower of cost or net realizable value. The value of the device trade-ins considers estimated prices offered to us by independent, third parties that contemplate changes in value after the launch of a device. At September 30, 2014, our deferred purchase price receivable was $901, which is included in "Other Assets" on our consolidated balance sheets. Our maximum exposure to loss as a result of selling these receivables is limited to the amount of our deferred purchase price at any point in time.

These transactions did not have a material impact in our consolidated statements of income or to "Total Assets" reported on our consolidated balance sheets. We reflect the cash flows related to the arrangement as operating activities in our consolidated statements of cash flows because the cash received from the Purchasers upon both the sale of the receivables and the collection of the deferred purchase price is not subject to significant interest rate risk.

20

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

RESULTS OF OPERATIONS

For ease of reading, AT&T Inc. is referred to as "we," "AT&T" or the "Company" throughout this document, and the names of the particular subsidiaries and affiliates providing the services generally have been omitted. AT&T is a holding company whose subsidiaries and affiliates operate in the communications services industry both in the United States and internationally, providing wireless and wireline telecommunication services and equipment. You should read this discussion in conjunction with the consolidated financial statements, accompanying notes and management's discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2013. A reference to a "Note" in this section refers to the accompanying Notes to Consolidated Financial Statements. In the tables throughout this section, percentage increases and decreases that are not considered meaningful are denoted with a dash. Certain amounts have been reclassified to conform to the current period's presentation.

Consolidated Results  Our financial results in the third quarter and for the first nine months of 2014 and 2013 are summarized as follows:

	Third Quarter							Nine-Month Period
	2014		2013		Percent Change			2014		2013		Percent Change
Operating Revenues	$	32,957	$	32,158		2.5	%	$	98,008	$	95,589		2.5	%
Operating expenses
Cost of services and sales		14,541		13,403		8.5			42,074		39,227		7.3
Selling, general and administrative		8,475		7,952		6.6			24,932		24,406		2.2
Depreciation and amortization		4,539		4,615		(1.6	)		13,706		13,715		(0.1	)
Total Operating Expenses		27,555		25,970		6.1			80,712		77,348		4.3
Operating Income		5,402		6,188		(12.7	)		17,296		18,241		(5.2	)
Income Before Income Taxes		4,426		5,500		(19.5	)		16,183		16,624		(2.7	)
Net Income		3,059		3,905		(21.7	)		10,414		11,558		(9.9	)
Net Income Attributable to AT&T	$	3,002	$	3,814		(21.3	)%	$	10,201	$	11,336		(10.0	)%

Overview

Operating income decreased $786, or 12.7%, in the third quarter and $945, or 5.2%, for the first nine months of 2014. Operating income in the third quarter and for the first nine months reflects continued decline in legacy voice and data product revenues as well as higher AT&T U-verse® (U-verse) content costs. This decline is partially offset by higher wireless equipment revenue for device sales under our AT&T Next^SM (AT&T Next) program as well as continued growth in our U-verse and strategic business services. Our operating results include the operations of Leap Wireless International, Inc. (Leap) from March 13, 2014, the date of acquisition.

Operating revenues increased $799, or 2.5%, in the third quarter and $2,419, or 2.5%, for the first nine months of 2014. Growth in wireless revenues reflected the continuing trend by our postpaid subscribers to choose devices on installment purchase rather than the device subsidy model, which resulted in increased equipment revenue recognized for device sales. Wireline revenues were slightly lower and continue to be driven by service revenues from our U-verse services and strategic business services, which almost offset decreases from our legacy voice and data products.

The telecommunications industry is rapidly evolving from fixed location, voice-oriented services into an industry driven by customer demand for instantly available, data-based services (including video). Our products, services and plans are changing as we transition to sophisticated, high-speed, IP-based alternatives. In addition to re-designing our networks to accommodate these new demands and to take advantage of related technological efficiencies, we are also repositioning our wireless model by moving to simple pricing and no-device-subsidy plans. We expect continued growth in our wireless and wireline IP-based services as we bundle and price plans with greater focus on data and video offerings. We expect continued declines in voice services and our basic wireline data services as customers choose these next-generation services.

21

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Cost of services and sales expenses increased $1,138, or 8.5%, in the third quarter and $2,847, or 7.3%, for the first nine months of 2014. The increases were primarily due to higher sales volume and customers choosing higher-priced devices, which contributed to increased wireless equipment costs, and handset insurance costs. The increases also reflect higher wireless network costs and wireline costs attributable to U-verse content costs and subscriber growth and employee-related charges.

Selling, general and administrative expenses increased $523, or 6.6%, in the third quarter and $526, or 2.2%, for the first nine months of 2014. The increases were primarily due to the 2013 gains on spectrum transactions of $293, which resulted in lower expense in the third quarter and for the first nine months of 2013. Also contributing to increased selling and administrative expenses were increased sales expense in our Wireless segment and unallocated corporate expenses related to information technology enhancements, legal and new product and development costs. Partially offsetting the increases were lower Wireless commissions expenses and lower employee-related costs in our Wireline segment.

Depreciation and amortization expense decreased $76, or 1.6%, in the third quarter and $9, or 0.1%, for the first nine months of 2014. The decreases were primarily due to extending the estimated useful life of software and an increase in fully depreciated assets, which were largely offset by ongoing capital spending for network upgrades and expansion and additional expense due to assets acquired from Leap.

Interest expense increased $187, or 22.6%, in the third quarter and $276, or 11.1%, for the first nine months of 2014. The increases were primarily due to charges associated with the early redemption of debt, interest related to our December 2013 tower transaction, and higher debt balances. These increases were partially offset by lower interest rates resulting from 2013 refinancing activity.

Equity in net income (loss) of affiliates decreased $93 in the third quarter and $306, or 61.9%, for the first nine months of 2014. This decrease in equity income for the third quarter and the first nine months primarily resulted from the sale of América Móvil, S.A. de C.V. (América Móvil) in June 2014 (see Note 7).

	Third Quarter						Nine-Month Period
	2014			2013			2014			2013
América Móvil	$	-		$	85		$	153		$	410
YP Holdings LLC (YP Holdings)		23			23			108			138
SoftcardTM Mobile Wallet Joint Venture		(25	)		(18	)		(74	)		(55	)
Other		-			1			1			1
Equity in Net Income (Loss) of Affiliates	$	(2	)	$	91		$	188		$	494

Other income (expense) – net We had other income of $42 in the third quarter and $1,456 for the first nine months of 2014, compared to other income of $50 in the third quarter and $370 for the first nine months of 2013. Results in the third quarter of 2014 included interest and dividend income of $15, a net gain on the sale of various investments of $9 and leveraged lease income of $7. Results for the first nine months of 2014 included a net gain on the sale of América Móvil shares and other investments of $1,376, interest and dividend income of $51 and leveraged lease income of $20.

Other income in the third quarter and for the first nine months of 2013 included interest and dividend income of $14 and $54 and leveraged lease income of $6 and $21, respectively. Income for the first nine months of 2013 also included a net gain on the sale of América Móvil shares and other investments of $272.

Income taxes decreased $228, or 14.3%, in the third quarter and increased $703, or 13.9%, for the first nine months of 2014. Our effective tax rate was 30.9% for the third quarter and 35.6% for the first nine months of 2014, as compared to 29.0% for the third quarter and 30.5% for the first nine months of 2013. The increase in effective tax rate for the first nine months was primarily due to the sale of América Móvil shares in 2014. We had previously assumed that a portion of our undistributed earnings for our investment in América Móvil would be returned through dividends that, when received, would qualify for foreign tax credits. As a result of our strategic decision to sell this equity position in connection with our pending acquisition of DIRECTV, these foreign tax credits were not available to be realized.

22

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Selected Financial and Operating Data
	September 30,
Subscribers and connections in (000s)	2014			2013
Wireless subscribers		118,650			109,460
Network access lines in service		21,464			25,680
U-Verse VoIP connections		4,756			3,616
Total wireline broadband connections		16,486			16,427
Debt ratio1		44.8	%		46.9	%
Ratio of earnings to fixed charges2		4.99			5.50
Number of AT&T employees		247,700			246,740

¹ Debt ratios are calculated by dividing total debt (debt maturing within one year plus long-term debt) by total capital (total debt plus total stockholders' equity) and do not consider cash available to pay down debt. See our "Liquidity and Capital Resources" section for discussion.

² See Exhibit 12.

Segment Results

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. Our operating segment results presented in Note 4 and discussed below for each segment follow our internal management reporting. We analyze our operating segments based on segment income before income taxes. We make our capital allocation decisions based on our strategic direction of the business, needs of the network (wireless or wireline) providing services and demands to provide emerging services to our customers. Actuarial gains and losses from pension and other postretirement benefits, interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in each segment's reportable results. The customers and long-lived assets of our reportable segments are predominantly in the United States. We have two reportable segments: (1) Wireless and (2) Wireline.

The Wireless segment uses our nationwide network to provide consumer and business customers with wireless data and voice communications services. This segment includes our portion of the results from our mobile wallet joint venture which is accounted for as an equity investment.

The Wireline segment uses our regional, national and global network to provide consumer and business customers with data and voice communications services, U-verse high speed Internet, video and VoIP services and managed networking to business customers.

We discuss capital expenditures for each segment in "Liquidity and Capital Resources."

23

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Wireless
Segment Results
	Third Quarter							Nine-Month Period
	2014		2013		Percent Change			2014		2013		Percent Change
Segment operating revenues
Service	$	15,423	$	15,460		(0.2	)%	$	45,958	$	45,892		0.1	%
Equipment		2,914		2,020		44.3			8,175		5,570		46.8
Total Segment Operating Revenues		18,337		17,480		4.9			54,133		51,462		5.2
Segment operating expenses
Operations and support		11,855		10,982		7.9			34,305		31,932		7.4
Depreciation and amortization		1,965		1,875		4.8			5,931		5,553		6.8
Total Segment Operating Expenses		13,820		12,857		7.5			40,236		37,485		7.3
Segment Operating Income		4,517		4,623		(2.3	)		13,897		13,977		(0.6	)
Equity in Net Income (Loss) of
Affiliates		(26)		(18)		(44.4	)		(75)		(55)		(36.4	)
Segment Income	$	4,491	$	4,605		(2.5	)%	$	13,822	$	13,922		(0.7	)%

24

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

The following table highlights other key measures of performance for the Wireless segment:
	Third Quarter								Nine-Month Period
	2014			2013			Percent Change		2014			2013			Percent Change
(in 000s)
Wireless Subscribers 1										118,650			109,460			8.4	%
Postpaid smartphones										55,791			50,637			10.2
Postpaid feature phones and data-centric
devices										19,314			21,395			(9.7	)
Postpaid										75,105			72,032			4.3
Prepaid										11,179			7,425			50.6
Reseller										13,884			14,089			(1.5	)
Connected devices 2										18,482			15,914			16.1
Total Wireless Subscribers										118,650			109,460			8.4
Net Additions 3
Postpaid		785			363			-		2,436			1,210			-
Prepaid		(140	)		192			-		(595	)		19			-
Reseller		87			(285	)		-		(281	)		(951	)		70.5
Connected devices2		1,275			719			77.3		2,143			1,634			31.2
Net Subscriber Additions		2,007			989			-		3,703			1,912			93.7
Mobile Share connections										46,909			16,130			-
Smartphones sold under our installment
program during period		3,401			401			-		9,411			401			-
Total Churn4		1.36	%		1.31	%	5 BP			1.41	%		1.35	%	6 BP
Postpaid Churn4		0.99	%		1.07	%	(8) BP			0.97	%		1.04	%	(7) BP

¹ Represents 100% of AT&T Mobility wireless subscribers.

² Includes data-centric devices (e.g., eReaders and automobile systems). Excludes tablets, which are primarily included in postpaid.

³ Excludes merger and acquisition-related additions during the period.

⁴ Calculated by dividing the aggregate number of wireless subscribers who canceled service during a period divided by the total number of wireless subscribers at the beginning of that period. The churn rate for the period is equal to the average of the churn rate for each month of that period.

Subscriber Relationships

As the wireless industry continues to mature, we believe that future wireless growth will increasingly depend on our ability to offer innovative services, plans and devices and a wireless network that has sufficient spectrum and capacity to support these innovations on as broad a geographic basis as possible. To attract and retain subscribers in a maturing market, we have launched a wide variety of plans, including Mobile Share and Mobile Share Value (Mobile Share) and AT&T Next^SM (AT&T Next). While we have historically focused on attracting and retaining postpaid subscribers, we have recently increased our focus on prepaid subscribers with our acquisition of Leap.

At September 30, 2014, we served 118.7 million subscribers (including Cricket subscribers from our March 13, 2014 acquisition of Leap, which were approximately 4.5 million at closing), an increase of 8.4% from the prior year. Our subscriber base consists primarily of postpaid accounts. Our prepaid services, which include results from services sold under the Cricket brand, are monthly pay-as-you-go services.

25

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

ARPU

Total ARPU (average service revenue per average wireless subscribers) was down 8.0% in the third quarter and 6.4% for the first nine months of 2014. Postpaid ARPU was down 9.2% and 6.8% when compared to the third quarter and first nine months of 2013, primarily due to our transition to plans that result in lower service revenues in lieu of subsidized devices, which began in the first quarter of 2014. As we adjust our service offerings and pricing structures, management believes that postpaid phone-only ARPU plus Next subscriber installment billings (postpaid phone-only ARPU plus AT&T Next) is a better representation of the monthly economic value per postpaid subscriber. For the quarter and nine months, postpaid phone-only ARPU decreased 8.0% and 5.2% versus the year-ago periods and postpaid phone-only ARPU plus AT&T Next decreased 3.4% and 2.1% compared to the same periods last year. Compared to the second quarter of 2014, postpaid ARPU increased 0.6%, postpaid phone-only ARPU increased 0.3%, and postpaid phone-only ARPU plus AT&T Next increased 2.0%.

Churn

The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. Total churn was higher in the third quarter and for the first nine months of 2014 due to the expected pressure in prepaid with the acquisition of Leap. Postpaid churn was lower for both the third quarter and the first nine months.

Postpaid

Postpaid subscribers increased 1.0% during the third quarter and 4.3% when compared to September 30, 2013. At September 30, 2014, 81% of our postpaid phone subscriber base used smartphones, compared to 75% at September 30, 2013. About 96% of our postpaid smartphone subscribers are on plans that provide for service on multiple devices at reduced rates, and such subscribers tend to have higher retention and lower churn rates. A growing percentage of our postpaid smartphone subscribers are on usage-based data plans, with approximately 82% on these plans as compared to 72% in the prior year, and about 51% of our Mobile Share accounts have chosen the 10 gigabyte or higher plans. Device connections on our Mobile Share plans now represent about 62% of our postpaid customer base. Such offerings are intended to encourage existing subscribers to upgrade their current services and/or add connected devices, attract subscribers from other providers and minimize subscriber churn.

As of September 30, 2014, approximately 86% of our postpaid smartphone subscribers use a 4G-capable device (i.e., a device that would operate on our HSPA+ or LTE network), and about 67% of our postpaid smartphone subscribers use an LTE device.

Historically, our postpaid customers have signed two-year service contracts for subsidized handsets. However, through our Mobile Share plans, we have recently begun offering postpaid services at lower prices for those customers who either bring their own devices (BYOD) or participate in our AT&T Next program. Approximately 50% of all postpaid smartphone gross adds and upgrades during the quarter chose AT&T Next. We also experienced a sharp rise in the number of BYOD gross adds to 462,000, compared to 109,000 at September 30, 2013. While BYOD customers do not generate equipment revenue, the lack of a device cost and subsidy helps improve our margins. We expect continued increases in our AT&T Next take rate as we have expanded offering to additional distributors.

Our AT&T Next program allows for postpaid subscribers to purchase certain devices in installments over a period of up to 24 months. Additionally, after a specified period of time they also have the right to trade in the original device for a new device and have the remaining unpaid balance satisfied. For customers that elect these trade-in programs, at the time of the sale, we recognize equipment revenue for the amount of the customer receivable, net of the fair value of the trade-in right guarantee and imputed interest. A significant percentage of our customers on the AT&T Next program pay a lower monthly service charge, which results in lower service revenue recorded for these subscribers. In the second quarter of 2014, we began offering the AT&T Next program through other distributors and we expanded the offering to almost all of our remaining distributors during the third quarter, which is expected to further accelerate the impacts on service revenues.

Prepaid

In March 2014, we completed our acquisition of Leap, which included approximately 4.5 million prepaid subscribers at closing. Prepaid subscribers decreased 1.4% during the third quarter due in part to expected transition of Cricket subscribers. As of October 31, 2014 we have over 2 million Leap and former Aio subscribers on our GSM network.

26

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Operating Results

Our Wireless segment operating income margin in the third quarter decreased from 26.4% in 2013 to 24.6% in 2014 and for the first nine months decreased from 27.2% in 2013 to 25.7% in 2014. Our Wireless segment operating income decreased $106, or 2.3%, in the third quarter and decreased $80, or 0.6%, for the first nine months of 2014. The decreases in operating margin and income in the third quarter and for the first nine months reflected the increasing popularity of Mobile Share plans, promotional activities and our continued investment in new services.

Service revenues decreased $37, or 0.2%, in the third quarter and increased $66, or 0.1%, for the first nine months of 2014. The decrease in the third quarter is due to customers shifting to no-device-subsidy plans, which allow for discounted monthly service charges under our Mobile Share plans. This decrease was largely offset by revenues from Cricket subscribers that were not included in our 2013 results. The increase in the first nine months was primarily due to the increased number of subscribers using smartphones with larger data plans and revenues from Cricket subscribers, which were partially offset by the growing adoption of Mobile Share plans. While we expect monthly service revenues to continue to be pressured as customers move to Mobile Share plans, we expect equipment revenues to increase for those subscribers who elect the AT&T Next program.

Equipment revenues increased $894, or 44.3%, in the third quarter and $2,605, or 46.8%, for the first nine months of 2014. The increases were primarily related to devices sold under our AT&T Next program. During the second quarter of 2014, with the launch of the AT&T Next program through other distributors we began deferring the recognition of equipment revenue and costs until the device is sold to the end subscriber and the trade-in right is conveyed. This lag in timing of the recognition of the sale resulted in lower revenue through these distributors beginning in the second quarter of 2014.

Operations and support expensesincreased $873, or 7.9%, in the third quarter and $2,373, or 7.4%, in the first nine months of 2014. The increases in the third quarter and for the first nine months were primarily due to the following:

· Equipment costs increased $406 and $950, respectively, reflecting the sales of more expensive smartphones. Equipment costs also include Cricket and Alltel subscriber integration charges, which we expect will continue into 2015 as we complete the transition of those subscribers to our network.

· Selling (other than commissions) and administrative expenses increased $267 and $966 due primarily to increases of: $125 and $290, which include increased legal costs and new product development expenses; $50 and $106 in bad debt expense; $29 and $125 in customer service expense; and $7 and $117 in sales expense. Also contributing to the increase in the first nine months were higher marketing and advertising expenses of $119. Each of these increases included additional costs related to acquisitions.

· Network system costs increased $185 and $538 due to higher network traffic and personnel-related network support costs and cell site related costs in conjunction with our network enhancement efforts and increased costs related to the Cricket acquisition.

· Handset insurance cost increased $122 and $285 due to an increase in the cost of replacement phones.

Partially offsetting these increases were lower commission expenses of $182 and $522. Commission expense was lower in both the third quarter and first nine months of 2014 primarily due to lower average commission rates and increased national equipment activation credits. A decrease in upgrade transactions contributed to the lower commission expense for the nine month period.

Depreciation and amortization expenses increased $90, or 4.8%, in the third quarter and $378, or 6.8%, for the first nine months of 2014. Depreciation expense increased $80, or 4.4%, in the third quarter and $419, or 7.8%, for the first nine months primarily due to ongoing capital spending for network upgrades and expansion and acquisition of Leap partially offset by extending the estimated useful life of software.

Amortization expense increased $10, or 21.3%, in the third quarter and decreased $41, or 21.9%, for the first nine months. The increase in the third quarter is primarily due to higher amortization of intangibles for customer lists related to our acquisition of Leap, mostly offset by the completion of amortization of customer lists from our December 2006 acquisition of BellSouth Corporation (BellSouth). The decrease for the first nine months reflects the fully amortized customer lists from our acquisition of BellSouth, slightly offset by amortization of customer lists from our March 2014 acquisition of Leap.

27

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Wireline
Segment Results
	Third Quarter							Nine-Month Period
	2014		2013		Percent Change			2014		2013		Percent Change
Segment operating revenues
Service	$	14,368	$	14,403		(0.2)	%	$	43,165	$	43,266		(0.2)	%
Equipment		247		267		(7.5)			688		832		(17.3)
Total Segment Operating Revenues		14,615		14,670		(0.4)			43,853		44,098		(0.6)
Segment operating expenses
Operations and support		10,761		10,385		3.6			31,918		31,137		2.5
Depreciation and amortization		2,571		2,736		(6.0)			7,769		8,146		(4.6)
Total Segment Operating Expenses		13,332		13,121		1.6			39,687		39,283		1.0
Segment Operating Income		1,283		1,549		(17.2)			4,166		4,815		(13.5)
Equity in Net Income of Affiliates		1		-		-			2		1		-
Segment Income	$	1,284	$	1,549		(17.1)	%	$	4,168	$	4,816		(13.5)	%

Supplemental Information

Wireline Broadband, Telephone and Video Connections Summary

Our broadband, switched access lines and other services provided at September 30, 2014 and 2013 are shown below and trends are addressed throughout this segment discussion.

	September 30,		September 30,		Percent
(in 000s)	2014		2013		Change
U-verse high speed Internet		12,098		9,745		24.1	%
DSL and Other Broadband Connections		4,388		6,682		(34.3)
Total Wireline Broadband Connections1		16,486		16,427		0.4
Total U-verse Video Connections		6,067		5,266		15.2
Retail Consumer Switched Access Lines		10,182		13,133		(22.5)
U-verse Consumer VoIP Connections		4,698		3,616		29.9
Total Retail Consumer Voice Connections		14,880		16,749		(11.2)
Switched Access Lines
Retail Consumer		10,182		13,133		(22.5)
Retail Business		9,509		10,632		(10.6)
Retail Subtotal		19,691		23,765		(17.1)
Wholesale Subtotal		1,562		1,655		(5.6)
Total Switched Access Lines2		21,464		25,680		(16.4)	%

¹ Total wireline broadband connections include DSL, U-verse high speed Internet and satellite broadband.

² Total switched access lines includes access lines provided to national mass markets and private payphone service providers of 211 at September 30, 2014 and 260 at September 30, 2013.

28

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Operating Results

Our Wireline segment operating income margin in the third quarter decreased from 10.6% in 2013 to 8.8% in 2014, and for the first nine months decreased from 10.9% in 2013 to 9.5% in 2014. Our Wireline segment operating income decreased $266, or 17.2%, in the third quarter and $649, or 13.5%, for the first nine months of 2014. The decrease in operating margins and income was driven primarily by continued revenue decreases from our legacy voice and data products and increased U-verse content costs, partially offset by increased revenues from our U-verse and IP-based strategic business services.

Service revenues decreased $35, or 0.2%, in the third quarter and $101, or 0.2%, for the first nine months of 2014. Lower service revenues from business customers (which include integration, government-related and outsourcing services) and the continued decline in revenues from legacy services that we no longer actively market were largely offset by higher service revenues from our residential customers.

Business

Service revenues from business customers decreased $168, or 2.0%, in the third quarter and $547, or 2.1%, for the first nine months of 2014. The revenue decreases were due to a $176 and $440 decrease, respectively, in long-distance and local voice revenues and a $284 and $928 decrease in traditional data revenues, which include circuit-based and packet-switched data services. The decreases were primarily due to lower demand as customers continue to shift to our most advanced IP-based offerings, such as Ethernet, VPN, U-verse high speed Internet access and managed Internet services, or to other service providers. The lower traditional service revenues were largely offset by higher demand for our next generation services. Strategic business service revenues, which include VPNs, Ethernet, hosting, IP conferencing, VoIP, Ethernet-access to Managed Internet Service (EaMIS), security services, and U-verse services provided to business customers increased $308, or 14.3%, in the third quarter and $909, or 14.6%, for the first nine months of 2014. In the third quarter and for the first nine months, revenue from VPN increased $82 and $270, Ethernet increased $87 and $252, U-verse services increased $48 and $126 and EaMIS increased $50 and $123.

Consumer

Service revenues from residential customers increased $175, or 3.2%, in the third quarter and $590, or 3.6%, for the first nine months of 2014. The increases were driven by higher IP data revenue reflecting increased U-verse penetration, customer additions, and migration from our legacy voice and DSL services. In the third quarter and for the first nine months, U-verse revenue from consumers increased $327 and $1,029 for high-speed Internet access, $265 and $806 for video and $101 and $306 for voice. These increases were partially offset by a decrease of $184 and $536 in DSL revenue as customers continue to shift to our strategic high-speed Internet access offerings, and a $348 and $1,048 decrease in traditional voice revenues.

Equipment revenues decreased $20, or 7.5%, in the third quarter of 2014, and $144, or 17.3%, for the first nine months of 2014. Our equipment revenues are mainly attributable to our business customers.

Operations and support expensesincreased $376, or 3.6%, in the third quarter and $781, or 2.5%, for the first nine months of 2014. Operations and support expenses consist of costs incurred to provide our products and services, including costs of operating and maintaining our networks and personnel costs, such as compensation and benefits.

The increases in expenses were primarily due to increased cost of sales of $197 and $450, related to U-verse content fees; higher nonemployee expenses of $108 and $350 in conjunction with Project Velocity IP (VIP) deployment, information technology enhancements and overall growth of our U-verse services; higher Universal Service Fund (USF) fees of $39 and $142, which are offset by higher USF revenues; higher materials and energy costs of $46 and $120; and higher traffic compensation costs of $67 for the year-to-date period. These increases were partially offset by lower employee related expense of $23 and $301, reflecting ongoing workforce reduction initiatives.

Depreciation and amortization expenses decreased $165, or 6.0%, in the third quarter and $377, or 4.6%, for the first nine months of 2014. Depreciation expense decreased $130, or 4.9%, in the third quarter and $270, or 3.5%, for the first nine months of 2014 primarily due to extending the estimated useful life of software, partially offset by ongoing capital spending for network upgrades and expansion. Amortization expense decreased $35, or 34.0%, and $107, or 31.8%, for the first nine months of 2014 primarily due to fully amortized customer lists associated with acquisitions.

29

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

OTHER BUSINESS MATTERS

U-verse Services  As part of Project VIP, we announced a goal to expand our IP-broadband service to approximately 57 million customer locations and we achieved that goal during the third quarter. As of September 30, 2014, we had 12.4 million total U-verse subscribers (high-speed Internet and video), including 12.1 million Internet and 6.1 million video subscribers (subscribers to both services are only counted once in the total).

We believe that our U-verse TV service is a "video service" under the Federal Communications Act. However, some cable providers and municipalities have claimed that certain IP services should be treated as a traditional cable service and therefore subject to the applicable state and local cable regulation. Petitions have been filed at the Federal Communications Commission (FCC) alleging that the manner in which we provision "public, educational and governmental" (PEG) programming over our U-verse TV service conflicts with federal law. If courts having jurisdiction where we have significant deployments of our U-verse services were to decide that federal, state and/or local cable regulation were applicable to our U-verse services, or if the FCC, state agencies or the courts were to rule that we must deliver PEG programming in a manner substantially different from the way we do today or in ways that are inconsistent with our current network architecture, it could have a material adverse effect on the cost and extent of our U-verse offerings.

DIRECTV Acquisition  In May 2014, we announced a merger agreement to acquire DIRECTV in a stock-and-cash transaction for ninety-five dollars per share of DIRECTV's common stock, or approximately $48,500 at the date of announcement. As of September 30, 2014, DIRECTV had approximately $16,852 in net debt based on DIRECTV's financial statements included in its Form 10-Q for the third quarter of 2014. Each DIRECTV shareholder will receive cash of $28.50 per share and $66.50 per share in our stock. The stock portion will be subject to a collar such that DIRECTV shareholders will receive 1.905 AT&T shares if our stock price is below $34.90 per share at closing and 1.724 AT&T shares if our stock price is above $38.58 at closing. If our average stock price (calculated in accordance with the merger agreement with DIRECTV) is between $34.90 and $38.58 at closing, then DIRECTV shareholders will receive a number of shares between 1.724 and 1.905, equal to $66.50 in value. DIRECTV is a premier pay TV provider in the United States and Latin America, with a high-quality customer base, the best selection of programming, the best technology for delivering and viewing high-quality video on any device and the best customer satisfaction among major U.S. cable and satellite TV providers.

The merger agreement was adopted by DIRECTV's stockholders on September 25, 2014 and remains subject to review by the FCC and the Department of Justice and to other closing conditions. It is also a condition that all necessary consents by certain foreign governmental entities have been obtained and are in full force and effect. The transaction is expected to close in the first half of 2015. The merger agreement provides certain mutual termination rights for us and DIRECTV, including the right of either party to terminate the agreement if the merger is not consummated by May 18, 2015, subject to extension in certain cases to a date no later than November 13, 2015. Either party may also terminate the agreement if an order permanently restraining, enjoining, or otherwise prohibiting consummation of the merger becomes final and nonappealable. In September 2014, DIRECTV and the National Football League renewed their agreement for the "NFL Sunday Ticket" service substantially on the terms discussed between AT&T and DIRECTV, satisfying one of the conditions to closing the merger. Under certain circumstances relating to a competing transaction, DIRECTV may be required to pay a termination fee to us in connection with or following a termination of the agreement.

Based on synergies we expect to realize with the acquisition, we have also committed to the following upon closing of the transaction: (1) expanding and enhancing our deployment of both wireline and fixed wireless broadband to at least 15 million customer locations across 48 states, with most of the locations in underserved rural areas, (2) adhering to the FCC's Open Internet protections established in 2010 for three years after closing, regardless of whether the FCC re-establishes such protections for other industry participants following the D.C. Circuit's vacating of those rules, (3) for three years after closing, offering standalone retail broadband Internet access service at reasonable market-based prices, including a service of at least 6 Mbps down (where feasible) at guaranteed prices, in areas where we offer wireline broadband service today, and (4) offering, for three years after closing, standalone DIRECTV satellite video service at nationwide package prices that do not differ between customers in AT&T's wireline footprint and customers outside our current 22-state wireline footprint.

30

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

GSF Telecom Acquisition  On November 7, 2014, we entered into an agreement to acquire 100 percent of the stock of Mexican wireless company GSF Telecom Holdings, S.A.P.I. de C.V. (GSF Telecom) for $2,500, less net debt at closing, which was approximately $700 at announcement. GSF Telecom offers service under both the Iusacell and Unefon brand names in Mexico with a network that covers about 70 percent of Mexico's population of approximately 120 million. Under the terms of the purchase agreement, we will acquire all of GSF Telecom's wireless properties, including licenses, network assets, retail stores and about 8.6 million subscribers. The acquisition will occur after Grupo Salinas, the current owner of 50 percent of GSF Telecom, closes its announced purchase of the other 50 percent of GSF Telecom it does not own today. The purchase is subject to review by the Mexican Federal Telecommunications Institute and the Mexican National Foreign Investment Commission. We expect to close the purchase during the first quarter of 2015, subject to customary closing conditions.

Spectrum Acquisitions  On September 3, 2014, we completed our acquisition of 49 Advanced Wireless Services (AWS) spectrum licenses, covering nearly 50 million people in 14 states, from Aloha Partners II, L.P., for approximately $804 in cash.

Connecticut Wireline Disposition  In December 2013, we agreed to sell our incumbent local exchange operations in Connecticut to Frontier Communications Corporation for $2,000 in cash. The transaction was approved by the FCC in July 2014 and was approved by the Connecticut Public Utilities Regulatory Authority on October 15, 2014. The transaction closed on October 24, 2014. We anticipate the cash tax impact of the transaction will be partially offset by the availability of capital losses.

Federal Trade Commission Litigation  On October 28, 2014, the Federal Trade Commission (FTC) filed a civil suit against AT&T Mobility, LLC seeking injunctive relief and unspecified money damages under Section 5 of the Federal Trade Commission Act. The FTC's allegations concern AT&T's Maximum Bit Rate ("MBR") program, which temporarily reduces the download speeds of a small portion of our Unlimited Data Plan customers each month. MBR is an industry-standard practice that is authorized by the FCC and designed to affect only the most data-intensive applications (such as video streaming). Texts, emails, tweets, social media posts, internet browsing, and many other applications are typically unaffected. Contrary to the FTC's allegations, which we vigorously dispute, our MBR program is permitted by our customer contracts, was fully disclosed in advance to our Unlimited Data Plan customers, and was implemented to protect the network for the benefit of all customers.

Environmental  In 2012, AT&T Mobility entered into an administrative settlement with the U.S. Environmental Protection Agency (EPA) regarding alleged violations of federal environmental statutes in connection with management of back-up power systems at AT&T Mobility facilities. As part of the settlement, we are required to audit our compliance at over 1,300 facilities and to pay stipulated penalties for any violations discovered by those audits. At this time, it is probable that as a result of these audits, we will face civil penalties in excess of one hundred thousand dollars but not in an amount that would be material.

In December 2011, Harris County, Texas brought suit on behalf of itself and the Texas Commission on Environmental Quality (TCEQ) alleging AT&T to be liable for statutory civil penalties for past leakage at eleven petroleum storage tank locations. All eleven sites have been remediated (with de minimis actual impact) in accordance with state programs and the TCEQ has issued No Further Action letters closing the sites. Notwithstanding these facts, Harris County declined to dismiss its claims. In September 2014, the parties agreed to settle the case for an immaterial amount in civil penalties.

COMPETITIVE AND REGULATORY ENVIRONMENT

Overview  AT&T subsidiaries operating within the United States are subject to federal and state regulatory authorities. AT&T subsidiaries operating outside the United States are subject to the jurisdiction of national and supranational regulatory authorities in the markets where service is provided, and regulation is generally limited to operational licensing authority for the provision of services to enterprise customers.

In the Telecommunications Act of 1996 (Telecom Act), Congress established a national policy framework intended to bring the benefits of competition and investment in advanced telecommunications facilities and services to all Americans by opening all telecommunications markets to competition and reducing or eliminating regulatory burdens that harm consumer welfare. However, since the Telecom Act was passed, the FCC and some state regulatory commissions have maintained or expanded certain regulatory requirements that were imposed decades ago on our traditional wireline subsidiaries when they operated as legal monopolies. We are pursuing, at both the state and federal levels, additional legislative and regulatory measures to reduce regulatory burdens that are no longer appropriate in a competitive telecommunications market and that inhibit our ability to compete more effectively and offer services wanted and needed by our customers, including initiatives to transition services from traditional networks to all IP-based networks. At the same time, we also seek to ensure that legacy regulations are not extended to broadband or wireless services, which are subject to vigorous competition.

31

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

In addition, states representing a majority of our local service access lines have adopted legislation that enables new video entrants to acquire a single statewide or state-approved franchise (as opposed to the need to acquire hundreds or even thousands of municipal-approved franchises) to offer competitive video services. We also are supporting efforts to update and improve regulatory treatment for retail services. Regulatory reform and passage of legislation is uncertain and depends on many factors.

We provide wireless services in robustly competitive markets, but those services are subject to substantial and increasing governmental regulation. Wireless communications providers must obtain licenses from the FCC to provide communications services at specified spectrum frequencies within specified geographic areas and must comply with the FCC rules and policies governing the use of the spectrum. While wireless communications providers' prices and service offerings are generally not subject to state regulation, states sometimes attempt to regulate or legislate various aspects of wireless services, such as in the area of consumer protection.

The FCC has recognized that the explosive growth of bandwidth-intensive wireless data services requires the U.S. Government to make more spectrum available. In February 2012, Congress set forth specific spectrum blocks to be auctioned and licensed by February 2015 (the "AWS-3 Auction"), and also authorized the FCC to conduct an "incentive auction," to make available for wireless broadband use certain spectrum that is currently used by broadcast television licensees (the "600 MHz Auction"). On September 12, 2014, AT&T submitted an application to participate in the AWS auction. The FCC has initiated proceedings to establish rules that would govern these auctions. The AWS-3 Auction is expected to begin in the second half of 2014. The FCC recently announced that the 600 MHz Auction has been postponed until 2016. Due to the FCC's rules restricting communications regarding auction strategy, we will not disclose our financial plans for the auctions during the quiet period for these auctions, unless legally required.

In May 2014, in a separate proceeding, the FCC issued an order revising its policies governing mobile spectrum holdings. The FCC rejected the imposition of caps on the amount of spectrum any carrier could acquire, retaining its case by case review policy. Moreover, it increased the amount of spectrum that could be acquired before exceeding an aggregation "screen" that would automatically trigger closer scrutiny of a proposed transaction. On the other hand, it indicated that it will separately consider an acquisition of "low band" spectrum that exceeds one third of the available low band spectrum as presumptively harmful to competition. In addition, the FCC imposed limits on certain bidders in the 600 MHz Auction, including AT&T, restricting them from bidding on up to 40 percent of the available spectrum in the incentive auction in markets that cover as much as 70-80 percent of the U.S. population. On balance, the order and the new spectrum screen should allow AT&T to obtain additional spectrum to meet our customers' needs, but because AT&T uses more "low band" spectrum in its network than some other national carriers, the separate consideration of low band spectrum acquisitions might affect AT&T's ability to expand capacity in these bands ("low band" spectrum has better propagation characteristics than "high band" spectrum). We seek to ensure that we have the opportunity, through the auction process and otherwise, to obtain the spectrum we need to provide our customers with high-quality service in the future.

Due to substantial increases in the demand for wireless service in the United States, AT&T is facing significant spectrum and capacity constraints on its wireless network in certain markets. We expect such constraints to increase and expand to additional markets in the coming years. While we are continuing to invest significant capital in expanding our network capacity, our capacity constraints could affect the quality of existing data and voice services and our ability to launch new, advanced wireless broadband services, unless we are able to obtain more spectrum. Any long-term spectrum solution will require that the FCC make new or existing spectrum available to the wireless industry to meet the expanding needs of our subscribers. We will continue to attempt to address spectrum and capacity constraints on a market-by-market basis.

32

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Net Neutrality  In January 2014, the D.C. Circuit released its decision on Verizon's appeal of the FCC's Net Neutrality rules. Those rules prohibited providers of fixed, mass market Internet access service from blocking access to lawful content, applications, services or non-harmful devices. The rules prohibited providers of mobile broadband Internet access service from blocking consumers from accessing lawful websites or applications that compete with the provider's own voice or video telephony services. The rules also imposed transparency requirements on providers of both fixed and mobile broadband Internet access services, requiring public disclosure of information regarding network management practices, performance and commercial terms of their service offerings. In addition, the rules prohibited providers of fixed (but not mobile) broadband Internet access service from unreasonably discriminating in their transmission of lawful network traffic.

In its decision, the court found the FCC had authority under section 706 of the Act (which directs the FCC and state commissions to promote broadband deployment) to adopt rules designed to preserve the open Internet, but vacated and remanded the antidiscrimination and no-blocking rules on the ground that they impermissibly imposed common carrier regulation on broadband Internet access service. The court held that, having declared broadband Internet access services to be information services, the FCC could not regulate them as telecommunications services. The court did not vacate the transparency rules. 

The invalidation of the no-blocking and antidiscrimination rules means that broadband Internet access providers have greater flexibility in their provision of mass market services. However, the court's finding that section 706 provides the FCC independent authority to adopt rules to promote broadband deployment appears to give the FCC broad authority to regulate the Internet and, more generally, IP-based services, provided the FCC finds such regulation promotes deployment of broadband infrastructure. In addition, because section 706(a) grants authority to both the FCC and the states to adopt rules to promote broadband deployment, states could attempt to rely on that provision to regulate broadband services, although the states' authority to do so appears to be narrower than the FCC's. In May 2014, the FCC released a notice of proposed rulemaking in response to the D.C. Circuit's January decision that also asks wide-ranging questions that appear to re-open settled issues. Most significantly, the Commission asks whether it has sufficient authority under section 706 to reestablish protections against discrimination and blocking on broadband Internet access services or whether it needs to reclassify broadband Internet access service as a telecommunications service to achieve its regulatory goals. If the FCC were to reclassify broadband as a telecommunications service, or the FCC and/or the states were to impose additional regulation of the Internet or broadband services, it could have a material adverse impact on our broadband services and operating results.

Intercarrier Compensation/Universal Service  In October 2011, the FCC adopted an order fundamentally overhauling its high-cost universal service program, through which it disburses approximately $4,500 per year to carriers providing telephone service in high-cost areas, and its existing intercarrier compensation (ICC) rules, which govern payments between carriers for the exchange of traffic. The order adopts rules to address immediately certain practices that artificially increase ICC payments, as well as other practices to avoid such payments. The order also establishes a new ICC regime that will result in the elimination of virtually all terminating switched access charges and reciprocal compensation payments over a six-year transition. In the order, the FCC also repurposed its high-cost universal service program to encourage providers to deploy broadband facilities in unserved areas. To accomplish this goal, the FCC is transitioning support amounts disbursed through its existing high-cost program to its new Connect America Fund (CAF). In 2013, the FCC awarded us approximately $100 in new CAF funding to deploy broadband in unserved areas. In May 2014, the United States Court of Appeals for the Tenth Circuit denied all challenges to the universal service and intercarrier compensation rules adopted in the 2011 order. It subsequently denied two petitions for rehearing of discrete aspects of that decision. We do not expect the FCC's rules to have a material impact on our operating results.

33

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

LIQUIDITY AND CAPITAL RESOURCES

We had $2,458 in cash and cash equivalents available at September 30, 2014. Cash and cash equivalents included cash of $1,324 and money market funds and other cash equivalents of $1,134. We also had $1,890 in short-term cash investments, which we included in "Other current assets" on our consolidated balance sheet. In the first nine months of 2014, cash inflows were primarily provided by cash receipts from operations and long-term debt issuances, with additional cash from the monetization of our investment in América Móvil and other assets. These inflows were largely offset by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, funding capital expenditures, dividends to stockholders, debt redemptions, stock repurchases and the acquisition of wireless spectrum and operations. We discuss many of these factors in detail below.

Cash Provided by or Used in Operating Activities

During the first nine months of 2014, cash provided by operating activities was $25,593, compared to $26,879 for the first nine months of 2013. Lower operating cash flows in 2014 were primarily due to increased inventory levels, retirement benefit funding and wireless device financing related to our AT&T Next program, which results in cash collection over the installment period instead of at the time of sale. In June 2014, we entered into uncommitted agreements to periodically sell certain equipment installment receivables for cash and future consideration (see Note 8 for details). Proceeds from the sale of equipment installment receivables, which we included in our operating cash flows, and the timing of working capital payments partially offset the decline in operating cash flows. We expect lower cash from operations in 2014 as our AT&T Next program continues to gain popularity with customers and as we incur Leap and other wireless integration costs and DIRECTV merger costs.

Cash Used in or Provided by Investing Activities

For the first nine months of 2014, cash used in investing activities totaled $14,980 and consisted primarily of $16,829 for capital expenditures, excluding interest during construction, $1,996 in short-term investments ($1,890 of which are time deposits greater than 90 days), and $2,053 for the acquisitions of spectrum, Leap and other operations. These expenditures were partially offset by cash receipts of approximately $5,885 from the sale of our shares in América Móvil.

Virtually all of our capital expenditures are spent on our wireless and wireline networks, our U-verse services and support systems for our communications services. Capital expenditures, excluding interest during construction, increased $1,264 in the first nine months. Our Wireless segment represented 54% of our total spending and increased10% in the first nine months. The Wireline segment, which includes U-verse services, represented 46% of the total capital expenditures and increased 6% in the first nine months, primarily reflecting our ongoing implementation of Project VIP.

We continue to expect our capital expenditures during 2014 to be in the $21,000 range. We expect 2014 to be our peak investment year for Project VIP and anticipate our Wireless and Wireline segments' spend to be proportionally consistent to 2013. We expect our 2015 capital expenditures for our existing businesses to be in the $18,000 range.

On October 24, 2014, we completed the sale of our Connecticut operations for approximately $2,000 in cash.

34

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

Cash Used in or Provided by Financing Activities

For the first nine months of 2014, cash used in financing activities totaled $11,494 and included net proceeds of $8,564 from the following long-term debt issuances:

· March 2014 issuance of $1,100 of 2.300% global notes due 2019, $1,000 of 3.900% global notes due 2024 and $400 of floating rate global notes due 2019. The floating rate for the notes is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 67 basis points.

· March 2014 issuance of $500 of floating rate global notes due 2017. The floating rate for the notes is based upon the three-month LIBOR, reset quarterly, plus 42 basis points.

· May 2014 draw of $750 on a private financing agreement with Export Development Canada due 2017. The agreement is designed to encourage the purchase of Canadian-sourced equipment. The agreement contains terms similar to that provided under our revolving credit arrangements, discussed below.

· June 2014 issuance of $2,000 of 4.800% global notes due 2044.

· June 2014 issuance of €1,600 (equivalent to $2,181 when issued) of 2.400% global notes due 2024 and €500 (equivalent to $681 when issued) of 3.375% global notes due 2034.

For the first nine months of 2014, we redeemed $10,376 of debt, primarily consisting of the following:

· March 2014 redemption of $1,814 of Cricket Communications, Inc. term loans and approximately $38 of 4.500% Leap convertible senior notes (Leap senior notes) in connection with the Leap acquisition.

· April 2014 redemption of Cricket Communications, Inc. 7.750% senior notes with a face value of $1,600 in connection with the Leap acquisition.

· July 2014 redemption of $4,393 of debt consisting of all of the outstanding BellSouth 5.200% notes due 2014, AT&T 0.875% global notes due 2015, AT&T 5.625% global notes due 2016, and BellSouth 5.200% notes due 2016 as well as $750 in principal amount of the outstanding AT&T 2.500% global notes due 2015.

· July 2014 redemption of the remaining $211 of Leap senior notes in connection with the Leap acquisition.

· September 2014 redemption of $2,250 of SBC Communications Inc. 5.100% global notes due 2014.

Our weighted average interest rate of our long-term debt portfolio was approximately 4.4% as of September 30, 2014, and 4.5% as of December 31, 2013. We had $75,226 of total notes and debentures outstanding at September 30, 2014, which included Euro, British pound sterling and Canadian dollar denominated debt of approximately $19,823.

In October 2014, we initiated approximately $1,300 of Taiwan-based borrowing that will close in November.

In October 2014, we made a refundable deposit with the FCC for the upcoming AWS-3 Auction.

Since the first quarter of 2012, we have been buying back shares of AT&T common stock under three previous 300 million share repurchase authorizations approved by our Board of Directors. During the first nine months of 2014, we repurchased approximately 48 million shares for $1,617. In March 2014, our Board of Directors approved a fourth authorization to repurchase 300 million shares of our common stock, which has no expiration date. As of September 30, 2014, we had approximately 415 million shares remaining from the authorizations. We expect to make future repurchases opportunistically.

We paid dividends of $7,170 during the first nine months of 2014, compared with $7,325 for the first nine months of 2013, primarily reflecting the decline in shares outstanding due to our repurchase activity, partially offset by the increase in the quarterly dividend approved by our Board of Directors in December 2013. Dividends declared by our Board of Directors totaled $0.46 per share in the third quarter and $1.38 per share for the first nine months of 2014 and $0.45 per share in the third quarter and $1.35 per share for the first nine months of 2013. Our dividend policy considers the expectations and requirements of stockholders, capital funding requirements of AT&T and long-term growth opportunities. It is our intent to provide the financial flexibility to allow our Board of Directors to consider dividend growth and to recommend an increase in dividends to be paid in future periods. All dividends remain subject to declaration by our Board of Directors.

35

AT&T INC.

SEPTEMBER 30, 2014

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

Dollars in millions except per share amounts

At September 30, 2014, we had $5,109 of debt maturing within one year, $5,063 of which related to long-term debt issuances. Debt maturing within one year includes the following notes that may be put back to us by the holders:

· $1,000 of annual put reset securities issued by BellSouth that may be put back to us each April until maturity in 2021.

· An accreting zero-coupon note that may be redeemed each May until maturity in 2022. If the zero-coupon note (issued for principal of $500 in 2007) is held to maturity, the redemption amount will be $1,030.

We have two revolving credit agreements with a syndicate of banks: a $5,000 agreement expiring in December 2018 and a $3,000 agreement expiring in December 2017. Advances under either agreement may be used for general corporate purposes. Advances are not conditioned on the absence of a material adverse change. All advances must be repaid no later than the date on which lenders are no longer obligated to make any advances under each agreement. Under each agreement, we can terminate, in whole or in part, amounts committed by the lenders in excess of any outstanding advances; however, we cannot reinstate any such terminated commitments. Under each agreement, we must maintain a debt-to-EBITDA, including modifications described in the agreement, ratio of not more than three-to-one as of the last day of each fiscal quarter for the four quarters then ended. Both agreements also contain a negative pledge covenant, which generally provides that if we pledge assets or permit liens on our property, then any advances must also be secured. At September 30, 2014, we had no advances outstanding under either agreement and were in compliance with all covenants under each agreement.

Other

Our total capital consists of debt (long-term debt and debt maturing within one year) and stockholders' equity. Our capital structure does not include any debt issued by YP Holdings and other investees. At September 30, 2014, our debt ratio was 44.8%, compared to 46.9% at September 30, 2013, and 45.0% at December 31, 2013. The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances, debt in connection with acquisitions and stock repurchases.

During 2014, we also received approximately $8,074 from the monetization of various nonstrategic assets, including the sale of our Connecticut operations. A majority of that cash was attributable to sales of our investment in América Móvil and real estate holdings. We plan to continue to explore similar opportunities in the remainder of 2014.

In September 2013, we made a voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the holding company for our wireless business, to the trust used to pay pension benefits under our qualified pension plans. In July 2014, the U.S. Department of Labor (DOL) published in the Federal Register their final retroactive approval of our voluntary contribution.

The preferred equity interest had a value of $9,114 as of September 30, 2014, and$9,104 on the contribution date, does not have any voting rights and has a liquidation value of $8,000. The trust is entitled to receive cumulative cash distributions of $560 per annum, which will be distributed quarterly in equal amounts. We distributed $420 to the trust during the nine months ended September 30, 2014. So long as we make the distributions, the terms of the preferred equity interest will not impose any limitations on our ability to declare a dividend, or repurchase shares.

36

AT&T INC.

SEPTEMBER 30, 2014

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Dollars in millions except per share amounts

At September 30, 2014, we had interest rate swaps with a notional value of $6,550 and a net fair value of $121.

We have fixed-to-fixed cross-currency swaps on foreign-currency-denominated debt instruments with a U.S. dollar notional value of $20,650 to hedge our exposure to changes in foreign currency exchange rates. These derivatives have been designated at inception and qualify as cash flow hedges with a net fair value of $635 at September 30, 2014.

Item 4. Controls and Procedures

The registrant maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed by the registrant is recorded, processed, summarized, accumulated and communicated to its management, including its principal executive and principal financial officers, to allow timely decisions regarding required disclosure, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. The chief executive officer and chief financial officer have performed an evaluation of the effectiveness of the design and operation of the registrant's disclosure controls and procedures as of September 30, 2014. Based on that evaluation, the chief executive officer and chief financial officer concluded that the registrant's disclosure controls and procedures were effective as of September 30, 2014.

37

AT&T INC.

SEPTEMBER 30, 2014

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this report contains forward-looking statements that are subject to risks and uncertainties, and actual results could differ materially. Many of these factors are discussed in more detail in the "Risk Factors" section. We claim the protection of the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.

The following factors could cause our future results to differ materially from those expressed in the forward-looking statements:

· Adverse economic and/or capital access changes in the markets served by us or in countries in which we have significant investments, including the impact on customer demand and our ability and our suppliers' ability to access financial markets at favorable rates and terms.

· Changes in available technology and the effects of such changes, including product substitutions and deployment costs.

· Increases in our benefit plans' costs, including increases due to adverse changes in the United States and foreign securities markets, resulting in worse-than-assumed investment returns and discount rates; adverse changes in mortality assumptions; adverse medical cost trends, and unfavorable or delayed implementation of healthcare legislation, regulations or related court decisions.

· The final outcome of FCC and other federal or state agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limit, intercarrier compensation, interconnection obligations, the transition from legacy technologies to IP-based infrastructure, universal service, broadband deployment, E911 services, competition policy, net neutrality, unbundled network elements and other wholesale obligations, availability of new spectrum from the FCC on fair and balanced terms, and wireless license awards and renewals.

· The final outcome of state and federal legislative efforts involving issues that are important to our business, including deregulation of IP-based services, relief from Carrier of Last Resort obligations, and elimination of state commission review of the withdrawal of services.

· Enactment of additional state, federal and/or foreign regulatory and tax laws and regulations pertaining to our subsidiaries and foreign investments, including laws and regulations that reduce our incentive to invest in our networks, resulting in lower revenue growth and/or higher operating costs.

· Our ability to absorb revenue losses caused by increasing competition, including offerings that use alternative technologies (e.g., cable, wireless and VoIP) and our ability to maintain capital expenditures.

· The extent of competition and the resulting pressure on customer and access line totals and wireline and wireless operating margins.

· Our ability to develop attractive and profitable product/service offerings to offset increasing competition in our wireless and wireline markets.

· The ability of our competitors to offer product/service offerings at lower prices due to lower cost structures and regulatory and legislative actions adverse to us, including state regulatory proceedings relating to unbundled network elements and nonregulation of comparable alternative technologies (e.g., VoIP).

· The continued development of attractive and profitable U-verse service offerings; the extent to which regulatory, franchise fees and build-out requirements apply to this initiative; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.

· Our continued ability to attract and offer a diverse portfolio of wireless service and device financing plans, devices and maintain margins.

· The availability and cost of additional wireless spectrum and regulations and conditions relating to spectrum use, licensing, obtaining additional spectrum, technical standards and deployment and usage, including network management rules.

· Our ability to manage growth in wireless data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.

· The outcome of pending, threatened or potential litigation, including patent and product safety claims by or against third parties.

· The impact on our networks and business from major equipment failures; security breaches related to the network or customer information; our inability to obtain handsets, equipment/software or have handsets, equipment/software serviced in a timely and cost-effective manner from suppliers; or severe weather conditions, natural disasters, pandemics, energy shortages, wars or terrorist attacks.

· The issuance by the Financial Accounting Standards Board or other accounting oversight bodies of new accounting standards or changes to existing standards.

· The issuance by the Internal Revenue Service and/or state tax authorities of new tax regulations or changes to existing standards and actions by federal, state or local tax agencies and judicial authorities with respect to applying applicable tax laws and regulations and the resolution of disputes with any taxing jurisdictions.

· Our pending acquisition of DIRECTV.

· Our ability to adequately fund our wireless operations, including payment for additional spectrum, network upgrades and technological advancements.

· Changes in our corporate strategies, such as changing network requirements or acquisitions and dispositions, which may require significant amounts of cash or stock, to respond to competition and regulatory, legislative and technological developments.

· The uncertainty surrounding further congressional action to address spending reductions, which may result in a significant reduction in government spending and reluctance of businesses and consumers to spend in general and on our products and services specifically, due to this fiscal uncertainty.

Readers are cautioned that other factors discussed in this report, although not enumerated here, also could materially affect our future earnings.

38

AT&T INC.

SEPTEMBER 30, 2014

PART II – OTHER INFORMATION

Dollars in millions except per share amounts

Item 1A. Risk Factors

We discuss in our Annual Report on Form 10-K various risks that may materially affect our business. We use this section to update this discussion to reflect material developments since our Form 10-K was filed. The additional Risk Factor below reflects our pending acquisition of DIRECTV (See "Other Business Matters").

The impact of our pending acquisition of DIRECTV, including our ability to obtain governmental approvals on favorable terms including any required divestitures; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the acquisition may not be fully realized or may take longer to realize than expected; our costs in financing the acquisition and potential adverse effects on our share price and dividend amount due to the issuance of additional shares; the addition of DIRECTV's existing debt to our balance sheet; disruption from the acquisition making it more difficult to maintain relationships with customers, employees or suppliers; and competition and its effect on pricing, spending, third party relationships and revenues.

We have agreed to acquire DIRECTV for approximately $48,500. We believe that the acquisition will give us the scale, resources and ability to deploy video technology to more customers than otherwise possible and to provide an integrated bundle of broadband, video and wireless services enabling us to compete more effectively against cable operators as well as other technology, media and communications companies. In addition, we believe the acquisition will result in cost savings, especially in the area of video content costs, and other potential synergies, enabling us to expand and enhance our broadband deployment and provide more video options across multiple fixed and mobile devices.

Achieving these results will depend upon obtaining governmental approvals on favorable terms within the time limits contemplated by the parties. Delays in closing, including as a result of delays in obtaining regulatory approval could divert attention from ongoing operations on the part of management and employees, adversely affecting customers and suppliers and therefore revenues. If such approvals are obtained and the transaction is consummated, then we must integrate a large number of video network and other operational systems and administrative systems, which may involve significant management time and create uncertainty for employees, customers and suppliers. The integration process may also result in significant expenses and charges against earnings, both cash and noncash. While we have successfully merged large companies into our operations in the past, delays in the process could have a material adverse effect on our revenues, expenses, operating results and financial condition. This acquisition also will increase the amount of debt on our balance sheet (both from DIRECTV's debt and the indebtedness needed to pay a portion of the purchase price) leading to additional interest expense and, due to additional shares being issued, will result in additional cash being required for any dividends declared. Both of these factors could put pressure on our financial flexibility to continue capital investments, develop new services and declare future dividends. In addition, events outside of our control, including changes in regulation and laws as well as economic trends, could adversely affect our ability to realize the expected benefits from this acquisition.

39

AT&T INC.

SEPTEMBER 30, 2014

PART II – OTHER INFORMATION

Dollars in millions except per share amounts

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(c) A summary of our repurchases of common stock during the third quarter of 2014 is as follows:
Period	(a) Total Number of Shares (or Units) Purchased1,2		(b) Average Price Paid Per Share (or Unit)			(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs1		(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) That May Yet Be Purchased Under The Plans or Programs
July 1, 2014 - July 31, 2014		5,205,380		$	35.57		5,200,000		415,550,000
August 1, 2014 - August 31, 2014		1,004,945			35.67		1,000,000		414,550,000
September 1, 2014 - September 30, 2014		3,379			-		-		414,550,000
Total		6,213,704		$	35.58		6,200,000
1 In March 2014, our Board of Directors approved a fourth authorization to repurchase up to 300 million shares of our common stock. In March 2013, our Board of Directors approved a third authorization to repurchase up to an additional 300 million   shares of our common stock.
The authorizations have no expiration date.
2 Of the shares repurchased, 13,704 shares were acquired through the withholding of taxes on the vesting of restricted stock or through the payment in stock of taxes on the exercise price of options.

40

AT&T INC.

SEPTEMBER 30, 2014

Item 6. Exhibits

Exhibits identified in parentheses below, on file with the Securities and Exchange Commission, are incorporated by reference as exhibits hereto. Unless otherwise indicated, all exhibits so incorporated are from File No. 1-8610.

12	Computation of Ratios of Earnings to Fixed Charges
31	Rule 13a-14(a)/15d-14(a) Certifications 31.1Certification of Principal Executive Officer 31.2Certification of Principal Financial Officer
32	Section 1350 Certifications
101	XBRL Instance Document

41

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

        November 10, 2014 AT&T Inc.       /s/ John J. Stephens John J. Stephens Senior Executive Vice President     and Chief Financial Officer

42

EX-12

													EXHIBIT 12
AT&T INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in Millions
	Nine Months Ended
	September 30,				Year Ended December 31,
	(Unaudited)
	2014		2013		2013		2012		2011		2010		2009
Earnings:
Income from continuing operations before income taxes	$	16,183	$	16,624	$	27,777	$	10,439	$	6,716	$	18,238	$	18,518
Equity in net income of affiliates included above		(188)		(494)		(642)		(752)		(784)		(762)		(734)
Fixed charges		4,004		3,598		5,452		4,876		4,835		4,723		5,012
Distributed income of equity affiliates		143		262		318		137		161		161		317
Interest		(178)		(213)		(284)		(263)		(162)		(772)		(740)
Earnings, as adjusted	$	19,964	$	19,777	$	32,621	$	14,437	$	10,766	$	21,588	$	22,373
Fixed Charges:
Interest expense	$	2,757	$	2,481	$	3,940	$	3,444	$	3,535	$	2,994	$	3,368
Interest capitalized		178		213		284		263		162		772		740
Portion of rental expense representative of interest factor		1,069		904		1,228		1,169		1,138		957		904
Fixed Charges	$	4,004	$	3,598	$	5,452	$	4,876	$	4,835	$	4,723	$	5,012
Ratio of Earnings to Fixed Charges		4.99		5.50		5.98		2.96		2.23		4.57		4.46

EX-31.1

CERTIFICATION

I, Randall Stephenson, certify that:

1. I have reviewed this report on Form 10-Q of AT&T Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2014

/s/ Randall Stephenson..

Randall Stephenson Chairman of the Board,

  Chief Executive Officer and President

EX-31.2

CERTIFICATION

I, John J. Stephens, certify that:

1. I have reviewed this report on Form 10-Q of AT&T Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 10, 2014

/s/ John J. Stephens..

John J. Stephens Senior Executive Vice President

    and Chief Financial Officer

EX-32

Certification of Periodic Financial Reports

Pursuant to 18 U.S.C. Section 1350, each of the undersigned officers of AT&T Inc. (the "Company") hereby certifies that the Company's Quarterly Report on Form 10-Q for the three months ended September 30, 2014 (the "Report") fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 10, 2014 November 10, 2014

                                            .

By:     /s/ Randall Stephenson            Randall Stephenson            Chairman of the Board, Chief Executive Officer                  and President By:     /s/ John J. Stephens            John J. Stephens            Senior Executive Vice President                 and Chief Financial Officer

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document. This certification shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 ("Exchange Act") or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act except to the extent this Exhibit 32 is expressly and specifically incorporated by reference in any such filing.

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to AT&T Inc. and will be retained by AT&T Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Acquisitions, Dispositions And Other Adjustments (Operating Results Of Discontinued Operation) (Details) (Connecticut Wireline [Member], Pending Approval [Member], Disposition [Member], USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Jun. 30, 2014	Dec. 31, 2013
Connecticut Wireline [Member] | Pending Approval [Member] | Disposition [Member]
Assets Held For Sale:
Current assets	$ 122		$ 155
Property, plant and equipment - net	1,388		1,289
Goodwill	799		799
Other assets	18		17
Total assets	2,327		2,260
Liabilities related to assets held for sale:
Current liabilities		125	128
Noncurrent liabilities		478	480
Total liabilities		$ 603	$ 608

XML

Fair Value Measurements And Disclosure (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Fair Value Disclosures [Abstract]
Fixed income investments - maturities less than 1 year	$ 90
Fixed income investments - maturities within 1 to 3 years	285
Fixed income investments - maturities within 3 to 5 years	300
Fixed income investments - maturities for 5 or more years	274
Anticipated reclassification of holding losses during the next 12 months - cash flow hedges	43
Collateral received from counterparty	1,755	1,600
Collateral submitted to counterparty	3	8
Collateral contingently payable to the counterparty	$ 50

XML

Acquisitions, Dispositions And Other Adjustments (Tables)

6 Months Ended

Jun. 30, 2014

Acquisitions, Dispositions And Other Adjustments

Balance Sheet of Disposal Group

	June 30,		December 31,
	2014		2013
Assets held for sale:
Current assets	$	122	$	155
Property, plant and equipment - net		1,388		1,289
Goodwill		799		799
Other assets		18		17
Total assets	$	2,327	$	2,260
Liabilities related to assets held for sale:
Current liabilities	$	125	$	128
Noncurrent liabilities		478		480
Total liabilities	$	603	$	608

XML

Fair Value Measurements And Disclosure (Effect Of Derivatives On The Consolidated Statements Of Income) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Fair Value Hedging Relationships [Member] | Interest Rate Swaps [Member] | Interest expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on interest rate swaps	$ 22	$ (63)	$ 11	$ (87)
Gain (Loss) on long-term debt	(22)	63	(11)	87
Cash Flow Hedging Relationships [Member] | Cross-Currency Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) recognized in accumulated OCI	(160)	184	(149)	325
Cash Flow Hedging Relationships [Member] | Interest Rate Locks [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest income (expense) reclassified from accumulated OCI into income	(11)	(12)	(22)	(23)
Cash Flow Hedging Relationships [Member] | Foreign Exchange Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) recognized in accumulated OCI	$ 0	$ 2	$ (2)	$ 0

XML

Consolidated Statement Of Changes In Stockholders' Equity (Parenthetical) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statements Of Changes In Stockholders' Equity (Unaudited)
Net income attributable to AT&T, per diluted share	$ 0.68	$ 0.71	$ 1.38	$ 1.38
Dividends to stockholders, per share	$ 0.46	$ 0.45	$ 0.92	$ 0.90

XML

Segment Information (Summary Of Operating Revenues And Expenses By Segment) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Segment Reporting Information [Line Items]
Service	$ 29,556	$ 29,852	$ 59,332	$ 59,295
Equipment	3,019	2,223	5,719	4,136
Total segment operating revenues	32,575	32,075	65,051	63,431
Operations and support expenses	22,409	21,391	43,990	42,278
Depreciation and amortization expenses	4,550	4,571	9,167	9,100
Total segment operating expenses	26,959	25,962	53,157	51,378
Segment operating income (loss)	5,616	6,113	11,894	12,053
Interest expense	881	825	1,741	1,652
Equity in net income (loss) of affiliates	102	218	190	403
Other income (expense) - net	1,269	288	1,414	320
Segment income (loss) before income taxes	6,106	5,794	11,757	11,124
Operating Segments [Member] | Wireless [Member]
Segment Reporting Information [Line Items]
Service	15,148	15,370	30,535	30,432
Equipment	2,782	1,921	5,261	3,550
Total segment operating revenues	17,930	17,291	35,796	33,982
Operations and support expenses	11,568	10,770	22,450	20,950
Depreciation and amortization expenses	2,035	1,843	3,966	3,678
Total segment operating expenses	13,603	12,613	26,416	24,628
Segment operating income (loss)	4,327	4,678	9,380	9,354
Interest expense	0	0	0	0
Equity in net income (loss) of affiliates	(29)	(19)	(49)	(37)
Other income (expense) - net	0	0	0	0
Segment income (loss) before income taxes	4,298	4,659	9,331	9,317
Operating Segments [Member] | Wireline [Member]
Segment Reporting Information [Line Items]
Service	14,408	14,482	28,797	28,863
Equipment	229	291	441	565
Total segment operating revenues	14,637	14,773	29,238	29,428
Operations and support expenses	10,700	10,417	21,157	20,752
Depreciation and amortization expenses	2,514	2,722	5,198	5,410
Total segment operating expenses	13,214	13,139	26,355	26,162
Segment operating income (loss)	1,423	1,634	2,883	3,266
Interest expense	0	0	0	0
Equity in net income (loss) of affiliates	0	0	1	1
Other income (expense) - net	0	0	0	0
Segment income (loss) before income taxes	1,423	1,634	2,884	3,267
Consolidation Non-Segment [Member] | Corporate and Other [Member]
Segment Reporting Information [Line Items]
Service	0	0	0	0
Equipment	8	11	17	21
Total segment operating revenues	8	11	17	21
Operations and support expenses	141	204	383	576
Depreciation and amortization expenses	1	6	3	12
Total segment operating expenses	142	210	386	588
Segment operating income (loss)	(134)	(199)	(369)	(567)
Interest expense	881	825	1,741	1,652
Equity in net income (loss) of affiliates	131	237	238	439
Other income (expense) - net	1,269	288	1,414	320
Segment income (loss) before income taxes	$ 385	$ (499)	$ (458)	$ (1,460)

XML

Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance	$ 7,880	$ 5,236
Other comprehensive income (loss) before reclassification, net of tax	(34)	179
Amounts reclassifed from accumulated OCI, net of tax	5	(308)
Net other comprehensive income (loss), net of tax	(29)	(129)
Accumulated other comprehensive income, ending balance	7,851	5,107
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance	(367)	(284)
Other comprehensive income (loss) before reclassification, net of tax	5	(117)
Amounts reclassifed from accumulated OCI, net of tax	416	34
Net other comprehensive income (loss), net of tax	421	(83)
Accumulated other comprehensive income, ending balance	54	(367)
Net Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance	450	272
Other comprehensive income (loss) before reclassification, net of tax	59	86
Amounts reclassifed from accumulated OCI, net of tax	(14)	(10)
Net other comprehensive income (loss), net of tax	45	76
Accumulated other comprehensive income, ending balance	495	348
Net Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance	445	(110)
Other comprehensive income (loss) before reclassification, net of tax	(98)	210
Amounts reclassifed from accumulated OCI, net of tax	21	15
Net other comprehensive income (loss), net of tax	(77)	225
Accumulated other comprehensive income, ending balance	368	115
Defined Benefit Postretirement Plans [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance	7,352	5,358
Other comprehensive income (loss) before reclassification, net of tax	0	0
Amounts reclassifed from accumulated OCI, net of tax	(418)	(347)
Net other comprehensive income (loss), net of tax	(418)	(347)
Accumulated other comprehensive income, ending balance	$ 6,934	$ 5,011

XML

Segment Information (Summary Of Operating Revenues And Expenses By Segment) (Narrative) (Details)	6 Months Ended
	Jun. 30, 2014
Business Segment Transaction [Abstract]
Number of Reportable Segments	2

XML

Pension And Postretirement Benefits (Narrative) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	1 Months Ended	3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 09, 2013	Jul. 31, 2014	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2014
Pension And Postretirement Benefits
Combined net pension and postretirement cost increase (decrease)			$ (163)		$ (326)
Net supplemental retirement pension benefits costs			29	28	58	55
Net supplemental retirement pension benefits costs - interest cost			28	26	55	51
Pension Contribution Date	Sep. 09, 2013
Required contribution to our pension plans			280				560
Value of entity's noncash contribution to it's defined benefit plans			$ 9,187		$ 9,187
Voluntary Pension Contribution Department Of Labor Exemption Final Approval Date		2014-07

XML

Consolidated Statement Of Changes In Stockholders' Equity (USD $) In Millions	Total	Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income Attributable to AT&T, net of tax [Member]	Noncontrolling Interest [Member]
Balance at beginning of year at Dec. 31, 2013	$ 91,482	$ 6,495	$ 91,091	$ 31,141	$ (45,619)	$ 7,880	$ 494
Balance at beginning of year (in shares) at Dec. 31, 2013		6,495			(1,269)
Issuance of stock		0
Issuance of stock (in shares)		0
Repurchase of common stock					(1,396)
Repurchase of common stock (in shares)					(42)
Issuance of treasury stock			4		190
Issuance of treasury stock, (in shares)					7
Share-based payments			(34)
Change related to acquisition of interests held by noncontrolling owners			(4)
Net income attributable to AT&T ($1.38 per diluted share)	7,199			7,199
Dividends to stockholders ($0.92 per share)				(4,786)
Other comprehensive income (loss) attributable to AT&T	(29)					(29)
Net income attributable to noncontrolling interest	156						156
Distributions							(158)
Translation adjustments attributable to noncontrolling interest, net of taxes	1						1
Balance at end of period at Jun. 30, 2014	$ 92,625	$ 6,495	$ 91,057	$ 33,554	$ (46,825)	$ 7,851	$ 493
Balance at end of period (in shares) at Jun. 30, 2014		6,495			(1,304)

XML

Pension And Postretirement Benefits (Pension And Postretirement Benefit Costs Included In Operating Expenses) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Defined Benefit Plan Disclosure [Line Items]
Net (credit) cost	$ (32)	$ 131	$ (65)	$ 261
Pension Benefit Cost [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the period	282	330	564	660
Interest cost on benefit obligation	662	607	1,323	1,214
Expected return on assets	(851)	(828)	(1,700)	(1,656)
Amortization of prior service (credit)	(23)	(23)	(47)	(46)
Net (credit) cost	70	86	140	172
Postretirement Benefit Cost [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the period	58	96	116	191
Interest cost on benefit obligation	364	389	729	779
Expected return on assets	(162)	(178)	(326)	(356)
Amortization of prior service (credit)	(362)	(262)	(724)	(525)
Net (credit) cost	$ (102)	$ 45	$ (205)	$ 89

XML

Sale Of Equipment Installment Receivables (Narrative) (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended	6 Months Ended
	Jun. 27, 2014	Jun. 30, 2014
Deferred Purchase Price [Member]
Changes In Other Assets [Line Items]
Deferred purchase price recorded from sale of receivables	$ 565
Finance Receivables [Member]
Changes In Other Assets [Line Items]
Equipment installment sales - maximum installment period (in months)		0 years 24 months 0 days
Total equipment installment receivable included on our consolidated balance sheets (in millions)		2,427
Agreement Date - Sale of Equipment Installment Receivables	Jun. 27, 2014
Maximum amount expected to be funded at any given time (in millions)	2,000
Receivables sold during period (in millions)	1,637
Cash proceeds from sale of receivables	819
Finance Receivables, Net [Member]
Changes In Other Assets [Line Items]
Receivables sold during period (in millions)	$ 1,391

XML

Consolidated Statements Of Income (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statements Of Income (Unaudited)
Operating Revenues	$ 32,575	$ 32,075	$ 65,051	$ 63,431
Operating Expenses
Cost of services and sales (exclusive of depreciation and amortization shown separately below)	14,212	13,270	27,533	25,824
Selling, general and administrative	8,197	8,121	16,457	16,454
Depreciation and amortization	4,550	4,571	9,167	9,100
Total operating expenses	26,959	25,962	53,157	51,378
Operating Income	5,616	6,113	11,894	12,053
Other Income (Expense)
Interest expense	(881)	(825)	(1,741)	(1,652)
Equity in net income (loss) of affiliates	102	218	190	403
Other income (expense) - net	1,269	288	1,414	320
Total other income (expense)	490	(319)	(137)	(929)
Income Before Income Taxes	6,106	5,794	11,757	11,124
Income tax expense	2,485	1,914	4,402	3,471
Net Income	3,621	3,880	7,355	7,653
Less: Net Income Attributable to Noncontrolling Interest	(74)	(58)	(156)	(131)
Net Income Attributable to AT&T	$ 3,547	$ 3,822	$ 7,199	$ 7,522
Basic Earnings Per Share Attributable to AT&T	$ 0.68	$ 0.71	$ 1.38	$ 1.38
Diluted Earnings Per Share Attributable to AT&T	$ 0.68	$ 0.71	$ 1.38	$ 1.38
Weighted Average Number of Common Shares Outstanding - Basic (in millions)	5,204	5,381	5,213	5,446
Weighted Average Number of Common Shares Outstanding - with Dilution (in millions)	5,220	5,397	5,229	5,463
Dividends Declared Per Common Share	$ 0.46	$ 0.45	$ 0.92	$ 0.90

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Consolidated Balance Sheets (Unaudited)
Allowances for doubtful accounts	$ 461	$ 483
Common stock, par value	$ 1	$ 1
Common stock, authorized	14,000,000,000	14,000,000,000
Common stock, issued	6,495,231,088	6,495,231,088
Treasury stock, held	1,304,409,511	1,268,914,913

XML

Fair Value Measurements And Disclosure (Fair Value Leveling) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	$ 203	$ 191
Liability Derivatives (at fair value)		(7)
Cross-Currency Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	2,011	1,951
Liability Derivatives (at fair value)	(503)	(519)
Domestic Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	1,113	1,049
International Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	566	563
Fixed Income Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	949	759
Level 1 [Member] | Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	0	0
Liability Derivatives (at fair value)		0
Level 1 [Member] | Cross-Currency Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	0	0
Liability Derivatives (at fair value)	0	0
Level 1 [Member] | Domestic Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	1,113	1,049
Level 1 [Member] | International Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	566	563
Level 1 [Member] | Fixed Income Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	0	0
Level 2 [Member] | Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	203	191
Liability Derivatives (at fair value)		(7)
Level 2 [Member] | Cross-Currency Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	2,011	1,951
Liability Derivatives (at fair value)	(503)	(519)
Level 2 [Member] | Domestic Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	0	0
Level 2 [Member] | International Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	0	0
Level 2 [Member] | Fixed Income Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	949	759
Level 3 [Member] | Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	0	0
Liability Derivatives (at fair value)		0
Level 3 [Member] | Cross-Currency Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	0	0
Liability Derivatives (at fair value)	0	0
Level 3 [Member] | Domestic Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	0	0
Level 3 [Member] | International Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	0	0
Level 3 [Member] | Fixed Income Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)	$ 0	$ 0

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Information

Summary Of Operating Revenues And Expenses By Segment

For the three months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,148	$	14,408	$	-	$	29,556
Equipment		2,782		229		8		3,019
Total segment operating revenues		17,930		14,637		8		32,575
Operations and support expenses		11,568		10,700		141		22,409
Depreciation and amortization expenses		2,035		2,514		1		4,550
Total segment operating expenses		13,603		13,214		142		26,959
Segment operating income (loss)		4,327		1,423		(134)		5,616
Interest expense		-		-		881		881
Equity in net income (loss) of affiliates		(29)		-		131		102
Other income (expense) – net		-		-		1,269		1,269
Segment income before income taxes	$	4,298	$	1,423	$	385	$	6,106
For the six months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,535	$	28,797	$	-	$	59,332
Equipment		5,261		441		17		5,719
Total segment operating revenues		35,796		29,238		17		65,051
Operations and support expenses		22,450		21,157		383		43,990
Depreciation and amortization expenses		3,966		5,198		3		9,167
Total segment operating expenses		26,416		26,355		386		53,157
Segment operating income (loss)		9,380		2,883		(369)		11,894
Interest expense		-		-		1,741		1,741
Equity in net income (loss) of affiliates		(49)		1		238		190
Other income (expense) – net		-		-		1,414		1,414
Segment income (loss) before income taxes	$	9,331	$	2,884	$	(458)	$	11,757
For the three months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,370	$	14,482	$	-	$	29,852
Equipment		1,921		291		11		2,223
Total segment operating revenues		17,291		14,773		11		32,075
Operations and support expenses		10,770		10,417		204		21,391
Depreciation and amortization expenses		1,843		2,722		6		4,571
Total segment operating expenses		12,613		13,139		210		25,962
Segment operating income (loss)		4,678		1,634		(199)		6,113
Interest expense		-		-		825		825
Equity in net income (loss) of affiliates		(19)		-		237		218
Other income (expense) – net		-		-		288		288
Segment income (loss) before income taxes	$	4,659	$	1,634	$	(499)	$	5,794
For the six months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,432	$	28,863	$	-	$	59,295
Equipment		3,550		565		21		4,136
Total segment operating revenues		33,982		29,428		21		63,431
Operations and support expenses		20,950		20,752		576		42,278
Depreciation and amortization expenses		3,678		5,410		12		9,100
Total segment operating expenses		24,628		26,162		588		51,378
Segment operating income (loss)		9,354		3,266		(567)		12,053
Interest expense		-		-		1,652		1,652
Equity in net income (loss) of affiliates		(37)		1		439		403
Other income (expense) – net		-		-		320		320
Segment income (loss) before income taxes	$	9,317	$	3,267	$	(1,460)	$	11,124

XML

Fair Value Measurements And Disclosure (Notional Amount Of Our Outstanding Derivative Positions) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	$ 27,000	$ 22,537
Interest Rate Swaps [Member]
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	6,350	4,750
Cross-Currency Swaps [Member]
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	$ 20,650	$ 17,787

XML

Fair Value Measurements And Disclosure (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Long-Term Debt And Other Financial Instruments

	June 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Notes and debentures	$	83,548	$	91,833	$	74,484	$	79,309
Commercial paper		150		150		20		20
Bank borrowings		5		5		1		1
Investment securities		2,708		2,708		2,450		2,450

Fair Value Leveling

		June 30, 2014
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,113	$	-	$	-	$	1,113
International equities			566		-		-		566
Fixed income bonds			-		949		-		949
Asset Derivatives1
Interest rate swaps			-		203		-		203
Cross-currency swaps			-		2,011		-		2,011
Liability Derivatives1
Cross-currency swaps			-		(503)		-		(503)
		December 31, 2013
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,049	$	-	$	-	$	1,049
International equities			563		-		-		563
Fixed income bonds			-		759		-		759
Asset Derivatives1
Interest rate swaps			-		191		-		191
Cross-currency swaps			-		1,951		-		1,951
Liability Derivatives1
Interest rate swaps			-		(7)		-		(7)
Cross-currency swaps			-		(519)		-		(519)
1	Derivatives designated as hedging instruments are reflected as Other assets, Other noncurrent liabilities and, for a portion of interest
	rate swaps, Other current assets.

Notional Amount Of Outstanding Derivative Positions

	June 30,		December 31,
	2014		2013
Interest rate swaps	$	6,350	$	4,750
Cross-currency swaps		20,650		17,787
Total	$	27,000	$	22,537

Effect Of Derivatives On The Consolidated Statements Of Income

Following is the related hedged items affecting our financial position and performance:
Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	22	$	(63)	$	11	$	(87)
Gain (Loss) on long-term debt		(22)		63		(11)		87

Cash Flow Hedging Relationships	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	(160)	$	184	$	(149)	$	325
Interest rate locks:
Interest income (expense) reclassified from accumulated OCI into income		(11)		(12)		(22)		(23)
Foreign exchange contracts:
Gain (Loss) recognized in accumulated OCI		-		2		(2)		-

XML

Consolidated Statements Of Cash Flows (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Operating Activities
Net income	$ 7,355	$ 7,653
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	9,167	9,100
Undistributed earnings from investments in equity affiliates	(58)	(198)
Provision for uncollectible accounts	444	439
Deferred income tax expense	546	1,081
Net (gain) loss from sale of investments, net of impairments	(1,365)	(260)
Changes in operating assets and liabilities:
Accounts receivable	(566)	(290)
Other current assets	(771)	784
Accounts payable and accrued liabilities	2,894	(340)
Retirement benefit funding	(280)	0
Other - net	(497)	(258)
Total adjustments	9,514	10,058
Net Cash Provided by Operating Activities	16,869	17,711
Investing Activities
Capital expenditures	(11,649)	(9,665)
Interest during construction	(118)	(140)
Acquisitions, net of cash acquired	(857)	(1,182)
Disposition of business - cash received from sale of subsidiary/investment (in millions of U.S. dollars)	4,921	825
Return of advances to and investments in equity affiliates	2	301
Other	0	(4)
Net Cash Used in Investing Activities	(7,701)	(9,865)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	134	0
Issuance of other short-term borrowings	0	1,476
Repayment of other short-term borrowings	0	(233)
Issuance of long-term debt	8,564	6,416
Repayment of long-term debt	(3,508)	(1,823)
Purchase of treasury stock	(1,396)	(9,217)
Issuance of treasury stock	27	104
Dividends paid	(4,784)	(4,930)
Other	(239)	41
Net Cash Used in Financing Activities	(1,202)	(8,166)
Net increase (decrease) in cash and cash equivalents	7,966	(320)
Cash and cash equivalents beginning of year	3,339	4,868
Cash and Cash Equivalents End of Period	11,305	4,548
Cash paid during the six months ended June 30 for:
Interest	2,292	2,002
Income taxes, net of refunds	$ 987	$ 591

XML

Consolidated Statements Of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 3,621	$ 3,880	$ 7,355	$ 7,653
Foreign Currency:
Translation adjustments (includes $1, $(1), $1 and $(1) attributable to noncontrolling interest), net of taxes of $15, $(127), $5 and $(65)	26	(239)	6	(118)
Reclassification adjustment included in net income, net of taxes of $210, $19, $224 and $19	391	34	416	34
Available-for-sale securities:
Net unrealized gains, net of taxes of $24, $6, $34 and $46	43	11	59	86
Reclassification adjustment realized in net income, net of taxes of $(1), $(1), $(8) and $(5)	(3)	(3)	(14)	(10)
Cash flow hedges:
Net unrealized gains (losses), net of taxes of $(56), $66, $(53) and $115	(104)	120	(98)	210
Reclassification adjustment included in net income, net of taxes of $7, $4, $11 and $8	14	8	21	15
Defined benefit postretirement plans:
Reclassification adjustment included in net income, net of taxes $31, $5, $33, and $5	58	8	61	8
Amortization of net prior service credit included in net income, net of taxes of $(142), $(109), $(289) and $(218)	(239)	(177)	(479)	(355)
Other comprehensive income (loss)	186	(238)	(28)	(130)
Total comprehensive income	3,807	3,642	7,327	7,523
Less: Total comprehensive income attributable to noncontrolling interest	(75)	(57)	(157)	(130)
Total Comprehensive Income Attributable to AT&T	$ 3,732	$ 3,585	$ 7,170	$ 7,393

XML

Sale of Equipment Installment Receivables

6 Months Ended

Jun. 30, 2014

Changes In Other Assets [Abstract]

Finance Receivables [Text Block]

NOTE 8. SALE OF EQUIPMENT INSTALLMENT RECEIVABLES

We offer our customers the option to purchase certain wireless devices in installments over a period of up to 24 months, with the right to trade in the original equipment for a new device and have the remaining unpaid balance satisfied. As of June 30, 2014, gross equipment installment receivables of $2,427 were included on our consolidated balance sheets.

On June 27, 2014, we entered into uncommitted agreements pertaining to the sale of equipment installment receivables and related security with Citibank, N.A. and various other relationship banks as purchasers (collectively, the Purchasers) with a funding amount not expected to exceed $2,000 at any given time. Under the agreement, we may transfer the receivables to the Purchasers for cash and additional consideration upon settlement of the receivables. Under the terms of the arrangement, we continue to bill and collect on behalf of our customers for the receivables sold.

On June 27, 2014, we sold to the Purchasers equipment installment receivables totaling $1,637 (or $1,391 net of allowance, imputed interest and trade-in right guarantees) and received cash proceeds of $819 andwill collect the remaining balance over the remaining term of the equipment installment contracts. We have recorded a deferred purchase price of $565 that assumes customers elect to trade-in their device and agree to a new contract with AT&T; however, if customers choose not to trade-in, we expect to receive the remaining installments. The deferred purchase price was recorded at estimated fair value, which was based on remaining installment payments expected to be collected, adjusted by the expected timing and value of the device trade-ins. The value of the device trade-ins considers estimated prices offered to us by independent, third parties that contemplate changes in value after the launch of a device. Our maximum exposure to loss as a result of selling these is limited to the amount of our deferred purchase price at any point in time.

This transaction did not have a material impact in our consolidated statements of income or to “Total Assets” reported on our consolidated balance sheet. We will reflect the cash flows related to the arrangement as operating activities in our consolidated statements of cash flows because the cash received from the Purchasers upon both the sale of the receivables and the collection of the deferred purchase price is not subject to significant interest rate risk.

XML

Document And Entity Information In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jul. 31, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2
Document Period End Date	Sep. 30, 2014
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0000732717
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Registrant Name	AT&T Inc.
Entity Common Stock, Shares Outstanding		5,186

XML

Preparation Of Interim Financial Statements (Policy)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

Basis of Presentation Throughout this document, AT&T Inc. is referred to as “AT&T,” “we” or the “Company.” We believe that these consolidated financial statements include all adjustments, consisting only of normal recurring accruals, that are necessary to present fairly the results for the presented interim periods. The results for the interim periods are not necessarily indicative of those for the full year. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013. On March 13, 2014, we closed our acquisition of Leap Wireless International, Inc. (Leap) (see Note 7), and we incorporated Leap into our wireless operations following the date of acquisition.

The consolidated financial statements include the accounts of the Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the communications services industry both domestically and internationally, providing wireless communications services, traditional wireline voice services, data/broadband and Internet services, video services, telecommunications equipment, managed networking and wholesale services.

All significant intercompany transactions are eliminated in the consolidation process. Investments in less than majority-owned subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain foreign equity investments accounted for using the equity method are included for periods ended within up to one month of our period end. We also record our proportionate share of our equity method investees' other comprehensive income (OCI) items, including actuarial gains and losses on pension and other postretirement benefit obligations.On June 30, 2014, we completed the sale of our investment in AméricaMóvil, S.A.B. de C.V. (AméricaMóvil) to an unrelated third party (see Note 7).

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of probable losses and expenses. Actual results could differ from those estimates. Certain amounts have been reclassified to conform to the current period's presentation.

Stock Repurchase Program

Stock Repurchase Program During the first six months of 2014, we repurchased approximately 47 million shares for$1,581 under a repurchase authorization that was approved by our Board of Directors in March 2013. In March 2014, our Board of Directors approved another authorization to repurchase 300 million shares of our common stock. At September 30, 2014, we had 416 million shares remaining under these authorizations. The repurchase authorizations have no expiration date, and we expect to make future repurchases opportunistically.

Software Costs

Software CostsDuring 2014, we completed a study evaluating the periods that we were utilizing our non-network software assets. As of April 1, 2014, we modified our amortization period for capitalized non-network software to five years to better reflect the estimated periods during which these assets will remain in service and to align with amortization periods used in the industry. Had we not revised the amortization period, our depreciation and amortization expense would have been $4,763in the third quarter and $9,380for the first nine months.

New Accounting Standards

New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09), whichreplaces existing revenue recognition ruleswitha comprehensive revenue measurement and recognitionstandard and expanded disclosure requirements.Upon initial evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of contract revenues between service and equipment, and the timing in which those revenues are recognized. ASU 2014-09 also specifies that incremental costs of obtaining or fulfilling our contracts with customers should be deferred. ASU 2014-09 becomes effective for annual reporting periods beginning after December 15, 2016.

The FASB will allow two adoption methods under ASU 2014-09. Under one method, a company will apply the rules to contracts in all reporting periods presented, subject to certain allowable exceptions. Under the other method, a company will apply the rules to all contracts existing as of January 1, 2017, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and provide additional disclosures comparing results to previous rules. We continue to evaluate the impact of the new standard and available adoption methods.

XML

Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Consolidated Statements of Comprehensive Income [Abstract]
Foreign currency translation adjustments, attributable to noncontrolling interest, net of taxes	$ 1	$ (1)	$ 1	$ (1)
Foreign currency translation adjustments, tax effect	15	(127)	5	(65)
Foreign currency translation adjustment reclassification - tax effect	210	19	224	19
Unrealized gains (losses) on available-for-sale securities - tax	24	6	34	46
Reclassification adjustment included in net income on available-for-sale securities - tax effect	(1)	(1)	(8)	(5)
Unrealized gains (losses) on cash flow hedges - tax	(56)	66	(53)	115
Reclassification adjustment included in net income on cash flow hedges - tax effect	7	4	11	8
Reclassification adjustment in net income on actuarial loss from equity method investees - tax effect	31	5	33	5
Amortization of net prior service credit included in net income, tax effect	$ (142)	$ (109)	$ (289)	$ (218)

XML

Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

NOTE 3.OTHER COMPREHENSIVE INCOME

Changes in the balances of each component included in accumulated other comprehensive income (accumulated OCI) for the six months ended June 30, 2014 and 2013, are presented below. For the period ended June 30, 2014, the amounts reclassified from accumulated OCI include the adjustments resulting from our change in accounting for América Móvil (see Note 7). All amounts are net of tax and exclude noncontrolling interest.

At September 30, 2014 and for the period ended:
		Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2013		$	(367)		$	450		$	445		$	7,352		$	7,880
Other comprehensive income (loss) before reclassifications			5			59			(98)			-			(34)
Amounts reclassified from accumulated OCI			416	1		(14)	2		21	3		(418)	4		5
Net other comprehensive income (loss)			421			45			(77)			(418)			(29)
Balance as of September 30, 2014		$	54		$	495		$	368		$	6,934		$	7,851
At September 30, 2013 and for the period ended:
		Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2012		$	(284)		$	272		$	(110)		$	5,358		$	5,236
Other comprehensive income (loss) before reclassifications			(117)			86			210			-			179
Amounts reclassified from accumulated OCI			34	1		(10)	2		15	3		(347)	4		(308)
Net other comprehensive income (loss)			(83)			76			225			(347)			(129)
Balance as of September 30, 2013		$	(367)		$	348		$	115		$	5,011		$	5,107
1	Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income.
2	Pre-tax gains are included in Other income (expense) - net in the consolidated statements of income.
3	(Gains) losses are included in interest expense in the consolidated statements of income. See Note 6 for additional information.
4	The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction
	labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income
	(see Note 5). Actuarial loss reclassifications related to our equity method investees are included in Other income (expense) - net
	in the consolidated statements of income.

XML

Earnings Per Share

6 Months Ended

Jun. 30, 2014

Earnings Per Share

Earnings Per Share

NOTE 2. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic earnings per share and diluted earnings for the three and six months ended June 30, 2014 and 2013, is shown in the table below:

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerators
Numerator for basic earnings per share:
Net Income	$	3,621	$	3,880	$	7,355	$	7,653
Less: Net income attributable to noncontrolling interest		(74)		(58)		(156)		(131)
Net Income attributable to AT&T		3,547		3,822		7,199		7,522
Dilutive potential common shares:
Share-based payment		3		2		7		6
Numerator for diluted earnings per share	$	3,550	$	3,824	$	7,206	$	7,528
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		5,204		5,381		5,213		5,446
Dilutive potential common shares:
Share-based payment (in shares)		16		16		16		17
Denominator for diluted earnings per share		5,220		5,397		5,229		5,463
Basic earnings per share attributable to AT&T	$	0.68	$	0.71	$	1.38	$	1.38
Diluted earnings per share attributable to AT&T	$	0.68	$	0.71	$	1.38	$	1.38

At June 30, 2014 and 2013, we had issued and outstanding options to purchase approximately 11 million and 13million shares of AT&T common stock. For the quarter ended June 30, 2014 and 2013, the exercise prices of 3 million and 2 million shares were above the market price of AT&T stock for the respective periods. Accordingly, we did not include these amounts in determining the dilutive potential common shares.

XML

Pension And Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2014

Pension And Postretirement Benefits

Pension And Postretirement Benefit Costs Included In Operating Expenses

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Pension cost:
Service cost – benefits earned during the period	$	282	$	330	$	564	$	660
Interest cost on projected benefit obligation		662		607		1,323		1,214
Expected return on assets		(851)		(828)		(1,700)		(1,656)
Amortization of prior service credit		(23)		(23)		(47)		(46)
Net pension cost	$	70	$	86	$	140	$	172
Postretirement cost:
Service cost – benefits earned during the period	$	58	$	96	$	116	$	191
Interest cost on accumulated postretirement benefit obligation		364		389		729		779
Expected return on assets		(162)		(178)		(326)		(356)
Amortization of prior service credit		(362)		(262)		(724)		(525)
Net postretirement (credit) cost	$	(102)	$	45	$	(205)	$	89
Combined net pension and postretirement (credit) cost	$	(32)	$	131	$	(65)	$	261

XML

Fair Value Measurements And Disclosure (Policy)

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Derivatives, Offsetting Fair Value Amounts, Policy [Policy Text Block]

We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable), against the fair value of the derivative instruments.

XML

Fair Value Measurements And Disclosure

6 Months Ended

Jun. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements And Disclosure

NOTE 6. FAIR VALUE MEASUREMENTS AND DISCLOSURE

The Fair Value Measurement and Disclosure framework provides a three-tiered fair value hierarchy that gives highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1       Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that we have the ability to access.

Level 2       Inputs to the valuation methodology include:

• Quoted prices for similar assets and liabilities in active markets.
• Quoted prices for identical or similar assets or liabilities in inactive markets.
• Inputs other than quoted market prices that are observable for the asset or liability.
• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3       Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

• Fair value is often based on developed models in which there are few, if any, external observations.

The fair value measurements level of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used should maximize the use of observable inputs and minimize the use of unobservable inputs.

The valuation methodologies described above may produce a fair value calculation that may not be indicative of future net realizable value or reflective of future fair values. We believe our valuation methods are appropriate and consistent with other market participants. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. There have been no changes in the methodologies used since December 31, 2013.

Long-Term Debt and Other Financial Instruments

The carrying amounts and estimated fair values of our long-term debt, including current maturities and other financial instruments, are summarized as follows:

	June 30, 2014				December 31, 2013
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Notes and debentures	$	83,548	$	91,833	$	74,484	$	79,309
Commercial paper		150		150		20		20
Bank borrowings		5		5		1		1
Investment securities		2,708		2,708		2,450		2,450

The carrying value of debt with an original maturity of less than one year approximates market value. The fair value measurements used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for identical or similar securities in both active and inactive markets.

Following is the fair value leveling for available-for-sale securities and derivatives as of June 30, 2014and December 31, 2013:

		June 30, 2014
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,113	$	-	$	-	$	1,113
International equities			566		-		-		566
Fixed income bonds			-		949		-		949
Asset Derivatives1
Interest rate swaps			-		203		-		203
Cross-currency swaps			-		2,011		-		2,011
Liability Derivatives1
Cross-currency swaps			-		(503)		-		(503)
		December 31, 2013
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,049	$	-	$	-	$	1,049
International equities			563		-		-		563
Fixed income bonds			-		759		-		759
Asset Derivatives1
Interest rate swaps			-		191		-		191
Cross-currency swaps			-		1,951		-		1,951
Liability Derivatives1
Interest rate swaps			-		(7)		-		(7)
Cross-currency swaps			-		(519)		-		(519)
1	Derivatives designated as hedging instruments are reflected as Other assets, Other noncurrent liabilities and, for a portion of interest
	rate swaps, Other current assets.

Investment Securities

Our investment securities include equities, fixed income bonds and other securities. A substantial portion of the fair values of our available-for-sale securities was estimated based on quoted market prices. Investments in securities not traded on a national securities exchange are valued using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Realized gains and losses on securities are included in “Other income (expense) – net” in the consolidated statements of income using the specific identification method. Unrealized gains and losses, net of tax, on available-for-sale securities are recorded in accumulated OCI. Unrealized losses that are considered other than temporary are recorded in “Other income (expense) – net” with the corresponding reduction to the carrying basis of the investment. Fixed income investments of $90 have maturities of less than one year, $285 within one to three years, $300 within three to five years, and $274 for five or more years.

Our short-term investments (including money market securities) and customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. Our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Derivative Financial Instruments

We employ derivatives to manage certain market risks, primarily interest rate risk and foreign currency exchange risk. This includes the use of interest rate swaps, interest rate locks, foreign exchange forward contracts and combined interest rate foreign exchange contracts (cross-currency swaps). We do not use derivatives for trading or speculative purposes. We record derivatives on our consolidated balance sheets at fair value that is derived from observable market data, including yield curves and foreign exchange rates (all of our derivatives are Level 2). Cash flows associated with derivative instruments are presented in the same category on the consolidated statements of cash flows as the item being hedged.

The majority of our derivatives are designated either as a hedge of the fair value of a recognized asset or liability or of an unrecognized firm commitment (fair value hedge), or as a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (cash flow hedge).

Fair Value Hedging We designate our fixed-to-floating interest rate swaps as fair value hedges. The purpose of these swaps is to manage interest 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 rate payments over the life of the swaps without exchange of the underlying principal amount. Accrued and realized gains or losses from interest rate swaps impact interest expense in the consolidated statements of income. Unrealized gains on interest rate swaps are recorded at fair market value as assets, and unrealized losses on interest rate swaps are recorded at fair market value as liabilities. Changes in the fair values of the interest rate swaps are exactly offset by changes in the fair value of the underlying debt. Gains or losses realized upon early termination of our fair value hedges are recognized in interest expense. In the six months ended June 30, 2014 and June 30, 2013, no ineffectiveness was measured on interest rate swaps designated as fair value hedges.

Cash Flow Hedging We designate our cross-currency swaps as cash flow hedges. We have entered into multiple cross-currency swaps to hedge our exposure to variability in expected future cash flows that are attributable to foreign currency risk generated from the issuance of our Euro, British pound sterling and Canadian dollar denominated debt. These agreements include initial and final exchanges of principal from fixed foreign denominations to fixed U.S. denominated amounts, to be exchanged at a specified rate, which was determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed foreign-denominated rate to a fixed U.S. denominated interest rate.

Unrealized gains on derivatives designated as cash flow hedges are recorded at fair value as assets, and unrealized losses on derivatives designated as cash flow hedges are recorded at fair value as liabilities, both for the period they are outstanding. For derivative instruments designated as cash flow hedges, the effective portion is reported as a component of accumulated OCI until reclassified into interest expense in the same period the hedged transaction affects earnings. The gain or loss on the ineffective portion is recognized as “Other income (expense) – net” in the consolidated statements of income in each period. We evaluate the effectiveness of our cross-currency swaps each quarter. In the six months ended June 30, 2014 and June 30, 2013, no ineffectiveness was measured on cross-currency swaps designated as cash flow hedges.

Periodically, we enter into and designate interest rate locks to partially hedge the risk of changes in interest payments attributable to increases in the benchmark interest rate during the period leading up to the probable issuance of fixed-rate debt. We designate our interest rate locks as cash flow hedges. Gains and losses when we settle our interest rate locks are amortized into income over the life of the related debt, except where a material amount is deemed to be ineffective, which would be immediately reclassified to “Other income (expense) – net” in the consolidated statements of income. Over the next 12 months, we expect to reclassify $43from accumulated OCI to interest expense due to the amortization of net losses on historical interest rate locks.

We hedge a portion of the exchange risk involved in anticipation of highly probable foreign currency-denominated transactions. In anticipation of these transactions, we often enter into foreign exchange contracts to provide currency at a fixed rate. Some of these instruments are designated as cash flow hedges while others remain nondesignated, largely based on size and duration. Gains and losses at the time we settle or take delivery on our designated foreign exchange contracts are amortized into income in the same period the hedged transaction affects earnings, except where an amount is deemed to be ineffective, which would be immediately reclassified to “Other income (expense)– net” in the consolidated statements of income. In the six monthsended June 30, 2014 and June 30, 2013, no ineffectiveness was measured on foreign exchange contracts designated as cash flow hedges.

Collateral and Credit-Risk ContingencyWe have entered into agreements with our derivative counterparties establishing collateral thresholds based on respective credit ratings and netting agreements. At June 30, 2014, we had posted collateral of $3 (a deposit asset) and held collateral of $1,755 (a receipt liability). Under the agreements, if our credit rating had been downgraded one rating level by Moody's Investors Service and Standard & Poor's Rating Services and two rating levels by Fitch Ratings, before the final collateral exchange in June, we would have been required to post additional collateral of $50. At December 31, 2013, we had posted collateral of $8 (a deposit asset) and held collateral of $1,600 (a receipt liability). We do not offset the fair value of collateral, whether the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable), against the fair value of the derivative instruments.

Following is the notional amount of our outstanding derivative positions:

	June 30,		December 31,
	2014		2013
Interest rate swaps	$	6,350	$	4,750
Cross-currency swaps		20,650		17,787
Total	$	27,000	$	22,537

Following is the related hedged items affecting our financial position and performance:
Effect of Derivatives on the Consolidated Statements of Income
Fair Value Hedging Relationships	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	22	$	(63)	$	11	$	(87)
Gain (Loss) on long-term debt		(22)		63		(11)		87

In addition, the net swap settlements that accrued and settled in the quarter ended June 30 were offset against interest expense.

Cash Flow Hedging Relationships	Three months ended				Six months ended
	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	(160)	$	184	$	(149)	$	325
Interest rate locks:
Interest income (expense) reclassified from accumulated OCI into income		(11)		(12)		(22)		(23)
Foreign exchange contracts:
Gain (Loss) recognized in accumulated OCI		-		2		(2)		-

XML

Segment Information

6 Months Ended

Jun. 30, 2014

Segment Information

Segment Information

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer different products and services over various technology platforms and are managed accordingly. We analyze our operating segments based on segment income before income taxes. We make our capital allocation decisions based on our strategic direction of the business, needs of the network (wireless or wireline) providing services and demands to provide emerging services to our customers. Actuarial gains and losses from pension and other postretirement benefits, interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results. Therefore, these items are not included in each segment's reportable results. The customers and long-lived assets of our reportable segments are predominantly in the United States. We have two reportable segments: (1) Wireless and (2) Wireline.

The Wireless segment uses our nationwide network to provide consumer and business customers with wireless data and voice communications services. This segment includes our portion of the results from our mobile wallet joint venture which is accounted for as an equity investment.

The Wireline segment uses our regional, national and global network to provide consumer and business customers with data and voice communications services, AT&T U-verse® high speed Internet, video and VoIP services and managed networking to business customers.

The Corporate and Other column includes unallocated corporate expenses, which includes costs to support corporate-driven activities and operations, impacts of corporate-wide decisions for which the individual operating segments are not being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit plans as well as our actuarial gains and losses on our pension and postretirement plan valuations. Results from equity method investments in América Móvil (prior to our May 2014 announcement of our intention to dispose of our investment), YP Holdings LLC, and Otter Media (our joint venture with The Chernin Group), are also excluded from our segment results as those results are nonoperational and not considered in our assessment of segment performance. We have revised our prior-period presentation to conform to our current reporting.

In the following tables, we show how our segment results are reconciled to our consolidated results reported.

For the three months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,148	$	14,408	$	-	$	29,556
Equipment		2,782		229		8		3,019
Total segment operating revenues		17,930		14,637		8		32,575
Operations and support expenses		11,568		10,700		141		22,409
Depreciation and amortization expenses		2,035		2,514		1		4,550
Total segment operating expenses		13,603		13,214		142		26,959
Segment operating income (loss)		4,327		1,423		(134)		5,616
Interest expense		-		-		881		881
Equity in net income (loss) of affiliates		(29)		-		131		102
Other income (expense) – net		-		-		1,269		1,269
Segment income before income taxes	$	4,298	$	1,423	$	385	$	6,106
For the six months ended June 30, 2014								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,535	$	28,797	$	-	$	59,332
Equipment		5,261		441		17		5,719
Total segment operating revenues		35,796		29,238		17		65,051
Operations and support expenses		22,450		21,157		383		43,990
Depreciation and amortization expenses		3,966		5,198		3		9,167
Total segment operating expenses		26,416		26,355		386		53,157
Segment operating income (loss)		9,380		2,883		(369)		11,894
Interest expense		-		-		1,741		1,741
Equity in net income (loss) of affiliates		(49)		1		238		190
Other income (expense) – net		-		-		1,414		1,414
Segment income (loss) before income taxes	$	9,331	$	2,884	$	(458)	$	11,757
For the three months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	15,370	$	14,482	$	-	$	29,852
Equipment		1,921		291		11		2,223
Total segment operating revenues		17,291		14,773		11		32,075
Operations and support expenses		10,770		10,417		204		21,391
Depreciation and amortization expenses		1,843		2,722		6		4,571
Total segment operating expenses		12,613		13,139		210		25,962
Segment operating income (loss)		4,678		1,634		(199)		6,113
Interest expense		-		-		825		825
Equity in net income (loss) of affiliates		(19)		-		237		218
Other income (expense) – net		-		-		288		288
Segment income (loss) before income taxes	$	4,659	$	1,634	$	(499)	$	5,794
For the six months ended June 30, 2013								Consolidated Results
		Wireless		Wireline		Corporate and Other
Service	$	30,432	$	28,863	$	-	$	59,295
Equipment		3,550		565		21		4,136
Total segment operating revenues		33,982		29,428		21		63,431
Operations and support expenses		20,950		20,752		576		42,278
Depreciation and amortization expenses		3,678		5,410		12		9,100
Total segment operating expenses		24,628		26,162		588		51,378
Segment operating income (loss)		9,354		3,266		(567)		12,053
Interest expense		-		-		1,652		1,652
Equity in net income (loss) of affiliates		(37)		1		439		403
Other income (expense) – net		-		-		320		320
Segment income (loss) before income taxes	$	9,317	$	3,267	$	(1,460)	$	11,124

XML

Pension And Postretirement Benefits

6 Months Ended

Jun. 30, 2014

Pension And Postretirement Benefits

Pension And Postretirement Benefits

NOTE 5.PENSION AND POSTRETIREMENT BENEFITS

Substantially all of our employees are covered by one of our noncontributory pension plans. We also provide certain medical, dental, life insurance, and death benefits to certain retired employees under various plans and accrue actuarially determined postretirement benefit costs as active employees earn these benefits. Our objective in funding these plans, in combination with the standards of the Employee Retirement Income Security Act of 1974, as amended (ERISA), is to accumulate assets sufficient to meet the plans' obligations to provide benefits to employees upon their retirement.

In July 2014,the U.S. Department of Labor (DOL) published in the Federal Register their final retroactive approval of our September 9, 2013 voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the primary holding company for our wireless business, to the trust used to pay pension benefits under our qualified pension plans. The preferred equity interest had a value of $9,187 at June 30, 2014. The trust is entitled to receive cumulative cash distributions of $560 per annum, which will be distributed quarterly in equal amounts and will be accounted for as contributions. We distributed $280 to the trust during the six months ended June 30, 2014. So long as we make the distributions, the terms of the preferred interest will impose no limitations on our ability to declare a dividend, or repurchase shares. This preferred equity interest is a plan asset under ERISA and is recognized as such in the plan's separate financial statements. However, because the preferred equity interest is not unconditionally transferable to an unrelated party, it is not reflected in plan assets in our consolidated financial statements and instead has been eliminated in consolidation.

We recognize actuarial gains and losses on pension and postretirement plan assets in our operating results at our annual measurement date of December 31, unless earlier remeasurements are required. The following table details pension and postretirement benefit costs included in operating expenses in the accompanying consolidated statements of income, expense credits are denoted with parentheses. A portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net expense recorded.

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Pension cost:
Service cost – benefits earned during the period	$	282	$	330	$	564	$	660
Interest cost on projected benefit obligation		662		607		1,323		1,214
Expected return on assets		(851)		(828)		(1,700)		(1,656)
Amortization of prior service credit		(23)		(23)		(47)		(46)
Net pension cost	$	70	$	86	$	140	$	172
Postretirement cost:
Service cost – benefits earned during the period	$	58	$	96	$	116	$	191
Interest cost on accumulated postretirement benefit obligation		364		389		729		779
Expected return on assets		(162)		(178)		(326)		(356)
Amortization of prior service credit		(362)		(262)		(724)		(525)
Net postretirement (credit) cost	$	(102)	$	45	$	(205)	$	89
Combined net pension and postretirement (credit) cost	$	(32)	$	131	$	(65)	$	261

Our combined net pension and postretirement cost decreased $163 in the second quarter and $326 for the first six months of 2014.The decrease reflects higher amortization of prior service credits due to plan changes, including changes to future costs for continued retiree healthcare coverage. The decrease also reflects increasing corporate bond rates, which contributed to lower service cost and higher interest costs.

Due in part to our 2013 enhanced retirement offer and projected distribution levels, we expect that lump sum distributions from the plan during 2014 could exceed service and interest costs, resulting in settlement accounting for a portion of our pension plan. This would result in remeasurement of the plans assets and obligations, with remeasurement for each interim period thereafter.

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. Net supplemental retirement pension benefits cost, which is not included in the table above, was $29 in the second quarter of 2014, of which $28 was interest cost, and $58 for the first six months, of which $55 was interest cost. In 2013, net supplemental retirement pension benefits cost was $28 in the second quarter, of which $26 was interest cost, and $55 for the first six months, of which $51 was interest cost.

XML

Acquisitions, Dispositions And Other Adjustments

6 Months Ended

Jun. 30, 2014

Acquisitions, Dispositions And Other Adjustments

Acquisitions, Dispositions And Other Adjustments

NOTE 7. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS

Acquisitions

Leap On March 13, 2014, we acquired Leap, a provider of prepaid wireless service, for fifteen dollars per outstanding share of Leap's common stock, or $1,248 (excluding Leap's cash on hand), plus one nontransferable contingent value right (CVR) per share. The CVR will entitle each Leap stockholder to a pro rata share of the net proceeds of the future sale of the Chicago 700 MHz A-band Federal Communications Commission (FCC) license held by Leap.

The preliminary values of assets acquired under the terms of the agreement were: $3,000 in licenses, $510 in property, plant and equipment, $520 of customer lists, $340 for trade names and $716 of goodwill. The estimated fair value of debt associated with the acquisition of Leap was $3,889, all of which was redeemed or matured by July 31, 2014.

Pending Acquisition

DIRECTV On May 18, 2014, we announced an agreement to acquire DIRECTV in a stock-and-cash transaction for ninety-five dollars per share of DIRECTV's common stock, or approximately $48,500 at the date of announcement. As of June 30, 2014, DIRECTV had approximately $17,691 in net debt. Each DIRECTV shareholder will receive cash of $28.50 per share and $66.50 per share in our stock. The stock portion will be subject to a collar such that DIRECTV shareholders will receive 1.905 AT&T shares if our stock price is below $34.90 per share at closing and 1.724 AT&T shares if our stock price is above $38.58 at closing. If our stock price is between $34.90 and $38.58 at closing, then DIRECTV shareholders will receive a number of shares between 1.724 and 1.905, equal to $66.50 in value. DIRECTV is a premier pay TV provider in the United States and Latin America, with a high-quality customer base, the best selection of programming, the best technology for delivering and viewing high-quality video on any device and the best customer satisfaction among major U.S. cable and satellite TV providers.

The merger agreement must be adopted by DIRECTV's stockholders and is subject to review by the FCC and the Department of Justice and to other closing conditions. It is also a condition that all necessary consents by certain state public utility commissions and foreign governmental entities have been obtained and are in full force and effect. We have obtained all required state regulatory consents. The transaction is expected to close within 12 months of the announcement. The agreement provides certain mutual termination rights for us and DIRECTV, including the right of either party to terminate the agreement if the merger is not consummated by May 18, 2015, subject to extension in certain cases to a date no later than November 13, 2015. Either party may also terminate the agreement if the DIRECTV stockholders' approval has not been obtained at a duly convened meeting of DIRECTV stockholders or an order permanently restraining, enjoining, or otherwise prohibiting consummation of the merger becomes final and non-appealable. In addition, we may terminate the agreement if the DIRECTV board of directors changes its recommendation of the merger in a manner adverse to AT&T prior to the DIRECTV stockholders' approval having been obtained. The parties also have agreed that in the event that DIRECTV's agreement for the “NFL Sunday Ticket” service is not renewed substantially on the terms discussed between the parties, the Company may elect not to consummate the Merger, but the Company will not have a damages claim arising out of such failure so long as DIRECTV used its reasonable best efforts to obtain such renewal.Under certain circumstances relating to a competing transaction, DIRECTV may be required to pay a termination fee to us in connection with or following a termination of the agreement.

Disposition

América MóvilIn May 2014, in conjunction with the announcement of our intention to dispose of our investment in América Móvil and the resignation of our board members from the board of América Móvil, we discontinued accounting for this investment under the equity method due to our lack of significant influence. On June 30, 2014, we sold our remaining stake in América Móvil for approximately $5,566 and recorded a pre-tax gain of $1,243. At closing, we received $4,565 cash and have agreed to receive a final cash payment of approximately $1,001 within 60 days.To date we have received partial payments totaling $650.

Pending Disposition

Connecticut Wireline In December 2013, we entered into an agreement to sell our incumbent local exchange operations in Connecticut for $2,000 in cash. The transaction was approved by the FCC on July 25, 2014 and is pending before the Connecticut Public Utilities Regulatory Authority and other state regulatory authorities. We expect the deal to close in the fourth quarter of 2014, subject to customary closing conditions.

We applied held-for-sale treatment to the assets and liabilities of the Connecticut operations, and, accordingly, included the assets in “Other current assets,” and the related liabilities in “Accounts payable and accrued liabilities,” on our consolidated balance sheets. However, the business does not qualify as discontinued operations as we expect significant continuing direct cash flows related to the disposed operations. Assets and liabilities of the Connecticut operations included the following:

	June 30,		December 31,
	2014		2013
Assets held for sale:
Current assets	$	122	$	155
Property, plant and equipment - net		1,388		1,289
Goodwill		799		799
Other assets		18		17
Total assets	$	2,327	$	2,260
Liabilities related to assets held for sale:
Current liabilities	$	125	$	128
Noncurrent liabilities		478		480
Total liabilities	$	603	$	608

XML

Fair Value Measurements And Disclosure (Long-Term Debt And Other Financial Instruments) (Details) (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Carrying Amount [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Notes and debentures	$ 83,548	$ 74,484
Commercial paper	150	20
Bank borrowings	5	1
Investment securities	2,708	2,450
Fair Value [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Commercial paper	150	20
Bank borrowings	5	1
Investment securities	2,708	2,450
Fair Value [Member] | Level 2 [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Notes and debentures	$ 91,833	$ 79,309

XML

Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2014

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

At September 30, 2014 and for the period ended:
		Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2013		$	(367)		$	450		$	445		$	7,352		$	7,880
Other comprehensive income (loss) before reclassifications			5			59			(98)			-			(34)
Amounts reclassified from accumulated OCI			416	1		(14)	2		21	3		(418)	4		5
Net other comprehensive income (loss)			421			45			(77)			(418)			(29)
Balance as of September 30, 2014		$	54		$	495		$	368		$	6,934		$	7,851
At September 30, 2013 and for the period ended:
		Foreign Currency Translation Adjustment			Net Unrealized Gains (Losses) on Available-for-Sale Securities			Net Unrealized Gains (Losses) on Cash Flow Hedges			Defined Benefit Postretirement Plans			Accumulated Other Comprehensive Income
Balance as of December 31, 2012		$	(284)		$	272		$	(110)		$	5,358		$	5,236
Other comprehensive income (loss) before reclassifications			(117)			86			210			-			179
Amounts reclassified from accumulated OCI			34	1		(10)	2		15	3		(347)	4		(308)
Net other comprehensive income (loss)			(83)			76			225			(347)			(129)
Balance as of September 30, 2013		$	(367)		$	348		$	115		$	5,011		$	5,107
1	Pre-tax translation loss reclassifications are included in Other income (expense) - net in the consolidated statements of income.
2	Pre-tax gains are included in Other income (expense) - net in the consolidated statements of income.
3	(Gains) losses are included in interest expense in the consolidated statements of income. See Note 6 for additional information.
4	The amortization of prior service credits associated with postretirement benefits, net of amounts capitalized as part of construction
	labor, are included in Cost of services and sales and Selling, general and administrative in the consolidated statements of income
	(see Note 5). Actuarial loss reclassifications related to our equity method investees are included in Other income (expense) - net
	in the consolidated statements of income.

XML

Preparation Of Interim Financial Statements (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		6 Months Ended		0 Months Ended	3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Apr. 02, 2014 Software Non-Network [Member] Pro-Forma [Member]	Jun. 30, 2014 Software Non-Network [Member] Pro-Forma [Member]	Jun. 30, 2014 Software Non-Network [Member] Pro-Forma [Member]	Jun. 30, 2014 Stock Repurchase Program March 2013 [Member]	Mar. 31, 2014 Stock Repurchase Program March 2014 [Member]
Equity, Class of Treasury Stock [Line Items]
Stock Repurchase Program, Number of Shares Authorized to be Repurchased									300
Stock Repurchase Program, Remaining Number of Shares Authorized to be Repurchased	416		416
Treasury Stock, Value, Acquired, Cost Method								$ 1,581
Treasury Stock, Shares, Acquired								47
Property Plant And Equipment [Line Items]
Estimated useful life (years)					5 years 0 months 0 days
Depreciation and amortization expenses	$ 4,550	$ 4,571	$ 9,167	$ 9,100		$ 4,763	$ 9,380

XML

Consolidated Balance Sheets (USD $) In Millions, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Current Assets
Cash and cash equivalents	$ 11,305	$ 3,339
Accounts receivable - net of allowances for doubtful accounts of $461 and $483	13,001	12,918
Prepaid expenses	928	960
Deferred income taxes	1,180	1,199
Other current assets	6,698	4,780
Total current assets	33,112	23,196
Property, plant and equipment	283,252	274,798
Less: accumulated depreciation and amortization	(168,892)	(163,830)
Property, Plant and Equipment - Net	114,360	110,968
Goodwill	70,094	69,273
Licenses	59,655	56,433
Other Intangible Assets - Net	6,380	5,779
Investments in Equity Affiliates	159	3,860
Other Assets	9,706	8,278
Total Assets	293,466	277,787
Current Liabilities
Debt maturing within one year	10,482	5,498
Accounts payable and accrued liabilities	22,966	21,107
Advanced billing and customer deposits	3,990	4,212
Accrued taxes	3,962	1,774
Dividends payable	2,388	2,404
Total current liabilities	43,788	34,995
Long-Term Debt	73,570	69,290
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	36,835	36,308
Postemployment benefit obligation	30,070	29,946
Other noncurrent liabilities	16,578	15,766
Total deferred credits and other noncurrent liabilities	83,483	82,020
Stockholders' Equity
Common stock ($1 par value, 14,000,000,000 authorized at June 30, 2014 and December 31, 2013: issued 6,495,231,088 at June 30, 2014 and December 31, 2013)	6,495	6,495
Additional paid-in capital	91,057	91,091
Retained earnings	33,554	31,141
Treasury stock (1,304,409,511 at June 30, 2014 and 1,268,914,913 at December 31, 2013, at cost)	(46,825)	(45,619)
Accumulated other comprehensive income	7,851	7,880
Noncontrolling interest	493	494
Total stockholders' equity	92,625	91,482
Total Liabilities and Stockholders' Equity	$ 293,466	$ 277,787

XML

Preparation Of Interim Financial Statements

6 Months Ended

Jun. 30, 2014

Preparation Of Interim Financial Statements Disclosure [Abstract]

Preparation Of Interim Financial Statements

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation Throughout this document, AT&T Inc. is referred to as “AT&T,” “we” or the “Company.” We believe that these consolidated financial statements include all adjustments, consisting only of normal recurring accruals, that are necessary to present fairly the results for the presented interim periods. The results for the interim periods are not necessarily indicative of those for the full year. You should read this document in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2013. On March 13, 2014, we closed our acquisition of Leap Wireless International, Inc. (Leap) (see Note 7), and we incorporated Leap into our wireless operations following the date of acquisition.

The consolidated financial statements include the accounts of the Company and our majority-owned subsidiaries and affiliates. Our subsidiaries and affiliates operate in the communications services industry both domestically and internationally, providing wireless communications services, traditional wireline voice services, data/broadband and Internet services, video services, telecommunications equipment, managed networking and wholesale services.

All significant intercompany transactions are eliminated in the consolidation process. Investments in less than majority-owned subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain foreign equity investments accounted for using the equity method are included for periods ended within up to one month of our period end. We also record our proportionate share of our equity method investees' other comprehensive income (OCI) items, including actuarial gains and losses on pension and other postretirement benefit obligations.On June 30, 2014, we completed the sale of our investment in AméricaMóvil, S.A.B. de C.V. (AméricaMóvil) to an unrelated third party (see Note 7).

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including estimates of probable losses and expenses. Actual results could differ from those estimates. Certain amounts have been reclassified to conform to the current period's presentation.

Stock Repurchase Program During the first six months of 2014, we repurchased approximately 47 million shares for$1,581 under a repurchase authorization that was approved by our Board of Directors in March 2013. In March 2014, our Board of Directors approved another authorization to repurchase 300 million shares of our common stock. At September 30, 2014, we had 416 million shares remaining under these authorizations. The repurchase authorizations have no expiration date, and we expect to make future repurchases opportunistically.

Software CostsDuring 2014, we completed a study evaluating the periods that we were utilizing our non-network software assets. As of April 1, 2014, we modified our amortization period for capitalized non-network software to five years to better reflect the estimated periods during which these assets will remain in service and to align with amortization periods used in the industry. Had we not revised the amortization period, our depreciation and amortization expense would have been $4,763in the third quarter and $9,380for the first nine months.

New Accounting Standards In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASU 2014-09), whichreplaces existing revenue recognition ruleswitha comprehensive revenue measurement and recognitionstandard and expanded disclosure requirements.Upon initial evaluation, we believe the key changes in the standard that impact our revenue recognition relate to the allocation of contract revenues between service and equipment, and the timing in which those revenues are recognized. ASU 2014-09 also specifies that incremental costs of obtaining or fulfilling our contracts with customers should be deferred. ASU 2014-09 becomes effective for annual reporting periods beginning after December 15, 2016.

The FASB will allow two adoption methods under ASU 2014-09. Under one method, a company will apply the rules to contracts in all reporting periods presented, subject to certain allowable exceptions. Under the other method, a company will apply the rules to all contracts existing as of January 1, 2017, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and provide additional disclosures comparing results to previous rules. We continue to evaluate the impact of the new standard and available adoption methods.

XML

Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Earnings Per Share
Net income	$ 3,621	$ 3,880	$ 7,355	$ 7,653
Less: Net income attributable to noncontrolling interest	(74)	(58)	(156)	(131)
Net income attributable to AT&T	3,547	3,822	7,199	7,522
Share-based payment	3	2	7	6
Numerator for diluted earnings per share	$ 3,550	$ 3,824	$ 7,206	$ 7,528
Weighted-average number of common shares outstanding	5,204	5,381	5,213	5,446
Share-based payment (in shares)	16	16	16	17
Denominator for diluted earnings per share	5,220	5,397	5,229	5,463
Basic Earnings Per Share Attributable to AT&T	$ 0.68	$ 0.71	$ 1.38	$ 1.38
Diluted Earnings Per Share Attributable to AT&T	$ 0.68	$ 0.71	$ 1.38	$ 1.38
Stock options issued and outstanding	11	13	11	13
Stock options with exercise prices above average market price of company stock	3	2

XML

Acquisitions, Dispositions And Other Adjustments (Narrative) (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	6 Months Ended		0 Months Ended	7 Months Ended	0 Months Ended						6 Months Ended	0 Months Ended		6 Months Ended				0 Months Ended	1 Months Ended		6 Months Ended	0 Months Ended	1 Months Ended	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member]	Jul. 31, 2014 Acquisition [Member] Leap Wireless International [Member]	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member] Licenses [Member]	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member] Property, Plant and Equipment [Member]	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member] Customer Lists [Member]	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member] Goodwill [Member]	Mar. 13, 2014 Acquisition [Member] Leap Wireless International [Member] Trade Names [Member]	May 18, 2015 Acquisition [Member] Pending Approval [Member] DIRECTV [Member]	Jun. 30, 2014 Acquisition [Member] Pending Approval [Member] DIRECTV [Member]	May 18, 2015 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Initial Period [Member]	Nov. 13, 2015 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Extended Period [Member]	Jun. 30, 2014 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Stock Price Scenario 1 [Member]	Jun. 30, 2014 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Stock Price Scenario 2 [Member] Minimum [Member]	Jun. 30, 2014 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Stock Price Scenario 2 [Member] Maximum [Member]	Jun. 30, 2014 Acquisition [Member] Pending Approval [Member] DIRECTV [Member] Stock Price Scenario 3 [Member]	Jun. 30, 2014 Disposition [Member] America Movil [Member]	Jul. 31, 2014 Disposition [Member] America Movil [Member]	May 30, 2014 Disposition [Member] America Movil [Member]	Jun. 30, 2014 Disposition [Member] America Movil [Member]	Jul. 25, 2014 Disposition [Member] Pending Approval [Member] Connecticut Wireline [Member]	Dec. 31, 2013 Disposition [Member] Pending Approval [Member] Connecticut Wireline [Member]	Dec. 31, 2014 Disposition [Member] Pending Approval [Member] Connecticut Wireline [Member]
Business Acquisition [Line Items]
Acquisition of assets - anticipated or actual acquisition date			Mar. 13, 2014
Acquisition of assets - anticipated or actual cash paid to seller	$ 857	$ 1,182
Acquisition of assets - noncash consideration			one non-transferable contingent value right per share
Acquisition of business - end of termination rights period												May 18, 2015	Nov. 13, 2015
Acquisition of business - purchase price			1,248
Acquisition of business - purchase price (in US dollars per share)			$ 15
Acquisition of business - repayments of debt				3,889
Acquisition of business - preliminary value/amount of assets acquired					3,000	510	520	716	340
Agreement date sale of equity method investment																				May 31, 2014
Disposal date of subsidiary/assets																		Jun. 30, 2014
Total sales price (in U.S. dollars) of the company's investment in subsidiary																		5,566
Disposition of business - pretax gain recognized from sale of subsidiary/investment																		1,243
Disposition of business - cash received from sale of subsidiary/investment (in millions of U.S. dollars)	4,921	825																4,565	650
Disposition of business - estimated cash to be received from sale of subsidiary/investment																					1,001
Disposition Of Business - Collection Final Payment To Be Received Period																					60 days
Regulatory Approval Date																						Jul. 25, 2014
Pendiing Acquisitions Dispositions
Acquisition of business - agreement date or period										May 18, 2014
Acquisition of business - anticipated or actual acquisition period											12 months
Acquisition of business - purchase price										48,500
Acquisition of business - purchase price (in US dollars per share)										$ 95	$ 28.50
Acquisition of business - preliminary allocation to debt, net of cash received by seller											17,691
Acquisition of business - noncash consideration to be given														1.905 shares of AT&T stock per share of DIRECTV	1.724 shares of AT&T stock per share of DIRECTV	1.905 shares of AT&T stock per share of DIRECTV	1.724 shares of AT&T stock per share of DIRECTV
Acquisition of business - value of noncash consideration to be given (in US dollars per share)											$ 66.50			$ 34.90	$ 34.90	$ 38.58	$ 38.58
Disposition of business - estimated cash to be received from sale of subsidiary																							$ 2,000
Disposition of business - anticipated disposition period																								Dec. 31, 2014
Disposition of asset - agreement period																							2013-12

XML

Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2014

Earnings Per Share

Reconciliation Of The Numerators And Denominators Of Basic Earnings Per Share And Diluted Earnings Per Share

	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Numerators
Numerator for basic earnings per share:
Net Income	$	3,621	$	3,880	$	7,355	$	7,653
Less: Net income attributable to noncontrolling interest		(74)		(58)		(156)		(131)
Net Income attributable to AT&T		3,547		3,822		7,199		7,522
Dilutive potential common shares:
Share-based payment		3		2		7		6
Numerator for diluted earnings per share	$	3,550	$	3,824	$	7,206	$	7,528
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		5,204		5,381		5,213		5,446
Dilutive potential common shares:
Share-based payment (in shares)		16		16		16		17
Denominator for diluted earnings per share		5,220		5,397		5,229		5,463
Basic earnings per share attributable to AT&T	$	0.68	$	0.71	$	1.38	$	1.38
Diluted earnings per share attributable to AT&T	$	0.68	$	0.71	$	1.38	$	1.38