AT&T Inc.

Company Overview

Business Model: AT&T Inc. is a holding company that provides telecommunications and technology services globally. Its core value proposition is connectivity services, primarily through 5G and fiber networks. Revenue is generated from wireless and wireline telecom and broadband services to consumers in the United States and businesses globally, as well as wireless services in Mexico. The company focuses on integrated product offerings that leverage shared assets and capitalize on increasing demand for high-speed broadband driven by streaming, augmented reality, "smart" technologies, user-generated content, and artificial intelligence.

Market Position: AT&T Inc. is a leading provider of connectivity services, emphasizing 5G and fiber. In the United States, its LTE network covers over 337 million people, and its 5G network covers more than 322 million people. In North America, its 4G LTE network covers over 441 million people and 5G technology covers over 322 million people. The company had 10.4 million fiber consumer wireline broadband customers at December 31, 2025, adding 1.1 million during the year. It also had 1.5 million AT&T Internet Air connections, adding 875,000 during the year. AT&T Inc. is one of three facilities-based wireless providers in Mexico. The company faces substantial competition from national and regional wireless providers, cable companies, and other internet-based service providers.

Recent Strategic Developments:

• DIRECTV Divestiture: In July 2025, AT&T Inc. sold its remaining interest in DIRECTV to TPG Capital, recognizing a gain of approximately $5.6 billion.
• Fiber Expansion: The company is accelerating its fiber expansion organically and through the pending acquisition of substantially all of Lumen’s Mass Markets fiber business for $5.75 billion in cash. This acquisition, completed on February 2, 2026, includes approximately one million fiber customers and fiber network assets reaching over four million fiber locations.
• Spectrum Acquisitions: AT&T Inc. is deploying low- and mid-band spectrum to improve speed and capacity. This includes spectrum acquired from United States Cellular Corporation for approximately $1 billion (completed January 13, 2026) and a pending acquisition of FCC licenses in the 600 MHz and 3.45 GHz bands from EchoStar Corporation for approximately $23 billion, expected to close in early 2026.
• Network Modernization: The company is focused on deploying Open RAN to build a more robust ecosystem of network infrastructure providers and suppliers, aiming for lower network costs and improved operational efficiencies. It is also actively working to decommission its legacy copper network operations, migrating customers to fiber and wireless alternatives.
• Strategic Investment: Invested $620 million in DriveNets, a new strategic partner related to wireline network transformation, accounted for under the equity method.

Geographic Footprint: AT&T Inc. provides services primarily in the United States, which accounted for $120.22 billion of its total revenues in 2025. It also has significant operations in Mexico, which generated $4.43 billion in revenues in 2025. Other international operations include Asia/Pacific Rim, Europe, and Latin America (excluding Mexico), contributing smaller portions of total revenue.

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 59.55%
• Operating Margin: 19.23%
• Net Margin: 18.61%

Investment in Growth (2025):

• R&D Expenditure: $0.84 billion (0.67% of revenue)
• Capital Expenditures: $20.84 billion
• Strategic Investments:
  • Investment in DriveNets: $0.62 billion
  • Pending acquisition of Lumen’s Mass Markets fiber business: $5.75 billion (cash)
  • Pending acquisition of FCC licenses from EchoStar Corporation: $23.00 billion
  • Acquisition of select spectrum licenses from United States Cellular Corporation: $1.00 billion

Business Segment Analysis

Communications segment

Financial Performance (2025):

• Revenue: $120.90 billion (+2.8% YoY)
• Operating Income: $27.93 billion (+3.1% YoY)
• Operating Margin: 23.1%
• EBITDA Margin: 39.6%
• Key Growth Drivers: Increases in Mobility service revenue and Consumer Wireline business unit, driven by gains in wireless and broadband services. Partially offset by declines in Business Wireline due to lower demand for legacy services.

Product Portfolio:

• Mobility: Nationwide wireless service and equipment, including voice and data services, high-speed internet over wireless devices, and FirstNet services for public safety. Offers postpaid, prepaid (Cricket and AT&T PREPAID brands), and reseller services. Sells a variety of handsets, wireless data cards, and computing devices.
• Business Wireline: Advanced ethernet-based fiber services, fixed wireless services, IP Voice, managed professional services, and legacy voice and data services to multinational corporations, small and mid-sized businesses, and governmental and wholesale customers.
• Consumer Wireline: Broadband services (fiber connections, AT&T Internet Air), and legacy telephony voice communication services to residential customers.

Market Dynamics:

• Mobility: Experiences rapid growth in data usage, with increasing demand for data-centric services and network connectivity for Internet of Things (IoT) devices. Future growth depends on innovative services, plans, and devices that bundle product offerings and leverage 5G.
• Business Wireline: Facing secular declines in legacy copper-based voice and data services. Focus is shifting to owned and operated connectivity services powered by 5G and fiber.
• Consumer Wireline: High demand for high-speed broadband services driven by data-intensive activities. Investment in expanding fiber network and AT&T Internet Air positions the company as a leader in wired connectivity. Actively decommissioning legacy copper network.

Sub-segment Breakdown (2025):

• Mobility:
  • Revenue: $89.48 billion (+5.0% YoY)
  • Operating Income: $27.20 billion (+3.4% YoY)
  • Operating Margin: 30.4%
  • EBITDA Margin: 42.0%
  • Subscribers: 120.1 million (+1.9% YoY), including 90.9 million postpaid (74.2 million phone), 18.3 million prepaid, and 10.9 million reseller.
  • Postpaid Phone Net Additions: 1.55 million (-6.2% YoY)
  • Postpaid ARPU: Increased reflecting pricing actions, growth in converged customer relationships, and success in attracting customers in underpenetrated segments with lower ARPUs.
  • Churn: Postpaid churn (1.05%) and postpaid phone churn (0.90%) were higher, partially driven by an increase in the customer base that reached the end of device financing periods.
• Business Wireline:
  • Revenue: $17.23 billion (-8.4% YoY)
  • Operating Loss: $(0.82) billion (vs. $(0.09) billion in 2024)
  • Operating Margin: (4.7)%
  • EBITDA Margin: 29.1%
  • Legacy and Other Transitional Services Revenue: Decreased due to lower demand for legacy and VPN services.
  • Fiber and Advanced Connectivity Services Revenue: Increased due to higher fiber and fixed wireless revenues.
• Consumer Wireline:
  • Revenue: $14.18 billion (+4.5% YoY)
  • Operating Income: $1.55 billion (+78.0% YoY)
  • Operating Margin: 10.9%
  • EBITDA Margin: 37.0%
  • Broadband Connections: 14.7 million (+5.1% YoY), including 10.4 million fiber broadband connections (+11.5% YoY) and 1.5 million AT&T Internet Air connections.
  • Fiber Broadband Net Additions: 1.08 million (+5.0% YoY)
  • Broadband Revenue: Increased, driven by a 17.0% increase in fiber revenues (higher customers and ARPU) and growth in AT&T Internet Air revenues, partially offset by declines in copper-based services.
  • Legacy Voice and Data Services Revenue: Decreased, reflecting continued decline in demand.

Latin America segment

Financial Performance (2025):

• Revenue: $4.38 billion (+3.5% YoY)
• Operating Income: $0.15 billion (vs. $0.04 billion in 2024)
• Operating Margin: 3.3%
• EBITDA Margin: 18.6%
• Key Growth Drivers: Growth in subscribers and ARPU, partially offset by unfavorable foreign exchange impacts.

Product Portfolio:

• Provides wireless service and equipment in Mexico under the AT&T and Unefon brands. Offers postpaid and prepaid wireless services. Sells a variety of handsets.

Market Dynamics:

• Operates in Mexico as one of three facilities-based providers.
• Subscribers: 24.7 million (+4.7% YoY), including 6.8 million postpaid (+15.7% YoY) and 17.7 million prepaid (+1.4% YoY).
• Mexico Wireless Net Additions: 1.10 million (-12.4% YoY).
• LTE coverage to over 104 million people in Mexico.

Capital Allocation Strategy

Shareholder Returns (2025):

• Share Repurchases: $4.27 billion (159 million shares) under a $10 billion common stock repurchase authorization approved in December 2024.
• Dividend Payments: $8.18 billion (common and preferred shares).
• Dividend per common share: $1.11.
• Dividend Yield: 3.83% (based on 2025 dividend and June 30, 2025 closing price of $28.94).
• Future Capital Return Commitments: On January 27, 2026, the Board approved an authorization to repurchase an additional $10 billion of common stock.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $18.23 billion (increased $14.94 billion since December 31, 2024, elevated in anticipation of announced transactions).
• Total Debt: $136.10 billion (including $9.01 billion maturing within one year).
• Net Cash Position: -$117.87 billion (Net Debt).
• Credit Rating: The company's credit facilities contain covenants customary for an issuer with investment grade senior debt credit ratings.
• Debt Maturity Profile: $8.65 billion due in 2026, $8.95 billion in 2027, $6.91 billion in 2028, $6.92 billion in 2029, $6.92 billion in 2030, and $94.37 billion thereafter. The weighted average interest rate of the long-term debt portfolio was approximately 4.2% as of December 31, 2025.

Cash Flow Generation (2025):

• Operating Cash Flow: $40.28 billion (+3.9% YoY), driven by operational growth and lower cash tax payments. Partially offsetting this were voluntary pension contributions of approximately $1.15 billion and advanced cash payments of about $0.90 billion to Frontier Communications.
• Free Cash Flow (estimated): $19.44 billion (Operating Cash Flow - Capital Expenditures).
• Cash Conversion Metrics: Supplier financing programs (supplier financing and direct supplier financing) improved cash from operating activities by $0.44 billion in 2025. Vendor financing payments were $1.18 billion in 2025.

Operational Excellence

Production & Service Model: AT&T Inc. operates an integrated telecommunications network utilizing various technological platforms to provide instant connectivity and higher speeds through fiber network expansion and wireless network enhancements. The company is transitioning to a software-based network, leveraging Software Defined Network (SDN) and Network Function Virtualization (NFV) for cost advantages and efficient deployment of next-generation technologies like 5G and broadband-based services. The operational philosophy includes aggregating traffic on a large, low marginal cost, converged network through efficient spectrum deployment and construction of high-capacity broadband solutions, while decommissioning high-cost legacy copper technologies.

Supply Chain Architecture: Key Suppliers & Partners:

• Network Equipment & Devices: Depends on various suppliers for network equipment, customer premises equipment, and wireless-related equipment (mobile hotspots, handsets, wirelessly enabled computers, wireless data cards, other connected devices).
• Software Developers: Increasingly relies on software developers for network functions in lieu of physical network equipment.
• Financial Institutions: Partners with financial institutions for supplier financing programs to optimize cash use and extend payment terms for handset inventory.

Facility Network:

• Manufacturing: Not directly involved in manufacturing, relies on suppliers.
• Research & Development: AT&T Inc. scientists and engineers conduct research in IP networking, advanced network design and architecture, network and cybersecurity, network operations support systems, and data analytics.
• Distribution: Sells wireless devices online, through company-owned stores, agents, and third-party retail stores.
• Network Infrastructure: Owns and operates extensive wireline and wireless network infrastructure, including central office equipment, cable, wiring, conduit, and wireless communications towers. Many garages, administrative and business offices, wireless towers, telephone centers, and retail stores are leased.

Operational Metrics (2025):

• Fiber Footprint: 10.4 million fiber consumer wireline broadband customers, adding 1.1 million during the year.
• AT&T Internet Air Connections: 1.5 million, adding 875,000 during the year.
• Legacy Copper Decommissioning: Retired approximately $16.6 billion of fully depreciated assets no longer in use. Reduced customer location switched access lines to 2.1 million (from 2.7 million in 2024) and legacy consumer internet connections to 2.8 million (from 4.1 million in 2024).
• Network Coverage: Over 441 million people in North America with 4G LTE, over 322 million with 5G technology. In the United States, over 337 million people with LTE and over 322 million with 5G. In Mexico, LTE coverage to over 104 million people.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Enterprise sales force for business customers, direct customer relationships for consumers.
• Channel Partners: Agents and third-party retail stores for wireless device sales.
• Digital Platforms: Online sales channels for wireless devices and services.

Customer Portfolio: Enterprise Customers:

• Serves multinational corporations, small and mid-sized businesses, and governmental and wholesale customers through its Business Wireline segment.
• Customer Concentration: No single customer accounted for 10% or more of consolidated revenues in 2025, 2024, or 2023.

Geographic Revenue Distribution (2025):

• United States: 95.67% of total revenue ($120.22 billion)
• Mexico: 3.52% of total revenue ($4.43 billion)
• Asia/Pacific Rim: 0.31% of total revenue ($0.40 billion)
• Europe: 0.30% of total revenue ($0.38 billion)
• Latin America (excluding Mexico): 0.09% of total revenue ($0.11 billion)
• Other: 0.09% of total revenue ($0.11 billion)

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The telecommunications industry is characterized by rapid technological changes, increasing data usage, and converging wireless and broadband services. Demand for high-speed data, video streaming, augmented reality, "smart" technologies, user-generated content, and AI-enabled applications continues to grow. The industry is highly competitive, with market saturation in wireless leading to increased competition for customers. The regulatory landscape is dynamic, with ongoing efforts to reduce legacy regulatory burdens and prevent their extension to broadband or wireless services.

Competitive Positioning Matrix (2025):

Direct Competitors

Primary Competitors:

• Wireless Providers: Two national wireless providers, a larger number of regional providers and resellers, and certain cable companies. In Mexico, América Móvil holds the most significant market share.
• Broadband Providers: Large cable companies and wireless broadband providers for high-speed internet and voice services.
• Legacy Voice and Data: Wireless, cable, and VoIP providers.

Emerging Competitive Threats: Providers offering services using advanced wireless technologies and IP-based networks, strategic alliances in converged connectivity, new entrants, disruptive technologies, and alternative solutions. AI-driven efficiencies by cybercriminals may also increase the frequency and severity of cybersecurity attacks.

Competitive Response Strategy: AT&T Inc. competes based on service/device offerings, price, network quality, reliability, speed, coverage area, and customer service. Its strategy involves continuous investment in network capacity and spectrum, innovative services, plans, and devices that bundle product offerings, and leveraging its 5G and fiber deployments for convergence growth opportunities. The company is also focused on cost transformation initiatives, including IT infrastructure modernization and product simplification, and using AI-driven efficiencies.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Adverse Economic and Political Changes: Global growth uncertainty, inflation, and higher interest rates can increase benefit plan costs, impact access to capital, and pressure pricing.
• Technology Disruption: Rapid technological changes and increasing demand for data-intensive services require continuous investment in networks and spectrum. Failure to deploy services timely or with acceptable quality/cost can affect customer attraction/retention and operating margins.
• Customer Concentration: No single customer accounts for 10% or more of consolidated revenues, mitigating concentration risk.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Reliance on various suppliers for network equipment, devices, and components. Interruption or delay in supply (due to market conditions, raw material demand, severe weather, energy costs, currency fluctuations, governmental actions, tariffs, AI-driven supply chain pressure) can adversely impact operating results. Dependence on key single-source suppliers poses risks.
• Capacity Constraints: Growing demand for high-speed video and data services can strain network capacity.
• Software Functionality: Increasing reliance on single-source and software solutions for network functions. Software not functioning as intended or inadequate intellectual property protection could lead to higher costs and reputational harm.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Customer adoption of new software-based technologies and increasing demand for high-quality services may increase capital costs.
• Foreign Exchange: International operations (e.g., Mexico) expose the company to fluctuations in currency values.
• Credit & Liquidity: Adverse changes in global financial markets could limit access to capital or increase borrowing costs. Downgrades of credit rating by Fitch Ratings, S&P, and Moody’s could increase borrowing costs and collateral requirements.
• Benefit Plan Costs: Adverse changes in U.S. securities markets, higher interest rates, rising inflation, and medical costs could materially increase benefit plan costs and future funding requirements.
• Debt Levels: Increased debt to fund spectrum purchases or other strategic decisions could adversely affect ability to finance future debt at attractive rates and reduce responsiveness to competition and adverse economic trends.

Regulatory & Compliance Risks:

• Industry Regulation: Subject to significant federal (FCC) and state government regulation for wired services, and varying degrees for wireless services. Adverse regulations or rulings (e.g., broadband and wireless deployment, intercarrier compensation, interconnection, access charges, net neutrality, digital discrimination, privacy) could increase operating costs, alter customer perceptions, or impede network management and cost recovery.
• International Compliance: International operations require compliance with complex local laws, regulations, and treaties, including the Foreign Corrupt Practices Act (FCPA).
• Legal Proceedings: Subject to numerous lawsuits and regulatory proceedings (antitrust, patent infringement, wage and hour, personal injury, environmental, customer data and privacy violations, cyberattacks, lead-clad cables litigation). Unfavorable outcomes could result in significant costs, damage to brand, or onerous operating procedures.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: International operations increase exposure to political instability, changes in international economy, and regulation in countries like Mexico.
• Trade Relations: Impact of tariffs and uncertainty surrounding further tariffs.
• Natural Disasters & Hostile Acts: Extreme weather events (storms, floods, fires, freezing conditions, sea-level rise), terrorist acts, or other hostile acts could cause significant damage to infrastructure, disrupt services, and result in significant recovery costs and revenue loss.
• Public Health Crises: Potential negative effects on operating results due to retail store closures, customer payment ability, reduced international roaming revenue, and staffing levels.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• IP Networking: Research in advanced network design and architecture.
• Network & Cybersecurity: Focus on secure and reliable networks.
• Network Operations Support Systems & Data Analytics: Development of tools and systems for network management.
• 5G & Fiber: Significant capital investment in ongoing development and deployment of 5G and fiber networks.
• Software-based Technologies: Investment in converting to a software-based network, including Software Defined Network (SDN) and Network Function Virtualization (NFV).
• Artificial Intelligence (AI): Using AI-driven efficiencies in network design and operations, software development, sales, marketing, customer support services, and general and administrative costs.

Innovation Pipeline:

• Development of new services and tools/systems to manage secure and reliable networks.
• Expansion of fiber footprint and 5G deployment.
• Deployment of Open RAN to foster a robust ecosystem of network infrastructure providers.

Intellectual Property Portfolio:

• Patent Strategy: Actively pursues patents, trademarks, and service marks globally to protect intellectual property. Maintains a significant global portfolio.
• Licensing Programs: Enters into licenses allowing other companies to utilize its patents, trademarks, service marks, and technologies. Increasingly enters into licensing agreements with software developers.
• IP Litigation: Periodically receives claims from third parties asserting infringement. Does not believe resolution of current claims or expiration/non-renewal of IP rights would have a material adverse effect.

Technology Partnerships:

• DriveNets: Strategic partner for wireline network transformation (16.6% interest).
• Gigapower, LLC: Joint venture providing a fiber network in select areas (50% interest).
• First Responder Network Authority (FirstNet): Partnered to build and manage the first nationwide broadband network dedicated to public safety.

Leadership & Governance

Executive Leadership Team (as of February 1, 2026)

Leadership Continuity: Executive officers are not appointed to a fixed term of office. The company maintains a Chief Security Office (CSO) led by a Chief Information Security Officer (CISO) with over 20 years of experience in cybersecurity.

Board Composition: The Board of Directors has delegated to the Audit Committee the oversight responsibility for privacy and data security, including cybersecurity risks, policies, and practices. The Audit Committee members are Messrs. Luczo and McCallister, and Mses. Mayer and Taylor. The full Board and Audit Committee regularly receive reports and presentations on privacy and data security.

Human Capital Strategy

Workforce Composition (as of December 31, 2025):

• Total Employees: Approximately 133,030 persons.
• Union Representation: Approximately 43% of employees are represented by the Communications Workers of America (CWA), the International Brotherhood of Electrical Workers (IBEW), or other unions. Main contracts set to expire in 2026 cover approximately 15,100 employees.
• Retirees and Dependents: Approximately 477,000 eligible for retiree benefits.

Talent Management: Acquisition & Retention:

• Employee Development: Offers training and elective courses to enhance employee skills and cultivate future talent through its internal training organization.
• Retention Metrics: Not explicitly disclosed, but the company emphasizes an inclusive workplace, ethical business practices, and competitive compensation and benefits.

Diversity & Development:

• Compensation and Benefits: Provides competitive packages including 401(k) plans, pension benefits, and health and welfare benefits. Committed to pay equity for employees with the same jobs, geographic area, experience, and performance.
• Employee Wellness: Provides access to flexible and convenient health and welfare programs and workplace accommodations, prioritizing self-care and flexible scheduling.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Not explicitly detailed in the provided text.
• Carbon Neutrality: Not explicitly detailed in the provided text.
• Renewable Energy: Not explicitly detailed in the provided text. The company acknowledges the potential physical effects of extreme weather events and other climate change impacts on its infrastructure and services.

Supply Chain Sustainability: Not explicitly detailed in the provided text.

Social Impact Initiatives:

• Community Investment: Not explicitly detailed in the provided text.
• Product Impact: Not explicitly detailed in the provided text.
• Public Health: The company's business is subject to risks related to public health crises, which can negatively affect operating results.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Not explicitly detailed in the provided text.
• Economic Sensitivity: The company's business is sensitive to macroeconomic factors, including global growth rates, inflation, and interest rates, which can produce volatility in credit, currency, and equity markets. Consumer spending trends are also a factor.
• Industry Cycles: The wireless industry has matured, with nearly full penetration of smartphones in the U.S. population, leading to a moderation in customer growth rates compared to historical trends.

Planning & Forecasting: The company expects ongoing pressure on pricing during 2026 due to the geopolitical and macroeconomic environment and competitive marketplace. It plans to voluntarily contribute $350 million to its pension plans in 2026. Capital investment for 2026 (including capital expenditures and cash paid for vendor financing) is expected to be in the $23 billion to $24 billion range.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• U.S. Regulation: Subject to federal (FCC) and state government regulation for interstate and intrastate telecommunications services. Wireless providers must be licensed by the FCC and comply with rules governing spectrum use. ILEC subsidiaries are subject to state regulation.
• Internet Regulation: The FCC reclassified fixed and mobile consumer broadband internet access services as telecommunications services subject to broader regulation and "net neutrality rules" in April 2024. This reclassification was challenged and set aside by the U.S. Court of Appeals for the Sixth Circuit in January 2025. Some states (e.g., New York, Connecticut, California, Maine, Minnesota, Vermont, Washington) have enacted or considered state-level net neutrality rules or discounted plans for low-income customers.
• Digital Discrimination: FCC adopted rules in November 2023 to prevent digital discrimination in broadband access, prohibiting policies or practices that differentially impact access based on prohibited characteristics.
• Infrastructure Investment: The Infrastructure Investment and Jobs Act (IIJA) appropriates $65 billion to support broadband deployment and adoption, with the National Telecommunications and Information Agency (NTIA) distributing over $48 billion in state grants. AT&T Inc. has applied for and been awarded grants under such programs.
• Wireless Spectrum: Industry-wide network densification and 5G expansion require significant deployment of "small cell" equipment, increasing the importance of local permitting processes. Additional spectrum is needed for 5G and future services. The President signed legislation (One Big Beautiful Bill) in July 2025 reauthorizing FCC spectrum auctions and requiring auction of 800 MHz of spectrum within eight years.
• Privacy: New privacy laws and regulations (e.g., Europe's General Data Protection Regulation, state-level legislation) could affect data collection, targeted advertising, and increase compliance costs or litigation.

Trade & Export Controls:

• Export Restrictions: Suppliers may face difficulties in obtaining export licenses for certain technologies.
• Sanctions Compliance: Not explicitly detailed in the provided text.

Legal Proceedings:

• Party to numerous lawsuits, regulatory proceedings, and other matters in the ordinary course of business.
• Subject to litigation and government inquiries regarding alleged public health hazards or environmental risks from lead-clad telecommunications cables.
• Cybersecurity incidents can lead to investigations and legal liability.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 13.4% in 2025 (vs. 26.6% in 2024 and 21.3% in 2023). The lower rate in 2025 was driven by a tax-free gain on the sale of DIRECTV and larger discrete tax benefits.
• Geographic Tax Planning: Considers post-1986 unremitted foreign earnings subjected to one-time transition tax not indefinitely reinvested. Other unremitted foreign earnings are considered indefinitely reinvested, with no material unrecognized deferred tax liability.
• Tax Reform Impact: The One Big Beautiful Bill Act, enacted July 4, 2025, restores or makes permanent certain expiring business tax provisions, reducing taxable income in 2025 and expected to materially decrease cash taxes paid relative to expectations.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains insurance against losses from cyberattacks, but coverage may not be sufficient.
• Risk Transfer Mechanisms: Employs derivatives (interest rate swaps, interest rate locks, foreign currency exchange contracts, cross-currency swaps) to manage interest rate risk and foreign currency exchange risk. Does not use derivatives for trading or speculative purposes.
• Collateral Arrangements: Has agreements with derivative counterparties establishing collateral thresholds based on credit ratings (Fitch Ratings, S&P, Moody’s) and netting agreements.