AT&T Investor Update

AT&T Investor Update 4th Quarter Earnings January 30, 2019

Q4 2018 AT&T EARNINGS

Strategic Review Randall Stephenson Agenda Chairman and Chief Executive Officer Results and Outlook John Stephens Senior Executive Vice President and Chief Financial Officer

Q&A

Information set forth in this presentation contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this presentation based on new information or otherwise. This presentation may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com. The “quiet period” for FCC Spectrum Auctions 101/102 (28Ghz and 24Ghz) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy and post-auction market structure with other auction applicants.

Record cash flows FCF of $22 billion, debt reduction Closed Time Warner deal on plan, dividend payout 60% Accretive from Day 1

Wireless service revenue Xandr launched and EBITDA growth 2018 Integrating AppNexus platform; Solid smartphone gains with Summary Turner begins using Xandr data low churn

Best Network, per GWS WarnerMedia continues growth Strong revenue and margin trends Also: 5G introduced; FirstNet deployment ahead of schedule

Fiber deployment accelerates Solid subscriber gains in More than 11 million locations; Latin America ARPU improves with mix shift

Lead in network through fiber, 5G and FirstNet investments

Grow wireless service revenues Key 2019 Initiatives Stabilize Entertainment Group EBITDA

Deliver merger synergies, grow WarnerMedia, launch DTC

Expand targeted advertising, data analytics

Results and Outlook

4Q18 Highlights 2018 Full-Year Highlights

ADJUSTED EPS REVENUES ADJUSTED EPS REVENUES Adj. OI Margin Adj. OI Margin $170.8 $3.52 $160.5 $0.86 $48.0 $3.05 $0.78 $41.7

20.6% 19.6% 15.1% 18.4%

4Q17 4Q18 4Q17 4Q18 2017 2018 2017 2018

4Q17 4Q18 Full-year adjusted EPS of $3.52, up more than 15% Reported EPS $3.08 $0.66 Adjustments: Includes ~$0.26 impact of ASC 606, and ~$0.18 from WarnerMedia • Merger-related amortization1 $0.12 $0.25 • Merger integration items $0.07 $0.06 • Asset sales, impairments, other adjustments2 $0.48 $0.04 $171 billion in revenues; $174 billion on a comparable basis, • Actuarial (gain) loss on benefit plans $0.19 ($0.07) up nearly 9% due to TWX acquisition • Tax-related items3 ($3.16) ($0.08) Solid growth in Mobility service revenues and WarnerMedia Adjusted EPS $0.78 $0.86

1 4Q18 includes $0.17 of purchase accounting amortization for WarnerMedia, $0.07 for DIRECTV and $0.01 for Other. 2 4Q18 includes $0.04 severance and $0.04 other, partly offset by -$0.04 gain on sale of data center colocation operations and assets. 3 4Q18 includes true-up to 4Q17 deferred taxes liability remeasurement, partly offset by other tax items.

Cash From Operations Record operating and free cash flows for the year CAPEX FREE CASH FLOW $43.6 billion cash from operations 4Q18 2018 $22.4 billion free cash flow, up $5.9 billion, or 36% $43.6 $7.9 billion free cash flow in 4Q $38.0 Capex of $21.3 billion, consistent with prior year $21.3 Approximately $23 billion with FirstNet1 $21.6 $12.1 Full-year dividend payout of FCF improves to 60% $9.5 $4.2 Fourth-quarter payout of 46% $5.1 $22.4 Strong cash flow enables balanced capital allocation $7.9 $16.5 $4.5 Investing at record levels

4Q17 4Q18 2017 2018 Solid dividend payout Significant debt reduction

1 Excludes FirstNet reimbursement.

De-levering with record FCF Expect strong 2019 cash generation Plus asset monetization initiatives

~$12B FCF after dividends ~$6-8B cash generation $180B ~$171B2

~$158B ~$150B 3.0x1 Real estate sales 2.8x1 ~2.6x1 ~2.5x1 Non-core asset sales

Working capital initiatives

At Merger Close YE 2018 2019 YE 2019

1 Net debt to Adj. EBITDA ratio; illustrative of approximately $60B Adj. EBITDA 2 Includes 4Q cash collateral posting of ~$1 billion, net of change in foreign debt.

© 2019 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated 9 companies. All other marks are the property of their respective owners. 4Q18* Communications Segment – EBITDA Growth and Margin Expansion $ in billions REVENUES EBITDA MARGIN EBITDA Wireless service revenues up 2.9% and EBITDA up 13.3% $39.1 $38.3 Record 4Q Mobility EBITDA service margin of 48.6%, up 450 basis points 304,000 postpaid smartphones and 467,000 branded smartphones added to base 134,000 postpaid phone net adds; 26,000 prepaid net adds

$11.5 $11.7 EG revenue and EBITDA trends improve 30.5% 29.3% DIRECTV Now subscribers down 267,000 as discounted introductory offers ended; traditional video subscribers down 391,000 4Q17 4Q18 EG profitability expected to improve throughout 2019, with EBITDA stable for full year

Mobility Entertainment Group Business Wireline $19.2 $19.1 $12.6 $12.2 $7.4 $7.1

37.5% 32.9% 37.9% 36.0% 18.9% 16.4%

4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 * 4Q18 presented on a comparable basis to remove the impact of revenue recognition accounting change and the USF policy election.

$9.2 $8.7 Revenue growth of 5.9%; operating income growth of 33.2%, with double-digit gains in all units Delivering on merger promise of EPS and cash flow accretion; solid expense management 4 Golden Globe® awards and 11 Academy Award® nominations Strong Warner Bros. box office performance propels the studio’s best operating income year ever $2.6 $2.0 Home Box Office subscribers and revenues impacted by carriage dispute 28.4% 22.6% Turner subscription revenues grow; ad revenues impacted by domestic audience declines, partly 4Q17 4Q18 offset by higher pricing

Warner Bros. Home Box Office Turner

$4.5 $4.1 $3.2 $3.2 $1.7 $1.7 40.2% 37.2% 33.1% 12.7% 18.1% Op. Income 28.8% Op. Income Op. Income +$295M +$138M +$221M 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 * Results reflect the combination of historic Time Warner adjusted results and AT&T’s RSNs (reported in the Turner division). Otter Media financials included in WarnerMedia results after the 8/7/18 acquisition of the controlling interest. Prior to this date, Otter Media was included as an equity-method investment.

Xandr continues significant momentum Solid subscriber growth in Mexico Strong revenue and EBITDA growth 1 million net adds in 4Q; 3.2 million for full year 18.3 million total subscribers Applying Xandr data and analytics to Turner inventory Mexico 4Q EBITDA impacted by higher operational expenses, including some non-recurring items AppNexus integration underway Expect improvement throughout 2019 AT&T programmatic spend moved to AppNexus platform AT&T digital inventory moving to AppNexus platform Vrio revenues and EBITDA pressured by FX Remained cash flow positive

FREE CASH FLOW $26B range

DIVIDEND PAYOUT High 50s % 2019 NET DEBT TO ADJ. EBITDA 2.5x range Consolidated Guidance GROSS CAPITAL INVESTMENT1 $23B range

ADJ. EPS GROWTH % Low single digits

1 Excludes expected FirstNet reimbursement in the $1 billion range; includes potential vendor financing. Adjustments to EPS include merger-related amortization in the range of $7.5 billion, a non-cash mark-to-market benefit plan gain/loss, merger integration and other adjustments. We expect the mark-to-market adjustment which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our EPS, free cash flow and EBITDA estimates depend on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between our non-GAAP metrics and the reported GAAP metrics without unreasonable effort. (Our 2019 outlook for Net Debt to Adjusted EBITDA ratio excludes the impact of a new accounting standard for leases (ASC 842) that is effective beginning January 1, 2019 to be consistent with our existing multi-year guidance on this debt ratio).

Q4 2018 AT&T EARNINGS