Reports Second-Quarter Results

Q2 2017 AT&T EARNINGS

Investor Briefing

No. 297 | JULY 25, 2017 Investor Briefing Q2 2017 AT&T EARNINGS

Contents

Consolidated Results 3

Business Solutions 5

Entertainment Group 7

Consumer Mobility 9

International 10

AT&T Mobility 12

Highlights 15

Financial and Operational Information 18

Discussion and Reconciliation 28 of Non-GAAP Measures Investor Briefing Q2 2017 AT&T EARNINGS Consolidated Results

AT&T Reports Second-Quarter Results

ǋǋ Consolidated revenues of $39.8 billion ǋǋ Operating income of $7.3 billion ǋǋ Net income attributable to AT&T of $3.9 billion ǋǋ Diluted EPS of $0.63 as reported and $0.79 as adjusted, compared to $0.55 and $0.72 in the year-ago quarter ǋǋ Cash from operations of $8.9 billion ǋǋ Free cash flow of $3.7 billion

Company Maintains Full-Year Guidance

HIGHLIGHTS: ǋǋ U.S. wireless results:

Best-ever postpaid phone churn of 0.79% Total postpaid churn including tablets of 1.01% Growing operating income margin of 30.4% with record-high EBITDA margins including best-ever wireless service margin of 50.4% ǋǋ 2.8 million wireless net adds

2.3 million U.S., driven by connected devices, prepaid and postpaid 476,000 Mexico net adds ǋǋ Entertainment Group results:

112,000 IP broadband net adds; 8,000 total broadband net adds More than 5.5 million AT&T Fiber customer locations passed Total video losses of 199,000 with DIRECTV NOW gains helping offset traditional TV subscriber decline; Total video subscribers essentially flat year over year ǋǋ International results:

Revenues up 10.8% with favorable operating trends Continued revenue growth and margin improvement in Mexico

3 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Consolidated Results

CONSOLIDATED FINANCIAL RESULTS Cash from operating activities was $8.9 billion in the second quarter and $18.2 billion year to date. Capital AT&T's consolidated revenues for the second quarter expenditures were $5.2 billion in the quarter and totaled $39.8 billion versus $40.5 billion in the year- $11.2 billion year to date. Free cash flow — cash from ago quarter, primarily due to declines in legacy operating activities minus capital expenditures — wireline services and consumer mobility. Compared was $3.7 billion for the quarter and $6.9 billion year with results for the second quarter of 2016, to date. operating expenses were $32.5 billion versus $34.0 billion; operating income was $7.3 billion versus $6.6 billion; and operating income margin was Cash from Operations 18.4% versus 16.2%. When adjusting for amortization, IN BILLIONS merger- and integration-related expenses and other $11.0 items, operating income was $8.6 billion versus $10.3 $10.1 $9.2 $8.9 $8.1 billion; and operating income margin was 21.6%, $5.8 $6.5 v v up 150 basis points versus the year-ago quarter. $5.5 $6.0 $5.2

Consolidated Revenues $4.8 $5.2 $3.7 $3.7 IN BILLIONS $3.2

$41.8 $40.5 $40.9 2Q16 3Q16 4Q16 1Q17 2Q17 $39.4 $39.8 Free Cash Flow Capital Expenditures

2Q16 3Q16 4Q16 1Q17 2Q17

Second-quarter net income attributable to AT&T totaled $3.9 billion, or $0.63 per diluted share, compared with $3.4 billion, or $0.55 per diluted share, in the year-ago quarter. Adjusting for $0.16 of costs for amortization, merger- and integration-related expenses and other items, earnings per diluted share was $0.79 compared with an adjusted $0.72 in the year-ago quarter, up 9.7%.

Adjusted Earnings Per Share $0.79 $0.74 $0.74 $0.72

$0.66

2Q16 3Q16 4Q16 1Q17 2Q17

REPORTED: $0.55 $0.54 $0.39 $0.56 $0.63

4 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Business Solutions

The Business Solutions segment provides both wireless and wireline services to business customers and wireless services to individual subscribers who participate through employer-sponsored plans. AT&T's wireless and wired networks provide complete communications solutions to these customers. AT&T’s business customer revenues include results from enterprise, public sector, wholesale and small/midsize customers.

FINANCIAL HIGHLIGHTS BUSINESS WIRELESS FINANCIAL RESULTS Total second-quarter revenues from business Business wireless revenues were essentially flat year customers were $17.1 billion, down 2.7% versus over year at $9.7 billion with service revenue growth the year-earlier quarter due to declines in legacy largely offsetting lower equipment revenues. wireline services. ǋǋ Wireless service revenues were up 0.5% year ǋǋ Growth in wireless service revenues and over year, reflecting continued migration from strategic business services helped offset declines consumer plans. in legacy wireline services and wireless equipment sales. BUSINESS WIRELINE FINANCIAL RESULTS ǋǋ Second-quarter operating expenses were In business wireline, declines in legacy products $12.6 billion, down 5.5% versus the second were partially offset by continued growth in strategic quarter of 2016. Operating income totaled business services. Continued weakness in business $4.5 billion, up 6.1% year over year with cost fixed investment along with technology transitions efficiencies and depreciation more than also impacted results. Total business wireline offsetting declines in legacy services. revenues were $7.4 billion, down 5.9% year over year.

ǋǋ Second-quarter operating income margin ǋǋ Strategic business services, the advanced wireline was 26.1%, up 220 basis points year over year capabilities that lead AT&T’s most advanced with growth in IP revenues and increased cost business solutions — including VPNs, Ethernet, efficiencies more than offsetting declines in cloud, hosting, IP conferencing, voice over IP, higher-margin legacy services. dedicated internet, IP broadband and security services — continued its solid performance. Revenues grew by $223 million, or 8.0%, versus Revenues & EBITDA Margin IN BILLIONS the year-earlier quarter. These services represent 41% of total business wireline revenues and $17.8 $18.0 $17.6 $16.8 $17.1 an annualized revenue stream of more than $12 billion. Growth in strategic business services helped offset a decline of more than $600 million 38.2% 38.5% 39.6% 39.7% 34.9% in legacy services in the quarter.

$6.7 $6.8 $6.3 $6.7 $6.8

2Q16 3Q16 4Q16 1Q17 2Q17 Revenues EBITDA EBITDA Margin

5 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Business Solutions

Strategic Business Services Revenues IN BILLIONS

$3.0 $3.0 $3.0 $2.9 41.0% $2.8 40.1% 38.5% 37.1% 35.8%

2Q16 3Q16 4Q16 1Q17 2Q17 Strategic Services Revenues % of Business Wireline Revenues

SUBSCRIBER METRICS At the end of the second quarter, AT&T had more than 84 million business wireless subscribers.

ǋǋ Business Solutions added 36,000 postpaid subscribers and added 2.2 million connected devices in the second quarter. Postpaid business wireless subscriber churn increased to 0.97% versus 0.91% in the year-ago quarter due to tablets.

Connected Device Subscribers & Net Adds IN MILLIONS 33.6 31.4 29.4 30.6 28.1

2.6 2.2

1.2 1.3 1.3

2Q16 3Q16 4Q16 1Q17 2Q17 Net Adds Subscribers

ǋǋ During the quarter, the company also added 12,000 high-speed IP broadband business subscribers. Total business broadband had a loss of 17,000 subscribers.

6 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Entertainment Group

AT&T’s Entertainment Group provides entertainment, high-speed internet and communications services predominantly to residential customers in the United States.

FINANCIAL HIGHLIGHTS ǋǋ Entertainment Group EBITDA margin was 24.6%, compared to 24.7% in the second quarter of Total revenues were $12.7 billion, generally flat versus 2016, with video and IP broadband revenue the year-earlier quarter, but up sequentially. growth and cost efficiencies mostly offsetting ǋǋ Total video revenues were up 2.1% with satellite TV content-cost pressure, declines in legacy gains more than offsetting declines in IPTV. services and start-up costs for DIRECTV NOW.

AdWorks continues to show strong gains with Revenues and EBITDA Margin revenues up nearly 15%. IN BILLIONS

$13.2 ǋǋ Broadband revenues were down slightly in the $12.7 $12.7 $12.6 $12.7 quarter as the company introduced simplified pricing. IP broadband revenues grew by 3.2%. 24.7% 23.5% 23.9% 24.6% 20.8% Product Revenues IN BILLIONS $13.2 $12.7 $12.7 $12.6 $12.7 $3.1 $3.0 $2.7 $3.0 $3.1 $1.9 $1.9 $1.9 $1.9 $1.9 2Q16 3Q16 4Q16 1Q17 2Q17 Revenues EBITDA EBITDA Margin $9.6 $9.2 $9.0 $9.0 $9.0

$1.9 $1.8 $1.7 $1.7 $1.6

2Q16 3Q16 4Q16 1Q17 2Q17 High-speed Internet Video Other

Second-quarter operating expenses were $11.0 billion, essentially flat from a year ago as cost synergies helped offset annual content-cost increases.

ǋǋ Operating income totaled $1.7 billion, up slightly from the year-ago quarter.

ǋǋ Second-quarter operating income margin was 13.1%, up from 13.0% in the year-earlier quarter.

7 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Entertainment Group

SUBSCRIBER METRICS Entertainment Group continued to gain broadband subscribers in the second quarter. Total video subscribers were down 199,000 in the quarter as DIRECTV NOW subscribers helped offset ǋǋ The Entertainment Group had a net gain of traditional video decreases. The company ended the 112,000 IP broadband subscribers in the second quarter with 25.2 million total video subscribers, quarter with DSL losses of 104,000, for total essentially flat from a year ago. broadband subscriber growth of 8,000. Only about 1 million DSL subscribers remain in AT&T's ǋǋ Traditional video subscribers declined 351,000 in broadband subscriber base. IP broadband second quarter due to seasonality and elevated subscribers benefitted from the expansion of competition. Satellite subscribers declined by the AT&T fiber network and simplified pricing, 156,000 in the quarter and IPTV subscribers and at the end of the quarter totaled declined by 195,000 as the company continued to 13.2 million. focus on profitability. About 85% of the traditional video base is now on the satellite platform. IP Broadband Subscribers IN MILLIONS Video Net Adds 13.1 13.2 12.8 12.9 IN THOUSANDS 12.6

267

342 323 235 152 72 (156) (391) (326) (262) (233) (195) 2Q16 3Q16 4Q16 1Q17 2Q17

(49) (3) 240 (161) (199) 2Q16 3Q16 4Q16 1Q17 2Q17 ǋǋ Customers continue to move up the broadband DIRECTV U-verse DTVNow speed tiers. About 60% of all broadband customers have broadband speeds between 18 megabits and 1 gigabit. The number of ǋǋ DIRECTV NOW added 152,000 subscribers to reach customers with speeds of 18 megabits or faster nearly a half million customers. During the quarter, has increased by 1.6 million in the past year. the company enhanced the user experience, added streaming devices and increased content choices. ǋǋ At the same time, the company continues its fiber deployment. The company now markets AT&T Fiber to more than 5.5 million customer Total Video Subscribers IN MILLIONS locations in 55 markets.

25.3 25.3 25.5 25.4 25.2

20.5 20.8 21.0 21.0 20.9

4.8 4.5 4.3 4.0 3.8 2Q16 3Q16 4Q16 1Q17 2Q17

U-verse DIRECTV DTVNow

8 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Consumer Mobility

The Consumer Mobility segment provides nationwide wireless service to consumer and wholesale subscribers located in the United States and in U.S. territories. The company’s wireless network powers voice and data services, including high-speed internet, video entertainment and home monitoring services.

FINANCIAL HIGHLIGHTS EBITDA Service Margin Total revenues from Consumer Mobility customers 50.5% 50.9% totaled $7.8 billion, down 4.8% versus the year-earlier 48.6% 50.1% quarter, reflecting lower postpaid service revenues 46.1% mostly due to migrations to business plans.

ǋǋ Second-quarter operating expenses were $5.4 billion, down 3.9% versus the second quarter of 2016, reflecting increased operational efficiencies and fewer upgrades. 2Q16 3Q16 4Q16 1Q17 2Q17 ǋǋ AT&T’s Consumer Mobility operating income totaled $2.4 billion, down 6.8% versus the second quarter of 2016. Second-quarter SUBSCRIBER METRICS operating income margin was 30.8%, down At the end of the second quarter, AT&T had 60 basis points from the year-earlier quarter with 51.7 million Consumer Mobility subscribers. lower volumes and increased cost efficiencies partially offsetting service-revenue pressure. ǋǋ In the quarter, Consumer Mobility added 81,000 total subscribers with 267,000 prepaid, 91,000 postpaid ǋǋ Consumer Mobility EBITDA margin was 42.0%, and 86,000 connected device net adds offsetting a compared to 42.8% in the second quarter of loss of 363,000 reseller subscribers. 2016. (EBITDA margin is operating income before depreciation and amortization, divided by total Prepaid Net Adds wireless revenues.) EBITDA service margin was IN THOUSANDS 50.1%, compared to 50.5% in the year-ago quarter. (EBITDA service margin is operating 406 income before depreciation and amortization, 365 divided by total service revenues.) 304 282 267

2Q16 3Q16 4Q16 1Q17 2Q17

ǋǋ Consumer Mobility postpaid churn was 1.09%, the same as the year-ago quarter. Consumer postpaid phone churn was 0.86% versus 0.96% in the year-ago quarter. 9 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS International

The International segment includes wireless services in Mexico and satellite entertainment services in Latin America. AT&T is a leading provider of pay television services in Latin America with satellite operations serving Argentina, Brazil, Chile, Colombia, Ecuador, Peru, Uruguay, Venezuela and parts of the Caribbean. The company also owns 41% of Sky Mexico. Sky Mexico financial results are accounted for as an equity-method investment.

Total International revenues totaled $2.0 billion, up ǋǋ Second-quarter operating loss was $198 million from $1.8 billion in the year-ago quarter. Second- compared to a loss of $225 million in the year- quarter operating expenses were $2.1 billion. AT&T’s ago quarter, reflecting continued investment in International operating loss totaled $57 million, operations, network and subscriber acquisitions. compared to ($193 million) in the year-ago second quarter and ($120 million) in the first quarter of 2017. ǋǋ In the quarter, AT&T added 92,000 postpaid Second-quarter operating income margin was (2.8)%. subscribers and 402,000 prepaid subscribers to reach 13.1 million total wireless subscribers in Mexico, a 31% increase from a year ago. Revenues IN BILLIONS $2.0 Wireless Subscribers - Mexico $1.8 $1.9 $1.9 $1.9 IN MILLIONS 13.1 $0.6 $0.6 $0.6 $0.7 12.6 $0.6 12.0 0.2 10.7 0.3 10.0 0.3 0.3 0.3 7.6 7.2 $1.2 $1.3 $1.3 $1.3 $1.4 6.7 5.1 5.7

2Q16 3Q16 4Q16 1Q17 2Q17 5.1 5.2 4.7 5.0 Latin America Mexico Wireless 4.6

2Q16 3Q16 4Q16 1Q17 2Q17 MEXICO Postpaid Prepaid Other

AT&T owns and operates a wireless network in Mexico. AT&T covered more than 88 million people in Mexico with 4G LTE at the end of the second quarter and expects to cover 100 million POPs by the end of 2018. Second-quarter 4G LTE coverage included adjustments for a new population census in Mexico as well as continued 4G LTE deployment.

ǋǋ Wireless revenues from Mexico were $665 million, up 9.7% versus the year-earlier quarter, largely due to subscriber growth, which was partially offset by competitive pressures and foreign exchange.

10 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS International

DIRECTV LATIN AMERICA DIRECTV Latin America revenues reflect price increases driven by macroeconomic conditions with mixed local currencies. Total revenues from Latin America were $1.4 billion, up 11.4%. Operating income was $141 million with continued positive free cash flow.

ǋǋ Second-quarter subscriber net losses were 56,000 with losses in Brazil, Argentina and Venezuela offsetting gains in other countries. Total subscribers at the end of the quarter were 13.6 million. Sky Mexico had approximately 8.0 million subscribers as of June 30, 2017.

11 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS AT&T Mobility

AT&T’s U.S. mobility operations are divided between the Business Solutions and Consumer Mobility segments. For comparison purposes, the company is providing supplemental information for its total domestic mobility operations.

FINANCIAL HIGHLIGHTS Revenues and EBITDA Service Margins Wireless revenues reflected lower service revenues $18.8 $17.9 $18.2 $17.5 from the continued adoption of unlimited plans and $17.2 lower equipment revenues from fewer postpaid gross adds and upgrades than in the year-ago quarter. 50.4% 49.8% 50.1% 45.4% 49.3% ǋǋ Total wireless revenues were $17.5 billion, down 2.3% year over year, due to decreases in service $7.4 and equipment revenues. Wireless service revenues $7.5 $6.7 $7.2 $7.3 of $14.5 billion were down 2.5% year over year but flat sequentially. Wireless equipment revenues 2Q16 3Q16 4Q16 1Q17 2Q17 decreased 1.0% to $3.0 billion reflecting customers’ Revenues EBITDA EBITDA Service Margin decisions to hold onto their devices longer. The upgrade rate was an all-time low for a second quarter. ARPU ǋǋ Second-quarter wireless operating expenses The migration to non-subsidized plans is reflected in totaled $12.2 billion, down 3.1% year over year, postpaid service ARPU (average revenues per user). reflecting operating efficiencies and lower sales volumes. Wireless operating income was $5.3 ǋǋ Phone-only postpaid ARPU decreased 2.5% versus billion, essentially flat year over year. the year-earlier quarter but increased sequentially. Phone-only postpaid ARPU with AT&T Next ǋǋ Wireless margins hit record levels and reflect monthly billings decreased 1.3% year over year continued success in driving operating costs out but also increased sequentially as customers of the business and fewer smartphone upgrades. continue holding onto their devices after AT&T’s second-quarter wireless operating income completing AT&T Next payments. margin was 30.4%, a 60 basis point improvement from the year-earlier quarter and the best-ever second-quarter operating income margin. Phone-only Postpaid + EIP ARPU

ǋǋ Wireless EBITDA margin equaled its best ever at $69.97 $69.99 $69.54 $68.81 $69.04 41.8%, compared to 41.4% in the second quarter $10.17 $10.35 $10.70 $10.72 $10.74 of 2016. Wireless EBITDA service margin was a best-ever 50.4%, compared to 49.8% in the year-ago quarter. $59.80 $59.64 $58.84 $58.09 $58.30

2Q16 3Q16 4Q16 1Q17 2Q17 Phone-only Postpaid ARPU EIP Billings

12 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS AT&T Mobility

SUBSCRIBER METRICS SMARTPHONES In the second quarter, AT&T posted a net increase The company’s branded smartphone base continued in total wireless subscribers of 2.3 million to reach to grow in the quarter, and even more customers 136.5 million in service. moved off the subsidy model — either choosing AT&T Next or bringing their own devices. ǋǋ The company had a net gain of 127,000 postpaid subscribers and added 267,000 prepaid phone ǋǋ The company had 6.3 million branded smartphone subscribers with gains in both Cricket and AT&T gross adds and upgrades in the quarter, including PREPAID. AT&T also added 2.3 million connected 1.9 million from prepaid. The postpaid upgrade devices in the quarter. The company lost 368,000 rate in the quarter was a near-record low 4.1%. reseller subscribers in the quarter. Postpaid tablet and computing device net adds were 156,000 with a loss of 89,000 postpaid voice, almost all feature- Branded Phone Subscribers & phone subscribers, which is a significant Postpaid Upgrade Rate improvement both year over year and 78.4 78.7 78.6 78.8 sequentially. 78.3 12.6 13.0 13.5 13.8 14.2 7.2 6.7 6.1 5.8 5.4 Wireless Subscribers 58.5 58.7 59.1 59.0 59.2 IN MILLIONS 136.5 131.8 133.3 134.9 134.2 34.7 30.3 31.6 32.4 6.3% 29.0 5.1% 4.1% 4.6% 3.9% 12.9 12.6 11.9 10.6 10.3 12.6 13.0 13.5 13.8 14.2 2Q16 3Q16 4Q16 1Q17 2Q17

Prepaid Postpaid Feature Postpaid Postpaid 77.3 77.4 77.8 77.3 77.4 Phones Phones & Other Smartphones Upgrade Rate

2Q16 3Q16 4Q16 1Q17 2Q17 ǋǋ Sales on AT&T Next were 3.6 million, or 83% Postpaid Prepaid Reseller Connected Devices of all postpaid smartphone gross adds and upgrades. The company also had 421,000 BYOD gross adds. That means about 93% of postpaid ǋǋ The company had 394,000 branded net adds smartphone transactions in the quarter were (both postpaid and prepaid) in the quarter, non-subsidy. including a gain of 212,000 branded smartphones. More than half a million total branded More than 50% of the company’s postpaid smartphones were added to the base. smartphone base is currently on AT&T Next, with 88% of postpaid smartphone subscribers Branded Net Adds on no-device-subsidy plans. IN THOUSANDS 926

406 622 516 365 304 394 520 91 267 257 212 282 127 191 2Q16 3Q16 4Q16 1Q17 2Q17

Postpaid Prepaid

13 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS AT&T Mobility

CHURN Postpaid churn was 1.01%, compared to 0.97% in the year-ago quarter due to increases in tablet churn. Postpaid phone churn was a record low 0.79%, compared to 0.84% in the year-ago quarter. Branded churn was 1.57%, compared to 1.47% in the year-ago quarter. Total churn was 1.28%, down from 1.35% in the year-ago quarter.

Postpaid Churn

1.16% 1.12% 1.05% 1.01% 0.97%

0.98% 0.90% 0.90% 0.84% 0.79%

2Q16 3Q16 4Q16 1Q17 2Q17 Postpaid Churn Postpaid Phone Churn

14 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Highlights

AT&T helps millions around the globe connect with leading entertainment, mobile, high-speed internet and voice services. The company is one of the world’s largest providers of pay TV with customers in the U.S. and 11 Latin American countries. And it helps businesses worldwide serve their customers better with mobility and highly secure cloud solutions.

In recent weeks, AT&T: ENTERTAINMENT ǋǋ Introduced a $25 monthly video credit for AT&T WIRELESS Unlimited Choice customers, letting them enjoy endless entertainment on DIRECTV NOW for as ǋǋ Launched 5G Evolution in select areas of Austin little as $10/month. and Indianapolis, providing a taste of the future of connectivity to customers using the Samsung ǋǋ DIRECTV NOW on several Roku® devices with a 2 Galaxy S8 or S8+, or the upcoming Moto Z Force limited time offer that lets DIRECTV NOW TM Edition . AT&T plans to roll out 5G Evolution to customers receive a free Roku Premiere when more than 20 markets later this year while it they pay in full for two months of service up prepares to launch standards-based 5G starting front. as early as 2018. ǋǋ Collaborated with Best Buy to offer 30 free ǋǋ Rolled out new unlimited plans for postpaid days of DIRECTV NOW for any customer who wireless subscribers. AT&T Unlimited Plus wireless purchases an eligible streaming device. customers get a $25 video credit toward DIRECTV, DIRECTV NOW or U-verse and HBO ǋǋ Turned on more than 30 new local affiliate included. stations on DIRECTV NOW, more than doubling DIRECTV NOW’s local offering since the product ǋǋ Introduced a new unlimited plan for AT&T launched at the end of 2016. PREPAIDSM (formerly AT&T GoPhone) customers, as well as a limited-time offer allowing them to ǋǋ Expanded the company’s 100% fiber network receive bill credits for their 3rd and 12th months powered by AT&T Fiber to parts of Monterey, of service on select prepaid plans. Salinas and Oakland, Calif; South Dallas; and Wilmington, N.C. Ultra-fast speeds are now ǋǋ Was named to MONEY Magazine’s “The Best Cell available in parts of 55 metros with plans to Phone Plans of 2017.” Cricket’s Smart plan won reach at least 20 more metros. AT&T now “Best Couples Plan,” and the AT&T PREPAID 6GB markets the ultra-fast service to over 5.5 million ($45/mo) plan won “Best Everyday Plan,” both locations. The company is well on its way to among plans with 4 GB or more of high-speed adding a total of 2 million fiber locations in 2017. data, after MONEY evaluated 100 plans from 15 companies. This is the third year in a row the ǋǋ Launched Fixed Wireless Internet to more than company has made the list of top plans. 70,000 customer locations across 9 states: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee. This is part of the company’s FCC Connect America Fund commitment to serve more than 400,000 customer locations across 18 states by the end of 2017 and more than 1.1 million locations by 2020. 15 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Highlights

ǋǋ Announced the availability of STAYCAST, ǋǋ Deployed a nationwide Low-Power Wide-Area powered by Google Chromecast, a streaming LTE-M network across the U.S. on AT&T’s 4G LTE solution for hotels and institutions that allows network. This LTE-M network will enable a new hotel guests to stream their own content from generation of IoT devices and applications. their devices onto the TV in their room. ǋǋ Announced that AT&T NetBond® for Cloud users gained enhanced connectivity to more than 100 BUSINESS & INTERNATIONAL additional cloud software and service providers ǋǋ Worked with FirstNet to deliver state plans to U.S. hosted on Amazon Web Services (AWS) as part states and territories in June – 3 months ahead of of the new AWS Direct Connect Bundle. AWS FirstNet’s original goal. This significant milestone in software and solution providers can also join the the public-private partnership between AT&T and AT&T NetBond for Cloud Solution Provider FirstNet opens the door for states and territories program. to begin their decision-making process. To date, ǋǋ Launched the company’s second fixed wireless Arkansas, Iowa, Kentucky, Virginia and Wyoming 5G trial using millimeter wave technology to deliver have opted in. an ultra-fast 5G internet connection to residential, ǋǋ Strengthened cooperation with China Telecom to small business and enterprise locations in develop more advanced network services for Austin, TX using Ericsson’s 5G RAN and the Intel® multinational companies in China. In addition to 5G Mobile Trial Platform. extending the companies’ unique joint venture for ǋǋ Announced the deployment of an LTE-M network another 20 years, AT&T and China Telecom will for IoT devices in Mexico. Construction is underway explore ways to develop new services in Internet with plans to be complete by December 2017. of Things (IoT), cloud-based big data, VoLTE AT&T has the most reliable voice and data network roaming and software-defined networks. in Mexico. ǋǋ Accelerated global momentum for the AT&T ǋǋ Opened the Enterprise Experience Center for FlexWareSM platform, with new network business customers in Mexico City. The center is connectivity options and security applications and a one-of-a-kind destination for companies of all increased availability to more than 200 countries kinds to learn, collaborate and innovate. AT&T and territories1. We have now signed contracts for also launched a portfolio of solutions to help more than 4,000 FlexWare devices globally across a businesses address their needs, grow revenues, variety of industries. lower costs and increase security. ǋǋ Announced Ericsson as a global AT&T FlexWare ǋǋ Continued to expand the company’s accessibility to customer. Ericsson will use AT&T FlexWare to boost consumers in Mexico with the opening of more network agility and save costs. than 250 new wireless points of sale throughout ǋǋ Announced DXC Technology as the first IT services the country. company to launch a third-party virtual network ǋǋ Led the industry in employee engagement, moving function (VNF) based on AT&T FlexWare. DXC will from #19 to #13 in the “Great Places to Work® en use AT&T FlexWare in its own operations. México” ranking. ǋǋ Acquired the Vyatta® network operating system and associated assets of Brocade Communications Systems. The deal will expand AT&T’s white box platform capabilities and bolster the company’s ability to deliver cloud or premises-based virtual network functions, starting with our previously announced SD-WAN cloud service with VeloCloud.

1Subject to conditions 16 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS

THIRD-QUARTER 2017 EARNINGS AT&T INVESTOR BRIEFING DATE: OCTOBER 24, 2017 The AT&T Investor Briefing is published by the Investor AT&T will release third-quarter 2017 earnings Relations staff of AT&T Inc. Requests for further on October 24, 2017, after the market closes. information may be directed to one of the Investor Relations managers by phone at 210-351-3327. The company’s Investor Briefing and related earnings materials will be available on the AT&T website at Correspondence should be sent to: https://investors.att.com by 4:30 p.m. Eastern time. Investor Relations AT&T Inc. AT&T will also host a conference call to discuss the 208 S. Akard Street results at 4:30 p.m. Eastern time the same day. Dial-in Dallas, TX 75202 and replay information will be announced on First Call approximately 8 weeks before the call, which will also Email address: be broadcast live and will be available for replay over [email protected] the internet at https://investors.att.com. Senior Vice President-Investor Relations Mike Viola CAUTIONARY LANGUAGE CONCERNING FORWARD- Investor Relations Staff LOOKING STATEMENTS Jamie Anderson Information set forth in this Investor Briefing contains Tim Bever financial estimates and other forward-looking Michael Black statements that are subject to risks and uncertainties, Jeston Dumas and actual results may differ materially. A discussion Kent Evans of factors that may affect future results is contained Matt Gallaher in AT&T’s filings with the Securities and Exchange Martin Sheehan Commission. AT&T disclaims any obligation to update Chris Womack or revise statements contained in this Investor Briefing based on new information or otherwise. This Investor Briefing may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are included in the exhibits to the Investor Briefing and are available on the company’s website at https://investors.att.com.

17 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS FinancialBusiness & Operational Solutions Information

AT&T INC. FINANCIAL DATA

Consolidated Statements of Income Dollars in millions except per share amounts Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 (exclusive of depreciation and amortization shown separately below) 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 % Interest Expense (1,395) (1,258) 10.9 % (2,688) (2,465) 9.0 % Equity in Net Income (Loss) of Affiliates 14 28 -50.0 % (159) 41 - % Other Income (Expense) - Net 128 91 40.7 % 108 161 -32.9 % Income Before Income Taxes 6,070 5,421 12.0 % 11,448 11,428 0.2 % Income Tax Expense 2,056 1,906 7.9 % 3,860 4,028 -4.2 % Net Income 4,014 3,515 14.2 % 7,588 7,400 2.5 % Less: Net Income Attributable to Noncontrolling Interest (99) (107) -7.5 % (204) (189) 7.9 % Net Income Attributable to AT&T $ 3,915 $ 3,408 14.9 % $ 7,384 $ 7,211 2.4 %

Basic Earnings Per Share Attributable to AT&T $ 0.63 $ 0.55 14.5 % $ 1.19 $ 1.17 1.7 % Weighted Average Common Shares Outstanding (000,000) 6,165 6,174 -0.1 % 6,166 6,173 -0.1 %

Diluted Earnings Per Share Attributable to AT&T $ 0.63 $ 0.55 14.5 % $ 1.19 $ 1.17 1.7 % Weighted Average Common Shares Outstanding with Dilution (000,000) 6,184 6,195 -0.2 % 6,185 6,193 -0.1 %

18 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

AT&T INC. FINANCIAL DATA

Consolidated Balance Sheets Dollars in millions Unaudited Jun. 30, Dec. 31, 2017 2016 Assets 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 - 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 6,495 6,495 Additional paid-in capital 89,471 89,604 Retained earnings 36,067 34,734 Treasury stock (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

19 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

AT&T INC. FINANCIAL DATA

Consolidated Statements of Cash Flows Dollars in millions Six Months Ended Unaudited 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 Sales 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

20 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

AT&T INC. FINANCIAL DATA

Supplementary Financial Data Dollars in millions except per share amounts Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change Capital expenditures Purchase of property and equipment $ 4,966 $ 5,251 -5.4 % $ 10,750 $ 9,702 10.8 % Interest during construction $ 242 $ 219 10.5 % $ 473 $ 437 8.2 %

Dividends Declared per Share $ 0.49 $ 0.48 2.1 % $ 0.98 $ 0.96 2.1 %

End of Period Common Shares Outstanding (000,000) 6,140 6,152 -0.2 % Debt Ratio 53.3% 50.5% 280 BP Total Employees 260,480 277,200 -6.0 %

Supplementary Operating Data Subscribers and connections in thousands Unaudited June 30, Percent 2017 2016 Change Wireless Subscribers Domestic 136,500 131,805 3.6 % Mexico 13,082 9,955 31.4 % Total Wireless Subscribers 149,582 141,760 5.5 %

Total Branded Wireless Subscribers 104,421 99,557 4.9 %

Video Connections Domestic 25,200 25,323 -0.5 % PanAmericana 8,103 7,175 12.9 % Brazil 5,519 5,348 3.2 % Total Video Connections 38,822 37,846 2.6 %

Broadband Connections IP 14,234 13,544 5.1 % DSL 1,452 2,097 -30.8 % Total Broadband Connections 15,686 15,641 0.3 %

Voice Connections Network Access Lines 12,791 15,284 -16.3 % U-verse VoIP Connections 5,853 5,593 4.6 % Total Retail Consumer Voice Connections 18,644 20,877 -10.7 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change Wireless Net Additions Domestic 2,282 1,361 67.7 % 4,363 3,142 38.9 % Mexico 476 742 -35.8 % 1,109 1,271 -12.7 % Total Wireless Net Additions 2,758 2,103 31.1 % 5,472 4,413 24.0 %

Total Branded Wireless Net Additions 888 1,401 -36.6 % 1,626 2,596 -37.4 %

Video Net Additions Domestic (199) (49) - % (360) (101) - % PanAmericana 13 81 -84.0 % 65 109 -40.4 % Brazil (69) 6 - % (30) (95) 68.4 % Total Video Net Additions (255) 38 - % (325) (87) - %

Broadband Net Additions IP 124 74 67.6 % 370 276 34.1 % DSL (133) (197) 32.5 % (289) (413) 30.0 % Total Broadband Net Additions (9) (123) 92.7 % 81 (137) - %

21 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

BUSINESS SOLUTIONS 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 strategic business services; as well as traditional data and voice products. We utilize our wireless and wired networks (referred to as “wired” or “wireline”) to provide a complete communications solution to our business customers.

Segment Results Dollars in millions Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 expenses 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 %

Segment Operating Income Margin 26.1 % 23.9 % 26.0 % 24.2 %

Supplementary Operating Data Subscribers and connections in thousands Unaudited June 30, Percent 2017 2016 Change Business Solutions Wireless Subscribers Postpaid/Branded 51,111 49,433 3.4 % Reseller 72 51 41.2 % Connected Devices 33,611 28,061 19.8 % Total Business Solutions Wireless Subscribers 84,794 77,545 9.3 %

Business Solutions IP Broadband Connections 992 948 4.6 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change Business Solutions Wireless Net Additions Postpaid/Branded 36 185 -80.5 % (89) 318 - % Reseller (5) (13) 61.5 % 1 (35) - % Connected Devices 2,170 1,199 81.0 % 4,723 2,777 70.1 % Total Business Solutions Wireless Net Additions 2,201 1,371 60.5 % 4,635 3,060 51.5 %

Business Solutions Wireless Postpaid Churn 0.97% 0.91% 6 BP 1.02% 0.97% 5 BP

Business Solutions IP Broadband Net Additions 12 20 -40.0 % 16 37 -56.8 %

22 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

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

Segment Results Dollars in millions Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 expenses 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 %

Segment Operating Income Margin 13.1 % 13.0 % 12.9 % 12.8 %

Supplementary Operating Data Subscribers and connections in thousands Six Months Ended Unaudited June 30, Percent 2017 2016 Change Video Connections Satellite 20,856 20,454 2.0 % U-verse 3,825 4,841 -21.0 % DIRECTV NOW 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 %

Voice Connections 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 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change Video Net Additions Satellite (156) 342 - % (156) 670 - % U-verse (195) (391) 50.1 % (428) (773) 44.6 % DIRECTV NOW 152 - - % 224 - - % Total Video Net Additions (199) (49) - % (360) (103) - %

Broadband Net Additions IP 112 54 - % 354 240 47.5 % DSL (104) (164) 36.6 % (231) (345) 33.0 % Total Broadband Net Additions 8 (110) - % 123 (105) - %

23 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

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

Segment Results Dollars in millions Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 expenses 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 %

Segment Operating Income Margin 30.8 % 31.4 % 30.5 % 30.7 %

Supplementary Operating Data Subscribers and connections in thousands Unaudited June 30, Percent 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 1,047 896 16.9 % Total Consumer Mobility Subscribers 51,706 54,260 -4.7 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change Consumer Mobility Net Additions Postpaid 91 72 26.4 % 25 68 -63.2 % Prepaid 267 365 -26.8 % 549 865 -36.5 % Branded 358 437 -18.1 % 574 933 -38.5 % Reseller (363) (446) 18.6 % (951) (824) -15.4 % Connected Devices 86 (1) - % 105 (27) - % Total Consumer Mobility Net Additions 81 (10) - % (272) 82 - %

Total Churn 2.15% 1.96% 19 BP 2.29% 2.04% 25 BP Postpaid Churn 1.09% 1.09% - BP 1.16% 1.16% - BP

24 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

INTERNATIONAL 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 wireless 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.

Segment Results Dollars in millions Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 expenses 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 %

Segment Operating Income Margin (2.8) % (10.6) % (4.5) % (11.2) %

Supplementary Operating Data Subscribers and connections in thousands Unaudited June 30, Percent 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 5,519 5,348 3.2 % Total Latin America Satellite Subscribers 13,622 12,523 8.8 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 494 779 -36.6 % 1,141 1,345 -15.2 % Reseller (18) (37) 51.4 % (32) (74) 56.8 % Total Mexican Wireless Net Additions 476 742 -35.8 % 1,109 1,271 -12.7 %

Latin America Satellite Net Additions PanAmericana 13 81 -84.0 % 65 109 -40.4 % SKY Brazil (69) 6 - % (30) (95) 68.4 % Total Latin America Satellite Net Additions (56) 87 - % 35 14 - % 25 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY 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).

Operating Results Dollars in millions Three Months Ended Six Months Ended Unaudited June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 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 expenses 10,197 10,501 -2.9 % 20,195 21,125 -4.4 % 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 %

Operating Income Margin 30.4 % 29.8 % 30.3 % 29.6 %

Supplementary Operating Data Subscribers and connections in thousands Unaudited June 30, Percent 2017 2016 Change AT&T Mobility Subscribers 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 34,658 28,957 19.7 % Total AT&T Mobility Subscribers 136,500 131,805 3.6 %

Domestic Licensed POPs (000,000) 326 322 1.2 %

Three Months Ended Six Months Ended June 30, Percent June 30, Percent 2017 2016 Change 2017 2016 Change AT&T Mobility Net Additions Postpaid 127 257 -50.6 % (64) 386 - % Prepaid 267 365 -26.8 % 549 865 -36.5 % Branded 394 622 -36.7 % 485 1,251 -61.2 % Reseller (368) (459) 19.8 % (950) (859) -10.6 % Connected Devices 2,256 1,198 88.3 % 4,828 2,750 75.6 % Total AT&T Mobility Net Additions 2,282 1,361 67.7 % 4,363 3,142 38.9 % M&A Activity, Partitioned Customers and Other Adjustments - (1) - % (2,723) 23 - %

Total Churn 1.28% 1.35% -7 BP 1.37% 1.38% -1 BP Postpaid Churn 1.01% 0.97% 4 BP 1.07% 1.04% 3 BP

26 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Financial & Operational Information

SUPPLEMENTAL SEGMENT RECONCILIATION

Three Months Ended Dollars in millions Unaudited

June 30, 2017 Operations Depreciation Equity in Net and Support and Operating Income (Loss) Segment Revenues Expenses EBITDA Amortization Income (Loss) of Affiliates 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

June 30, 2016 Operations Depreciation Equity in Net and Support and Operating Income (Loss) Segment Revenues Expenses EBITDA Amortization Income (Loss) of Affiliates 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

Six Months Ended Dollars in millions Unaudited

June 30, 2017 Operations Depreciation Equity in Net and Support and Operating Income (Loss) Segment Revenues Expenses EBITDA Amortization Income (Loss) of Affiliates 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

June 30, 2016 Operations Depreciation Equity in Net and Support and Operating Income (Loss) Segment Revenues Expenses EBITDA Amortization Income (Loss) of Affiliates 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

27 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS DiscussionBusiness andSolutions Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to investors Discussion and Reconciliation of Non-GAAP Measures as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal performance of AT&T and its segments. Management also uses these measures as a management reporting and planning processes and are important metrics that management uses to evaluate the operating method of comparing performance with that of many of our competitors. performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors. FREE CASH FLOW FreeFree cash Cash flow Flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the usefulpercentage information of dividends to our paid investors to free cash because flow. We managementbelieve these metrics views provide free cash useful flow information as an to our important investors indicatorbecauseof howmanagement much cash views is freegenerated cash flow by as routine an important business indicator operations, of how much including cash is Capital generated expenditures, by routine b usinessand makes operations, decisionsincluding Capital based expenditures, on it. Management and makes also decisions views based free cashon it. Management flow as a also measure views free of cash cash flow available as a measure to ofpay cash debt and returnavailable cash to payto shareowners.debt and return cash to shareowners.

Free Cash Flow and Free Cash Flow Dividend Payout Ratio Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net cash provided by operating activities $ 8,942 $ 10,307 $ 18,160 $ 18,207 Less: Capital expenditures (5,208) (5,470) (11,223) (10,139) Free Cash Flow 3,734 4,837 6,937 8,068

Less: Dividends paid (3,012) (2,952) (6,021) (5,899) Free Cash Flow after Dividends $ 722 $ 1,885 $ 916 $ 2,169 Free Cash Flow Dividend Payout Ratio 80.7% 61.0% 86.8% 73.1%

EBITDAEBITDA OurOur calculationcalculation of of EBITDA, EBITDA, as aspresented, presented, may may differ differ from similarly from titledsimilarly measures titled reported measures by other reported companies. by otherFor AT&T, companies.EBITDA excludes For AT&T, other EBITDAincome (expense)excludes other– net, andincome equity (expense) in net income – net, (loss) and ofequity affiliates, in net as theseincome do (loss)not reflect of the affiliates,operating results as theseof our subscriber do not basereflect or operations the operating that are notresults under ourof control.our subscriber Equity in net incomebase or (loss) operations of affiliates that arenotunder ourrep resents control. the Equity proportionate in net income share of (loss) the net of income affiliates (loss) ofrepresents affiliates in which the weproportionate exercise significant share influence, of the but donet income not (loss)control. of Because affiliates we do in not which control we these exercise entities, significant management influence,excludes these but results do when not evaluatingcontrol. the Because performance we donotcontrol of theseour primar entities,y operations. management EBITDA excludes also excludes these interest results expense when evaluatingand the provision the performance for income taxes. of our Excluding primary these items operations.eliminates theEBITDA expenses also excludesassociated interest with our expense capital andand thetax provisionstructures. for Finally, income EBITDA taxes. excludes Excluding depreciation these items and eliminatesamortization the in expensesorder to elimina associatedte the withimpact our of capitalcapital investments.and tax structures. EBITDA doesFinally, not EBITDA give effect excludes to cash depreciation used for debt andservice amortization requirements in orderand thus to does eliminate not reflect the impactavailable of funds capital for distributions, investments. reinvestment EBITDA does or notother give discretionary effect to uses. cash usedEBITDA for is debt not presented service requirements as an alternative and me thusasure does of operating not reflect results available or cash flowsfunds from for operations, distributions, as determined reinvestment in or otheraccordance discretionary with U.S. uses.generally EBITDA accepted is not accounting presented principles as an (GAAP). alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP). EBITDA service margin is calculated as EBITDA divided by service revenues. EBITDA service margin is calculated as EBITDA divided by service revenues. When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations28 (AT&TCONTENTS Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.

1 Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income. These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers forwhich segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, andour investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations. We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measureWe believe than EBITDA EBITDA Service Margin Margin (EBITDA (EBITDA asas a a percentage percentage of serviceof total revenues) revenue) to forbe a our more Consumer relevant measure Mobility than segment EBITDA operatingMargin (EBITDA margin as anda percentage our supplemental of total AT&Trevenue) Mobility for our operating Consumer margin. Mobility We segment also use operating wireless servicemargin revenuesand our tosupplemental calculate margin AT&T Mobility to facilitate operating comparison, margin. Weboth also internally use wireless and serviceexternally revenues with ourto calculatewireless margincompetitors, to facilitate as theycomparison, calculate both their internally margins and using externally wireless with service our wireless revenues competitors, as well. as they calculate their margins using wireless service revenues as well. There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDAThere are service material margin, limitations as we to haveusing definedthese non -them,GAAP financial may not measures. be comparable EBITDA, EBITDA to similarly margin andtitled EBITDA measures service reportedmargin, as by we other have companies.defined them, Furthermore, may not be thesecomparable performance to similarly measures titled measures do not takereport intoed byaccount other companies.certain significantFurthermore, items, these performance including measuresdepreciation do not and take amortization, into account interest certain significant expense, items, tax including expense depreciation and equity innetand incomeamortization, (loss) interest of affiliates. expense, tax Management expense and equity compensates in net income for (loss) these of affiliates.limitations Management by carefully compensates analyzing for howitsthese competitorslimitations by carefullypresent analyzingperformance how itsmeasures competitors that present are similar performance in nature measures to EBITDA that are as similarwe present in nature it, toand EBITDA as consideringwe present it, the and economic considering effect the economic of the effect excluded of the excluded expense expense items items independently independently as as well well asas in connection in connection with itswith analysis its analysis of net of net income income as as calculated calculated inin accordance with with GAAP. GAAP. EBITDA, EBITDA, EBITDA EBITDA margin margin and EBITDAand EBITDA service service margin marginshould be should considered be considered in addition in to, addition but not to, as buta substitute not as a for, substitute other measures for, other of measuresfinancial performance of financial reported in performanceaccordance with reported GAAP. in accordance with GAAP.

EBITDA, EBITDA Margin and EBITDA Service Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Net Income $ 4,014 $ 3,515 $ 7,588 $ 7,400 Additions: Income Tax Expense 2,056 1,906 3,860 4,028 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) Depreciation and amortization 6,147 6,576 12,274 13,139 EBITDA 13,470 13,136 26,461 26,830

Total Operating Revenues 39,837 40,520 79,202 81,055 Service Revenues 36,538 37,142 72,994 74,243

EBITDA Margin 33.8% 32.4% 33.4% 33.1% EBITDA Service Margin 36.9% 35.4% 36.3% 36.1%

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2 Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

Segment EBITDA, EBITDA Margin and EBITDA Service Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Business Solutions Segment Segment Contribution $ 4,459 $ 4,201 $ 8,819 $ 8,500 Additions: Depreciation and amortization 2,335 2,521 4,647 5,029 EBITDA 6,794 6,722 13,466 13,529

Total Segment Operating Revenues 17,107 17,579 33,955 35,188

Segment Operating Income Margin 26.1% 23.9% 26.0% 24.2% EBITDA Margin 39.7% 38.2% 39.7% 38.4%

Entertainment Group Segment Segment Contribution $ 1,655 $ 1,651 $ 3,252 $ 3,246 Additions: Equity in Net (Income) Loss of Affiliates 11 2 17 (1) Depreciation and amortization 1,458 1,489 2,877 2,977 EBITDA 3,124 3,142 6,146 6,222

Total Segment Operating Revenues 12,682 12,711 25,305 25,369

Segment Operating Income Margin 13.1% 13.0% 12.9% 12.8% EBITDA Margin 24.6% 24.7% 24.3% 24.5%

Consumer Mobility Segment Segment Contribution $ 2,400 $ 2,574 $ 4,739 $ 5,068 Additions: Depreciation and amortization 871 932 1,744 1,854 EBITDA 3,271 3,506 6,483 6,922

Total Segment Operating Revenues 7,791 8,186 15,531 16,514 Service Revenues 6,528 6,948 13,137 13,891

Segment Operating Income Margin 30.8% 31.4% 30.5% 30.7% EBITDA Margin 42.0% 42.8% 41.7% 41.9% EBITDA Service Margin 50.1% 50.5% 49.3% 49.8%

International Segment Segment Contribution $ (32) $ (184) $ (132) $ (368) Additions: Equity in Net (Income) of Affiliates (25) (9) (45) (23) Depreciation and amortization 311 298 601 575 EBITDA 254 105 424 184

Total Segment Operating Revenues 2,026 1,828 3,955 3,495

Segment Operating Income Margin -2.8% -10.6% -4.5% -11.2% EBITDA Margin 12.5% 5.7% 10.7% 5.3%

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3 Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 AT&T Mobility Operating Income $ 5,329 $ 5,342 $ 10,501 $ 10,616 Add: Depreciation and amortization 1,992 2,081 3,989 4,137 EBITDA 7,321 7,423 14,490 14,753

Total Operating Revenues 17,518 17,924 34,685 35,878 Service Revenues 14,534 14,911 29,072 29,709

Operating Income Margin 30.4% 29.8% 30.3% 29.6% EBITDA Margin 41.8% 41.4% 41.8% 41.1% EBITDA Service Margin 50.4% 49.8% 49.8% 49.7%

Supplemental Latin America EBITDA and EBITDA Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 International - Latin America Operating Income $ 141 $ 32 $ 218 $ 85 Add: Depreciation and amortization 222 212 436 408 EBITDA 363 244 654 493

Tota Operating Revenues 1,361 1,222 2,702 2,352

Operating Income Margin 10.4% 2.6% 8.1% 3.6% EBITDA Margin 26.7% 20.0% 24.2% 21.0%

Supplemental Mexico EBITDA and EBITDA Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 International - Mexico Operating Income $ (198) $ (225) $ (395) $ (476) Add: Depreciation and amortization 89 86 165 167 EBITDA (109) (139) (230) (309)

Total Operating Revenues 665 606 1,253 1,143

Operating Income Margin -29.8% -37.1% -31.5% -41.6% EBITDA Margin -16.4% -22.9% -18.4% -27.0%

ADJUSTING ITEMS Adjusting Items Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset and postemployment benefit plans due to the often significant impact on our fourth-quarter results (we acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the benefit plans due to the often significant impact on our fourth-quarter results (we immediately recognize this gain or loss in recognition of actuarial gains and losses). the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the 31 GAAPCONTENTS measure of income.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38%. Certain foreign operations with losses, where such losses are not realizable for tax purposes, are not tax effected, resulting in no tax impact for Venezuela devaluation. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.

4 Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

Consequently, our adjusted results reflect an expected return on plan assets rather than the actual returnon plan assets, as included in the GAAP measure of income. The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38%. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.

Adjusting Items Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Operating Expenses DIRECTV and other video merger integration costs $ 123 $ 133 $ 250 $ 306 Mexico merger integration costs 80 66 119 147 Time Warner merger costs 78 - 119 - Wireless merger integration costs - 33 - 75 Actuarial (gain) loss (259) - (259) - Employee separation costs 60 29 60 54 (Gain) loss on transfer of wireless spectrum (63) - (181) (736) Venezuela devaluation 98 - 98 - Adjustments to Operations and Support Expenses 117 261 206 (154) Amortization of intangible assets 1,170 1,316 2,372 2,667 Adjustments to Operating Expenses 1,287 1,577 2,578 2,513 Other Merger related interest expense and exchange fees1 158 - 267 16 (Gain) loss on sale of assets, impairments and other adjustments (36) - 221 4 Adjustments to Income Before Income Taxes 1,409 1,577 3,066 2,533 Tax impact of adjustments 445 550 1,001 881 Adjustments to Net Income $ 964 $ 1,027 $ 2,065 $ 1,652 1 Includes interest expense incurred on the debt issued prior to the close of merger transactions.

Adjusted Operating Operating Income, Income, Adjusted Adjusted Operating Operating Income Income Margin, Margin, Adjusted Adjusted EBITDA, AdjustedEBITDA, EBITDAAdjusted margin, EBITDA Adjusted margin, EBITDA Adjustedservice margin EBITDA and serviceAdjusted margin diluted EPS and are Adjusted non-GAAP diluted financial EPS measures are non-GAAP calculated financial by excluding measures from operating calculated revenues, by excludingoperating expenses from operating and income revenues, tax expense operating certain expenses significant and items income that are tax non expense-operational certain or non significant-recurring items in nature, that areincluding non-operational dispositions andor non-recurring merger integration in nature, and transaction including dispositionscosts. Management and merger believes integration that these and measures transaction provide costs.relevant Management and useful information believes that to investors these measures and other provide users of relevant our financial and datauseful in informationevaluating the to effectiveness investors and of our otheroperations users and of underlying our financial business data trends. in evaluating the effectiveness of our operations and underlying business trends. Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted AdjustedEBITDA margin, Operating Adjusted Revenues, EBITDA serviceAdjusted margin Operating and Adjusted Income, diluted Adjusted EPS should Operating be considered Income inMargin, addition Adjusted to, but not as a EBITDA,substitute Adjusted for, other EBITDA measures margin, of financial Adjusted performance EBITDA servicereported margin in accordance and Adjusted with GAAP. diluted AT&T's EPS calculation should be of Adjusted considereditems, as presented, in addition may to,differ but from not similarly as a substitute titled measures for, other reported measures by other of companies. financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other Adjustedcompanies. Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Operating Income $ 7,323 $ 6,560 $ 14,187 $ 13,691 Adjustments to Operating Expenses 1,287 1,577 2,578 2,513 Adjusted Operating Income1 8,610 8,137 16,765 16,204

EBITDA 13,470 13,136 26,461 26,830 Adjustments to Operations and Support Expenses 117 261 206 (154) Adjusted EBITDA1 13,587 13,397 26,667 26,676

Total Operating Revenues 39,837 40,520 79,202 81,05532 ServiceCONTENTS Revenues 36,538 37,142 72,994 74,243

Operating Income Margin 18.4% 16.2% 17.9% 16.9% Adjusted Operating Income Margin1 21.6% 20.1% 21.2% 20.0% Adjusted EBITDA Margin1 34.1% 33.1% 33.7% 32.9% Adjusted EBITDA Service Margin1 37.2% 36.1% 36.5% 35.9% 1 Adjusted Operating Income, Adjusted EBITDA and associated margins exclude all actuarial gains or losses ($259 million gain in the second quarter of 2017) associated with our postemployment benefit plan, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. As a result, Adjusted Operating Income and Margin reflect an expected return on plan assets of $106 million (based on an average expected return on plan assets of 5.75% for our VEBA trusts), rather than the actual return on plan assets of $234 million (actual annualized VEBA return of 12.2%), as included in the GAAP measure of income.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends. Investor Briefing Discussion and Reconciliation Q2 2017Adjusted AT&T Operating EARNINGS Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted of Non-GAAP Measures EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin Dollars in millions Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Operating Income $ 7,323 $ 6,560 $ 14,187 $ 13,691 Adjustments to Operating Expenses 1,287 1,577 2,578 2,513 Adjusted Operating Income1 8,610 8,137 16,765 16,204

EBITDA 13,470 13,136 26,461 26,830 Adjustments to Operations and Support Expenses 117 261 206 (154) Adjusted EBITDA1 13,587 13,397 26,667 26,676

Total Operating Revenues 39,837 40,520 79,202 81,055 Service Revenues 36,538 37,142 72,994 74,243

Adjusted Diluted EPS Adjusted Diluted EPSThree Months Ended Six Months Ended Three JuneMonths 30, Ended Six MonthsJune 30,Ended 5 2017 June 30, 2016 2017 June 30, 2016 Diluted Earnings Per Share (EPS) $ 20170.63 $ 20160.55 $ 20171.19 $ 2016 1.17 Diluted Amortization Earnings of intangiblePer Share assets(EPS) $ 0.630.13 $ 0.140.55 $ 0.261.19 $ 0.281.17 MergerAmortization integration of intangible and other assets items 1 0.050.13 0.030.14 0.080.26 0.060.28 AssetMerger abandonments, integration and impairments other items 1and other adjustments 0.05- 0.03- 0.030.08 0.06- ActuarialAsset abandonments, (gain) loss impairments and other adjustments (0.03)- - (0.03)0.03 - (Gain)Actuarial loss (gain) on transfer loss of wireless spectrum (0.01)(0.03) - (0.02)(0.03) (0.08)- Venezuela(Gain) loss devaluationon transfer of wireless spectrum (0.01)0.02 - (0.02)0.02 (0.08)- Adjusted Venezuela EPS devaluation $ 0.790.02 $ 0.72- $ 0.021.53 $ 1.43- YearAdjusted-over -EPSyear growth - Adjusted $ 0.799.7% $ 0.72 $ 7.0%1.53 $ 1.43 WeightedYear-over- yearAverage growth Common - Adjusted Shares Outstanding 9.7% 7.0% 6,184 6,195 6,185 6,193 Weighted Average Common Shares Outstanding with Dilution (000,000) 6,184 6,195 6,185 6,193 1 Includes with Dilution combined (000,000) merger integration items, merger-related interest expense. 1 Includes combined merger integration items, merger-related interest expense. NET DEBT TO ADJUSTED EBITDA Net Debt to Adjusted EBITDA Net Debt to Adjusted EBITDA Net Debt toNet EBITDA Debt to EBITDA ratios ratios are are non-GAAP non-GAAP financialfinancial measures measures frequently frequently used by investors used and by credit investors rating agencies and creditand rating agencies andmanagementNet Debtmanagement to EBITDA believes ratios thesebelieves are measures non these-GAAP provide financialmeasures relevant measures andprovide useful frequently informationrelevant used byandto investorsinvestors useful andand information othercredit users rating of agencies toour investorsfinancial and and other usersdata.management of The our Net financial Debtbelieves to Adjusted these data. measures EBITDA The provideratio Net is calculat relevant Debted and by to dividinguseful Adjusted information the Net DebtEBITDA to byinvestors A nnualizratio and ed is otherAdjusted calculated users EBITDA. of our Net financialby Debt dividing the NetDebt by annualizedisdata. calculated AdjustedThe Net by Debt subtracting EBITDA. to Adjusted cash Net EBITDA and Debt cash ratio equivalents is is calculated calculat anded by certificates by dividing subtracting the of Netdeposit Debt cash and by timeA nnualiz and deposits cashed Adjusted that equivalents are EBITDA. greater Net andthan Debt 90 certificates of deposit days,isand calculated fromtime the bydeposits subtractingsum of debt that cash maturing areand cashgreater within equivalents one than year and 90and certificates days, long-term from of debt. deposit the Annualized sum and time of Adjusted depositsdebt maturing EBITDAthat are isgreater calculated within than one by90 year and days, from the sum of debt maturing within one year and long-term debt. Annualized Adjusted EBITDA is calculated by long-term annualizingdebt. Annualized the year-to -Adjusteddate Adjusted EBITDA EBITDA. is calculated by annualizing the year-to-date Adjusted EBITDA. annualizing the year-to-date Adjusted EBITDA.

Net Debt to Adjusted EBITDA Dollars in millions Net Debt to Adjusted EBITDA Dollars in millions Three Months Ended Three Months Ended Mar. 31, Jun. 30 Mar. 31, Jun. 30 YTD 2017 2017 2017 YTD 2017 2017 2017 Adjusted EBITDA $ 13,080 $ 13,587 $ 26,667 Adjusted EBITDA $ 13,080 $ 13,587 $ 26,667 Add back severance - (60) (60) Add back severance - (60) (60) Net Debt Adjusted EBITDA 13,080 13,527 26,607 Net Debt Adjusted EBITDA 13,080 13,527 26,607 Annualized Adjusted EBITDA 53,214 Annualized Adjusted EBITDA 53,214 End-of-period current debt 10,831 End-of-period current debt 10,831 End-of-period long-term debt 132,824 End-of-period long-term debt 132,824 Total End-of-Period Debt 143,655 Total End-of-Period Debt 143,655 Less: Cash and Cash Equivalents 25,617 Less: Cash and Cash Equivalents 25,617 Net Debt Balance 118,038 Net Debt Balance 118,038 Annualized Net Debt to Adjusted EBITDA Ratio 2.22 Annualized Net Debt to Adjusted EBITDA Ratio 2.22

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6 Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

SUPPLEMENTAL OPERATIONAL MEASURES WeSupplemental provide Operationala supplemental Measures discussion of our domestic wireless operations that is calculated by combining our ConsumerWe provide a supplemental Mobility discussionand Business of our domestic Solutions wireless operationssegments, that isand calculated then by combiningadjusting our Consumerto remove Mobility non-wireless and Business Solutions operations. segments, and Thethen adjustingfollowing to remove table non presents-wireless operations. a reconciliation The following table of presents our supplementala reconciliation of our AT&T supplemental Mobility AT&T Mobilityresults results.

Supplemental Operational Measures Supplemental Operational Measure Three Months Ended We provide a supplemental discussion of our domestic wireless operationsJune that30, 2017 is calculated by combining our Consumer Mobility andJune Business 30, 2016 Solutions segments, and then adjusting to remove non-wireless operations. TheConsumer following tableBusiness presents a reconciliation of our AT&Tsupplemental Consumer AT&T Mobility results.Business Mobility Solutions Adjustments1 Mobility Mobility Solutions Adjustments1 AT&T Mobility Operating Revenues Wireless service $ 6,948 $ 7,963 $ - $ 14,911 $ 6,528 $ Supplemental 8,006 $ Operational - $ Measure 14,534 Fixed strategic services - 2,805 (2,805) - - 3,028 (3,028) Three Months- Ended Legacy voice and data services - 3,508 (3,508) - - 4,162 (4,162) - June 30, 2017 June 30, 2016 Other services and equipment - 844 (844) - - 874 (874) - Consumer Business AT&T Consumer Business Wireless equipment 1,263 1,721 - 2,984 1,238 1,775 - 3,013 Mobility Solutions Adjustments1 Mobility Mobility Solutions Adjustments1 AT&T Mobility Total Operating Revenues 7,791 17,107 (7,380) 17,518 8,186 17,579 (7,841) 17,924 Operating Revenues

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

1 OperatingNon-wireless Expenses (fixed) operations reported in Business Sol utions segment. Operations and support 4,520 10,313 (4,636) 10,197 4,680 10,857 (5,036) 10,501 EBITDA 3,271 Supplemental6,794 Operational(2,744) Measure 7,321 3,506 6,722 (2,805) 7,423 We Depre provideciation and aamortization supplemental presentation 871 of the2,335 Latin America (1,214) andSix 1,992Mexico Months Ended Wireless 932 operations2,521 within (1,372) our 2,081 InternationalTotal Operating Expense segment.s The following table5,391 presents12,648June 30, 2017a reconciliation (5,850) 12,189 of our International5,612 13,378 Junesegment. 30, 2016 (6,408) 12,582 Operating Income $ Consumer2,400 $ Business4,459 $ (1,530) $ AT&T5,329 $ Consumer2,574 $ Business4,201 $ (1,433) $ 5,342 1 1 1 Non-wireless (fixed) operations reported in Business SolutionsMobility segment. Solutions Adjustments Mobility Mobility Solutions Adjustments AT&T Mobility Operating Revenues Wireless service $ 13,891 $ 15,818 $ - $ 29,709 $ 13,137 $ Supplemental 15,935 $ Operational - $ Measure 29,072 Fixed strategic services - 5,556 (5,556) - - 6,002 (6,002) Six Months - Ended Legacy voice and data services - 7,138 (7,138) - - 8,535 (8,535) - June 30, 2017 June 30, 2016 Other services and equipment - 1,661 (1,661) - - 1,733 (1,733) - Consumer Business AT&T Consumer Business Wireless equipment 2,394 3,219 - 5,613 2,623 3,546 - 6,169 Mobility Solutions Adjustments1 Mobility Mobility Solutions Adjustments1 AT&T Mobility Total Operating Revenues 15,531 33,955 (14,801) 34,685 16,514 35,188 (15,824) 35,878 Operating Revenues

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

1 OperatingNon-wireless Expenses (fixed) operations reported in Business Solutions segment. 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 7 Total Operating Expenses 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.

34 CONTENTS Investor Briefing Q2 2017 AT&T EARNINGS Discussion and Reconciliation of Non-GAAP Measures

SUPPLEMENTAL INTERNATIONAL WeSupplemental provide Internationala supplemental presentation of the Latin America and Mexico Wireless operations within our International segment. The following table presents a reconciliation of our International segment. SupplementalWe provide a supplemental International presentation of the Latin America and Mexico Wireless operations within out International segment. The following table presents a reconciliation of our International segment. We provide a supplemental presentation of the Latin America and Mexico Wireless operations within out International segment. The following table presents a reconciliation of our International segment. Supplemental International Three Months Ended SupplementalJune 30, 2017International June 30, 2016 Latin America Mexico InternationalThree Months Ended Latin America Mexico International Operating Revenues June 30, 2017 June 30, 2016 Video service $ Latin America 1,361 $ Mexico - $ International 1,361 $ Latin America 1,222 $ Mexico - $ International 1,222 Operating Wireless service Revenues - 535 535 - 489 489 VideoWireless service equipment $ 1,361 - $ 130 - $ 1,361 130 $ 1,222 - $ 117 - $ 1,222 117 Total Wireless Operating service Revenues 1,361 - 665535 2,026 535 1,222 - 489606 1,828 489 Wireless equipment - 130 130 - 117 117 TotalOperating Operating Expenses Revenues 1,361 665 2,026 1,222 606 1,828 Operations and support 998 774 1,772 978 745 1,723 Operating Depreciation Expenses and amortization 222 89 311 212 86 298 Total Operations Operating and Expensesupport s 1,220998 863774 2,0831,772 1,190978 745831 2,0211,723 Operating Depreciation Income and amortization 222141 (198) 89 (57)311 21232 (225) 86 (193)298 TotalEquity Operating in Net Income Expense of Affiliatess 1,22025 863 - 2,08325 1,1909 831 - 2,0219 OperatingSegment Contribution Income $ 166141 $ (198) $ (32)(57) $ 3241 $ (225) $ (184)(193) Equity in Net Income of Affiliates 25 - 25 9 - 9 Segment Contribution $ 166 $ (198) $ (32) $ 41 $ (225) $ (184) Supplemental International Six Months Ended SupplementalJune 30, 2017International June 30, 2016 Latin America Mexico InternationalSix Months Ended Latin America Mexico International Operating Revenues June 30, 2017 June 30, 2016 Video service $ Latin America 2,702 $ Mexico - $ International 2,702 $ Latin America 2,352 $ Mexico - $ International 2,352 Operating Wireless service Revenues - 1,010 1,010 - 944 944 VideoWireless service equipment $ 2,702 - $ 243 - $ 2,702 243 $ 2,352 - $ 199 - $ 2,352 199 Total Wireless Operating service Revenues 2,702 - 1,0101,253 3,9551,010 2,352 - 1,143 944 3,495 944 Wireless equipment - 243 243 - 199 199 TotalOperating Operating Expenses Revenues 2,702 1,253 3,955 2,352 1,143 3,495 Operations and support 2,048 1,483 3,531 1,859 1,452 3,311 Operating Depreciation Expenses and amortization 436 165 601 408 167 575 Total Operations Operating and Expensesupport s 2,0482,484 1,6481,483 4,1323,531 2,2671,859 1,4521,619 3,8863,311 Operating Depreciation Income and amortization 436218 (395) 165 (177)601 40885 (476) 167 (391)575 TotalEquity Operating in Net Income Expense of Affiliatess 2,48445 1,648 - 4,13245 2,26723 1,619 - 3,88623 OperatingSegment Contribution Income $ 263218 $ (395) $ (132)(177) $ 10885 $ (476) $ (368)(391) Equity in Net Income of Affiliates 45 - 45 23 - 23 Segment Contribution $ 263 $ (395) $ (132) $ 108 $ (476) $ (368)

35 CONTENTS