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 For the quarterly period ended June 30, 2017 or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from     to

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," "smaller reporting company" and "emerging growth 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	[   ]
			Emerging growth company	[   ]

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

                                                                                                                                                                              Yes [   ]   No [   ]

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

                                                                                                                                                                              Yes [   ]   No [X]

At July 31, 2017, there were 6,140 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						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Operating Revenues
Service	$	36,538		$	37,142		$	72,994		$	74,243
Equipment		3,299			3,378			6,208			6,812
Total operating revenues		39,837			40,520			79,202			81,055
Operating Expenses
Cost of services and sales
Equipment		4,138			4,260			7,986			8,635
Broadcast, programming and operations		4,898			4,701			9,872			9,330
Other cost of services (exclusive of depreciation and          amortization shown separately below)		9,218			9,514			18,283			18,910
Selling, general and administrative		8,113			8,909			16,600			17,350
Depreciation and amortization		6,147			6,576			12,274			13,139
Total operating expenses		32,514			33,960			65,015			67,364
Operating Income		7,323			6,560			14,187			13,691
Other Income (Expense)
Interest expense		(1,395	)		(1,258	)		(2,688	)		(2,465	)
Equity in net income (loss) of affiliates		14			28			(159	)		41
Other income (expense) – net		128			91			108			161
Total other income (expense)		(1,253	)		(1,139	)		(2,739	)		(2,263	)
Income Before Income Taxes		6,070			5,421			11,448			11,428
Income tax expense		2,056			1,906			3,860			4,028
Net Income		4,014			3,515			7,588			7,400
Less: Net Income Attributable to Noncontrolling Interest		(99	)		(107	)		(204	)		(189	)
Net Income Attributable to AT&T	$	3,915		$	3,408		$	7,384		$	7,211
Basic Earnings Per Share Attributable to AT&T	$	0.63		$	0.55		$	1.19		$	1.17
Diluted Earnings Per Share Attributable to AT&T	$	0.63		$	0.55		$	1.19		$	1.17
Weighted Average Number of Common Shares    Outstanding – Basic (in millions)		6,165			6,174			6,166			6,173
Weighted Average Number of Common Shares    Outstanding – with Dilution (in millions)		6,184			6,195			6,185			6,193
Dividends Declared Per Common Share	$	0.49		$	0.48		$	0.98		$	0.96
See Notes to Consolidated Financial Statements.

2

AT&T INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Dollars in millions
(Unaudited)
	Three months ended						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Net income	$	4,014		$	3,515		$	7,588		$	7,400
Other comprehensive income (loss), net of tax:
Foreign currency:
Foreign currency translation adjustment (includes $(10),             $0, $(4) and $0 attributable to noncontrolling interest),             net of taxes of $115, $136, $506 and $126		(33	)		218			339			174
Available-for-sale securities:
Net unrealized gains (losses), net of taxes of $29, $2, $44             and $(13)		50			5			83			(21	)
Reclassification adjustment included in net income, net of             taxes of $(7), $2, $(4) and $0		(12	)		3			(7	)		-
Cash flow hedges:
Net unrealized gains (losses), net of taxes of $(279), $(208),             $(272) and $(141)		(517	)		(387	)		(504	)		(263	)
Reclassification adjustment included in net income, net of             taxes of $5, $5, $10 and $10		9			9			19			19
Defined benefit postretirement plans:
Net prior service credit arising during period, net of             taxes of $594, $0, $594 and $0		969			-			969			-
Amortization of net prior service credit included in net             income, net of taxes of $(151), $(131), $(290) and $(262)		(247	)		(214	)		(475	)		(429	)
Other comprehensive income (loss)		219			(366	)		424			(520	)
Total comprehensive income		4,233			3,149			8,012			6,880
Less: Total comprehensive income attributable to         noncontrolling interest		(89	)		(107	)		(200	)		(189	)
Total Comprehensive Income Attributable to AT&T	$	4,144		$	3,042		$	7,812		$	6,691
See Notes to Consolidated Financial Statements.

3

AT&T INC.
CONSOLIDATED BALANCE SHEETS
Dollars in millions except per share amounts
	June 30,			December 31,
	2017			2016
Assets	(Unaudited)
Current Assets
Cash and cash equivalents	$	25,617		$	5,788
Accounts receivable - net of allowances for doubtful accounts of $732 and $661		14,997			16,794
Prepaid expenses		1,371			1,555
Other current assets		11,562			14,232
Total current assets		53,547			38,369
Property, plant and equipment		323,098			319,648
Less: accumulated depreciation and amortization		(196,914	)		(194,749	)
Property, Plant and Equipment – Net		126,184			124,899
Goodwill		105,546			105,207
Licenses		95,864			94,176
Customer Lists and Relationships – Net		12,414			14,243
Other Intangible Assets – Net		7,980			8,441
Investments in Equity Affiliates		1,615			1,674
Other Assets		17,645			16,812
Total Assets	$	420,795		$	403,821
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	10,831		$	9,832
Accounts payable and accrued liabilities		26,471			31,138
Advanced billing and customer deposits		4,371			4,519
Accrued taxes		3,331			2,079
Dividends payable		3,008			3,008
Total current liabilities		48,012			50,576
Long-Term Debt		132,824			113,681
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		61,926			60,128
Postemployment benefit obligation		31,422			33,578
Other noncurrent liabilities		20,753			21,748
Total deferred credits and other noncurrent liabilities		114,101			115,454
Stockholders' Equity
Common stock ($1 par value, 14,000,000,000 authorized at June 30, 2017 and
December 31, 2016: issued 6,495,231,088 at June 30, 2017 and December 31, 2016)		6,495			6,495
Additional paid-in capital		89,471			89,604
Retained earnings		36,067			34,734
Treasury stock (355,448,811 at June 30, 2017 and 356,237,141
at December 31, 2016, at cost)		(12,697	)		(12,659	)
Accumulated other comprehensive income		5,389			4,961
Noncontrolling interest		1,133			975
Total stockholders' equity		125,858			124,110
Total Liabilities and Stockholders' Equity	$	420,795		$	403,821
See Notes to Consolidated Financial Statements.

4

AT&T INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in millions
(Unaudited)
	Six months ended
	June 30,
	2017			2016
Operating Activities
Net income	$	7,588		$	7,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		12,274			13,139
Undistributed loss (earnings) from investments in equity affiliates		167			(22	)
Provision for uncollectible accounts		795			705
Deferred income tax expense		964			1,767
Net loss (gain) from sale of investments, net of impairments		12			(85	)
Actuarial loss (gain) on pension and postretirement benefits		(259	)		-
Changes in operating assets and liabilities:
Accounts receivable		119			(364	)
Other current assets		471			2,229
Accounts payable and other accrued liabilities		(2,761	)		(3,032	)
Equipment installment receivables and related sales		907			464
Deferred fulfillment costs		(796	)		(1,190	)
Retirement benefit funding		(280	)		(280	)
Other - net		(1,041	)		(2,524	)
Total adjustments		10,572			10,807
Net Cash Provided by Operating Activities		18,160			18,207
Investing Activities
Capital expenditures:
Purchase of property and equipment		(10,750	)		(9,702	)
Interest during construction		(473	)		(437	)
Acquisitions, net of cash acquired		1,224			(485	)
Dispositions		51			107
Sale of securities, net		-			500
Net Cash Used in Investing Activities		(9,948	)		(10,017	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(2	)		-
Issuance of long-term debt		24,115			10,140
Repayment of long-term debt		(6,118	)		(9,129	)
Purchase of treasury stock		(458	)		(197	)
Issuance of treasury stock		24			119
Dividends paid		(6,021	)		(5,899	)
Other		77			(1,137	)
Net Cash Provided by (Used in) Financing Activities		11,617			(6,103	)
Net increase in cash and cash equivalents		19,829			2,087
Cash and cash equivalents beginning of year		5,788			5,121
Cash and Cash Equivalents End of Period	$	25,617		$	7,208
Cash paid during the six months ended June 30 for:
Interest	$	3,095		$	2,914
Income taxes, net of refunds	$	1,470		$	2,468
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)
	June 30, 2017
	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				$	89,604
Issuance of treasury stock					4
Share-based payments					(137	)
Balance at end of period				$	89,471
Retained Earnings
Balance at beginning of year				$	34,734
Net income attributable to AT&T ($1.19 per diluted share)					7,384
Dividends to stockholders ($0.98 per share)					(6,053	)
Other					2
Balance at end of period				$	36,067
Treasury Stock
Balance at beginning of year		(356	)	$	(12,659	)
Repurchase and acquisition of common stock		(13	)		(504	)
Issuance of treasury stock		14			466
Balance at end of period		(355	)	$	(12,697	)
Accumulated Other Comprehensive Income Attributable to AT&T, net of tax
Balance at beginning of year				$	4,961
Other comprehensive income attributable to AT&T					428
Balance at end of period				$	5,389
Noncontrolling Interest
Balance at beginning of year				$	975
Net income attributable to noncontrolling interest					204
Distributions					(174	)
Acquisition of noncontrolling interest					132
Translation adjustments attributable to noncontrolling interest, net of taxes					(4	)
Balance at end of period				$	1,133
Total Stockholders' Equity at beginning of year				$	124,110
Total Stockholders' Equity at end of period				$	125,858
See Notes to Consolidated Financial Statements.

6

AT&T INC.

JUNE 30, 2017

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 and digital entertainment services industry. Our subsidiaries and affiliates provide services and equipment that deliver voice, video and broadband services both domestically and internationally. 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, 2016. The results for the interim periods are not necessarily indicative of those for the full year.

In the tables throughout this document, percentage increases and decreases that are not considered meaningful are denoted with a dash.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Dollars in millions except per share amounts

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation  These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items. The consolidated financial statements include the accounts of the Company and our subsidiaries and affiliates over which we exercise control.

All significant intercompany transactions are eliminated in the consolidation process. Investments in unconsolidated subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain investments accounted for using the equity method are included for periods ended within up to one quarter of our period end. We also record our proportionate share of our equity method investees' other comprehensive income (OCI) items, including cumulative translation adjustments.

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.

Recently Adopted Accounting Standards

Income Taxes  As of January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2016-16, "Income Taxes (Topic 740)" (ASU 2016-16), with modified retrospective application, resulting in our recognition of an immaterial adjustment to retained earnings. Under ASU 2016-16, we recognize the income tax effects of intercompany sales or transfers of assets other than inventory (e.g., intellectual property or property, plant and equipment) during the period of intercompany sale or transfer instead of the period of either sale or transfer to a third party or recognition of depreciation or impairment.

New Accounting Standards

Pension and Other Postretirement Benefits  In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, "Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" (ASU 2017-07), which changes the presentation of periodic benefit cost components. Under ASU 2017-07, we will continue to present service costs within our operating expenses but present amortization of prior service credits and other components of our net periodic benefit cost in "other income (expense) – net" in our consolidated statements of income. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017. See Note 5 for our components of net periodic benefit cost.

Revenue RecognitionIn May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers (Topic 606)" (ASC 606), and has modified the standard thereafter. This standard replaces existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASC 606, as amended, becomes effective for annual reporting periods beginning after December 15, 2017, at which point we plan to adopt the standard using the "modified retrospective method." Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous accounting standards.

7

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

NOTE 2. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months and six months ended June 30, 2017 and 2016, is shown in the table below:

	Three months ended						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Numerators
Numerator for basic earnings per share:
Net Income	$	4,014		$	3,515		$	7,588		$	7,400
Less: Net income attributable to noncontrolling interest		(99	)		(107	)		(204	)		(189	)
Net Income attributable to AT&T		3,915			3,408			7,384			7,211
Dilutive potential common shares:
Share-based payment		2			2			6			6
Numerator for diluted earnings per share	$	3,917		$	3,410		$	7,390		$	7,217
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		6,165			6,174			6,166			6,173
Dilutive potential common shares:
Share-based payment (in shares)		19			21			19			20
Denominator for diluted earnings per share		6,184			6,195			6,185			6,193
Basic earnings per share attributable to AT&T	$	0.63		$	0.55		$	1.19		$	1.17
Diluted earnings per share attributable to AT&T	$	0.63		$	0.55		$	1.19		$	1.17

8

AT&T INC.

JUNE 30, 2017

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) are presented below. All amounts are net of tax and exclude noncontrolling interest.

	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, 2016	$	(1,995)		$	541		$	744		$	5,671		$	4,961
Other comprehensive income    (loss) before reclassifications		343			83			(504)			969			891
Amounts reclassified    from accumulated OCI		-	1		(7)	1		19	2		(475)	3		(463)
Net other comprehensive    income (loss)		343			76			(485)			494			428
Balance as of June 30, 2017	$	(1,652)		$	617		$	259		$	6,165		$	5,389
	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, 2015	$	(1,198)		$	484		$	16		$	6,032		$	5,334
Other comprehensive income    (loss) before reclassifications		174			(21)			(263)			-			(110)
Amounts reclassified    from accumulated OCI		-	1		-	1		19	2		(429)	3		(410)
Net other comprehensive    income (loss)		174			(21)			(244)			(429)			(520)
Balance as of June 30, 2016	$	(1,024)		$	463		$	(228)		$	5,603		$	4,814
1 (Gains) losses are included in Other income (expense) - net in the consolidated statements of income.
2 (Gains) losses are included in Interest expense in the consolidated statements of income. See Note 6 for additional information.
3 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).

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly. We analyze our segments based on Segment Contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have four reportable segments: (1) Business Solutions, (2) Entertainment Group, (3) Consumer Mobility and (4) International.

We also evaluate segment performance based on EBITDA and/or EBITDA margin, which is defined as Segment Contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate segment operating performance. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues.

9

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

 

The Business Solutions segment provides services to business customers, including multinational companies;governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as fixed strategic services; as well as traditional data and voice products. We utilize our wireless and wired networks to provide a complete communications solution to our business customers.

The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the United States or in U.S. territories. We utilize our copper and IP-based wired network and our satellite technology.

The Consumer Mobility segment provides nationwide wireless service to consumers, wholesale and resale wireless subscribers located in the United States or in U.S. territories. We utilize our network to provide voice and data services, including high-speed internet, video and home monitoring services over wireless devices.

The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency, and operating results are converted to U.S. dollars using official exchange rates.

In reconciling items to consolidated operating income and income before income taxes, Corporate and Other includes: (1) operations that are not considered reportable segments and that are no longer integral to our operations or which we no longer actively market, and (2) impacts of corporate-wide decisions for which the individual segments are not being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit plans.

Certain operating items are not allocated to our business segments, and those include:

· Acquisition-related items which consists of (1) items associated with the merger and integration of acquired businesses and (2) the noncash amortization of intangible assets acquired in acquisitions.

· Certain significant items which consists of (1) noncash actuarial gains and losses from pension and other postretirement benefits, (2) employee separation charges associated with voluntary and/or strategic offers, (3) losses resulting from abandonment or impairment of assets and (4) other items for which the segments are not being evaluated.

Interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

Our operating assets are utilized by multiple segments and consist of our wireless and wired networks as well as our satellite fleet. We manage our assets to provide for the most efficient, effective and integrated service to our customers, not by segment, and, therefore, asset information and capital expenditures by segment are not presented. Depreciation is allocated based on asset utilization by segment.

10

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended June 30, 2017
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	17,107	$	10,313		$	6,794		$	2,335	$	4,459		$	-		$	4,459
Entertainment Group		12,682		9,558			3,124			1,458		1,666			(11	)		1,655
Consumer Mobility		7,791		4,520			3,271			871		2,400			-			2,400
International		2,026		1,772			254			311		(57	)		25			(32	)
Segment Total		39,606		26,163			13,443			4,975		8,468		$	14		$	8,482
Corporate and Other		231		87			144			2		142
Acquisition-related items		-		281			(281	)		1,170		(1,451	)
Certain significant items		-		(164	)		164			-		164
AT&T Inc.	$	39,837	$	26,367		$	13,470		$	6,147	$	7,323
For the six months ended June 30, 2017
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	33,955	$	20,489		$	13,466		$	4,647	$	8,819		$	-		$	8,819
Entertainment Group		25,305		19,159			6,146			2,877		3,269			(17	)		3,252
Consumer Mobility		15,531		9,048			6,483			1,744		4,739			-			4,739
International		3,955		3,531			424			601		(177	)		45			(132	)
Segment Total		78,746		52,227			26,519			9,869		16,650		$	28		$	16,678
Corporate and Other		456		308			148			33		115
Acquisition-related items		-		488			(488	)		2,372		(2,860	)
Certain significant items		-		(282	)		282			-		282
AT&T Inc.	$	79,202	$	52,741		$	26,461		$	12,274	$	14,187

11

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

For the three months ended June 30, 2016
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	17,579	$	10,857		$	6,722		$	2,521	$	4,201		$	-		$	4,201
Entertainment Group		12,711		9,569			3,142			1,489		1,653			(2	)		1,651
Consumer Mobility		8,186		4,680			3,506			932		2,574			-			2,574
International		1,828		1,723			105			298		(193	)		9			(184	)
Segment Total		40,304		26,829			13,475			5,240		8,235		$	7		$	8,242
Corporate and Other		216		293			(77	)		20		(97	)
Acquisition-related items		-		233			(233	)		1,316		(1,549	)
Certain significant items		-		29			(29	)		-		(29	)
AT&T Inc.	$	40,520	$	27,384		$	13,136		$	6,576	$	6,560
For the six months ended June 30, 2016
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	35,188	$	21,659		$	13,529		$	5,029	$	8,500		$	-		$	8,500
Entertainment Group		25,369		19,147			6,222			2,977		3,245			1			3,246
Consumer Mobility		16,514		9,592			6,922			1,854		5,068			-			5,068
International		3,495		3,311			184			575		(391	)		23			(368	)
Segment Total		80,566		53,709			26,857			10,435		16,422		$	24		$	16,446
Corporate and Other		489		670			(181	)		37		(218	)
Acquisition-related items		-		528			(528	)		2,667		(3,195	)
Certain significant items		-		(682	)		682			-		682
AT&T Inc.	$	81,055	$	54,225		$	26,830		$	13,139	$	13,691

12

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

 

The following table is a reconciliation of Segment Contribution to "Income Before Income Taxes" reported on our consolidated statements of income.
	Second Quarter						Six Month Period
	2017			2016			2017			2016
Business Solutions	$	4,459		$	4,201		$	8,819		$	8,500
Entertainment Group		1,655			1,651			3,252			3,246
Consumer Mobility		2,400			2,574			4,739			5,068
International		(32	)		(184	)		(132	)		(368	)
Segment Contribution		8,482			8,242			16,678			16,446
Reconciling Items:
Corporate and Other		142			(97	)		115			(218	)
Merger and integration charges		(281	)		(233	)		(488	)		(528	)
Amortization of intangibles acquired		(1,170	)		(1,316	)		(2,372	)		(2,667	)
Actuarial gain (loss)		259			-			259			-
Employee separation costs		(60	)		(29	)		(60	)		(54	)
Gain on wireless spectrum transactions		63			-			181			736
Venezuela devaluation		(98	)		-			(98	)		-
Segment equity in net (income) loss of affiliates		(14	)		(7	)		(28	)		(24	)
AT&T Operating Income		7,323			6,560			14,187			13,691
Interest expense		1,395			1,258			2,688			2,465
Equity in net income (loss) of affiliates		14			28			(159	)		41
Other income (expense) - net		128			91			108			161
Income Before Income Taxes	$	6,070		$	5,421		$	11,448		$	11,428

NOTE 5. PENSION AND POSTRETIREMENT BENEFITS

Many 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. 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 provide benefits described in the plans to employees upon their retirement.

In 2013, we made a voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the primary holding company for our domestic wireless business, to the trust used to pay pension benefits under our qualified pension plans. The preferred equity interest had a value of $8,294 at June 30, 2017. The trust is entitled to receive cumulative cash distributions of $560 per annum, which are distributed quarterly by AT&T Mobility II LLC to the trust, in equal amounts and accounted for as contributions. We distributed $280 to the trust during the six months ended June 30, 2017. So long as we make the distributions, we will have 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. During the second quarter of 2017, a substantive plan change involving the frequency of considering potential health reimbursement account credit increases was communicated to our retirees. This plan change resulted in additional prior service credits recognized in other comprehensive income, reducing our liability by $1,563. Such credits will be amortized through earnings over a period approximating the average service period to full eligibility. Upon our adoption of ASU 2017-07, the amortization of these prior service credits will be recorded in other income (expense) - net. The plan change also triggered a remeasurement of our postretirement benefit obligation, resulting in an actuarial gain of $259 recognized in the second quarter of 2017.

13

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

The following table details pension and postretirement benefit costs included in operating expenses in the accompanying consolidated statements of income. A portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net expense recorded. Service costs and prior service credits are reported in our segment results while interest costs and expected return on plan assets are included with Corporate and Other (see Note 4).

	Three months ended						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Pension cost:
Service cost – benefits earned during the period	$	282		$	278		$	564		$	556
Interest cost on projected benefit obligation		484			495			968			990
Expected return on assets		(784	)		(780	)		(1,567	)		(1,558	)
Amortization of prior service credit		(31	)		(25	)		(62	)		(51	)
Net pension (credit) cost	$	(49	)	$	(32	)	$	(97	)	$	(63	)
Postretirement cost:
Service cost – benefits earned during the period	$	34		$	48		$	75		$	96
Interest cost on accumulated postretirement benefit obligation		202			243			424			486
Expected return on assets		(79	)		(89	)		(159	)		(178	)
Amortization of prior service credit		(366	)		(319	)		(702	)		(638	)
Actuarial (gain) loss		(259	)		-			(259	)		-
Net postretirement (credit) cost	$	(468	)	$	(117	)	$	(621	)	$	(234	)
Combined net pension and postretirement (credit) cost	$	(517	)	$	(149	)	$	(718	)	$	(297	)

The decrease in the combined net pension and postretirement costs in the second quarter and first six months reflects higher amortization of prior service credits as well as decreasing corporate bond rates, which contributed to lower interest costs.

As part of our second-quarter 2017 remeasurement, we decreased the weighted-average discount rate used to measure our postretirement benefit obligation to 4.10%. The discount rate in effect for determining postretirement service and interest costs after remeasurement is 4.50% and 3.30%, respectively. Including the effects of our plan change and remeasurement, the total estimated prior service credits that will be amortized from accumulated OCI into net periodic benefit cost over the last half of 2017 is $764 ($474 net of tax) for postretirement benefits.

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. For the second quarter ended 2017 and 2016, net supplemental pension benefits costs not included in the table above were $23 and $24. For the first six months of 2017 and 2016, net supplemental pension benefit costs were $45 and $47.
 

14

AT&T INC.

JUNE 30, 2017

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. Our valuation techniques 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, 2016.

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, 2017						December 31, 2016
	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value
Notes and debentures1		$	142,816		$	151,338		$	122,381		$	128,726
Bank borrowings			2			2			4			4
Investment securities			2,556			2,556			2,587			2,587
1 Includes credit agreement borrowings.

The carrying amount 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.

15

AT&T INC.

JUNE 30, 2017

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 June 30, 2017 and December 31, 2016:

	June 30, 2017
	Level 1		Level 2			Level 3		Total
Available-for-Sale Securities
Domestic equities	$	1,276	$	-		$	-	$	1,276
International equities		659		-			-		659
Fixed income bonds		-		370			-		370
Asset Derivatives1
Interest rate swaps		-		57			-		57
Cross-currency swaps		-		294			-		294
Interest rate locks		-		3			-		3
Liability Derivatives1
Interest rate swaps		-		(42	)		-		(42	)
Cross-currency swaps		-		(2,631	)		-		(2,631	)
Interest rate locks		-		(82	)		-		(82	)
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" in our consolidated balance sheets.

	December 31, 2016
	Level 1		Level 2			Level 3		Total
Available-for-Sale Securities
Domestic equities	$	1,215	$	-		$	-	$	1,215
International equities		594		-			-		594
Fixed income bonds		-		508			-		508
Asset Derivatives1
Interest rate swaps		-		79			-		79
Cross-currency swaps		-		89			-		89
Liability Derivatives1
Interest rate swaps		-		(14	)		-		(14	)
Cross-currency swaps		-		(3,867	)		-		(3,867	)
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" in our consolidated balance sheets.

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 $220 have maturities of less than one year, $33 within one to three years, $32 within three to five years and $85 for five or more years.

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

16

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

Derivative Financial Instruments

We enter into derivative transactions 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.

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, 2017 and June 30, 2016, 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, Canadian dollar and Swiss franc denominated debt. These agreements include initial and final exchanges of principal from fixed foreign currency denominated amounts to fixed U.S. dollar denominated amounts, to be exchanged at a specified rate that is usually determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed or floating foreign currency-denominated rate to a fixed U.S. dollar 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. 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, 2017 and June 30, 2016, 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 $59 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. 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 months ended June 30, 2017 and June 30, 2016, no ineffectiveness was measured on foreign exchange contracts designated as cash flow hedges.

17

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

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 June 30, 2017, we had posted collateral of $2,297 (a deposit asset) and held collateral of $13 (a receipt liability). Under the agreements, if AT&T's credit rating had been downgraded one rating level by Fitch Ratings, before the final collateral exchange in June, we would have been required to post additional collateral of $133. If DIRECTV Holdings LLC's credit rating had been downgraded below BBB- (S&P), we would have been required to post additional collateral of $239. At December 31, 2016, we had posted collateral of $3,242 (a deposit asset) and held no collateral. 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) exists, against the fair value of the derivative instruments.

Following are the notional amounts of our outstanding derivative positions:

	June 30,		December 31,
	2017		2016
Interest rate swaps	$	10,775	$	9,650
Cross-currency swaps		38,694		29,642
Interest rate locks		5,000		-
Total	$	54,469	$	39,292

Following are 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,								June 30,
	2017				2016				2017				2016
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps		$	(23	)		$	5			$	(48	)		$	71
Gain (Loss) on long-term debt			23				(5	)			48				(71	)

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

	Three months ended								Six months ended
	June 30,								June 30,
Cash Flow Hedging Relationships	2017				2016				2017				2016
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI		$	(717	)		$	(595	)		$	(697	)		$	(404	)
Interest rate locks:
Gain (Loss) recognized in accumulated OCI			(79	)			-				(79	)			-
Interest income (expense) reclassified from         accumulated OCI into income			(14	)			(14	)			(29	)			(29	)

18

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

 

NOTE 7. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS

Acquisitions

Auction 1000 On April 13, 2017, the Federal Communications Commission (FCC) announced that we were the successful bidder for $910 of spectrum in 18 markets. We provided the FCC an initial deposit of $2,348 in July 2016 and received a refund of $1,438 in April 2017.

Dispositions

YP Holdings LLC  In June 2017, YP Holdings LLC was acquired by Dex Media. Our second-quarter results include a gain of $36 for our portion of the proceeds.

Pending Acquisitions

Time Warner Inc.  On October 22, 2016, we entered into and announced a merger agreement (Merger Agreement) to acquire Time Warner Inc. (Time Warner) in a 50% cash and 50% stock transaction for $107.50 per share of Time Warner common stock, or approximately $85,400 at the date of the announcement (Merger). Combined with Time Warner's net debt at March 31, 2017, the total transaction value is approximately $107,160. Each share of Time Warner common stock will be exchanged for $53.75 per share in cash and a number of shares of AT&T common stock equal to the exchange ratio. If the average stock price (as defined in the Merger Agreement) at the time of closing the Merger is between (or equal to) $37.411 and $41.349 per share, the exchange ratio will be the quotient of $53.75 divided by the average stock price. If the average stock price is greater than $41.349, the exchange ratio will be 1.300. If the average stock price is less than $37.411, the exchange ratio will be 1.437. Post-transaction, Time Warner shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding. The cash portion of the purchase price will be financed with new debt and cash.

Time Warner is a global leader in media and entertainment whose major businesses encompass an array of some of the most respected and successful media brands. The deal combines Time Warner's vast library of content and ability to create new premium content for audiences around the world with our extensive customer relationships and distribution, one of the world's largest pay-TV subscriber bases and leading scale in TV, mobile and broadband distribution.

The Merger Agreement was approved by Time Warner shareholders on February 15, 2017 and remains subject to review by the U.S. Department of Justice and certain foreign jurisdictions. The FCC has stated that it does not believe it will need to review the deal as no licenses are involved. It is also a condition to closing that necessary consents from foreign governmental entities must be obtained. The transaction is expected to close before year-end 2017. If the Merger is terminated as a result of reaching the termination date (and at that time one or more of the conditions relating to certain regulatory approvals have not been satisfied) or there is a final, non-appealable order preventing the transaction relating to antitrust laws, communications laws, utilities laws or foreign regulatory laws, then under certain circumstances, we would be obligated to pay Time Warner $500.

Other Events

FirstNet  On March 30, 2017, the First Responder Network Authority (FirstNet) announced its selection of AT&T to build and manage the first nationwide broadband network dedicated to America's first responders. FirstNet expects to provide 20 MHz of valuable telecommunications spectrum and success-based payments of $6,500 over the next five years to support network buildout. The actual reach of the network and our investment over the 25-year period will be determined by the number of individual states electing to participate in FirstNet. As of July 31, 2017, seven states have opted-in to the program. We do not expect FirstNet to materially impact our 2017 results.

19

AT&T INC.

JUNE 30, 2017

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 30 months and, in many cases, they have the right to trade in the original equipment for a new device within a set period and have the remaining unpaid balance satisfied. As of June 30, 2017 and December 31, 2016, gross equipment installment receivables of $3,920 and $5,665 were included on our consolidated balance sheets, of which $2,230 and $3,425 are notes receivable that are included in "Accounts receivable - net."

In 2014, we entered into an uncommitted agreement pertaining to the sale of equipment installment receivables and related security with Citibank and various other relationship banks as purchasers (collectively, the Purchasers). Under this agreement, we transfer certain receivables to the Purchasers for cash and additional consideration upon settlement of the receivables, referred to as the deferred purchase price. In June 2017, we modified the agreement with the Purchasers such that we receive more upfront cash consideration at the time the receivables are transferred to the Purchasers. Additionally, in the event a customer trades in a device prior to the end of the installment contract period, we agree to make a payment to the Purchasers equal to any outstanding remaining installment receivable balance. Accordingly, we record a guarantee obligation to the Purchasers for this estimated amount at the time the receivables are transferred. Under the terms of the agreement, we continue to bill and collect the payments from our customers on behalf of the Purchasers. Since inception, cash proceeds received, net of remittances (excluding amounts returned as deferred purchase price), were $3,946.

The following table sets forth a summary of equipment installment receivables sold during the three and six months ended June 30, 2017 and 2016:

	Three months ended					Six months ended
	June 30,					June 30,
	2017			2016		2017		2016
Gross receivables sold		$	1,752	$	1,845	$	4,598	$	4,327
Net receivables sold1			1,599		1,671		4,220		3,927
Cash proceeds received			1,415		1,126		2,847		2,647
Deferred purchase price recorded			293		563		1,482		1,282
Guarantee obligation recorded			74		-		74		-
1 Receivables net of allowance, imputed interest and trade-in right guarantees.

The deferred purchase price and guarantee obligation are initially recorded at estimated fair value and subsequently carried at the lower of cost or net realizable value. The estimation of their fair values is based on remaining installment payments expected to be collected and the expected timing and value of device trade-ins. The estimated value of the device trade-ins considers prices offered to us by independent third parties that contemplate changes in value after the launch of a device model. The fair value measurements used for the deferred purchase price and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 6).

The following table shows the equipment installment receivables, previously sold to the Purchasers, which we repurchased in exchange for the associated deferred purchase price during the three months and six months ended June 30, 2017 and 2016:

	Three months ended						Six months ended
	June 30,						June 30,
	2017			2016			2017			2016
Fair value of repurchased receivables		$	337		$	-		$	714		$	532
Carrying value of deferred purchase price			301			-			640			539
Gain (loss) on repurchases1		$	36		$	-		$	74		$	(7	)
1 These gains (losses) are included in "Selling, general and administrative" in the consolidated statements of income.

20

AT&T INC.

JUNE 30, 2017

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - Continued

Dollars in millions except per share amounts

At June 30, 2017 and December 31, 2016, our deferred purchase price receivable was $3,648 and $3,090, respectively, of which $2,232 and $1,606 are included in "Other current assets" on our consolidated balance sheets, with the remainder in "Other Assets." Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our deferred purchase price and guarantee obligation.

The sales of equipment installment receivables did not have a material impact on 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.

Derecognized Installment Receivables

The following table sets forth a summary of equipment installment receivables that were sold to Purchasers and are no longer considered our assets.

	2017
Outstanding derecognized receivables at January 1,	$	7,232
Gross receivables sold		4,598
Collections on cash purchase price		(2,337	)
Collections on deferred purchase price		(382	)
Fees		(48	)
Trade ins and other		(141	)
Fair value of repurchased receivables		(714	)
Outstanding derecognized receivables at June 30,	$	8,208

NOTE 9. SUBSEQUENT EVENT

On July 27, 2017, we initiated a debt offering for $22,500 that will be completed on August 7, 2017. The proceeds will be used for general corporate purposes, including funding the cash consideration for the Time Warner acquisition. Upon settlement of the debt offering, we expect to terminate our bridge loan credit agreement.

Details for the offering are as follows:

· $750 of floating rate notes due 2023.

· $1,750 of 2.850% global notes due 2023.

· $3,000 of 3.400% global notes due 2024.

· $5,000 of 3.900% global notes due 2027.

· $4,500 of 4.900% global notes due 2037.

· $5,000 of 5.150% global notes due 2050.

· $2,500 of 5.300% global notes due 2058.

The notes detailed above, along with $7,301 of floating rate and global notes issued in June 2017, are subject to a special mandatory redemption feature. If we do not consummate the Time Warner acquisition pursuant to the merger agreement on or prior to April 22, 2018, or, if prior to such date, the merger agreement is terminated, then in either case, we must redeem the notes at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest.

In conjunction with this offering, we settled our interest rate locks.

21

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

RESULTS OF OPERATIONS

AT&T is a holding company whose subsidiaries and affiliates operate in the communications and digital entertainment services industry. Our subsidiaries and affiliates provide services and equipment that deliver voice, video and broadband services both domestically and internationally. You should read this discussion in conjunction with the consolidated financial statements and accompanying notes. A reference to a "Note" in this section refers to the accompanying Notes to Consolidated Financial Statements.

Consolidated Results  Our financial results in the second quarter and for the first six months of 2017 and 2016 are summarized as follows:

	Second Quarter							Six-Month Period
	2017		2016		Percent Change			2017		2016		Percent Change
Operating Revenues
Service	$	36,538	$	37,142		(1.6	)%	$	72,994	$	74,243		(1.7	)%
Equipment		3,299		3,378		(2.3	)		6,208		6,812		(8.9	)
Total Operating Revenues		39,837		40,520		(1.7	)		79,202		81,055		(2.3	)
Operating expenses
Cost of services and sales
Equipment		4,138		4,260		(2.9	)		7,986		8,635		(7.5	)
Broadcast, programming and operations		4,898		4,701		4.2			9,872		9,330		5.8
Other cost of services		9,218		9,514		(3.1	)		18,283		18,910		(3.3	)
Selling, general and administrative		8,113		8,909		(8.9	)		16,600		17,350		(4.3	)
Depreciation and amortization		6,147		6,576		(6.5	)		12,274		13,139		(6.6	)
Total Operating Expenses		32,514		33,960		(4.3	)		65,015		67,364		(3.5	)
Operating Income		7,323		6,560		11.6			14,187		13,691		3.6
Income Before Income Taxes		6,070		5,421		12.0			11,448		11,428		0.2
Net Income		4,014		3,515		14.2			7,588		7,400		2.5
Net Income Attributable to AT&T	$	3,915	$	3,408		14.9	%	$	7,384	$	7,211		2.4	%

Overview

Operating revenues decreased $683, or 1.7%, in the second quarter and $1,853, or 2.3%, for the first six months of 2017.

Service revenues decreased $604, or 1.6%, in the second quarter and $1,249, or 1.7%, for the first six months of 2017. The decreases were primarily due to continued declines in legacy wireline voice and data products and lower wireless service revenues reflecting increased adoption of unlimited plans. These were partially offset by increased revenues from video and strategic business services.

Equipment revenues decreased $79, or 2.3%, in the second quarter and $604, or 8.9%, for the first six months of 2017. The decreases were primarily due to lower wireless handset sales, driven by a continuing low rate of customer device upgrades and strong Bring Your Own Device (BYOD) participation. Equipment revenue is becoming increasingly unpredictable as many customers are choosing to upgrade devices less frequently or are bringing their own.

Operating expenses decreased $1,446, or 4.3%, in the second quarter and $2,349, or 3.5%, for the first six months of 2017.

Equipment expenses decreased $122, or 2.9%, in the second quarter and $649, or 7.5%, for the first six months of 2017. The decreases were driven by a decline in devices sold reflecting a change in customer buying habits.

22

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Broadcast, programming and operations expenses increased $197, or 4.2%, in the second quarter and $542, or 5.8%, for the first six months of 2017, reflecting annual content cost increases.

Other cost of services expenses decreased $296, or 3.1%, in the second quarter and $627, or 3.3%, for the first six months of 2017. The decreases reflect our continued focus on cost management and the utilization of automation and digitalization where appropriate. Also contributing to the decreases were lower Federal Universal Service Fund (USF) rates and fees and an actuarial gain due to remeasurement of our postretirement benefit obligation. These expense declines were partially offset by an increase in amortization of deferred customer fulfillment cost.

Selling, general and administrativeexpenses decreased $796, or 8.9%, in the second quarter and $750, or 4.3%, for the first six months of 2017. The decreases were attributable to our disciplined cost management, lower advertising costs and an actuarial gain due to remeasurement of our postretirement benefit obligation. The decrease in the first six months was partially offset by lower gains on wireless spectrum transactions during 2017 than in the comparable period of 2016.

Depreciation and amortization expense decreased $429, or 6.5%, in the second quarter and $865, or 6.6%, for the first six months of 2017. Depreciation expense decreased $281, or 5.3%, in the second quarter and $569, or 5.4%, for the first six months of 2017. The decreases were primarily due to our fourth-quarter 2016 change in estimated useful lives and salvage values of certain assets associated with our transition to an IP-based network, which accounted for $327 of the decrease in the second quarter and $654 of the decrease for the first six months. These decreases were partially offset by increases resulting from ongoing capital spending for upgrades and expansion.

Amortization expense decreased $148, or 11.2%, in the second quarter and $296, or 11.1%, for the first six months of 2017 due to lower amortization of intangibles for the customer lists associated with acquisitions.

Operating income increased $763, or 11.6%, in the second quarter and $496, or 3.6%, for the first six months of 2017. Our operating income margin in the second quarter increased from 16.2% in 2016 to 18.4% in 2017, and the first six months increased from 16.9% in 2016 to 17.9% in 2017.

Interest expense increased $137, or 10.9%, in the second quarter and $223, or 9.0%, for the first six months of 2017. The increases were primarily due to higher debt balances and average interest rates when compared to the prior year. Fees paid to secure financing for pending acquisitions also contributed to higher expenses in 2017.

Equity in net income (loss) of affiliates decreased $14 in the second quarter and $200 for the first six months of 2017, predominantly from losses from our legacy publishing business (which we sold in June 2017), partially offset by income from our investments in video-related businesses.

Other income (expense) – net increased $37, or 40.7%, in the second quarter and decreased $53, or 32.9%, for the first six months. The increase in the second quarter was primarily due to growth in interest and dividend income of $54, including interest on tax-related settlements, and net gains from the sale of non-strategic assets and investments of $8. These increases were partially offset by foreign exchange pressure.

The decrease for the first six months was primarily due to additional net losses from the sale of non-strategic assets totaling $97 and foreign exchange pressure, partially offset by growth in interest and dividend income of $55.

Income taxes increased $150, or 7.9%, in the second quarter of 2017 and decreased $168, or 4.2%, for the first six months of 2017. Our effective tax rate was 33.9% for the second quarter and 33.7% for the first six months of 2017, as compared to 35.2% for the second quarter and 35.2% for the first six months of 2016. The increase in income tax expense for the second quarter was primarily due to higher income before income taxes in 2017. The decrease in income tax expense for the first six months of 2017 was primarily due to the recognition of tax benefits related to the restructuring of a portion of our wireless business, which also resulted in decreases in our effective tax rate for the second quarter and the first six months of 2017.

23

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Selected Financial and Operating Data
	June 30,
Subscribers and connections in (000s)	2017		2016
Domestic wireless subscribers		136,500		131,805
Mexican wireless subscribers		13,082		9,955
North American wireless subscribers		149,582		141,760
North American branded subscribers		104,421		99,557
North American branded net additions		1,626		2,596
Domestic satellite and over-the-top video subscribers		21,347		20,454
AT&T U-verse® (U-verse) video subscribers		3,853		4,869
Latin America satellite video subscribers 1		13,622		12,523
Total video subscribers		38,822		37,846
Total domestic broadband connections		15,686		15,641
Network access lines in service		12,791		15,284
U-verse VoIP connections		5,853		5,593
Debt ratio 2		53.3%		50.5%
Net debt ratio 3		43.8%		47.6%
Ratio of earnings to fixed charges 4		3.84		4.01
Number of AT&T employees		260,480		277,200

¹ Excludes subscribers of our International segment equity investments in SKY Mexico, in which we own a 41% stake. At March 31, 2017, SKY Mexico had 8.0 million subscribers.

² 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.

³ Net debt ratios are calculated by deriving total debt (debt maturing within one year plus long-term debt) less cash available by total capital (total debt plus total stockholders' equity).

⁴ See Exhibit 12.

Segment Results

Our segments are strategic business units that offer different products and services over various technology platforms and/or in different geographies that are managed accordingly. Our segment results presented in Note 4 and discussed below for each segment follow our internal management reporting. We analyze our segments based on Segment Contribution, which consists of operating income, excluding acquisition-related costs and other significant items, and equity in net income (loss) of affiliates for investments managed within each segment. We have four reportable segments: (1) Business Solutions, (2) Entertainment Group, (3) Consumer Mobility and (4) International.

We also evaluate segment performance based on EBITDA and/or EBITDA margin, which is defined as Segment Contribution, excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate operating performance. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues.

24

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

The Business Solutions segment provides services to business customers, including multinational companies;governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as fixed strategic services; as well as traditional data and voice products. We utilize our wireless and wired networks to provide a complete integrated communications solution to our business customers.

The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the United States or in U.S. territories. We utilize our copper and IP-based wired network and our satellite technology.

The Consumer Mobility segment provides nationwide wireless service to consumers, wholesale and resale wireless subscribers located in the United States or in U.S. territories. We utilize our networks to provide voice and data services, including high-speed internet, video and home monitoring services over wireless devices.

The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency, and operating results are converted to U.S. dollars using official exchange rates. Our International segment is subject to foreign currency fluctuations.

Our operating assets are utilized by multiple segments and consist of our wireless and wired networks as well as an international satellite fleet. We manage our assets to provide for the most efficient, effective and integrated service to our customers, not by segment, and therefore asset information and capital expenditures by segment are not presented. Depreciation is allocated based on asset utilization by segment.

Business Solutions
Segment Results
	Second Quarter							Six-Month Period
	2017		2016		Percent Change			2017		2016		Percent Change
Segment operating revenues
Wireless service	$	8,006	$	7,963		0.5	%	$	15,935	$	15,818		0.7	%
Fixed strategic services		3,028		2,805		8.0			6,002		5,556		8.0
Legacy voice and data services		3,508		4,162		(15.7	)		7,138		8,535		(16.4	)
Other service and equipment		844		874		(3.4	)		1,661		1,733		(4.2	)
Wireless equipment		1,721		1,775		(3.0	)		3,219		3,546		(9.2	)
Total Segment Operating Revenues		17,107		17,579		(2.7	)		33,955		35,188		(3.5	)
Segment operating expenses
Operations and support		10,313		10,857		(5.0	)		20,489		21,659		(5.4	)
Depreciation and amortization		2,335		2,521		(7.4	)		4,647		5,029		(7.6	)
Total Segment Operating Expenses		12,648		13,378		(5.5	)		25,136		26,688		(5.8	)
Segment Operating Income		4,459		4,201		6.1			8,819		8,500		3.8
Equity in Net Income of Affiliates		-		-		-			-		-		-
Segment Contribution	$	4,459	$	4,201		6.1	%	$	8,819	$	8,500		3.8	%

25

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

The following tables highlight other key measures of performance for the Business Solutions segment:

	June 30,				Percent
(in 000s)	2017		2016		Change
Business Wireless Subscribers
Postpaid/Branded		51,111		49,433		3.4	%
Reseller		72		51		41.2
Connected devices 1		33,611		28,061		19.8
Total Business Wireless Subscribers		84,794		77,545		9.3
Business IP Broadband Connections		992		948		4.6	%
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.

	Second Quarter									Six-Month Period
	2017			2016			Percent			2017			2016			Percent
(in 000s)							Change									Change
Business Wireless Net Additions 1, 4
Postpaid/Branded		36			185			(80.5	)%		(89	)		318			-	%
Reseller		(5	)		(13	)		61.5			1			(35	)		-
Connected devices 2		2,170			1,199			81.0			4,723			2,777			70.1
Business Wireless Net Subscriber		2,201			1,371			60.5			4,635			3,060			51.5
Additions
Business Wireless Postpaid Churn 1, 3, 4		0.97	%		0.91	%	6 BP				1.02	%		0.97	%	5 BP
Business IP Broadband Net Additions		12			20			(40.0	)%		16			37			(56.8	)%
1 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period.
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.
3 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.
4 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscribers.

Operating Revenues decreased $472, or 2.7%, in the second quarter and $1,233, or 3.5%, for the first six months of 2017. Revenue declines reflect technological shifts away from legacy products, as well as decreasing wireless equipment revenues resulting from changes in customer buying habits. These decreases were partially offset by continued growth in wireless services and fixed strategic services, which represent 41% of non-wireless revenues. Our revenues continue to be pressured by slower fixed business investment.

Wireless service revenues increased $43, or 0.5%, in the second quarter and $117, or 0.7%, for the first six months of 2017. The revenue increases are primarily due to the migration of customers from our Consumer Mobility segment.

At June 30, 2017, we served 84.8 million subscribers, an increase of 9.3% from the prior year. Postpaid subscribers increased 3.4% from the prior year reflecting the addition of new customers as well as migrations from our Consumer Mobility segment, partially offset by continuing competitive pressures in the industry. Connected devices, which have lower average revenue per average subscriber (ARPU) and churn, increased 19.8% from the prior year reflecting growth in our connected car business and other data centric devices that utilize the network to connect and control physical devices using embedded computing systems and/or software, commonly called the Internet of Things (IoT).

26

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

The effective management of subscriber churn is critical to our ability to maximize revenue growth and to maintain and improve margins. In the second quarter, business wireless postpaid churn increased to 0.97% in 2017 from 0.91% in 2016, and for the first six months increased to 1.02% in 2017 from 0.97% in 2016.

Fixed strategic services revenues increased $223, or 8.0%, in the second quarter and $446, or 8.0%, for the first six months of 2017. Our revenues increased in the second quarter and first six months of 2017 primarily due to: Ethernet of $93 and $166; Dedicated Internet services of $45 and $104; and VoIP of $61 and $118, respectively.

Legacy wired voice and data service revenues decreased $654, or 15.7%, in the second quarter and $1,397, or 16.4%, for the first six months of 2017. In the second quarter and first six months of 2017, legacy voice billings decreased $342 and $744 and traditional data billings decreased $312 and $653, respectively. These decreases were primarily due to lower demand, as customers continue to shift to our more advanced IP-based offerings or to competitors.

Wireless equipment revenues decreased $54, or 3.0%, in the second quarter and $327, or 9.2%, for the first six months of 2017. While equipment revenue is becoming increasingly unpredictable as many customers are choosing to upgrade devices less frequently or bring their own, equipment revenues improved sequentially in the second quarter as compared to the first quarter of 2017 due to customers choosing to purchase higher priced devices and lower promotional activity in the quarter.

Operations and support expenses decreased $544, or 5.0%, in the second quarter and $1,170, or 5.4%, for the first six months of 2017. 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.

Decreased operations and support expenses in the second quarter and first six months were primarily due to efforts to automate and digitize our support activities, improving results approximately $230 and $397, and lower equipment sales and wireless upgrade transactions, decreasing equipment costs by $148 and $396, respectively. Expense reductions also reflect lower administrative costs, contributing to a reduction in expenses of $149 and $164, and fewer traffic compensation and wireless interconnect costs, resulting in declines of $60 and $111, respectively, in access and interconnect costs. USF rates and fees also contributed to lower expenses for the first six months.

Depreciation expense decreased $186, or 7.4%, in the second quarter and $382, or 7.6%, for the first six months of 2017. The decreases were primarily due to our fourth-quarter 2016 change in estimated useful lives and salvage value of certain network assets. Also contributing to lower depreciation expenses were network assets becoming fully depreciated, partially offset by ongoing capital spending for network upgrades and expansion.

Operating income increased $258, or 6.1%, in the second quarter and $319, or 3.8%, for the first six months of 2017. Our Business Solutions segment operating income margin in the second quarter increased from 23.9% in 2016 to 26.1% in 2017, and for the first six months increased from 24.2% in 2016 to 26.0% in 2017. Our Business Solutions EBITDA margin in the second quarter increased from 38.2% in 2016 to 39.7% in 2017, and for the first six months increased from 38.4% in 2016 to 39.7% in 2017.

27

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Entertainment Group
Segment Results
	Second Quarter									Six-Month Period
	2017			2016			Percent Change			2017			2016		Percent Change
Segment operating revenues
Video entertainment	$	9,153		$	8,963			2.1	%	$	18,173		$	17,867		1.7	%
High-speed internet		1,927			1,867			3.2			3,868			3,670		5.4
Legacy voice and data services		1,005			1,244			(19.2	)		2,061			2,557		(19.4	)
Other service and equipment		597			637			(6.3	)		1,203			1,275		(5.6	)
Total Segment Operating Revenues		12,682			12,711			(0.2	)		25,305			25,369		(0.3	)
Segment operating expenses
Operations and support		9,558			9,569			(0.1	)		19,159			19,147		0.1
Depreciation and amortization		1,458			1,489			(2.1	)		2,877			2,977		(3.4	)
Total Segment Operating Expenses		11,016			11,058			(0.4	)		22,036			22,124		(0.4	)
Segment Operating Income		1,666			1,653			0.8			3,269			3,245		0.7
Equity in Net Income (Loss) of Affiliates		(11	)		(2	)		-			(17	)		1		-
Segment Contribution	$	1,655		$	1,651			0.2	%	$	3,252		$	3,246		0.2	%

The following tables highlight other key measures of performance for the Entertainment Group segment:

	June 30,
(in 000s)	2017		2016		Percent Change
Video Connections
Satellite		20,856		20,454		2.0	%
U-verse		3,825		4,841		(21.0	)
DIRECTV NOW 1		491		-		-
Total Video Connections		25,172		25,295		(0.5	)
Broadband Connections
IP		13,242		12,596		5.1
DSL		1,060		1,585		(33.1	)
Total Broadband Connections		14,302		14,181		0.9
Retail Consumer Switched Access Lines		5,257		6,515		(19.3	)
U-verse Consumer VoIP Connections		5,439		5,300		2.6
Total Retail Consumer Voice Connections		10,696		11,815		(9.5	)%
1 Consistent with industry practice, DIRECTV NOW includes trial-period subscribers.

28

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

	Second Quarter									Six-Month Period
	2017			2016			Percent Change			2017			2016			Percent Change
(in 000s)
Video Net Additions
Satellite 1		(156	)		342			-	%		(156	)		670			-	%
U-verse 1		(195	)		(391	)		50.1			(428	)		(773	)		44.6
DIRECTV NOW 2		152			-			-			224			-			-
Net Video Additions		(199	)		(49	)		-			(360	)		(103	)		-
Broadband Net Additions
IP		112			54			-			354			240			47.5
DSL		(104	)		(164	)		36.6			(231	)		(345	)		33.0
Net Broadband Additions		8			(110	)		-	%		123			(105	)		-	%
1 Includes disconnections for customers that migrated to DIRECTV NOW.
2 Consistent with industry practice, DIRECTV NOW includes trial-period subscribers.

Operating revenues decreased $29, or 0.2%, in the second quarter and $64, or 0.3%, for the first six months of 2017, largely due to lower revenues from legacy voice and data products, offset by growth in revenues from consumer IP broadband and satellite video services.

As consumers continue to demand more mobile access to video, we provide streaming access to our subscribers, including mobile access for existing satellite and U-verse subscribers. In November 2016, we launched DIRECTV NOW, our newest video streaming option that does not require either satellite or U-verse service (commonly called over-the-top video service).

Video entertainment revenues increased $190, or 2.1%, in the second quarter and $306, or 1.7%, for the first six months of 2017, reflecting a 3.5% and 2.3% increase in average revenue per linear (combined satellite and U-verse) video connection and increases of $51 and $72 in advertising revenues, respectively. While linear video losses have continued their recent trend, we are beginning to see the impact of customers wanting mobile and over-the-top offerings, which is contributing to growth in our DIRECTV NOW connections and offsetting linear video subscriber losses. DIRECTV NOW connections continue to grow as we add eligible devices and increase content choices. While our ability to bundle services has also positively impacted subscriber trends and churn, we did experience an increase in churn for subscribers with linear video but no wireless service through AT&T, partially due to pricing increases associated with annual content cost increases and involuntary churn.

High-speed internet revenues increased $60, or 3.2%, in the second quarter and $198, or 5.4%, for the first six months of 2017, reflecting a 5.1% increase in IP broadband subscribers when compared to the prior year. Also contributing to higher revenues was the increasing trend of subscribers to select higher-speed and higher-rated plans. Average revenue per IP broadband connection (ARPU) increased 0.7% in the first six months of 2017. To compete more effectively against other broadband providers in the midst of ongoing declines in DSL broadband subscribers, we continued to deploy our all-fiber, high-speed wireline network, which has improved customer retention rates.

Legacy voice and data service revenues decreased $239, or 19.2%, in the second quarter and $496, or 19.4%, for the first six months of 2017. For the six months ended June 30, 2017, legacy voice and data services represented approximately 8% of our total Entertainment Group revenue compared to 10% for the June 30, 2016 period, and reflect second quarter and year to date decreases of $161 and $335 in local voice and long-distance, and $79 and $162 in traditional data billings, respectively. The decreases reflect the continued migration of customers to our more advanced IP-based offerings or to competitors. At June 30, 2017, approximately 7% of our broadband connections were DSL compared to 11% at June 30, 2016.

Operations and support expenses decreased $11, or 0.1%, in the second quarter and increased $12, or 0.1%, for the first six months of 2017. Operations and support expenses consist of costs associated with providing video content, and expenses incurred to provide our products and services, which include costs of operating and maintaining our networks, as well as personnel charges for compensation and benefits.

29

AT&T INC.

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

Dollars in millions except per share and per subscriber amounts

Decreased operations and support expenses in the second quarter were due to merger synergies and efforts to automate and digitize our support activities. These reductions were mostly offset by annual content cost increases and an increase in amortization of deferred customer fulfillment cost.

Increased operations and support expenses for the first six months of 2017 were primarily due to annual content cost increases, deferred customer fulfillment cost amortization, and impacts of storms and flooding on the West Coast that occurred earlier in 2017. Offsetting these increases were the impact of our ongoing focus on cost efficiencies and merger synergies, as well as workforce reductions and lower advertising costs.

Depreciation expense decreased $31, or 2.1%, in the second quarter, and $100, or 3.4%, for the first six months of 2017. The decreases were primarily due to our fourth-quarter 2016 change in estimated useful lives and salvage value of certain assets. Also contributing to lower depreciation expenses were network assets becoming fully depreciated. These decreases were offset by ongoing capital spending for network upgrades and expansion.

Operating income increased $13, or 0.8%, in the second quarter and $24, or 0.7%, for the first six months of 2017. Our Entertainment Group segment operating income margin in the second quarter increased from 13.0% in 2016 to 13.1% in 2017, and for the first six months increased from 12.8% in 2016 to 12.9% in 2017. Our Entertainment Group segment EBITDA margin in the second quarter decreased from 24.7% in 2016 to 24.6% in 2017, and for the first six months decreased from 24.5% in 2016 to 24.3% in 2017.

Consumer Mobility
Segment Results
	Second Quarter							Six-Month Period
	2017		2016		Percent Change			2017		2016		Percent Change
Segment operating revenues
Service	$	6,528	$	6,948		(6.0	)%	$	13,137	$	13,891		(5.4	)%
Equipment		1,263		1,238		2.0			2,394		2,623		(8.7	)
Total Segment Operating Revenues		7,791		8,186		(4.8	)		15,531		16,514		(6.0	)
Segment operating expenses
Operations and support		4,520		4,680		(3.4	)		9,048		9,592		(5.7	)
Depreciation and amortization		871		932		(6.5	)		1,744		1,854		(5.9	)
Total Segment Operating Expenses		5,391		5,612		(3.9	)		10,792		11,446		(5.7	)
Segment Operating Income		2,400		2,574		(6.8	)		4,739		5,068		(6.5	)
Equity in Net Income of Affiliates		-		-		-			-		-		-
Segment Contribution	$	2,400	$	2,574		(6.8	)%	$	4,739	$	5,068		(6.5	)%

30

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

 

The following tables highlight other key measures of performance for the Consumer Mobility segment:
	June 30,				Percent
(in 000s)	2017		2016		Change
Consumer Mobility Subscribers
Postpaid		26,290		27,862		(5.6	)%
Prepaid		14,187		12,633		12.3
Branded		40,477		40,495		-
Reseller		10,182		12,869		(20.9	)
Connected devices 1		1,047		896		16.9
Total Consumer Mobility Subscribers		51,706		54,260		(4.7	)%
1 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.

	Second Quarter									Six-Month Period
	2017			2016			Percent Change			2017			2016			Percent Change
(in 000s)
Consumer Mobility Net Additions 1, 4
Postpaid		91			72			26.4	%		25			68			(63.2	)%
Prepaid		267			365			(26.8	)		549			865			(36.5	)
Branded Net Additions		358			437			(18.1	)		574			933			(38.5	)
Reseller		(363	)		(446	)		18.6			(951	)		(824	)		(15.4	)
Connected devices 2		86			(1	)		-			105			(27	)		-
Consumer Mobility Net Subscriber Additions		81			(10	)		-	%		(272	)		82			-	%
Total Churn 1, 3, 4		2.15	%		1.96	%	19 BP				2.29	%		2.04	%	25 BP
Postpaid Churn 1, 3, 4		1.09	%		1.09	%	- BP				1.16	%		1.16	%	- BP
1 Excludes migrations between AT&T segments and/or subscriber categories and acquisition-related additions during the period.
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.
3 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total number
of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period.
4 2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which were reflected in beginning of period subscribers.

Operating Revenues decreased $395, or 4.8%, in the second quarter and $983, or 6.0%, for the first six months of 2017. Decreased revenues reflect declines in postpaid service revenues due to customers migrating to our Business Solutions segment and choosing unlimited plans, partially offset by higher prepaid service revenues. Our business wireless offerings allow for individual subscribers to purchase wireless services through employer-sponsored plans for a reduced price. The migration of these subscribers to the Business Solutions segment negatively impacted our consumer postpaid subscriber total and service revenue growth.

Service revenue decreased $420, or 6.0%, in the second quarter and $754, or 5.4%, for the first six months of 2017. The decreases were largely due to the migration of subscribers to Business Solutions and postpaid customers continuing to shift to discounted monthly service charges under our unlimited plans. Revenues from postpaid customers declined $496, or 9.9%, in the second quarter and $1,003, or 9.9%, for the first six months of 2017. Without the migration of customers to Business Solutions, postpaid wireless revenues would have decreased approximately 5.4% for both the second quarter and the first six months of 2017. The decreases were partially offset by higher prepaid service revenues of $201, or 14.7%, in the second quarter and $440, or 16.5%, for the first six months primarily from growth in Cricket and AT&T PREPAID^SM subscribers.

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AT&T INC.

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

Dollars in millions except per share and per subscriber amounts

Equipment revenue increased $25, or 2.0%, in the second quarter and decreased $229, or 8.7%, for the first six months of 2017. The increase in the second quarter equipment revenues resulted from higher handset sales and upgrades, a substantial improvement over the first quarter. As previously discussed, equipment revenue is becoming increasingly unpredictable as customers are choosing to upgrade devices less frequently or bring their own.

Operations and support expenses decreased $160, or 3.4%, in the second quarter and $544, or 5.7%, for the first six months of 2017. Operations and support expenses consist of costs incurred to provide our products and services, including costs of operating and maintaining our networks and personnel expenses, such as compensation and benefits.

Decreased operations and support expenses for the second quarter were primarily due to increased operational efficiencies and lower marketing and advertising costs resulting from the timing of scheduled ad campaigns and integrated advertising. These decreases were partially offset by increased equipment costs due to higher volumes of wireless equipment sales and upgrades.

Decreased operations and support expenses for the first six months were primarily due to lower volumes of wireless equipment sales and upgrades, which decreased equipment and selling and commission costs, and lower marketing and advertising costs resulting from the timing of scheduled ad campaigns and integrated advertising.

Depreciation expense decreased $61, or 6.5%, in the second quarter and $110, or 5.9%, for the first six months of 2017. The decreases were primarily due to fully depreciated assets, partially offset by ongoing capital spending for network upgrades and expansion.

Operating income decreased $174, or 6.8%, in the second quarter and $329, or 6.5%, for the first six months of 2017. Our Consumer Mobility segment operating income margin in the second quarter decreased from 31.4% in 2016 to 30.8% in 2017, and for the first six months decreased from 30.7% in 2016 to 30.5% in 2017. Our Consumer Mobility EBITDA margin in the second quarter decreased from 42.8% in 2016 to 42.0% in 2017, and for the first six months decreased from 41.9% in 2016 to 41.7% in 2017.

International
Segment Results
	Second Quarter									Six-Month Period
	2017			2016			Percent Change			2017			2016			Percent Change
Segment operating revenues
Video entertainment	$	1,361		$	1,222			11.4	%	$	2,702		$	2,352			14.9	%
Wireless service		535			489			9.4			1,010			944			7.0
Wireless equipment		130			117			11.1			243			199			22.1
Total Segment Operating Revenues		2,026			1,828			10.8			3,955			3,495			13.2
Segment operating expenses
Operations and support		1,772			1,723			2.8			3,531			3,311			6.6
Depreciation and amortization		311			298			4.4			601			575			4.5
Total Segment Operating Expenses		2,083			2,021			3.1			4,132			3,886			6.3
Segment Operating Income (Loss)		(57	)		(193	)		70.5			(177	)		(391	)		54.7
Equity in Net Income (Loss) of Affiliates		25			9			-			45			23			95.7
Segment Contribution	$	(32	)	$	(184	)		82.6	%	$	(132	)	$	(368	)		64.1	%

32

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

 

The following tables highlight other key measures of performance for the International segment:

	June 30,				Percent
(in 000s)	2017		2016		Change
Mexican Wireless Subscribers
Postpaid		5,187		4,570		13.5	%
Prepaid		7,646		5,059		51.1
Branded		12,833		9,629		33.3
Reseller		249		326		(23.6	)
Total Mexican Wireless Subscribers		13,082		9,955		31.4
Latin America Satellite Subscribers
PanAmericana		8,103		7,175		12.9
SKY Brazil 1		5,519		5,348		3.2
Total Latin America Satellite Subscribers		13,622		12,523		8.8	%
1 Excludes subscribers of our International segment equity investments in SKY Mexico, in which we own a 41.3% stake. SKY Mexico
had 8.0 million subscribers at March 31, 2017 and 7.8 million subscribers at June 30, 2016.

	Second Quarter									Six-Month Period
(in 000s)	2017			2016			Percent Change			2017			2016			Percent Change
Mexican Wireless Net Additions
Postpaid		92			165			(44.2	)%		222			281			(21.0	)%
Prepaid		402			614			(34.5	)		919			1,064			(13.6	)
Branded Net Additions		494			779			(36.6	)		1,141			1,345			(15.2	)
Reseller		(18	)		(37	)		51.4			(32	)		(74	)		56.8
Mexican Wireless    Net Subscriber Additions		476			742			(35.8	)		1,109			1,271			(12.7	)
Latin America Satellite Net Additions 1
PanAmericana		13			81			(84.0	)		65			109			(40.4	)
SKY Brazil		(69	)		6			-			(30	)		(95	)		68.4
Latin America Satellite    Net Subscriber Additions 2		(56	)		87			-	%		35			14			-	%
1 In 2017, we updated the methodology used to account for prepaid video connections, which were reflected in beginning of period subscribers.
2 Excludes SKY Mexico net subscriber losses of 18,000 for the quarter ended March 31, 2017 and additions of 398,000 for the quarter ended
March 31, 2016.

Operating Results

Our International segment consists of the Latin American operations acquired with DIRECTV as well as our Mexican wireless operations. Video entertainment services are provided to primarily residential customers using satellite technology. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates. Our International segment is subject to foreign currency fluctuations.

Operating revenues increased $198, or 10.8%, in the second quarter and $460, or 13.2%, for the first six months of 2017. The increases include $139 and $350 from video services in Latin America due to price increases driven primarily by macroeconomic conditions with mixed local currencies. Mexico wireless revenues increased $59, or 9.7%, in the second quarter and $110, or 9.6%, for the first six months of 2017, primarily due to an increase in our subscriber base and higher equipment sales offset by competition and lower ARPU (average revenue per average wireless subscriber) and foreign currency pressures.

33

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Operations and support expenses increased $49, or 2.8%, in the second quarter and $220, or 6.6%, for the first six months of 2017. Operations and support expenses consist of costs incurred to provide our products and services, including costs of operating and maintaining our networks and providing video content and personnel expenses, such as compensation and benefits.

The increases in Latin America in the second quarter and for the first six months were primarily due to higher programming and other operating costs. The second quarter was partially offset by favorable foreign currency exchange rates and our reassessment of operating tax contingencies in Brazil. The increases in Mexico in the second quarter and for the first six months were primarily driven by higher operational costs, including expenses associated with our network expansion, partially offset by favorable foreign currency exchange rates.

Depreciation expense increased $13, or 4.4%, in the second quarter and $26, or 4.5%, for the first six months of 2017. The increases were primarily due to updating the estimated asset lives for video equipment in Latin America and higher capital spending in Mexico.

Operating income increased $136, or 70.5%, in the second quarter and $214, or 54.7%, for the first six months of 2017. Our International segment operating income margin in the second quarter increased from (10.6)% in 2016 to (2.8)% in 2017, and for the first six months increased from (11.2)% in 2016 to (4.5)% in 2017. Our International EBITDA margin in the second quarter increased from 5.7% in 2016 to 12.5% in 2017, and for the first six months increased from 5.3% in 2016 to 10.7% in 2017.

34

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Supplemental Operating Information

As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined domestic wireless operations (AT&T Mobility). See "Discussion and Reconciliation of Non-GAAP Measure" for a reconciliation of these supplemental measures to the most directly comparable financial measures calculated and presented in accordance with U.S. generally accepted accounting principles.

AT&T Mobility Results
	Second Quarter							Six-Month Period
	2017		2016		Percent Change			2017		2016		Percent Change
Operating revenues
Service	$	14,534	$	14,911		(2.5	)%	$	29,072	$	29,709		(2.1	)%
Equipment		2,984		3,013		(1.0	)		5,613		6,169		(9.0	)
Total Operating Revenues		17,518		17,924		(2.3	)		34,685		35,878		(3.3	)
Operating expenses
Operations and support		10,197		10,501		(2.9	)		20,195		21,125		(4.4	)
EBITDA		7,321		7,423		(1.4	)		14,490		14,753		(1.8	)
Depreciation and amortization		1,992		2,081		(4.3	)		3,989		4,137		(3.6	)
Total Operating Expenses		12,189		12,582		(3.1	)		24,184		25,262		(4.3	)
Operating Income	$	5,329	$	5,342		(0.2	)%	$	10,501	$	10,616		(1.1	)%

The following tables highlight other key measures of performance for AT&T Mobility:
	June 30,				Percent Change
(in 000s)	2017		2016
Wireless Subscribers 1
Postpaid smartphones		59,178		58,508		1.1	%
Postpaid feature phones and data-centric devices		18,223		18,787		(3.0	)
Postpaid		77,401		77,295		0.1
Prepaid		14,187		12,633		12.3
Branded		91,588		89,928		1.8
Reseller		10,254		12,920		(20.6	)
Connected devices 2		34,658		28,957		19.7
Total Wireless Subscribers		136,500		131,805		3.6
Branded Smartphones		71,818		69,058		4.0
Smartphones under our installment programs at end of period		31,649		29,026		9.0	%
1 Represents 100% of AT&T Mobility wireless subscribers.
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.

35

AT&T INC.

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

Dollars in millions except per share and per subscriber amounts

	Second Quarter									Six-Month Period
	2017			2016			Percent Change			2017			2016			Percent Change
(in 000s)
Wireless Net Additions 1, 4
Postpaid		127			257			(50.6	)%		(64	)		386			-	%
Prepaid		267			365			(26.8	)		549			865			(36.5	)
Branded Net Additions		394			622			(36.7	)		485			1,251			(61.2	)
Reseller		(368	)		(459	)		19.8			(950	)		(859	)		(10.6	)
Connected devices 2		2,256			1,198			88.3			4,828			2,750			75.6
Wireless Net Subscriber Additions		2,282			1,361			67.7			4,363			3,142			38.9
Smartphones sold under our installment    programs during period		3,583			3,960			(9.5	)%		7,084			8,095			(12.5	)%
Total Churn 3, 4		1.28	%		1.35	%	(7) BP				1.37	%		1.38	%	(1) BP
Branded Churn 3, 4		1.57	%		1.47	%	10 BP				1.64	%		1.55	%	9 BP
Postpaid Churn 3, 4		1.01	%		0.97	%	4 BP				1.07	%		1.04	%	3 BP
Postpaid Phone Only Churn 3, 4		0.79	%		0.84	%	(5) BP				0.84	%		0.90	%	(6) BP
1 Excludes acquisition-related additions during the period.
2 Includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Excludes postpaid tablets.
3 Calculated by dividing the aggregate number of wireless subscribers who canceled service during a month divided by the total number
of wireless subscribers at the beginning of that month. The churn rate for the period is equal to the average of the churn rate for each month of that period.
4 2017 excludes the impact of the 2G shutdown and a true-up to the reseller subscriber base, which were reflected in beginning of period subscribers.

Operating income decreased $13, or 0.2%, in the second quarter and $115, or 1.1%, for the first six months of 2017. The second-quarter operating income margin of AT&T Mobility increased from 29.8% in 2016 to 30.4% in 2017 and for the first six months increased from 29.6% in 2016 to 30.3% in 2017. AT&T Mobility's second-quarter EBITDA margin increased from 41.4% in 2016 to 41.8% in 2017 and for the first six months increased from 41.1% in 2016 to 41.8% in 2017. AT&T Mobility's second-quarter EBITDA service margin increased from 49.8% in 2016 to 50.4% in 2017 and for the first six months increased from 49.7% in 2016 to 49.8% in 2017 (EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues).

Subscriber Relationships

As the wireless industry continues to mature, future wireless growth will become increasingly dependent 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 unlimited, as well as equipment installment programs. Beginning in the first quarter of 2017, we expanded our unlimited wireless data plans to make them available to customers that do not subscribe to our video services.

ARPU

Postpaid phone-only ARPU was $58.30 for the second quarter and $58.20 for the first six months of 2017, compared to $59.80 and $59.66 in 2016. Postpaid phone-only ARPU plus equipment installment billings was $69.04 for the second quarter and $68.93 for the first six months of 2017, compared to $69.97 and $69.75 in 2016. ARPU has been affected by customers shifting to unlimited plans, which decreases overage revenues; however, customers are adding additional devices helping to offset that decline.

36

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

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 lower for the second quarter and first six months of 2017. Postpaid churn was higher for the second quarter and first six months of 2017, reflecting higher tablet churn. Postpaid phone-only churn was lower in the second quarter and first six months of 2017, despite competitive pressure in the industry.

Branded Subscribers

Branded subscribers increased 0.4% in the second quarter of 2017 when compared to March 31, 2017 and increased 1.8% when compared to June 30, 2016. The sequential increase reflects growth of 0.1% and 2.5% in postpaid and prepaid subscribers and the year-over-year rise includes increases of 0.1% and 12.3% in postpaid and prepaid subscribers, respectively.

At June 30, 2017, 92% of our postpaid phone subscriber base used smartphones, compared to 89% at June 30, 2016, with more than 95% of phone sales during both years attributable to smartphones. Virtually all 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. Device connections on our Mobile Share and unlimited wireless data plans now represent 86% of our postpaid customer base, compared to 82% at June 30, 2016. Such offerings are intended to encourage existing subscribers to upgrade their current services and/or add connected devices, attract subscribers from other providers and/or minimize subscriber churn.

Our equipment installment purchase programs, including AT&T Next, allow for postpaid subscribers to purchase certain devices in installments over a period of up to 30 months. Additionally, after a specified period of time, AT&T Next subscribers also have the right to trade in the original device for a new device with a new installment plan and have the remaining unpaid balance satisfied. For installment programs, we recognize equipment revenue at the time of the sale 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 choosing equipment installment programs pay a lower monthly service charge, which results in lower service revenue recorded for these subscribers. At June 30, 2017, about 53% of the postpaid smartphone base is on an equipment installment program compared to 50% at June 30, 2016. Over 90% of postpaid smartphone gross adds and upgrades for all periods presented were either equipment installment plans or BYOD.While BYOD customers do not generate equipment revenue or expense, the service revenue helps improve our margins.

Connected Devices

Connected Devices includes data-centric devices such as session-based tablets, monitoring devices and automobile systems. Connected device subscribers increased 7.0% during the second quarter when compared to March 31, 2017 and 19.7% when compared to June 30, 2016. During the second quarter and first six months of 2017, we added approximately 1.5 million and 3.2 million "connected" cars, respectively, through agreements with various carmakers, and experienced strong growth in other IoT connections as well. We believe that these connected car agreements give us the opportunity to create future retail relationships with the car owners.

OTHER BUSINESS MATTERS

Time Warner Inc. Acquisition  In October 2016, we announced an agreement (Merger Agreement) to acquire Time Warner Inc. (Time Warner) in a 50% cash and 50% stock transaction for $107.50 per share of Time Warner common stock, or approximately $85,400 at the date of the announcement (Merger). Each share of Time Warner common stock will be exchanged for $53.75 per share in cash and a number of shares of AT&T common stock equal to the exchange ratio. The cash portion of the purchase price will be financed with new debt and cash. The transaction remains subject to review by the U.S. Department of Justice and certain foreign jurisdictions, but is expected to close before year-end 2017. See Note 7 for additional details of the transaction and "Liquidity" for a discussion of our financing arrangements.

FirstNet  On March 30, 2017, the First Responder Network Authority (FirstNet) announced its selection of AT&T to build and manage the first nationwide broadband network dedicated to America's first responders. FirstNet expects to provide 20 MHz of valuable telecommunications spectrum and success-based payments of $6,500 over the next five years to support network buildout. We expect to spend about $40,000 over the life of the 25-year contract to build, deploy, operate and maintain the network.

37

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

The actual reach of the network and our investment over the 25-year period will be determined by the number of individual states electing to participate in FirstNet. Individual states are currently reviewing participation plans, and as of July 31, 2017, seven states have opted-in to the program. We do not expect FirstNet to materially impact our 2017 results.

Litigation Challenging DIRECTV's NFL SUNDAY TICKET  More than two dozen putative class actions were filed in the U.S. District Courts for the Central District of California and the Southern District of New York against DIRECTV and the National Football League (NFL). These cases were brought by residential and commercial DIRECTV subscribers that have purchased NFL SUNDAY TICKET. The plaintiffs allege that (i) the 32 NFL teams have unlawfully agreed not to compete with each other in the market for nationally televised NFL football games and instead have "pooled" their broadcasts and assigned to the NFL the exclusive right to market them; and (ii) the NFL and DIRECTV have entered into an unlawful exclusive distribution agreement that allows DIRECTV to charge "supra-competitive" prices for the NFL SUNDAY TICKET package. The complaints seek unspecified treble damages and attorneys' fees along with injunctive relief. The first complaint, Abrahamian v. National Football League, Inc., et al., was served in June 2015. In December 2015, the Judicial Panel on Multidistrict Litigation transferred the cases outside the Central District of California to that court for consolidation and management of pre-trial proceedings. In June 2016, the plaintiffs filed a consolidated amended complaint. We vigorously dispute the allegations the complaints have asserted. In August 2016, DIRECTV filed a motion to compel arbitration and the NFL defendants filed a motion to dismiss the complaint. The court held a hearing on both motions on February 13, 2017. On June 30, 2017, the court granted the NFL defendants' motion to dismiss the complaint without leave to amend, finding that: (1) the plaintiffs did not plead a viable market; (2) the plaintiffs did not plead facts supporting the contention that the exclusive agreement between the NFL and DIRECTV harms competition; (3) the claims failed to overcome the fact that the NFL and its teams must cooperate to sell broadcasts; and (4) the plaintiffs do not have standing to challenge the horizontal agreement among the NFL and the teams. In light of the order granting the motion to dismiss, the court denied DIRECTV's motion to compel arbitration as moot.

Federal Trade Commission Litigation Involving DIRECTV  In March 2015, the Federal Trade Commission (FTC) filed a civil suit in the U.S. District Court for the Northern District of California against DIRECTV seeking injunctive relief and unspecified money damages under Section 5 of the Federal Trade Commission Act and Section 4 of the Restore Online Shoppers' Confidence Act. The FTC's allegations concern DIRECTV's advertising, marketing and sale of programming packages. The FTC alleges that DIRECTV did not adequately disclose all relevant terms. We vigorously dispute these allegations. On April 4, 2017, we reported to the court that we had reached a written settlement with the FTC Bureau of Consumer Protection. Commission approval is still required. The court scheduled trial to begin on August 14, 2017, if Commission approval has not been secured by that date.

Unlimited Data Plan Claims  In October 2014, the FTC filed a civil suit in the U.S. District Court for the Northern District of California 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 the application of AT&T's Maximum Bit Rate (MBR) program to customers who enrolled in our Unlimited Data Plan from 2007-2010. MBR temporarily reduces in certain instances the download speeds of a small portion of our legacy Unlimited Data Plan customers each month after the customer exceeds a designated amount of data during the customer's billing cycle. MBR is an industry-standard practice that is 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, 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. In March 2015, our motion to dismiss the litigation on the grounds that the FTC lacked jurisdiction to file suit was denied. In May 2015, the Court granted our motion to certify its decision for immediate appeal. The United States Court of Appeals for the Ninth Circuit subsequently granted our petition to accept the appeal, and, on August 29, 2016, issued its decision reversing the district court and finding that the FTC lacked jurisdiction to proceed with the action. The FTC asked the Court of Appeals to reconsider the decision. On May 9, 2017, the Ninth Circuit Court of Appeals granted the FTC's petition for en banc review, which will be conducted by an eleven-judge panel. The court set oral argument for the week of September 18, 2017, in San Francisco. In addition to the FTC case, several class actions have been filed also challenging our MBR program. We vigorously dispute the allegations the complaints have asserted.

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Labor Contracts As of June 30, 2017, we employed approximately 260,000 persons. Approximately 46% of our employees are represented by the Communications Workers of America, the International Brotherhood of Electrical Workers or other unions. After expiration of the agreements, work stoppages or labor disruptions may occur in the absence of new contracts or other agreements being reached.

A summary of labor contract negotiations, by region or employee group, is as follows:

· Approximately 20,000 traditional wireline employees in the Southwest ratified a new contract in April 2017. The new contract will expire in April 2021.

· Approximately 5,000 traditional wireline employees primarily in the Midwest ratified a new contract in May 2017. The new contract will expire in June 2022.

· Approximately 20,000 mobility employees across the country are covered by a contract that expired in early 2017. We continue to negotiate with labor representatives.

· Approximately 15,000 traditional wireline employees in our West region are covered by a contract that expired in April 2016. In July, we reached a tentative agreement on a new four-year contract that will expire in April 2020, if ratified.

· Approximately 11,000 former DIRECTV employees were eligible for and chose union representation. Bargaining has resulted in approximately 80% of these employees now being covered under ratified contracts that expire between 2017 and 2021.

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.

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. Since the Telecom Act was passed, the Federal Communications Commission (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. However, based on their public statements and written opinions, we expect the new leadership at the FCC to chart a more predictable and balanced regulatory course that will encourage long-term investment and benefit consumers. In addition, 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 further extended to broadband or wireless services, which are subject to vigorous competition.

In March 2017, the FCC circulated a draft order proposing to significantly reduce regulation of the bulk data connections that telecom companies provide to businesses, otherwise known as special access services or business data services. That order, which was adopted on April 20, 2017, maintains light touch pricing regulation of packet-based services, extends such light touch pricing regulation to high-speed TDM transport services and to most of our TDM channel termination services, based on a competitive market test for such services. For those services that do not qualify for light touch regulation, the order allows companies to offer volume and term discounts, as well as contract tariffs.

In October 2016, a sharply divided FCC adopted new rules governing the use of customer information by providers of broadband internet access service. Those rules were more restrictive in certain respects than those governing other participants in the internet economy, including so-called "edge" providers such as Google and Facebook. On April 3, 2017, the President signed a resolution passed by Congress repealing the new rules under the Congressional Review Act, which prohibits the issuance of a new rule that is substantially the same as a rule repealed under its provisions, or the reissuance of the repealed rule, unless the new or reissued rule is specifically authorized by a subsequent act of Congress. In June 2017, the FCC released an order clarifying that providers of broadband internet access service continue to be subject to privacy

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

requirements under section 222 of The Communications Act of 1934 (Communications Act), but not the more restrictive rules that were adopted in October 2016.

In February 2015, the FCC released an order classifying both fixed and mobile consumer broadband internet access services as telecommunications services, subject to Title II of the Communications Act. The FCC's decision significantly expands its authority to regulate the provision of fixed and mobile broadband internet access services. AT&T and other providers of broadband internet access services challenged the FCC's decision before the U.S. Court of Appeals for the D.C. Circuit. In June 2016, a panel of the Court of Appeals upheld the FCC's classification of broadband internet access and the attendant rules by a 2-1 vote. In July 2016, AT&T and several of the other parties that challenged the rules filed petitions with the Court of Appeals asking that the case be reheard either by the panel or by the full Court of Appeals. On May 1, 2017, the Court of Appeals denied the rehearing requests, and on July 20, 2017, the United States Supreme Court extended to September 28, 2017 the deadline for filing petitions for certiorari to review the Court of Appeals decision. In May 2017, the FCC initiated a proceeding to reverse its 2015 decision to classify broadband internet access services as telecommunications services. AT&T fully supports an open internet and believes that Congress must pass bipartisan legislation that codifies core principles of net neutrality while maintaining a stable regulatory environment conducive to investment, future innovation and economic growth.

We provide satellite video service through our subsidiary DIRECTV, whose satellites are licensed by the FCC. The Communications Act of 1934 and other related acts give the FCC broad authority to regulate the U.S. operations of DIRECTV. In addition, states representing a majority of our local service access lines have adopted legislation that enables us to provide IP-based service through a single statewide or state-approved franchise (as opposed to the need to acquire hundreds or even thousands of municipal-approved franchises) to offer a competitive video product. We also are supporting efforts to update and improve regulatory treatment for our services. Regulatory reform and passage of legislation is uncertain and depends on many factors.

We provide wireless services in robustly competitive markets, but are subject to substantial 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 offerings are generally not subject to state or local regulation, states sometimes attempt to regulate or legislate various aspects of wireless services, such as in the areas of consumer protection and the deployment of cell sites and equipment. The anticipated industry-wide deployment of 5G technology, which is needed to satisfy extensive demand for video and internet access, will involve significant deployment of "small cell" equipment and therefore increase the need for a quick permitting process.

The FCC has recognized that the explosive growth of bandwidth-intensive wireless data services requires the U.S. government to make more spectrum available. The FCC finished its most recent auction in April 2017 of certain spectrum that is currently used by broadcast television licensees (the "600 MHz Auction").

In May 2014, 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. The spectrum screen (including the low band screen) recently increased by 23 MHz. On balance, the order and the spectrum screen should allow AT&T to obtain additional spectrum to meet our customers' needs. 

40

AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

As the wireless industry continues to mature, future wireless growth will become increasingly dependent on our ability to offer innovative video and data services and a wireless network that has sufficient spectrum and capacity to support these innovations. We continue to invest significant capital in expanding our network capacity, as well as to secure and utilize spectrum that meets our long-term needs. To that end, we have:

· Submitted winning bids for 251 Advanced Wireless Services (AWS) spectrum licenses for a near-nationwide contiguous block of high-quality spectrum in the AWS-3 Auction.

· Redeployed spectrum previously used for basic 2G services to support more advanced mobile internet services on our 3G and 4G networks.

· Secured the FirstNet contract, which provides us with access to a nationwide low band 20 MHz of spectrum, assuming all states opt-in.

· Invested in 5G and millimeter-wave technologies with our in-process acquisition of Fiber Tower Corporation, which holds significant amounts of spectrum in the millimeter wave bands (28 GHz and 39 GHz) that the FCC recently reallocated for mobile broadband services. These bands will help to accelerate our entry into 5G services.

LIQUIDITY AND CAPITAL RESOURCES

In anticipation of the Time Warner transaction, we had $25,617 in cash and cash equivalents available at June 30, 2017. Cash and cash equivalents included cash of $2,801 and money market funds and other cash equivalents of $22,816. Approximately $866 of our cash and cash equivalents resided in foreign jurisdictions and were in foreign currencies; these funds are primarily used to meet working capital requirements of foreign operations.

Cash and cash equivalents increased $19,829 since December 31, 2016. In the first six months of 2017, cash inflows were primarily provided by the issuance of long-term debt, and cash receipts from operations, including cash from our sale and transfer of certain wireless equipment installment receivables to third parties. We also received a $1,438 deposit refund from the FCC. These inflows were offset by cash used to meet the needs of the business, including, but not limited to, payment of operating expenses, funding capital expenditures, debt repayments, dividends to stockholders, and the acquisition of wireless spectrum and other operations. We discuss many of these factors in detail below.

Cash Provided by or Used in Operating Activities

During the first six months of 2017, cash provided by operating activities was $18,160, compared to $18,207 for the first six months of 2016. Lower operating cash flows in 2017 were primarily due to higher cash payments for legal and other settlements, and the timing of working capital payments.

Cash Used in or Provided by Investing Activities

For the first six months of 2017, cash used in investing activities totaled $9,948 and consisted primarily of $10,750 for capital expenditures, excluding interest during construction.

Investing activities also include a refund from the FCC in the amount of $1,438 in April 2017, resulting from the FCC's 600 MHz Auction that concluded in April 2017. We submitted winning bids to purchase spectrum licenses in 18 markets for which we paid $910.

The majority of our capital expenditures are spent on our networks, our video services and related support systems. Capital expenditures, excluding interest during construction, increased $1,048 in the first six months. The increase was primarily due to our continued fiber buildout and timing of build schedules in 2017 compared with 2016. Additionally, in connection with capital improvements, we negotiate favorable payment terms (referred to as vendor financing). For the first six months of 2017, vendor financing related to capital investments was $799. We do not report capital expenditures at the segment level.

We continue to expect our 2017 capital expenditures to be in the $22,000 range, and we expect our capital expenditures to be in the 15% range of service revenues or lower for each of the years 2017 through 2019. The amount of capital expenditures is influenced by demand for services and products, capacity needs and network enhancements. Our capital spending also takes into account existing tax law and does not reflect anticipated tax reform. We are also focused on ensuring DIRECTV merger commitments are met.

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

Cash Provided by or Used in Financing Activities

For the first six months of 2017, cash provided by financing activities totaled $11,617 and included net proceeds of $24,115 primarily from the following long-term debt issuances:

· February issuance of $1,250 of 3.200% global notes due 2022.

· February issuance of $750 of 3.800% global notes due 2024.

· February issuance of $2,000 of 4.250% global notes due 2027.

· February issuance of $3,000 of 5.250% global notes due 2037.

· February issuance of $2,000 of 5.450% global notes due 2047.

· February issuance of $1,000 of 5.700% global notes due 2057.

· March issuance of $1,430 of 5.500% global notes due 2047.

· March issuance of $800 floating rate global notes due 2020. The floating rate for the notes is based upon the three-month London Interbank Offered Rate (LIBOR), reset quarterly, plus 65 basis points.

· March draw of $300 on a private financing agreement with Banco Nacional de Mexico, S.A. due March 2019. The agreement contains terms similar to that provided under our syndicated credit arrangements; the interest rate is a market rate.

· May issuance of $1,500 floating rate global notes due 2021. The floating rate for the notes is based upon the three-month LIBOR, reset quarterly, plus 95 basis points.

· May issuance of CAD$600 of 2.850% global notes due 2024 and CAD$750 of 4.850% global notes due 2047 (together, equivalent to $994, when issued).

· June issuance of £1,000 of 3.550% global notes due 2037, subject to mandatory redemption (equivalent to $1,282 when issued).

· June issuance of €750 of 1.050% global notes due 2023, €1,750 of 1.800% global notes due 2026, €1,500 of 2.350% global notes due 2029, €1,750 of 3.150% global notes due 2036 and €1,250 of floating rate global notes due 2023, all except the 2036 global notes are subject to mandatory redemption (together, equivalent to $7,883, when issued).

· June issuance of €750 of 1.050% global notes due 2023, €1,750 of 1.800% global notes due 2026, €1,500 of 2.350% global notes due 2029, €1,750 of 3.150% global notes due 2036 and €1,250 of floating rate global notes due 2023, all except the 2036 global notes are subject to mandatory redemption (together, equivalent to $7,883, when issued).

On July 27, 2017, we initiated a debt offering for $22,500 that will be completed on August 7, 2017. The proceeds will be used for general corporate purposes, including funding the cash consideration for the Time Warner acquisition and are subject to a special mandatory redemption feature described below. Details for the offering are as follows:

· $750 of floating rate notes due 2023.

· $1,750 of 2.850% global notes due 2023.

· $3,000 of 3.400% global notes due 2024.

· $5,000 of 3.900% global notes due 2027.

· $4,500 of 4.900% global notes due 2037.

· $5,000 of 5.150% global notes due 2050.

· $2,500 of 5.300% global notes due 2058.

For notes subject to mandatory redemption if we do not consummate the Time Warner acquisition pursuant to the merger agreement on or prior to April 22, 2018, or, if prior to such date, the merger agreement is terminated, then in either case, we must redeem certain of the notes at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest.

During the first six months of 2017, we redeemed $6,118 of debt, primarily consisting of the following:

· $1,142 of 2.400% global notes due 2017.

· $1,000 of 1.600% global notes due 2017.

· $500 of floating rate notes due 2017.

· £750 of 5.875% global notes due 2017.

· $750 repayment of a private financing agreement with Export Development Canada due 2017.

· $1,150 of 1.700% global notes due 2017.

Our weighted average interest rate of our entire long-term debt portfolio, including the impact of derivatives, was approximately 4.3% as of June 30, 2017, compared to 4.2% as of December 31, 2016. We had $142,816

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

of total notes and debentures outstanding at June 30, 2017, which included Euro, British pound sterling, Swiss franc, Brazilian real, Mexican peso and Canadian dollar denominated debt that totaled approximately $35,808.

As of June 30, 2017, we had approximately 388 million shares remaining from 2013 and 2014 authorizations from our Board of Directors to repurchase shares of our common stock. During the first six months of 2017, we repurchased approximately 7 million shares totaling $279 under these authorizations. In 2017, we intend to use free cash flow (operating cash flows less construction and capital expenditures) after dividends primarily to pay down debt.

We paid dividends of $6,021 during the first six months of 2017, compared with $5,899 for the first six months of 2016, primarily reflecting the increase in the quarterly dividend approved by our Board of Directors in October 2016. Dividends declared by our Board of Directors totaled $0.49 per share in the second quarter and $0.98 per share in the first six months of 2017 and $0.48 per share in the second quarter and $0.96 for the first six months of 2016. 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.

At June 30, 2017, we had $10,831 of debt maturing within one year, $10,662 of which was 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. No such put was exercised during April 2017.

· An accreting zero-coupon note that may be redeemed each May until maturity in 2022. In May 2017, $1 was redeemed by the holder for $1. If the remainder of the zero-coupon note (issued for principal of $500 in 2007) is held to maturity, the redemption amount will be $1,029.

Credit Facilities

The following summary of our various credit and loan agreements does not purport to be complete and is qualified in its entirety by reference to each agreement filed as exhibits to our Annual Report on Form 10-K.

We use credit facilities as a tool in managing our liquidity status. In December 2015, we entered into a five-year $12,000 revolving credit agreement of which no amounts are outstanding as of June 30, 2017. We also have a $9,155 syndicated credit agreement, of which $4,155 remains outstanding as of June 30, 2017 ($2,286 of which is payable March 2018).

We also enter into various credit arrangements supported by government agencies to support network equipment purchases.

In connection with our pending Merger with Time Warner, we have also entered into a $30,000 bridge loan credit agreement ("Bridge Loan") and a $10,000 term loan agreement ("Term Loan"). Following the June issuances of €7,000 global notes and £1,000 global notes, we reduced the commitments under the Bridge Loan to $21,000. Upon settlement of our July 27, 2017, debt offering, we expect to terminate our bridge loan credit agreement. No amounts will be borrowed under the Term Loan prior to the closing of the Merger. Borrowings under the Term Loan will be used solely to finance a portion of the cash to be paid in the Merger, the refinancing of debt of Time Warner and its subsidiaries and the payment of related expenses.

Each of our credit and loan agreements contains covenants that are customary for an issuer with an investment grade senior debt credit rating as well as a net debt-to-EBITDA financial ratio covenant requiring AT&T to maintain, as of the last day of each fiscal quarter, a ratio of not more than 3.5-to-1. As of June 30, 2017, we were in compliance with the covenants for our credit facilities.

Collateral Arrangements

During the first six months of 2017, we received $957 of additional cash collateral, on a net basis, from banks and other participants in our derivative arrangements. Subsequent to the end of the quarter, approximately $1,336 of additional collateral has been returned to AT&T. Cash postings under these arrangements vary with changes in credit ratings and netting agreements. (See Note 6)

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

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 debt issued by our equity method investments. At June 30, 2017, our debt ratio was 53.3%, compared to 50.5% at June 30, 2016, and 49.9% at December 31, 2016. Our net debt ratio was 43.8% at June 30, 2017, compared to 47.6% at June 30, 2016 and 47.5% at December 31, 2016. The debt ratio is affected by the same factors that affect total capital, and reflects our recent debt issuances and repayments.

During the first six months of 2017, we received $2,906 from the monetization of various assets, primarily the sale of certain equipment installment receivables. We plan to continue to explore similar opportunities.

In 2013, we made a voluntary contribution of a preferred equity interest in AT&T Mobility II LLC (Mobility), the holding company for our U.S. wireless operations, to the trust used to pay pension benefits under our qualified pension plans. The preferred equity interest had a value of $8,294 as of June 30, 2017, and $8,477 as of December 31, 2016, 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 are distributed quarterly in equal amounts. We distributed $280 to the trust during the first six months of 2017. 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.

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

DISCUSSION AND RECONCILIATION OF NON-GAAP MEASURE

We believe the following measure is relevant and useful information to investors as it is used by management as a method of comparing performance with that of many of our competitors. This supplemental measure should be considered in addition to, but not as a substitute of, our consolidated and segment financial information.

Supplemental Operational Measure

We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.

	Three Months Ended
	June 30, 2017									June 30, 2016
	Consumer Mobility		Business Solutions		Adjustments1			AT&T Mobility		Consumer Mobility		Business Solutions		Adjustments1			AT&T Mobility
Operating Revenues
Wireless service	$	6,528	$	8,006	$	-		$	14,534	$	6,948	$	7,963	$	-		$	14,911
Fixed strategic services		-		3,028		(3,028	)		-		-		2,805		(2,805	)		-
Legacy voice and data services		-		3,508		(3,508	)		-		-		4,162		(4,162	)		-
Other service and equipment		-		844		(844	)		-		-		874		(874	)		-
Wireless equipment		1,263		1,721		-			2,984		1,238		1,775		-			3,013
Total Operating Revenues		7,791		17,107		(7,380	)		17,518		8,186		17,579		(7,841	)		17,924
Operating Expenses
Operations and support		4,520		10,313		(4,636	)		10,197		4,680		10,857		(5,036	)		10,501
EBITDA		3,271		6,794		(2,744	)		7,321		3,506		6,722		(2,805	)		7,423
Depreciation and amortization		871		2,335		(1,214	)		1,992		932		2,521		(1,372	)		2,081
Total Operating Expense		5,391		12,648		(5,850	)		12,189		5,612		13,378		(6,408	)		12,582
Operating Income	$	2,400	$	4,459	$	(1,530	)	$	5,329	$	2,574	$	4,201	$	(1,433	)	$	5,342
1 Non-wireless (fixed) operations reported in Business Solutions segment.

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AT&T INC.

JUNE 30, 2017

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

Dollars in millions except per share and per subscriber amounts

	Six Months Ended
	June 30, 2017									June 30, 2016
	Consumer Mobility		Business Solutions		Adjustments1			AT&T Mobility		Consumer Mobility		Business Solutions		Adjustments1			AT&T Mobility
Operating Revenues
Wireless service	$	13,137	$	15,935	$	-		$	29,072	$	13,891	$	15,818	$	-		$	29,709
Fixed strategic services		-		6,002		(6,002	)		-		-		5,556		(5,556	)		-
Legacy voice and data services		-		7,138		(7,138	)		-		-		8,535		(8,535	)		-
Other service and equipment		-		1,661		(1,661	)		-		-		1,733		(1,733	)		-
Wireless equipment		2,394		3,219		-			5,613		2,623		3,546		-			6,169
Total Operating Revenues		15,531		33,955		(14,801	)		34,685		16,514		35,188		(15,824	)		35,878
Operating Expenses
Operations and support		9,048		20,489		(9,342	)		20,195		9,592		21,659		(10,126	)		21,125
EBITDA		6,483		13,466		(5,459	)		14,490		6,922		13,529		(5,698	)		14,753
Depreciation and amortization		1,744		4,647		(2,402	)		3,989		1,854		5,029		(2,746	)		4,137
Total Operating Expense		10,792		25,136		(11,744	)		24,184		11,446		26,688		(12,872	)		25,262
Operating Income	$	4,739	$	8,819	$	(3,057	)	$	10,501	$	5,068	$	8,500	$	(2,952	)	$	10,616
1 Non-wireless (fixed) operations reported in Business Solutions segment.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Dollars in millions except per share amounts

At June 30, 2017, we had interest rate swaps with a notional value of $10,775 and a fair value of $15.

We have fixed-to-fixed and floating-to-fixed cross-currency swaps on foreign currency-denominated debt instruments with a U.S. dollar notional value of $38,694 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 $(2,337) at June 30, 2017.

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 June 30, 2017. 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 June 30, 2017.

47

AT&T INC.

JUNE 30, 2017

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 or repeal of healthcare legislation, regulations or related court decisions.

· The final outcome of FCC and other federal, state or foreign government agency proceedings (including judicial review, if any, of such proceedings) involving issues that are important to our business, including, without limitation, special access and business data services; intercarrier compensation; interconnection obligations; pending Notices of Apparent Liability; the transition from legacy technologies to IP-based infrastructure, including the withdrawal of legacy TDM-based services; universal service; broadband deployment; wireless equipment siting regulations; E911 services; competition policy; privacy; net neutrality, including the FCC's order classifying broadband as Title II services subject to much more comprehensive regulation; unbundled network elements and other wholesale obligations; multi-channel video programming distributor services and equipment; availability of new spectrum, on fair and balanced terms; and wireless and satellite 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, local, federal and/or foreign regulatory and tax laws and regulations, or changes to existing standards and actions by tax agencies and judicial authorities including the resolution of disputes with any taxing jurisdictions, 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 or delivery methods (e.g., cable, wireless, VoIP and over-the-top video service), subscriber reluctance to purchase new wireless handsets, and our ability to maintain capital expenditures.

· The extent of competition including from governmental networks and other providers and the resulting pressure on customer totals and segment operating margins.

· Our ability to develop attractive and profitable product/service offerings to offset increasing competition.

· 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 non-regulation of comparable alternative technologies (e.g., VoIP).

· The continued development and delivery of attractive and profitable video offerings through satellite and IP-based networks; the extent to which regulatory and build-out requirements apply to our offerings; and the availability, cost and/or reliability of the various technologies and/or content required to provide such offerings.

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

· 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 video and data services, including network quality and acquisition of adequate spectrum at reasonable costs and terms.

· The outcome of pending, threatened or potential litigation (which includes arbitrations), including, without limitation, patent and product safety claims by or against third parties.

· The impact from major equipment failures on our networks, including satellites operated by DIRECTV; the effect of 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; and in the case of satellites launched, timely provisioning of services from vendors; 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.

· Our ability to integrate our acquisition of DIRECTV.

· Our ability to close our pending acquisition of Time Warner Inc. and successfully integrate its operations.

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

· Our increased exposure to video competition and foreign economies, including foreign exchange fluctuations as well as regulatory and political uncertainty.

· Changes in our corporate strategies, such as changing network-related 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 decrease in government spending and reluctance of businesses and consumers to spend in general.

· The uncertainty and impact of anticipated regulatory and corporate tax reform, which may impact the overall economy and incentives for business investments.

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

48

AT&T INC.

JUNE 30, 2017

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. For the second quarter 2017, there were no such material developments.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
(c) A summary of our repurchases of common stock during the second quarter of 2017 is as follows:
Period	(a) Total Number of Shares (or Units)  Purchased 1, 2, 3	(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
April 1, 2017 - April 30, 2017	12,802	$	41.46	-	395,550,000
May 1, 2017 - May 31, 2017	7,272,174		38.43	7,254,000	388,296,000
June 1, 2017 - June 30, 2017	642,772		38.84	-	388,296,000
Total	7,927,748	$	38.43	7,254,000
1 In March 2014, our Board of Directors approved an additional authorization to repurchase up to 300 million shares of our common
stock. In March 2013, our Board of Directors authorized the repurchase of up to an additional 300 million shares of our common stock.
The authorizations have no expiration date.
2 Of the shares repurchased, 46,300 shares were acquired through the withholding of taxes on the vesting of restricted stock
and performance shares or on the exercise price of options.
3 Of the shares repurchased, 627,448 shares were acquired through reimbursements from AT&T maintained Voluntary Employee Benefit
Association (VEBA) trusts.

49

AT&T INC.

JUNE 30, 2017

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

50

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.

        August 3, 2017 AT&T Inc.       /s/ John J. Stephens John J. Stephens Senior Executive Vice President     and Chief Financial Officer

51

EX-12

																EXHIBIT 12
AT&T, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
Dollars in millions
				Six Months Ended June 30, (Unaudited)				Year Ended December 31,
				2017		2016		2016		2015		2014		2013		2012
Earnings:
	Income from continuing operations before income taxes		$	11,448	$	11,428	$	19,812	$	20,692	$	10,355	$	28,050	$	10,496
	Equity in net (income) loss of affiliates included above			159		(41)		(98)		(79)		(175)		(642)		(752)
	Fixed Charges			3,925		3,644		7,296		6,592		5,295		5,452		4,876
	Distributed income of equity affiliates			8		19		61		30		148		318		137
	Interest capitalized			(473)		(437)		(892)		(797)		(234)		(284)		(263)
		Earnings, as adjusted	$	15,067	$	14,613	$	26,179	$	26,438	$	15,389	$	32,894	$	14,494
Fixed Charges:
	Interest expense		$	2,688	$	2,465	$	4,910	$	4,120	$	3,613	$	3,940	$	3,444
	Interest capitalized			473		437		892		797		234		284		263
	Portion of rental expense representative of interest factor			764		742		1,494		1,675		1,448		1,228		1,169
		Fixed Charges	$	3,925	$	3,644	$	7,296	$	6,592	$	5,295	$	5,452	$	4,876
	Ratio of Earnings to Fixed Charges			3.84		4.01		3.59		4.01		2.91		6.03		2.97

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: August 3, 2017

/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: August 3, 2017

/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 June 30, 2017 (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.

August 3, 2017 August 3, 2017

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

Document And Entity Information - shares shares in Millions	6 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Document Period End Date	Jun. 30, 2017
Current Fiscal Year End Date	--12-31
Entity Central Index Key	0000732717
Entity Filer Category	Large Accelerated Filer
Entity Registrant Name	AT&T Inc.
Entity Common Stock, Shares Outstanding		6,140
Entity Trading Symbol	T

XML

Consolidated Statements Of Income - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Operating Revenues
Service	$ 36,538	$ 37,142	$ 72,994	$ 74,243
Equipment	3,299	3,378	6,208	6,812
Total operating revenues	39,837	40,520	79,202	81,055
Operating Expenses
Equipment	4,138	4,260	7,986	8,635
Broadcast, programming and operations	4,898	4,701	9,872	9,330
Other cost of services (exclusive of depreciation and amortization shown separately below)	9,218	9,514	18,283	18,910
Selling, general and administrative	8,113	8,909	16,600	17,350
Depreciation and amortization	6,147	6,576	12,274	13,139
Total operating expenses	32,514	33,960	65,015	67,364
Operating Income	7,323	6,560	14,187	13,691
Other Income (Expense)
Interest expense	(1,395)	(1,258)	(2,688)	(2,465)
Equity in net income (loss) of affiliates	14	28	(159)	41
Other income (expense) - net	128	91	108	161
Total other income (expense)	(1,253)	(1,139)	(2,739)	(2,263)
Income Before Income Taxes	6,070	5,421	11,448	11,428
Income tax expense	2,056	1,906	3,860	4,028
Net Income	4,014	3,515	7,588	7,400
Less: Net Income Attributable to Noncontrolling Interest	(99)	(107)	(204)	(189)
Net Income Attributable to AT&T	$ 3,915	$ 3,408	$ 7,384	$ 7,211
Basic Earnings Per Share Attributable to AT&T	$ 0.63	$ 0.55	$ 1.19	$ 1.17
Diluted Earnings Per Share Attributable to AT&T	$ 0.63	$ 0.55	$ 1.19	$ 1.17
Weighted Average Number of Common Shares Outstanding - Basic (in millions)	6,165	6,174	6,166	6,173
Weighted Average Number of Common Shares Outstanding - with Dilution (in millions)	6,184	6,195	6,185	6,193
Dividends Declared Per Common Share	$ 0.49	$ 0.48	$ 0.98	$ 0.96

XML

Consolidated Statements Of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 4,014	$ 3,515	$ 7,588	$ 7,400
Foreign currency:
Foreign currency translation adjustment (includes $(10), $0, $(4) and $0 attributable to noncontrolling interest), net of taxes of $115, $136, $506 and $126	(33)	218	339	174
Available-for-sale securities:
Net unrealized gains (losses), net of taxes of $29, $2, $44 and $(13)	50	5	83	(21)
Reclassification adjustment included in net income, net of taxes of $(7), $2, $(4) and $0	(12)	3	(7)	0
Cash flow hedges:
Net unrealized gains (losses), net of taxes of $(279), $(208), $(272) and $(141)	(517)	(387)	(504)	(263)
Reclassification adjustment included in net income, net of taxes of $5, $5, $10 and $10	9	9	19	19
Defined benefit postretirement plans:
Net prior service credit arising during period, net of taxes of $594, $0, $594 and $0	969	0	969	0
Amortization of net prior service credit included in net income, net of taxes of $(151), $(131), $(290) and $(262)	(247)	(214)	(475)	(429)
Other comprehensive income (loss)	219	(366)	424	(520)
Total comprehensive income	4,233	3,149	8,012	6,880
Less: Total comprehensive income attributable to noncontrolling interest	(89)	(107)	(200)	(189)
Total Comprehensive Income Attributable to AT&T	$ 4,144	$ 3,042	$ 7,812	$ 6,691

XML

Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Comprehensive Income [Abstract]
Foreign currency translation adjustments, attributable to noncontrolling interest, net of taxes	$ (10)	$ 0	$ (4)	$ 0
Foreign currency translation adjustments, tax effect	115	136	506	126
Unrealized gains (losses) on available-for-sale securities - tax	29	2	44	(13)
Reclassification adjustment included in net income on available-for-sale securities - tax effect	(7)	2	(4)	0
Unrealized gains (losses) on cash flow hedges - tax	(279)	(208)	(272)	(141)
Reclassification adjustment included in net income on cash flow hedges - tax effect	5	5	10	10
Net prior service credit (cost) arising during period - tax effect	594	0	594	0
Amortization of net prior service credit included in net income, tax effect	$ (151)	$ (131)	$ (290)	$ (262)

XML

Consolidated Balance Sheets - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Current Assets
Cash and cash equivalents	$ 25,617	$ 5,788
Accounts receivable - net of allowances for doubtful accounts of $732 and $661	14,997	16,794
Prepaid expenses	1,371	1,555
Other current assets	11,562	14,232
Total current assets	53,547	38,369
Property, plant and equipment	323,098	319,648
Less: accumulated depreciation and amortization	(196,914)	(194,749)
Property, Plant and Equipment - Net	126,184	124,899
Goodwill	105,546	105,207
Licenses	95,864	94,176
Customer Lists and Relationships - Net	12,414	14,243
Other Intangible Assets - Net	7,980	8,441
Investments in Equity Affiliates	1,615	1,674
Other Assets	17,645	16,812
Total Assets	420,795	403,821
Current Liabilities
Debt maturing within one year	10,831	9,832
Accounts payable and accrued liabilities	26,471	31,138
Advanced billing and customer deposits	4,371	4,519
Accrued taxes	3,331	2,079
Dividends payable	3,008	3,008
Total current liabilities	48,012	50,576
Long-Term Debt	132,824	113,681
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes	61,926	60,128
Postemployment benefit obligation	31,422	33,578
Other noncurrent liabilities	20,753	21,748
Total deferred credits and other noncurrent liabilities	114,101	115,454
Stockholders' Equity
Common stock ($1 par value, 14,000,000,000 authorized at June 30, 2017 and December 31, 2016: issued 6,495,231,088 at June 30, 2017 and December 31, 2016)	6,495	6,495
Additional paid-in capital	89,471	89,604
Retained earnings	36,067	34,734
Treasury stock (355,448,811 at June 30, 2017 and 356,237,141 at December 31, 2016, at cost)	(12,697)	(12,659)
Accumulated other comprehensive income	5,389	4,961
Noncontrolling interest	1,133	975
Total stockholders' equity	125,858	124,110
Total Liabilities and Stockholders' Equity	$ 420,795	$ 403,821

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Consolidated Balance Sheets (Unaudited)
Allowances for doubtful accounts	$ 732	$ 661
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	355,448,811	356,237,141

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating Activities
Net income	$ 7,588	$ 7,400
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	12,274	13,139
Undistributed loss (earnings) from investments in equity affiliates	167	(22)
Provision for uncollectible accounts	795	705
Deferred income tax expense	964	1,767
Net loss (gain) from sale of investments, net of impairments	12	(85)
Actuarial loss (gain) on pension and postretirement benefits	(259)	0
Changes in operating assets and liabilities:
Accounts receivable	119	(364)
Other current assets	471	2,229
Accounts payable and accrued liabilities	(2,761)	(3,032)
Equipment installment receivables and related sales	907	464
Deferred fulfillment costs	(796)	(1,190)
Retirement benefit funding	(280)	(280)
Other - net	(1,041)	(2,524)
Total adjustments	10,572	10,807
Net Cash Provided by Operating Activities	18,160	18,207
Investing Activities
Purchase of property and equipment	(10,750)	(9,702)
Interest during construction	(473)	(437)
Acquisitions, net of cash acquired	1,224	(485)
Dispositions	51	107
Sale of securities, net	0	500
Net Cash Used in Investing Activities	(9,948)	(10,017)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less	(2)	0
Issuance of long-term debt	24,115	10,140
Repayment of long-term debt	(6,118)	(9,129)
Purchase of treasury stock	(458)	(197)
Issuance of treasury stock	24	119
Dividends paid	(6,021)	(5,899)
Other	77	(1,137)
Net Cash Provided by (Used in) Financing Activities	11,617	(6,103)
Net increase in cash and cash equivalents	19,829	2,087
Cash and cash equivalents beginning of year	5,788	5,121
Cash and Cash Equivalents End of Period	25,617	7,208
Cash paid (received) during the six months ended June 30 for:
Interest	3,095	2,914
Income taxes, net of refunds	$ 1,470	$ 2,468

XML

Consolidated Statement Of Changes In Stockholders' Equity - 6 months ended Jun. 30, 2017 - USD ($) shares in Millions, $ 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, 2016	$ 124,110	$ 6,495	$ 89,604	$ 34,734	$ (12,659)	$ 4,961	$ 975
Balance at beginning of year (in shares) at Dec. 31, 2016		6,495			(356)
Issuance of stock		$ 0
Issuance of stock (in shares)		0
Repurchase and acquisition of common stock					$ (504)
Repurchase and acquisition of common stock (in shares)					(13)
Issuance of treasury stock			4		$ 466
Issuance of treasury stock, (in shares)					14
Share-based payments			(137)
Net income attributable to AT&T ($1.19 per diluted share)	7,384			7,384
Dividends to stockholders ($0.98 per share)				(6,053)
Other				2
Other comprehensive income attributable to AT&T	428					428
Net income attributable to noncontrolling interest	204						204
Distributions							(174)
Acquisitions of noncontrolling interests							132
Translation adjustments attributable to noncontrolling interest, net of taxes	(4)						(4)
Balance at end of period at Jun. 30, 2017	$ 125,858	$ 6,495	$ 89,471	$ 36,067	$ (12,697)	$ 5,389	$ 1,133
Balance at end of period (in shares) at Jun. 30, 2017		6,495			(355)

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Consolidated Statement Of Changes In Stockholders' Equity (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements Of Changes In Stockholders' Equity (Unaudited)
Net income attributable to AT&T, per diluted share	$ 0.63	$ 0.55	$ 1.19	$ 1.17
Dividends to stockholders, per share	$ 0.49	$ 0.48	$ 0.98	$ 0.96

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Preparation Of Interim Financial Statements

6 Months Ended

Jun. 30, 2017

Preparation Of Interim Financial Statements Disclosure [Abstract]

Preparation Of Interim Financial Statements

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items. The consolidated financial statements include the accounts of the Company and our subsidiaries and affiliates over which we exercise control.

All significant intercompany transactions are eliminated in the consolidation process. Investments in unconsolidated subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain investments accounted for using the equity method are included for periods ended within up to one quarter of our period end. We also record our proportionate share of our equity method investees’ other comprehensive income (OCI) items, including cumulative translation adjustments.

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

Recently Adopted Accounting Standards

Income Taxes  As of January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2016-16, “Income Taxes (Topic 740)” (ASU 2016-16), with modified retrospective application, resulting in our recognition of an immaterial adjustment to retained earnings. Under ASU 2016-16, we recognize the income tax effects of intercompany sales or transfers of assets other than inventory (e.g., intellectual property or property, plant and equipment) during the period of intercompany sale or transfer instead of the period of either sale or transfer to a third party or recognition of depreciation or impairment.

New Accounting Standards

Pension and Other Postretirement Benefits  In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07), which changes the presentation of periodic benefit cost components. Under ASU 2017-07, we will continue to present service costs within our operating expenses but present amortization of prior service credits and other components of our net periodic benefit cost in “other income (expense) – net” in our consolidated statements of income. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017. See Note 5 for our components of net periodic benefit cost.

Revenue RecognitionIn May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASC 606), and has modified the standard thereafter. This standard replaces existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASC 606, as amended, becomes effective for annual reporting periods beginning after December 15, 2017, at which point we plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous accounting standards.

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Earnings Per Share

6 Months Ended

Jun. 30, 2017

Earnings Per Share

Earnings Per Share

NOTE 2. EARNINGS PER SHARE

A reconciliation of the numerators and denominators of basic and diluted earnings per share for the three months and six months ended June 30, 2017 and 2016, is shown in the table below:

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Numerators
Numerator for basic earnings per share:
Net Income	$	4,014	$	3,515	$	7,588	$	7,400
Less: Net income attributable to noncontrolling interest		(99)		(107)		(204)		(189)
Net Income attributable to AT&T		3,915		3,408		7,384		7,211
Dilutive potential common shares:
Share-based payment		2		2		6		6
Numerator for diluted earnings per share	$	3,917	$	3,410	$	7,390	$	7,217
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		6,165		6,174		6,166		6,173
Dilutive potential common shares:
Share-based payment (in shares)		19		21		19		20
Denominator for diluted earnings per share		6,184		6,195		6,185		6,193
Basic earnings per share attributable to AT&T	$	0.63	$	0.55	$	1.19	$	1.17
Diluted earnings per share attributable to AT&T	$	0.63	$	0.55	$	1.19	$	1.17

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

NOTE 3. OTHER COMPREHENSIVE INCOME

Changes in the balances of each component included in accumulated other comprehensive income (accumulated OCI) are presented below. All amounts are net of tax and exclude noncontrolling interest.

		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, 2016		$	(1,995)		$	541		$	744		$	5,671		$	4,961
Other comprehensive income (loss) before reclassifications			343			83			(504)			969			891
Amounts reclassified from accumulated OCI			-	1		(7)	1		19	2		(475)	3		(463)
Net other comprehensive income (loss)			343			76			(485)			494			428
Balance as of June 30, 2017		$	(1,652)		$	617		$	259		$	6,165		$	5,389
		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, 2015		$	(1,198)		$	484		$	16		$	6,032		$	5,334
Other comprehensive income (loss) before reclassifications			174			(21)			(263)			-			(110)
Amounts reclassified from accumulated OCI			-	1		-	1		19	2		(429)	3		(410)
Net other comprehensive income (loss)			174			(21)			(244)			(429)			(520)
Balance as of June 30, 2016		$	(1,024)		$	463		$	(228)		$	5,603		$	4,814
1	(Gains) losses are included in Other income (expense) - net in the consolidated statements of income.
2	(Gains) losses are included in Interest expense in the consolidated statements of income. See Note 6 for additional information.
3	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).

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Segment Information

6 Months Ended

Jun. 30, 2017

Segment Information

Segment Information

NOTE 4. SEGMENT INFORMATION

Our segments are strategic business units that offer products and services to different customer segments over various technology platforms and/or in different geographies that are managed accordingly.We analyze our segments based on Segment Contribution, which consists of operating income, excluding acquisition-related costs and other significant items (as discussed below), and equity in net income (loss) of affiliates for investments managed within each segment. We have four reportable segments: (1) Business Solutions, (2) Entertainment Group, (3) Consumer Mobility and (4) International.

We also evaluate segment performance based on EBITDA and/or EBITDA margin, which is defined as Segment Contribution excluding equity in net income (loss) of affiliates and depreciation and amortization. We believe EBITDA to be a relevant and useful measurement to our investors as it is part of our internal management reporting and planning processes and it is an important metric that management uses to evaluate segment operating performance. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA margin is EBITDA divided by total revenues.

The Business Solutions segment provides services to business customers, including multinational companies;governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as fixed strategic services; as well as traditional data and voice products. We utilize our wireless and wired networks to provide a complete communications solution to our business customers.

The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the United States or in U.S. territories. We utilize our copper and IP-based wired network and our satellite technology.

The Consumer Mobility segment provides nationwide wireless service to consumers, wholesale and resale wireless subscribers located in the United States or in U.S. territories. We utilize our network to provide voice and data services, including high-speed internet, video and home monitoring services over wireless devices.

The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency, and operating results are converted to U.S. dollars using official exchange rates.

In reconciling items to consolidated operating income and income before income taxes, Corporate and Other includes: (1) operations that are not considered reportable segments and that are no longer integral to our operations or which we no longer actively market, and (2) impacts of corporate-wide decisions for which the individual segments are not being evaluated, including interest costs and expected return on plan assets for our pension and postretirement benefit plans.

Certain operating items are not allocated to our business segments, and those include:

• Acquisition-related items which consists of (1) items associated with the merger and integration of acquired businesses and (2) the noncash amortization of intangible assets acquired in acquisitions.
• Certain significant items which consists of (1) noncash actuarial gains and losses from pension and other postretirement benefits, (2) employee separation charges associated with voluntary and/or strategic offers, (3) losses resulting from abandonment or impairment of assets and (4) other items for which the segments are not being evaluated.

Interest expense and other income (expense) – net, are managed only on a total company basis and are, accordingly, reflected only in consolidated results.

Our operating assets are utilized by multiple segments and consist of our wireless and wired networks as well as our satellite fleet. We manage our assets to provide for the most efficient, effective and integrated service to our customers, not by segment, and, therefore, asset information and capital expenditures by segment are not presented. Depreciation is allocated based on asset utilization by segment.

For the three months ended June 30, 2017
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	17,107	$	10,313	$	6,794	$	2,335	$	4,459	$	-	$	4,459
Entertainment Group		12,682		9,558		3,124		1,458		1,666		(11)		1,655
Consumer Mobility		7,791		4,520		3,271		871		2,400		-		2,400
International		2,026		1,772		254		311		(57)		25		(32)
Segment Total		39,606		26,163		13,443		4,975		8,468	$	14	$	8,482
Corporate and Other		231		87		144		2		142
Acquisition-related items		-		281		(281)		1,170		(1,451)
Certain significant items		-		(164)		164		-		164
AT&T Inc.	$	39,837	$	26,367	$	13,470	$	6,147	$	7,323
For the six months ended June 30, 2017
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	33,955	$	20,489	$	13,466	$	4,647	$	8,819	$	-	$	8,819
Entertainment Group		25,305		19,159		6,146		2,877		3,269		(17)		3,252
Consumer Mobility		15,531		9,048		6,483		1,744		4,739		-		4,739
International		3,955		3,531		424		601		(177)		45		(132)
Segment Total		78,746		52,227		26,519		9,869		16,650	$	28	$	16,678
Corporate and Other		456		308		148		33		115
Acquisition-related items		-		488		(488)		2,372		(2,860)
Certain significant items		-		(282)		282		-		282
AT&T Inc.	$	79,202	$	52,741	$	26,461	$	12,274	$	14,187

For the three months ended June 30, 2016
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	17,579	$	10,857	$	6,722	$	2,521	$	4,201	$	-	$	4,201
Entertainment Group		12,711		9,569		3,142		1,489		1,653		(2)		1,651
Consumer Mobility		8,186		4,680		3,506		932		2,574		-		2,574
International		1,828		1,723		105		298		(193)		9		(184)
Segment Total		40,304		26,829		13,475		5,240		8,235	$	7	$	8,242
Corporate and Other		216		293		(77)		20		(97)
Acquisition-related items		-		233		(233)		1,316		(1,549)
Certain significant items		-		29		(29)		-		(29)
AT&T Inc.	$	40,520	$	27,384	$	13,136	$	6,576	$	6,560
For the six months ended June 30, 2016
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	35,188	$	21,659	$	13,529	$	5,029	$	8,500	$	-	$	8,500
Entertainment Group		25,369		19,147		6,222		2,977		3,245		1		3,246
Consumer Mobility		16,514		9,592		6,922		1,854		5,068		-		5,068
International		3,495		3,311		184		575		(391)		23		(368)
Segment Total		80,566		53,709		26,857		10,435		16,422	$	24	$	16,446
Corporate and Other		489		670		(181)		37		(218)
Acquisition-related items		-		528		(528)		2,667		(3,195)
Certain significant items		-		(682)		682		-		682
AT&T Inc.	$	81,055	$	54,225	$	26,830	$	13,139	$	13,691

The following table is a reconciliation of Segment Contribution to “Income Before Income Taxes” reported on our consolidated statements of income.
	Second Quarter					Six Month Period
		2017		2016		2017		2016
Business Solutions	$	4,459	$	4,201	$	8,819	$	8,500
Entertainment Group		1,655		1,651		3,252		3,246
Consumer Mobility		2,400		2,574		4,739		5,068
International		(32)		(184)		(132)		(368)
Segment Contribution		8,482		8,242		16,678		16,446
Reconciling Items:
Corporate and Other		142		(97)		115		(218)
Merger and integration charges		(281)		(233)		(488)		(528)
Amortization of intangibles acquired		(1,170)		(1,316)		(2,372)		(2,667)
Actuarial gain (loss)		259		-		259		-
Employee separation costs		(60)		(29)		(60)		(54)
Gain on wireless spectrum transactions		63		-		181		736
Venezuela devaluation		(98)		-		(98)		-
Segment equity in net (income) loss of affiliates		(14)		(7)		(28)		(24)
AT&T Operating Income		7,323		6,560		14,187		13,691
Interest expense		1,395		1,258		2,688		2,465
Equity in net income (loss) of affiliates		14		28		(159)		41
Other income (expense) - net		128		91		108		161
Income Before Income Taxes	$	6,070	$	5,421	$	11,448	$	11,428

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Pension And Postretirement Benefits

6 Months Ended

Jun. 30, 2017

Pension And Postretirement Benefits

Pension And Postretirement Benefits

NOTE 5. PENSION AND POSTRETIREMENT BENEFITS

Many 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. 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 provide benefits described in the plans to employees upon their retirement.

In 2013, we made a voluntary contribution of a preferred equity interest in AT&T Mobility II LLC, the primary holding company for our domestic wireless business, to the trust used to pay pension benefits under our qualified pension plans. The preferred equity interest had a value of $8,294 at June 30, 2017. The trust is entitled to receive cumulative cash distributions of $560 per annum, which are distributed quarterly by AT&T Mobility II LLC to the trust, in equal amounts and accounted for as contributions. We distributed $280 to the trust during the six months ended June 30, 2017. So long as we make the distributions, we will have 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. During the second quarter of 2017, a substantive plan change involving the frequency of considering potential health reimbursement account credit increases was communicated to our retirees. This plan change resulted in additional prior service credits recognized in other comprehensive income, reducing our liability by $1,563. Such credits will be amortized through earnings over a period approximating the average service period to full eligibility. Upon our adoption of ASU 2017-07, the amortization of these prior service credits will be recorded in other income (expense) – net.The plan change also triggered a remeasurement of our postretirement benefit obligation, resulting in an actuarial gain of $259 recognized in the second quarter of 2017.

The following table details pension and postretirement benefit costs included in operating expenses in the accompanying consolidated statements of income. A portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net expense recorded.Service costs and prior service credits are reported in our segment results while interest costs and expected return on plan assets are included with Corporate and Other (see Note 4).

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Pension cost:
Service cost – benefits earned during the period	$	282	$	278	$	564	$	556
Interest cost on projected benefit obligation		484		495		968		990
Expected return on assets		(784)		(780)		(1,567)		(1,558)
Amortization of prior service credit		(31)		(25)		(62)		(51)
Net pension (credit) cost	$	(49)	$	(32)	$	(97)	$	(63)
Postretirement cost:
Service cost – benefits earned during the period	$	34	$	48	$	75	$	96
Interest cost on accumulated postretirement benefit obligation		202		243		424		486
Expected return on assets		(79)		(89)		(159)		(178)
Amortization of prior service credit		(366)		(319)		(702)		(638)
Actuarial (gain) loss		(259)		-		(259)		-
Net postretirement (credit) cost	$	(468)	$	(117)	$	(621)	$	(234)
Combined net pension and postretirement (credit) cost	$	(517)	$	(149)	$	(718)	$	(297)

The decrease in the combined net pension and postretirement costs in the second quarter and first six months reflects higher amortization of prior service credits as well as decreasing corporate bond rates, which contributed to lower interest costs.

As part of our second-quarter 2017 remeasurement, we decreased the weighted-average discount rate used to measure our postretirement benefit obligation to 4.10%. The discount rate in effect for determining postretirement service and interest costs after remeasurement is 4.50% and 3.30%, respectively. Including the effects of our plan change and remeasurement, the total estimated prior service credits that will be amortized from accumulated OCI into net periodic benefit cost over the last half of 2017 is $764 ($474 net of tax) for postretirement benefits.

We also provide senior- and middle-management employees with nonqualified, unfunded supplemental retirement and savings plans. For the second quarter ended 2017 and 2016, net supplemental pension benefits costs not included in the table above were $23 and $24. For the first six months of 2017 and 2016, net supplemental pension benefit costs were $45 and $47.

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Fair Value Measurements And Disclosure

6 Months Ended

Jun. 30, 2017

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. Our valuation techniques 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, 2016.

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, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Notes and debentures1	$	142,816	$	151,338	$	122,381	$	128,726
Bank borrowings		2		2		4		4
Investment securities		2,556		2,556		2,587		2,587
1 Includes credit agreement borrowings.

The carrying amount 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, 2017 and December 31, 2016:

		June 30, 2017
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,276	$	-	$	-	$	1,276
International equities			659		-		-		659
Fixed income bonds			-		370		-		370
Asset Derivatives1
Interest rate swaps			-		57		-		57
Cross-currency swaps			-		294		-		294
Interest rate locks			-		3		-		3
Liability Derivatives1
Interest rate swaps			-		(42)		-		(42)
Cross-currency swaps			-		(2,631)		-		(2,631)
Interest rate locks			-		(82)		-		(82)
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” in our consolidated balance sheets.

		December 31, 2016
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,215	$	-	$	-	$	1,215
International equities			594		-		-		594
Fixed income bonds			-		508		-		508
Asset Derivatives1
Interest rate swaps			-		79		-		79
Cross-currency swaps			-		89		-		89
Liability Derivatives1
Interest rate swaps			-		(14)		-		(14)
Cross-currency swaps			-		(3,867)		-		(3,867)
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” in our consolidated balance sheets.

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 $220 have maturities of less than one year, $33 within one to three years, $32 within three to five years and $85 for five or more years.

Our cash equivalents (money market securities), short-term investments (certificate and time deposits) and nonrefundable customer deposits are recorded at amortized cost, and the respective carrying amounts approximate fair values. Short-term investments and nonrefundable customer deposits are recorded in “Other current assets” and our investment securities are recorded in “Other Assets” on the consolidated balance sheets.

Derivative Financial Instruments

We enter into derivative transactions 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.

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, 2017 and June 30, 2016, 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, Canadian dollar and Swiss franc denominated debt. These agreements include initial and final exchanges of principal from fixed foreign currency denominated amounts to fixed U.S. dollar denominated amounts, to be exchanged at a specified rate that is usually determined by the market spot rate upon issuance. They also include an interest rate swap of a fixed or floating foreign currency-denominated rate to a fixed U.S. dollar 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. 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, 2017 and June 30, 2016, 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 $59 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. 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 months ended June 30, 2017 and June 30, 2016, 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 June 30, 2017, we had posted collateral of $2,297 (a deposit asset) and held collateral of $13 (a receipt liability). Under the agreements, if AT&T’s credit rating had been downgraded one rating level by Fitch Ratings, before the final collateral exchange in June, we would have been required to post additional collateral of $133. If DIRECTV Holdings LLC’s credit rating had been downgraded below BBB- (S&P), we would have been required to post additional collateral of $239. At December 31, 2016, we had posted collateral of $3,242 (a deposit asset) and held no collateral. 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) exists, against the fair value of the derivative instruments.

Following are the notional amounts of our outstanding derivative positions:

	June 30,		December 31,
	2017		2016
Interest rate swaps	$	10,775	$	9,650
Cross-currency swaps		38,694		29,642
Interest rate locks		5,000		-
Total	$	54,469	$	39,292

Following are 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,				June 30,
	2017		2016		2017		2016
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	(23)	$	5	$	(48)	$	71
Gain (Loss) on long-term debt		23		(5)		48		(71)

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,				June 30,
	2017		2016		2017		2016
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	(717)	$	(595)	$	(697)	$	(404)
Interest rate locks:
Gain (Loss) recognized in accumulated OCI		(79)		-		(79)		-
Interest income (expense) reclassified from accumulated OCI into income		(14)		(14)		(29)		(29)

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Acquisitions, Dispositions And Other Adjustments

6 Months Ended

Jun. 30, 2017

Acquisitions, Dispositions And Other Adjustments

Acquisitions, Dispositions And Other Adjustments

NOTE 7. ACQUISITIONS, DISPOSITIONS AND OTHER ADJUSTMENTS

Acquisitions

Auction 1000 On April 13, 2017,the Federal Communications Commission (FCC) announced that we were the successful bidder for $910 of spectrum in 18 markets. We provided the FCC an initial deposit of $2,348 in July 2016 and received a refund of $1,438 in April 2017.

Dispositions

YP Holdings LLC In June 2017, YP Holdings LLC was acquired by Dex Media. Our second-quarter results include a gain of $36 for our portion of the proceeds.

Pending Acquisitions

Time Warner Inc. On October 22, 2016, we entered into and announced a merger agreement (Merger Agreement) to acquire Time Warner Inc. (Time Warner) in a 50% cash and 50% stock transaction for $107.50 per share of Time Warner common stock, or approximately $85,400 at the date of the announcement (Merger). Combined with Time Warner’s net debt at March 31, 2017, the total transaction value is approximately $107,160. Each share of Time Warner common stock will be exchanged for $53.75 per share in cash and a number of shares of AT&T common stock equal to the exchange ratio. If the average stock price (as defined in the Merger Agreement) at the time of closing the Merger is between (or equal to) $37.411 and $41.349 per share, the exchange ratio will be the quotient of $53.75 divided by the average stock price. If the average stock price is greater than $41.349, the exchange ratio will be 1.300. If the average stock price is less than $37.411, the exchange ratio will be 1.437. Post-transaction, Time Warner shareholders will own between 14.4% and 15.7% of AT&T shares on a fully-diluted basis based on the number of AT&T shares outstanding. The cash portion of the purchase price will be financed with new debt and cash.

Time Warner is a global leader in media and entertainment whose major businesses encompass an array of some of the most respected and successful media brands. The deal combines Time Warner’s vast library of content and ability to create new premium content for audiences around the world with our extensive customer relationships and distribution, one of the world’s largest pay-TV subscriber bases and leading scale in TV, mobile and broadband distribution.

The Merger Agreement was approved by Time Warner shareholders on February 15, 2017 and remains subject to review by the U.S. Department of Justice and certain foreign jurisdictions. The FCC has stated that it does not believe it will need to review the deal as no licenses are involved. It is also a condition to closing that necessary consents from foreign governmental entities must be obtained. The transaction is expected to close before year-end 2017. If the Merger is terminated as a result of reaching the termination date (and at that time one or more of the conditions relating to certain regulatory approvals have not been satisfied) or there is a final, non-appealable order preventing the transaction relating to antitrust laws, communications laws, utilities laws or foreign regulatory laws, then under certain circumstances, we would be obligated to pay Time Warner $500.

Other Events

FirstNet  On March 30, 2017, the First Responder Network Authority (FirstNet) announced its selection of AT&T to build and manage the first nationwide broadband network dedicated to America’s first responders. FirstNet expects to provide 20 MHz of valuable telecommunications spectrum and success-based payments of $6,500 over the next five years to support network buildout. The actual reach of the network and our investment over the 25-year period will be determined by the number of individual states electing to participate in FirstNet. As of July 31, 2017, seven states have opted-in to the program. We do not expect FirstNet to materially impact our 2017 results.

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Sale of Equipment Installment Receivables

6 Months Ended

Jun. 30, 2017

Changes In Other Assets and Liabilities [Abstract]

Finance Receivables Disclosure[Text Block]

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 30 months and, in many cases, they have the right to trade in the original equipment for a new device within a set period and have the remaining unpaid balance satisfied. As of June 30, 2017 and December 31, 2016, gross equipment installment receivables of $3,920 and $5,665 were included on our consolidated balance sheets, of which $2,230 and $3,425 are notes receivable that are included in “Accounts receivable - net.”

In 2014, we entered into an uncommitted agreement pertaining to the sale of equipment installment receivables and related security with Citibank and various other relationship banks as purchasers (collectively, the Purchasers). Under this agreement, we transfer certain receivables to the Purchasers for cash and additional consideration upon settlement of the receivables, referred to as the deferred purchase price. In June 2017, we modified the agreement with the Purchasers such that we receive more upfront cash consideration at the time the receivables are transferred to the Purchasers. Additionally, in the event a customer trades in a device prior to the end of the installment contract period, we agree to make a payment to the Purchasers equal to any outstanding remaining installment receivable balance. Accordingly, we record a guarantee obligation to the Purchasers for this estimated amount at the time the receivablesare transferred. Under the terms of the agreement, we continue to bill and collect the payments from our customers on behalf of the Purchasers. Since inception, cash proceeds received, net of remittances (excluding amounts returned as deferred purchase price), were $3,946.

The following table sets forth a summary of equipment installment receivables sold during the three and six months ended June 30, 2017 and 2016:

		Three months ended				Six months ended
		June 30,				June 30,
		2017		2016		2017		2016
Gross receivables sold		$	1,752	$	1,845	$	4,598	$	4,327
Net receivables sold1			1,599		1,671		4,220		3,927
Cash proceeds received			1,415		1,126		2,847		2,647
Deferred purchase price recorded			293		563		1,482		1,282
Guarantee obligation recorded			74		-		74		-
1	Receivables net of allowance, imputed interest and trade-in right guarantees.

The deferred purchase price and guarantee obligation are initially recorded at estimated fair value and subsequently carried at the lower of cost or net realizable value.The estimation of their fair values isbased on remaining installment payments expected to be collected and the expected timing and value of device trade-ins.The estimated value of the device trade-ins considers prices offered to us by independent third parties that contemplate changes in value after the launch of a device model. The fair value measurements used for the deferred purchase price and the guarantee obligation are considered Level 3 under the Fair Value Measurement and Disclosure framework (see Note 6).

The following table shows the equipment installment receivables, previously sold to the Purchasers, which we repurchased in exchange for the associated deferred purchase price during the three months and six months ended June 30, 2017 and 2016:

		Three months ended				Six months ended
		June 30,				June 30,
		2017		2016		2017		2016
Fair value of repurchased receivables		$	337	$	-	$	714	$	532
Carrying value of deferred purchase price			301		-		640		539
Gain (loss) on repurchases1		$	36	$	-	$	74	$	(7)
1	These gains (losses) are included in “Selling, general and administrative” in the consolidated statements of income.

At June 30, 2017 and December 31, 2016, our deferred purchase price receivable was $3,648 and $3,090, respectively, of which $2,232 and $1,606 are included in “Other current assets” on our consolidated balance sheets, with the remainder in “Other Assets.”Our maximum exposure to loss as a result of selling these equipment installment receivables is limited to the total amount of our deferred purchase price and guarantee obligation.

The sales of equipment installment receivables did not have a material impact on 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.

Derecognized Installment Receivables

The following table sets forth a summary of equipment installment receivables that were sold to Purchasers and are no longer considered our assets.

		2017
Outstanding derecognized receivables at January 1,		$	7,232
	Gross receivables sold		4,598
	Collections on cash purchase price		(2,337)
	Collections on deferred purchase price		(382)
	Fees		(48)
	Trade ins and other		(141)
	Fair value of repurchased receivables		(714)
Outstanding derecognized receivables at June 30,		$	8,208

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Subsequent Events

6 Months Ended

Jun. 30, 2017

Subsequent Events [Abstract]

Subsequent Events [Text Block]

NOTE 9. SUBSEQUENT EVENT

On July 27, 2017, we initiated a debt offering for $22,500 that will be completed on August 7, 2017. The proceeds will be used for general corporate purposes, including funding the cash consideration for the Time Warner acquisition. Upon settlement of the debt offering, we expect toterminate our bridge loan credit agreement.

Details for the offering are as follows:

• $750 of floating rate notes due 2023.
• $1,750 of 2.850% global notes due 2023.
• $3,000 of 3.400% global notes due 2024.
• $5,000 of 3.900% global notes due 2027.
• $4,500 of 4.900% global notes due 2037.
• $5,000 of 5.150% global notes due 2050.
• $2,500 of 5.300% global notes due 2058.

The notes detailed above, along with $7,301 of floating rate and global notes issued in June 2017, are subject to a special mandatory redemption feature. If we do not consummate the Time Warner acquisition pursuant to the merger agreement on or prior to April 22, 2018, or, if prior to such date, the merger agreement is terminated, then in either case we must redeem the notes at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest.

In conjunction with this offering, we settled our interest rate locks.

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Preparation Of Interim Financial Statements (Policy)

6 Months Ended

Jun. 30, 2017

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

NOTE 1. PREPARATION OF INTERIM FINANCIAL STATEMENTS

Basis of Presentation These consolidated financial statements include all adjustments that are necessary to present fairly the results for the presented interim periods, consisting of normal recurring accruals and other items. The consolidated financial statements include the accounts of the Company and our subsidiaries and affiliates over which we exercise control.

All significant intercompany transactions are eliminated in the consolidation process. Investments in unconsolidated subsidiaries and partnerships where we have significant influence are accounted for under the equity method. Earnings from certain investments accounted for using the equity method are included for periods ended within up to one quarter of our period end. We also record our proportionate share of our equity method investees’ other comprehensive income (OCI) items, including cumulative translation adjustments.

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

Recently Adopted Accounting Standards

Income Taxes  As of January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2016-16, “Income Taxes (Topic 740)” (ASU 2016-16), with modified retrospective application, resulting in our recognition of an immaterial adjustment to retained earnings. Under ASU 2016-16, we recognize the income tax effects of intercompany sales or transfers of assets other than inventory (e.g., intellectual property or property, plant and equipment) during the period of intercompany sale or transfer instead of the period of either sale or transfer to a third party or recognition of depreciation or impairment.

New Accounting Standards

Pension and Other Postretirement Benefits  In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07), which changes the presentation of periodic benefit cost components. Under ASU 2017-07, we will continue to present service costs within our operating expenses but present amortization of prior service credits and other components of our net periodic benefit cost in “other income (expense) – net” in our consolidated statements of income. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017. See Note 5 for our components of net periodic benefit cost.

Revenue RecognitionIn May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASC 606), and has modified the standard thereafter. This standard replaces existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASC 606, as amended, becomes effective for annual reporting periods beginning after December 15, 2017, at which point we plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous accounting standards.

Income Taxes

Income Taxes  As of January 1, 2017, we adopted Accounting Standards Update (ASU) No. 2016-16, “Income Taxes (Topic 740)” (ASU 2016-16), with modified retrospective application, resulting in our recognition of an immaterial adjustment to retained earnings. Under ASU 2016-16, we recognize the income tax effects of intercompany sales or transfers of assets other than inventory (e.g., intellectual property or property, plant and equipment) during the period of intercompany sale or transfer instead of the period of either sale or transfer to a third party or recognition of depreciation or impairment.

Pension and Other Postretirement Benefits

Pension and Other Postretirement Benefits  In March 2017, the Financial Accounting Standards Board (FASB) issued ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost” (ASU 2017-07), which changes the presentation of periodic benefit cost components. Under ASU 2017-07, we will continue to present service costs within our operating expenses but present amortization of prior service credits and other components of our net periodic benefit cost in “other income (expense) – net” in our consolidated statements of income. ASU 2017-07 is effective for annual reporting periods beginning after December 15, 2017. See Note 5 for our components of net periodic benefit cost.

Revenue Recognition

Revenue RecognitionIn May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (ASC 606), and has modified the standard thereafter. This standard replaces existing revenue recognition rules with a comprehensive revenue measurement and recognition standard and expanded disclosure requirements. ASC 606, as amended, becomes effective for annual reporting periods beginning after December 15, 2017, at which point we plan to adopt the standard using the “modified retrospective method.” Under that method, we will apply the rules to all contracts existing as of January 1, 2018, recognizing in beginning retained earnings an adjustment for the cumulative effect of the change and providing additional disclosures comparing results to previous accounting standards.

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Pension And Postretirement Benefits (Policy)

6 Months Ended

Jun. 30, 2017

Pension And Postretirement Benefits

Capitalization Of Benefit Plan Costs

A portion of these expenses is capitalized as part of internal construction projects, providing a small reduction in the net expense recorded.

Recognition Of Actuarial Gains And Losses

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.

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Fair Value Measurements And Disclosure (Policy)

6 Months Ended

Jun. 30, 2017

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) exists, against the fair value of the derivative instruments.

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2017

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,
	2017		2016		2017		2016
Numerators
Numerator for basic earnings per share:
Net Income	$	4,014	$	3,515	$	7,588	$	7,400
Less: Net income attributable to noncontrolling interest		(99)		(107)		(204)		(189)
Net Income attributable to AT&T		3,915		3,408		7,384		7,211
Dilutive potential common shares:
Share-based payment		2		2		6		6
Numerator for diluted earnings per share	$	3,917	$	3,410	$	7,390	$	7,217
Denominators (000,000)
Denominator for basic earnings per share:
Weighted average number of common shares outstanding		6,165		6,174		6,166		6,173
Dilutive potential common shares:
Share-based payment (in shares)		19		21		19		20
Denominator for diluted earnings per share		6,184		6,195		6,185		6,193
Basic earnings per share attributable to AT&T	$	0.63	$	0.55	$	1.19	$	1.17
Diluted earnings per share attributable to AT&T	$	0.63	$	0.55	$	1.19	$	1.17

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Income [Abstract]

Accumulated Other Comprehensive Income

		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, 2016		$	(1,995)		$	541		$	744		$	5,671		$	4,961
Other comprehensive income (loss) before reclassifications			343			83			(504)			969			891
Amounts reclassified from accumulated OCI			-	1		(7)	1		19	2		(475)	3		(463)
Net other comprehensive income (loss)			343			76			(485)			494			428
Balance as of June 30, 2017		$	(1,652)		$	617		$	259		$	6,165		$	5,389
		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, 2015		$	(1,198)		$	484		$	16		$	6,032		$	5,334
Other comprehensive income (loss) before reclassifications			174			(21)			(263)			-			(110)
Amounts reclassified from accumulated OCI			-	1		-	1		19	2		(429)	3		(410)
Net other comprehensive income (loss)			174			(21)			(244)			(429)			(520)
Balance as of June 30, 2016		$	(1,024)		$	463		$	(228)		$	5,603		$	4,814
1	(Gains) losses are included in Other income (expense) - net in the consolidated statements of income.
2	(Gains) losses are included in Interest expense in the consolidated statements of income. See Note 6 for additional information.
3	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).

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2017

Segment Information

Reconciliation of Revenue from Segments to Consolidated

For the three months ended June 30, 2017
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	17,107	$	10,313	$	6,794	$	2,335	$	4,459	$	-	$	4,459
Entertainment Group		12,682		9,558		3,124		1,458		1,666		(11)		1,655
Consumer Mobility		7,791		4,520		3,271		871		2,400		-		2,400
International		2,026		1,772		254		311		(57)		25		(32)
Segment Total		39,606		26,163		13,443		4,975		8,468	$	14	$	8,482
Corporate and Other		231		87		144		2		142
Acquisition-related items		-		281		(281)		1,170		(1,451)
Certain significant items		-		(164)		164		-		164
AT&T Inc.	$	39,837	$	26,367	$	13,470	$	6,147	$	7,323
For the six months ended June 30, 2017
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	33,955	$	20,489	$	13,466	$	4,647	$	8,819	$	-	$	8,819
Entertainment Group		25,305		19,159		6,146		2,877		3,269		(17)		3,252
Consumer Mobility		15,531		9,048		6,483		1,744		4,739		-		4,739
International		3,955		3,531		424		601		(177)		45		(132)
Segment Total		78,746		52,227		26,519		9,869		16,650	$	28	$	16,678
Corporate and Other		456		308		148		33		115
Acquisition-related items		-		488		(488)		2,372		(2,860)
Certain significant items		-		(282)		282		-		282
AT&T Inc.	$	79,202	$	52,741	$	26,461	$	12,274	$	14,187

For the three months ended June 30, 2016
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	17,579	$	10,857	$	6,722	$	2,521	$	4,201	$	-	$	4,201
Entertainment Group		12,711		9,569		3,142		1,489		1,653		(2)		1,651
Consumer Mobility		8,186		4,680		3,506		932		2,574		-		2,574
International		1,828		1,723		105		298		(193)		9		(184)
Segment Total		40,304		26,829		13,475		5,240		8,235	$	7	$	8,242
Corporate and Other		216		293		(77)		20		(97)
Acquisition-related items		-		233		(233)		1,316		(1,549)
Certain significant items		-		29		(29)		-		(29)
AT&T Inc.	$	40,520	$	27,384	$	13,136	$	6,576	$	6,560
For the six months ended June 30, 2016
		Revenues		Operations and Support Expenses		EBITDA		Depreciation and Amortization		Operating Income (Loss)		Equity in Net Income (Loss) of Affiliates		Segment Contribution
Business Solutions	$	35,188	$	21,659	$	13,529	$	5,029	$	8,500	$	-	$	8,500
Entertainment Group		25,369		19,147		6,222		2,977		3,245		1		3,246
Consumer Mobility		16,514		9,592		6,922		1,854		5,068		-		5,068
International		3,495		3,311		184		575		(391)		23		(368)
Segment Total		80,566		53,709		26,857		10,435		16,422	$	24	$	16,446
Corporate and Other		489		670		(181)		37		(218)
Acquisition-related items		-		528		(528)		2,667		(3,195)
Certain significant items		-		(682)		682		-		682
AT&T Inc.	$	81,055	$	54,225	$	26,830	$	13,139	$	13,691

Reconciliation of Operating Income (Loss) from Segments to Consolidated Statements of Income

The following table is a reconciliation of Segment Contribution to “Income Before Income Taxes” reported on our consolidated statements of income.
	Second Quarter					Six Month Period
		2017		2016		2017		2016
Business Solutions	$	4,459	$	4,201	$	8,819	$	8,500
Entertainment Group		1,655		1,651		3,252		3,246
Consumer Mobility		2,400		2,574		4,739		5,068
International		(32)		(184)		(132)		(368)
Segment Contribution		8,482		8,242		16,678		16,446
Reconciling Items:
Corporate and Other		142		(97)		115		(218)
Merger and integration charges		(281)		(233)		(488)		(528)
Amortization of intangibles acquired		(1,170)		(1,316)		(2,372)		(2,667)
Actuarial gain (loss)		259		-		259		-
Employee separation costs		(60)		(29)		(60)		(54)
Gain on wireless spectrum transactions		63		-		181		736
Venezuela devaluation		(98)		-		(98)		-
Segment equity in net (income) loss of affiliates		(14)		(7)		(28)		(24)
AT&T Operating Income		7,323		6,560		14,187		13,691
Interest expense		1,395		1,258		2,688		2,465
Equity in net income (loss) of affiliates		14		28		(159)		41
Other income (expense) - net		128		91		108		161
Income Before Income Taxes	$	6,070	$	5,421	$	11,448	$	11,428

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Pension And Postretirement Benefits (Tables)

6 Months Ended

Jun. 30, 2017

Pension And Postretirement Benefits

Pension And Postretirement Benefit Costs Included In Operating Expenses

	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Pension cost:
Service cost – benefits earned during the period	$	282	$	278	$	564	$	556
Interest cost on projected benefit obligation		484		495		968		990
Expected return on assets		(784)		(780)		(1,567)		(1,558)
Amortization of prior service credit		(31)		(25)		(62)		(51)
Net pension (credit) cost	$	(49)	$	(32)	$	(97)	$	(63)
Postretirement cost:
Service cost – benefits earned during the period	$	34	$	48	$	75	$	96
Interest cost on accumulated postretirement benefit obligation		202		243		424		486
Expected return on assets		(79)		(89)		(159)		(178)
Amortization of prior service credit		(366)		(319)		(702)		(638)
Actuarial (gain) loss		(259)		-		(259)		-
Net postretirement (credit) cost	$	(468)	$	(117)	$	(621)	$	(234)
Combined net pension and postretirement (credit) cost	$	(517)	$	(149)	$	(718)	$	(297)

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Fair Value Measurements And Disclosure (Tables)

6 Months Ended

Jun. 30, 2017

Fair Value Disclosures [Abstract]

Long-Term Debt And Other Financial Instruments

	June 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
Notes and debentures1	$	142,816	$	151,338	$	122,381	$	128,726
Bank borrowings		2		2		4		4
Investment securities		2,556		2,556		2,587		2,587
1 Includes credit agreement borrowings.

Fair Value Leveling

		June 30, 2017
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,276	$	-	$	-	$	1,276
International equities			659		-		-		659
Fixed income bonds			-		370		-		370
Asset Derivatives1
Interest rate swaps			-		57		-		57
Cross-currency swaps			-		294		-		294
Interest rate locks			-		3		-		3
Liability Derivatives1
Interest rate swaps			-		(42)		-		(42)
Cross-currency swaps			-		(2,631)		-		(2,631)
Interest rate locks			-		(82)		-		(82)
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” in our consolidated balance sheets.

		December 31, 2016
		Level 1		Level 2		Level 3		Total
Available-for-Sale Securities
Domestic equities		$	1,215	$	-	$	-	$	1,215
International equities			594		-		-		594
Fixed income bonds			-		508		-		508
Asset Derivatives1
Interest rate swaps			-		79		-		79
Cross-currency swaps			-		89		-		89
Liability Derivatives1
Interest rate swaps			-		(14)		-		(14)
Cross-currency swaps			-		(3,867)		-		(3,867)
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” in our consolidated balance sheets.

Notional Amount Of Outstanding Derivative Positions

	June 30,		December 31,
	2017		2016
Interest rate swaps	$	10,775	$	9,650
Cross-currency swaps		38,694		29,642
Interest rate locks		5,000		-
Total	$	54,469	$	39,292

Effect Of Derivatives On The Consolidated Statements Of Income

Following are 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,				June 30,
	2017		2016		2017		2016
Interest rate swaps (Interest expense):
Gain (Loss) on interest rate swaps	$	(23)	$	5	$	(48)	$	71
Gain (Loss) on long-term debt		23		(5)		48		(71)

Cash Flow Hedging Relationships	Three months ended				Six months ended
	June 30,				June 30,
	2017		2016		2017		2016
Cross-currency swaps:
Gain (Loss) recognized in accumulated OCI	$	(717)	$	(595)	$	(697)	$	(404)
Interest rate locks:
Gain (Loss) recognized in accumulated OCI		(79)		-		(79)		-
Interest income (expense) reclassified from accumulated OCI into income		(14)		(14)		(29)		(29)

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Sale of Equipment Installment Receivables (Tables)

6 Months Ended

Jun. 30, 2017

Changes In Other Assets and Liabilities [Abstract]

Finance Receivables

		Three months ended				Six months ended
		June 30,				June 30,
		2017		2016		2017		2016
Gross receivables sold		$	1,752	$	1,845	$	4,598	$	4,327
Net receivables sold1			1,599		1,671		4,220		3,927
Cash proceeds received			1,415		1,126		2,847		2,647
Deferred purchase price recorded			293		563		1,482		1,282
Guarantee obligation recorded			74		-		74		-
1	Receivables net of allowance, imputed interest and trade-in right guarantees.

Finance Receivables Repurchased

		Three months ended				Six months ended
		June 30,				June 30,
		2017		2016		2017		2016
Fair value of repurchased receivables		$	337	$	-	$	714	$	532
Carrying value of deferred purchase price			301		-		640		539
Gain (loss) on repurchases1		$	36	$	-	$	74	$	(7)
1	These gains (losses) are included in “Selling, general and administrative” in the consolidated statements of income.

Derecognized Installment Receivables

		2017
Outstanding derecognized receivables at January 1,		$	7,232
	Gross receivables sold		4,598
	Collections on cash purchase price		(2,337)
	Collections on deferred purchase price		(382)
	Fees		(48)
	Trade ins and other		(141)
	Fair value of repurchased receivables		(714)
Outstanding derecognized receivables at June 30,		$	8,208

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Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share
Net income	$ 4,014	$ 3,515	$ 7,588	$ 7,400
Less: Net income attributable to noncontrolling interest	(99)	(107)	(204)	(189)
Net Income attributable to AT&T	3,915	3,408	7,384	7,211
Share-based payment	2	2	6	6
Numerator for diluted earnings per share	$ 3,917	$ 3,410	$ 7,390	$ 7,217
Weighted average number of common shares outstanding	6,165	6,174	6,166	6,173
Share-based payment (in shares)	19	21	19	20
Denominator for diluted earnings per share	6,184	6,195	6,185	6,193
Basic Earnings Per Share Attributable to AT&T	$ 0.63	$ 0.55	$ 1.19	$ 1.17
Diluted Earnings Per Share Attributable to AT&T	$ 0.63	$ 0.55	$ 1.19	$ 1.17

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Accumulated Other Comprehensive Income (Details) - USD ($) $ in Millions		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance		$ 4,961	$ 5,334
Other comprehensive income (loss) before reclassification, net of tax		891	(110)
Amounts reclassifed from accumulated OCI, net of tax		(463)	(410)
Net other comprehensive income (loss), net of tax		428	(520)
Accumulated other comprehensive income, ending balance		5,389	4,814
Foreign Currency Translation Adjustment [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance		(1,995)	(1,198)
Other comprehensive income (loss) before reclassification, net of tax		343	174
Amounts reclassifed from accumulated OCI, net of tax	[1]	0	0
Net other comprehensive income (loss), net of tax		343	174
Accumulated other comprehensive income, ending balance		(1,652)	(1,024)
Net Unrealized Gains (Losses) on Available-for-Sale Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance		541	484
Other comprehensive income (loss) before reclassification, net of tax		83	(21)
Amounts reclassifed from accumulated OCI, net of tax	[1]	(7)	0
Net other comprehensive income (loss), net of tax		76	(21)
Accumulated other comprehensive income, ending balance		617	463
Net Unrealized Gains (Losses) on Cash Flow Hedges [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance		744	16
Other comprehensive income (loss) before reclassification, net of tax		(504)	(263)
Amounts reclassifed from accumulated OCI, net of tax	[2]	19	19
Net other comprehensive income (loss), net of tax		(485)	(244)
Accumulated other comprehensive income, ending balance		259	(228)
Defined Benefit Postretirement Plans [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Accumulated other comprehensive income, beginning balance		5,671	6,032
Other comprehensive income (loss) before reclassification, net of tax		969	0
Amounts reclassifed from accumulated OCI, net of tax	[3]	(475)	(429)
Net other comprehensive income (loss), net of tax		494	(429)
Accumulated other comprehensive income, ending balance		$ 6,165	$ 5,603

[1] (Gains) losses are included in Other income (expense) - net in the consolidated statements of income.

[2] (Gains) losses are included in Interest expense in the consolidated statements of income. See Note 6 for additional information.

[3] 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).

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Segment Information (Summary Of Operating Revenues And Expenses) (Narrative) (Details)	6 Months Ended
	Jun. 30, 2017
Business Segment Transaction [Abstract]
Number of Reportable Segments	4

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Segment Information (Summary Of Operating Revenues And Expenses) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Information [Line Items]
Revenue	$ 39,837	$ 40,520	$ 79,202	$ 81,055
Operations and Support Expenses	26,367	27,384	52,741	54,225
EBITDA	13,470	13,136	26,461	26,830
Depreciation and Amortization	6,147	6,576	12,274	13,139
Operating Income (Loss)	7,323	6,560	14,187	13,691
Equity in Net Income (Loss) of Affiliates	14	28	(159)	41
Segment Contribution	6,070	5,421	11,448	11,428
Operating Segments [Member] | Business Solutions [Member]
Segment Reporting Information [Line Items]
Revenue	17,107	17,579	33,955	35,188
Operations and Support Expenses	10,313	10,857	20,489	21,659
EBITDA	6,794	6,722	13,466	13,529
Depreciation and Amortization	2,335	2,521	4,647	5,029
Operating Income (Loss)	4,459	4,201	8,819	8,500
Equity in Net Income (Loss) of Affiliates	0	0	0	0
Segment Contribution	4,459	4,201	8,819	8,500
Operating Segments [Member] | Entertainment Group [Member]
Segment Reporting Information [Line Items]
Revenue	12,682	12,711	25,305	25,369
Operations and Support Expenses	9,558	9,569	19,159	19,147
EBITDA	3,124	3,142	6,146	6,222
Depreciation and Amortization	1,458	1,489	2,877	2,977
Operating Income (Loss)	1,666	1,653	3,269	3,245
Equity in Net Income (Loss) of Affiliates	(11)	(2)	(17)	1
Segment Contribution	1,655	1,651	3,252	3,246
Operating Segments [Member] | Consumer Mobility [Member]
Segment Reporting Information [Line Items]
Revenue	7,791	8,186	15,531	16,514
Operations and Support Expenses	4,520	4,680	9,048	9,592
EBITDA	3,271	3,506	6,483	6,922
Depreciation and Amortization	871	932	1,744	1,854
Operating Income (Loss)	2,400	2,574	4,739	5,068
Equity in Net Income (Loss) of Affiliates	0	0	0	0
Segment Contribution	2,400	2,574	4,739	5,068
Operating Segments [Member] | International [Member]
Segment Reporting Information [Line Items]
Revenue	2,026	1,828	3,955	3,495
Operations and Support Expenses	1,772	1,723	3,531	3,311
EBITDA	254	105	424	184
Depreciation and Amortization	311	298	601	575
Operating Income (Loss)	(57)	(193)	(177)	(391)
Equity in Net Income (Loss) of Affiliates	25	9	45	23
Segment Contribution	(32)	(184)	(132)	(368)
Operating Segments [Member] | Segment Total [Member]
Segment Reporting Information [Line Items]
Revenue	39,606	40,304	78,746	80,566
Operations and Support Expenses	26,163	26,829	52,227	53,709
EBITDA	13,443	13,475	26,519	26,857
Depreciation and Amortization	4,975	5,240	9,869	10,435
Operating Income (Loss)	8,468	8,235	16,650	16,422
Equity in Net Income (Loss) of Affiliates	14	7	28	24
Segment Contribution	8,482	8,242	16,678	16,446
Consolidation Non-Segment [Member] | Corporate and Other [Member]
Segment Reporting Information [Line Items]
Revenue	231	216	456	489
Operations and Support Expenses	87	293	308	670
EBITDA	144	(77)	148	(181)
Depreciation and Amortization	2	20	33	37
Operating Income (Loss)	142	(97)	115	(218)
Consolidation Non-Segment [Member] | Acquisition-related items [Member]
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Operations and Support Expenses	281	233	488	528
EBITDA	(281)	(233)	(488)	(528)
Depreciation and Amortization	1,170	1,316	2,372	2,667
Operating Income (Loss)	(1,451)	(1,549)	(2,860)	(3,195)
Consolidation Non-Segment [Member] | Certain Significant Items [Member]
Segment Reporting Information [Line Items]
Revenue	0	0	0	0
Operations and Support Expenses	(164)	29	(282)	(682)
EBITDA	164	(29)	282	682
Depreciation and Amortization	0	0	0	0
Operating Income (Loss)	$ 164	$ (29)	$ 282	$ 682

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Segment Information (Reconciliation Of Operating Income Loss to Consolidated Statement Of Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	$ 7,323	$ 6,560	$ 14,187	$ 13,691
Interest Expense	1,395	1,258	2,688	2,465
Equity in net income (loss) of affiliates	14	28	(159)	41
Other income (expense) - net	128	91	108	161
Income Before Income Taxes	6,070	5,421	11,448	11,428
Operating Segments [Member] | Business Solutions [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	4,459	4,201	8,819	8,500
Equity in net income (loss) of affiliates	0	0	0	0
Income Before Income Taxes	4,459	4,201	8,819	8,500
Operating Segments [Member] | Entertainment Group [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	1,666	1,653	3,269	3,245
Equity in net income (loss) of affiliates	(11)	(2)	(17)	1
Income Before Income Taxes	1,655	1,651	3,252	3,246
Operating Segments [Member] | Consumer Mobility [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	2,400	2,574	4,739	5,068
Equity in net income (loss) of affiliates	0	0	0	0
Income Before Income Taxes	2,400	2,574	4,739	5,068
Operating Segments [Member] | International [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	(57)	(193)	(177)	(391)
Equity in net income (loss) of affiliates	25	9	45	23
Income Before Income Taxes	(32)	(184)	(132)	(368)
Operating Segments [Member] | Segment Contribution [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	8,468	8,235	16,650	16,422
Equity in net income (loss) of affiliates	14	7	28	24
Income Before Income Taxes	8,482	8,242	16,678	16,446
Segment Reconciling Items [Member] | Corporate and Other [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	142	(97)	115	(218)
Segment Reconciling Items [Member] | Merger and intergration items [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	(281)	(233)	(488)	(528)
Segment Reconciling Items [Member] | Amortization of intangibles acquired [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	(1,170)	(1,316)	(2,372)	(2,667)
Segment Reconciling Items [Member] | Actuarial gain (loss) [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	259	0	259	0
Segment Reconciling Items [Member] | Employee separate charges [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	(60)	(29)	(60)	(54)
Segment Reconciling Items [Member] | Gain (Loss) on wireless spectrum transactions [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	63	0	181	736
Segment Reconciling Items [Member] | Venezuela currency revaluation (devaluation) [Member]
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	(98)	0	(98)	0
Segment Reconciling Items [Member] | Segment equity in net (income) loss
Segment Reporting Reconciling Item For Operating Income (Loss) From Segment To Consolidated Statements Of Income [Line Items]
AT&T Operating Income	$ (14)	$ (7)	$ (28)	$ (24)

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Pension And Postretirement Benefits (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended			12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2017	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2017	Dec. 31, 2013
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actuarial Gain (Loss)				$ 259	$ 0
Forecast [Member]
Defined Benefit Plan Disclosure [Line Items]
Prior service cost (credit), before tax, for pension, other postretirement, or supplemental retirement benefits that will be amortized from accumulated OCI into net periodic benefit cost over the next fiscal year			$ (764)
Prior service cost (credit), net of tax, for pension, other postretirement, or supplemental retirement benefits that will be amortized from accumulated OCI into net periodic benefit cost over the next			$ (474)
Pension Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Net supplemental retirement pension benefits costs	$ 23	$ 24		45	47
Pension Contribution Date							Dec. 31, 2013
Required contribution to pension plans				280
Value of entity's noncash contribution to it's defined benefit plans	8,294			8,294
Pension Benefit [Member] | Forecast [Member]
Defined Benefit Plan Disclosure [Line Items]
Required contribution to pension plans						$ 560
Postretirement Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Defined Benefit Plan, Actuarial Gain (Loss)	259	$ 0		$ 259	$ 0
Defined Benefit Plan, Net Prior Service Cost (Credit) Arising During Period, before tax	(1,563)
Defined Benefit Plan, Plan Amendments	$ (1,563)
Discount rate for determining projected benefit obligation	4.10%			4.10%
Postretirement Benefit [Member] | Forecast [Member] | Service Cost [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate in effect for determining net cost						4.50%
Postretirement Benefit [Member] | Forecast [Member] | Interest Cost [Member]
Defined Benefit Plan Disclosure [Line Items]
Discount rate in effect for determining net cost						3.30%

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Pension And Postretirement Benefits (Pension And Postretirement Benefit Costs Included In Operating Expenses) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Defined Benefit Plan Disclosure [Line Items]
Actuarial (gain) loss			$ (259)	$ 0
Net (credit) cost	$ (517)	$ (149)	(718)	(297)
Pension Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the period	282	278	564	556
Interest cost on benefit obligation	484	495	968	990
Expected return on assets	(784)	(780)	(1,567)	(1,558)
Amortization of prior service credit	(31)	(25)	(62)	(51)
Net (credit) cost	(49)	(32)	(97)	(63)
Postretirement Benefit [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost - benefits earned during the period	34	48	75	96
Interest cost on benefit obligation	202	243	424	486
Expected return on assets	(79)	(89)	(159)	(178)
Amortization of prior service credit	(366)	(319)	(702)	(638)
Actuarial (gain) loss	(259)	0	(259)	0
Net (credit) cost	$ (468)	$ (117)	$ (621)	$ (234)

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Fair Value Measurements And Disclosure (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value Disclosures [Line Items]
Collateral received from counterparty	$ 13	$ 0
Collateral submitted to counterparty	2,297	$ 3,242
Collateral contingently payable to the counterparty	133
Fixed income investments - maturities less than 1 year	220
Fixed income investments - maturities within 1 to 3 years	33
Fixed income investments - maturities within 3 to 5 years	32
Fixed income investments - maturities for 5 or more years	85
Anticipated reclassification of holding losses during the next 12 months - cash flow hedges	59
DIRECTV [Member]
Fair Value Disclosures [Line Items]
Collateral contingently payable to the counterparty	$ 239

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Fair Value Measurements And Disclosure (Long-Term Debt And Other Financial Instruments) (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Carrying Amount [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Notes and debentures	[1]	$ 142,816	$ 122,381
Bank borrowings		2	4
Investment securities		2,556	2,587
Fair Value [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Bank borrowings		2	4
Investment securities		2,556	2,587
Fair Value [Member] | Level 2 [Member]
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Notes and debentures	[1]	$ 151,338	$ 128,726

[1] Includes credit agreement borrowings.

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Fair Value Measurements And Disclosure (Fair Value Leveling) (Details) - USD ($) $ in Millions		Jun. 30, 2017	Dec. 31, 2016
Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	$ 57	$ 79
Liability Derivatives (at fair value)	[1]	(42)	(14)
Cross-Currency Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	294	89
Liability Derivatives (at fair value)	[1]	(2,631)	(3,867)
Interest Rate Locks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	3
Liability Derivatives (at fair value)	[1]	(82)
Domestic Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)		1,276	1,215
International Equities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)		659	594
Fixed Income Bonds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-Sale Securities (at fair value)		370	508
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)	[1]	0	0
Liability Derivatives (at fair value)	[1]	0	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)	[1]	0	0
Liability Derivatives (at fair value)	[1]	0	0
Level 1 [Member] | Interest Rate Locks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	0
Liability Derivatives (at fair value)	[1]	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)		1,276	1,215
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)		659	594
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)	[1]	57	79
Liability Derivatives (at fair value)	[1]	(42)	(14)
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)	[1]	294	89
Liability Derivatives (at fair value)	[1]	(2,631)	(3,867)
Level 2 [Member] | Interest Rate Locks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	3
Liability Derivatives (at fair value)	[1]	(82)
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)		370	508
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)	[1]	0	0
Liability Derivatives (at fair value)	[1]	0	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)	[1]	0	0
Liability Derivatives (at fair value)	[1]	0	0
Level 3 [Member] | Interest Rate Locks [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset Derivatives (at fair value)	[1]	0
Liability Derivatives (at fair value)	[1]	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

[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” in our consolidated balance sheets.

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Fair Value Measurements And Disclosure (Notional Amount Of Our Outstanding Derivative Positions) (Details) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	$ 54,469	$ 39,292
Interest Rate Swaps [Member]
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	10,775	9,650
Cross-Currency Swaps [Member]
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	38,694	29,642
Interest Rate Locks [Member]
Derivative [Line Items]
Notional Amount of Outstanding Derivative Positions	$ 5,000	$ 0

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Fair Value Measurements And Disclosure (Effect Of Derivatives On The Consolidated Statements Of Income) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Fair Value Hedging Relationships [Member] | Interest Rate Swaps [Member] | Interest expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) on interest rate swaps	$ (23)	$ 5	$ (48)	$ 71
Gain (Loss) on long-term debt	23	(5)	48	(71)
Cash Flow Hedging Relationships [Member] | Cross-Currency Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) recognized in accumulated OCI	(717)	(595)	(697)	(404)
Cash Flow Hedging Relationships [Member] | Interest Rate Locks [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Gain (Loss) recognized in accumulated OCI	(79)	0	(79)	0
Interest income (expense) reclassified from accumulated OCI into income	$ (14)	$ (14)	$ (29)	$ (29)

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Acquisitions, Dispositions And Other Adjustments (Acquisitions) (Narrative) (Details) $ / shares in Units, $ in Millions			1 Months Ended		3 Months Ended	6 Months Ended
	Apr. 13, 2017 USD ($)	Feb. 15, 2017	Apr. 30, 2017 USD ($)	Jul. 31, 2016 USD ($)	Mar. 31, 2017 USD ($)	Jun. 30, 2017 USD ($) $ / shares	Jun. 30, 2016 USD ($)
Acquisitions and Dispositions [Line Items]
Acquisition of business - purchase price (in millions) | $						$ (1,224)	$ 485
Auction 1000 [Member] | Acquisition [Member] | Spectrum Licenses [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of intangible assets through a group purchase - value/amount of assets acquired | $	$ 910
Payments To Acquire Intangible Assets | $			$ (1,438)	$ 2,348
Assets Acquisition - number of markets (as shown)	18
Regulatory Approval Date	Apr. 13, 2017
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member]
Acquisitions and Dispositions [Line Items]
Business Acquisition, Date of Acquisition Agreement						Oct. 22, 2016
Acquisition of business - anticipated acquisition period						Dec. 31, 2017
Acquired entity's shareholder approval date		Feb. 15, 2017
Fair Value of Assets Acquired | $					$ 107,160
Acquisition of business - purchase price (in millions) | $						$ 85,400
Acquisition of business - purchase price (in US dollars per share) | $ / shares						$ 107.5
Acquisition of business - obligation upon termination | $						$ 500
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Minimum [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - percentage ownership of combined company held by former shareholders of acquiree						14.40%
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Maximum [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - percentage ownership of combined company held by former shareholders of acquiree						15.70%
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Cash [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - consideration to be given (percent)						50.00%
Acquisition of business - value of noncash consideration to be given (in US dollars per share) | $ / shares						$ 53.75
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Common Stock [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - consideration to be given (percent)						50.00%
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Common Stock [Member] | Stock Price Scenario 1 [Member] | Minimum [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - noncash consideration to be given						Quotient of $53.75 divided by the average stock price
Acquisition of business - value of noncash consideration to be given (in US dollars per share) | $ / shares						$ 37.411
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Common Stock [Member] | Stock Price Scenario 1 [Member] | Maximum [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - noncash consideration to be given						Quotient of $53.75 divided by the average stock price
Acquisition of business - value of noncash consideration to be given (in US dollars per share) | $ / shares						$ 41.349
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Common Stock [Member] | Stock Price Scenario 2 [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - noncash consideration to be given						1.300 shares of AT&T stock per share of Time Warner common stock
Acquisition of business - value of noncash consideration to be given (in US dollars per share) | $ / shares						$ 41.349
Time Warner Inc. [Member] | Acquisition [Member] | Pending Approval [Member] | Common Stock [Member] | Stock Price Scenario 3 [Member]
Acquisitions and Dispositions [Line Items]
Acquisition of business - noncash consideration to be given						1.437 shares of AT&T stock per share of Time Warner common stock
Acquisition of business - value of noncash consideration to be given (in US dollars per share) | $ / shares						$ 37.411

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Acquisitions, Dispositions And Other Adjustments (Dispositions) (Narrative) (Details) - YP Holdings, LLC [Member] - Disposition [Member] $ in Millions	1 Months Ended
	Jun. 30, 2017 USD ($)
Acquisitions and Dispositions [Line Items]
Disposal date of asset	Jun. 30, 2017
Gain (Loss) on sale of asset	$ 36

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Acquisitions, Dispositions And Other Adjustments (Other Events) (Narrative) (Details)	6 Months Ended
	Jun. 30, 2017	Jul. 31, 2017
Governmental Contracts Subject to Renegotiation [Abstract]
Refunds Due under Government Contracts Not Reasonably Estimable	success-based payments of $6,500 over the next five years
Basis of Provision for Refunds under Government Contracts	On March 30, 2017, the First Responder Network Authority (FirstNet) announced its selection of AT&T to build and manage the first nationwide broadband network dedicated to America’s first responders. FirstNet expects to provide 20 MHz of valuable telecommunications spectrum and success-based payments of $6,500 over the next five years to support network buildout. The actual reach of the network and our investment over the 25-year period will be determined by the number of individual states electing to participate in FirstNet. We do not expect FirstNet to materially impact our 2017 results.
Number of states opted-in to the FirstNet program		7

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Sale Of Equipment Installment Receivables (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended		37 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Dec. 31, 2016
Changes In Other Assets and Liabilities [Line Items]
Other Assets - current	$ 11,562		$ 11,562		$ 11,562	$ 14,232
Deferred Purchase Price [Member]
Changes In Other Assets and Liabilities [Line Items]
Other Assets	3,648		3,648		3,648	3,090
Other Assets - current	2,232		2,232		2,232	1,606
Finance Receivables [Member]
Changes In Other Assets and Liabilities [Line Items]
Other Assets	3,920		3,920		3,920	5,665
Cash proceeds from sale of receivables, net	1,415	$ 1,126	2,847	$ 2,647
Finance Receivables [Member] | Notes Receivable [Member]
Changes In Other Assets and Liabilities [Line Items]
Gross equipment installment receivables balance - current	$ 2,230		$ 2,230		2,230	$ 3,425
Finance Receivables, Net [Member]
Changes In Other Assets and Liabilities [Line Items]
Equipment installment sales - maximum installment period (in months)			30 months
Cash proceeds from sale of receivables, net					$ 3,946

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Sale Of Equipment Installment Receivables (Finance Receivables) (Details) - USD ($) $ in Millions		3 Months Ended		6 Months Ended		37 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017
Finance Receivables [Member]
Changes In Other Assets and Liabilities [Line Items]
Receivables sold during period		$ 1,752	$ 1,845	$ 4,598	$ 4,327
Cash proceeds received		1,415	1,126	2,847	2,647
Deferred purchase price recorded		293	563	1,482	1,282
Finance Receivables Net [Member]
Changes In Other Assets and Liabilities [Line Items]
Receivables sold during period	[1]	1,599	1,671	4,220	3,927
Cash proceeds received						$ 3,946
Deferred Purchase Price [Member]
Changes In Other Assets and Liabilities [Line Items]
Guarantee obligation recorded		$ 74	$ 0	$ 74	$ 0

[1] Receivables net of allowance, imputed interest and trade-in right guarantees.

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Sale Of Equipment Installment Receivables (Finance Receivables Repurchased) (Details) - Finance Receivables [Member] - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Changes In Other Assets and Liabilities [Line Items]
Fair value of repurchased receivables		$ 337	$ 0	$ 714	$ 532
Carrying value of deferred purchase price		301	0	640	539
Gain (Loss) on repurchases	[1]	$ 36	$ 0	$ 74	$ (7)

[1] These gains (losses) are included in “Selling, general and administrative” in the consolidated statements of income.

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Sale Of Equipment Installment Receivables (Derecognized Installment Receivables) (Details) $ in Millions	6 Months Ended
	Jun. 30, 2017 USD ($)
Derecognized Installment Receivables [Abstract]
Outstanding derecognized receivables at January 1,	$ 7,232
Gross receivables sold	4,598
Collections on cash purchase price	(2,337)
Collections on deferred purchase price	(382)
Fees	(48)
Trade-ins and other	(141)
Fair value of repurchased receivables	(714)
Outstanding derecognized receivables at June 30,	$ 8,208

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Subsequent Events (Debt) (Narrative) (Details) - USD ($) $ in Millions			6 Months Ended
	Aug. 07, 2017	Jul. 27, 2017	Jun. 30, 2017	Jun. 30, 2016
Debt Instrument [Line Items]
Proceeds from Issuance of Long-term Debt			$ 24,115	$ 10,140
Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount			$ 7,301
Subsequent Event [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Debt Initiation Date		Jul. 27, 2017
Debt Issuance Date	Aug. 07, 2017
Proceeds from Issuance of Long-term Debt	$ 22,500
Long term Debt, Contingent Payment of Principal or Interest		If we do not consummate the Time Warner acquisition pursuant to the merger agreement on or prior to April 22, 2018, or, if prior to such date, the merger agreement is terminated, then in either case, we must redeem the notes at a redemption price equal to 101% of the principal amount of the notes, plus accrued but unpaid interest.
Subsequent Event [Member] | Floating Rate Notes Due 2023 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 750
Debt Instrument, Maturity Date	Dec. 31, 2023
Subsequent Event [Member] | Global Notes Due 2023 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 1,750
Debt Instrument, Interest Rate, Stated Percentage	2.85%
Debt Instrument, Maturity Date	Dec. 31, 2023
Subsequent Event [Member] | Global Notes Due 2024 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 3,000
Debt Instrument, Interest Rate, Stated Percentage	3.40%
Debt Instrument, Maturity Date	Dec. 31, 2024
Subsequent Event [Member] | Global Notes Due 2027 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 5,000
Debt Instrument, Interest Rate, Stated Percentage	3.90%
Debt Instrument, Maturity Date	Dec. 31, 2027
Subsequent Event [Member] | Global Notes Due 2037 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 4,500
Debt Instrument, Interest Rate, Stated Percentage	4.90%
Debt Instrument, Maturity Date	Dec. 31, 2037
Subsequent Event [Member] | Global Notes Due 2050 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 5,000
Debt Instrument, Interest Rate, Stated Percentage	5.15%
Debt Instrument, Maturity Date	Dec. 31, 2050
Subsequent Event [Member] | Global Notes Due 2058 [Member] | Debentures Subject to Mandatory Redemption [Member]
Debt Instrument [Line Items]
Issuance of Long-term Debt, Principle Amount	$ 2,500
Debt Instrument, Interest Rate, Stated Percentage	5.30%
Debt Instrument, Maturity Date	Dec. 31, 2058