AT&T Finishes 2024 Strong, Delivering Growth in 5G and Fiber Subscribers, Service Revenues, Cash from Operations and Free Cash Flow
Company meets all 2024 consolidated financial guidance and reiterates full-year 2025 and long-term financial and operational guidance
Continued customer-centric and investment-led approach bolsters customer additions, increases convergence penetration and drives expected full-year industry-leading postpaid phone churn
DALLAS, Jan. 27, 2025 /PRNewswire/ -- AT&T Inc. (NYSE: T) reported strong fourth-quarter and full-year results that showcased solid momentum in gaining and retaining profitable 5G and fiber subscribers. The Company met all 2024 consolidated financial guidance and reiterates all financial and operational guidance for 2025 and beyond that was shared at its recent Analyst & Investor Day.
"The strong results this quarter are the result of a four-plus-year period of hard work and consistent execution by our teams, which has positioned us well for a new era of growth," said John Stankey, AT&T CEO. "We ended 2024 with strong momentum. Customers and shareholders can look forward to receiving even more value in 2025 as we expand the country's largest fiber network, modernize our wireless network, grow our business and begin share repurchases in the second half of the year."
Fourth-Quarter Consolidated Results
-- Revenues of $32.3 billion
-- Diluted EPS of $0.56; adjusted EPS* of $0.54
-- Operating income of $5.3 billion; adjusted operating income* of $5.4
billion
-- Net income of $4.4 billion; adjusted EBITDA* of $10.8 billion
-- Cash from operating activities of $11.9 billion, up $0.5 billion year
over year
-- Capital expenditures of $6.8 billion; capital investment* of $7.1
billion
-- Free cash flow* of $4.8 billion, down $1.5 billion year over year as the
Company continued to drive a more ratable quarterly free cash flow
cadence
Fourth-Quarter Highlights
-- 482,000 postpaid phone net adds with an expected industry-leading
postpaid phone churn of 0.85%
-- Mobility service revenues of $16.6 billion, up 3.3% year over year
-- 307,000 AT&T Fiber net adds; 200,000, or more, net adds for 20
consecutive quarters
-- Consumer broadband revenues of $2.9 billion, up 7.8% year over year
Full-Year Consolidated Results
-- Revenues of $122.3 billion
-- Diluted EPS of $1.49; adjusted EPS* of $2.26
-- Operating income of $19.0 billion; adjusted operating income* of $24.2
billion
-- Net income of $12.3 billion; adjusted EBITDA* of $44.8 billion
-- Cash from operating activities of $38.8 billion, up $0.5 billion year
over year
-- Capital expenditures of $20.3 billion; capital investment* of $22.1
billion
-- Free cash flow* of $17.6 billion, up $0.9 billion year over year
Full-Year Highlights
-- 1.7 million postpaid phone net adds with an expected industry-leading
postpaid phone churn of 0.76%
-- Mobility service revenues of $65.4 billion, up 3.5% year over year
-- 1.0 million AT&T Fiber net adds; 1 million, or more, net adds for seven
consecutive years
-- Consumer broadband revenues of $11.2 billion, up 7.2% year over year
-- 28.9 million consumer and business locations passed with fiber
2025 Outlook
For the full year, AT&T expects:
-- Consolidated service revenue growth in the low-single-digit range.
-- Mobility service revenue growth in the higher end of the 2% to 3%
range.
-- Consumer fiber broadband revenue growth in the mid-teens.
-- Adjusted EBITDA* growth of 3% or better.
-- Mobility EBITDA* growth in the higher end of the 3% to 4% range.
-- Business Wireline EBITDA* to decline in the mid-teens range.
-- Consumer Wireline EBITDA* growth in the high-single to
low-double-digit range.
-- Capital investment* in the $22 billion range.
-- Free cash flow*, excluding DIRECTV, of $16 billion+.
-- Adjusted EPS*, excluding DIRECTV, of $1.97 to $2.07.
The Company also expects to achieve net-debt-to-adjusted EBITDA* in the 2.5x range in the first half of 2025. Additionally, the Company continues to expect the sale of its entire 70% stake in DIRECTV to TPG to close in mid-2025.
Note: AT&T's fourth-quarter earnings conference call will be webcast at 8:30 a.m. ET on Monday, January 27, 2025. The webcast and related materials, including financial highlights, will be available at https://investors.att.com.
Consolidated Financial Results
-- Revenues for the fourth quarter totaled $32.3 billion versus $32.0
billion in the year-ago quarter, up 0.9%. This was due to higher
Mobility service and equipment revenues and Consumer Wireline revenues,
partially offset by declines in Business Wireline and Mexico.
-- Operating expenses were $27.0 billion versus $26.8 billion in the
year-ago quarter. Operating expenses increased primarily due to higher
depreciation from accelerated depreciation on wireless network equipment
associated with our Open RAN network modernization efforts, as well as
our continued fiber investment and network upgrades. Additionally,
equipment costs increased year over year in line with higher Mobility
equipment revenues and these increases were partially offset by a
prior-year charge, that did not recur, for the abandonment of
non-deployed wireless equipment in connection with our network
modernization efforts, and benefits from continued transformation.
-- Operating income was $5.3 billion, consistent with the year-ago quarter.
When adjusting for certain items, adjusted operating income* was $5.4
billion versus $5.8 billion in the year-ago quarter.
-- Equity in net income of affiliates was $1.1 billion, primarily from the
DIRECTV investment, versus $0.3 billion in the year-ago quarter,
reflecting cash distributions received by AT&T in excess of AT&T's share
of DIRECTV's earnings.
-- Net income was $4.4 billion versus $2.6 billion in the year-ago quarter.
-- Net income (loss) attributable to common stock was $4.0 billion versus
$2.1 billion in the year-ago quarter. Earnings per diluted common share
was $0.56 versus $0.30 in the year-ago quarter. Adjusting for ($0.02)
which includes a benefit from tax items offset by an actuarial loss on
benefit plans and other items, adjusted earnings per diluted common
share* was $0.54, consistent with the year-ago quarter.
-- Adjusted EBITDA* was $10.8 billion versus $10.6 billion in the year-ago
quarter.
-- Cash from operating activities was $11.9 billion, up $0.5 billion year
over year, reflecting higher cash distributions from DIRECTV classified
as operating, working capital timing, including lower device payments,
and operational improvements, partially offset by higher cash tax
payments.
-- Capital expenditures were $6.8 billion versus $4.6 billion in the
year-ago quarter. Capital investment* totaled $7.1 billion versus $5.6
billion in the year-ago quarter. Cash payments for vendor financing
totaled $0.2 billion versus $1.0 billion in the year-ago quarter.
-- Free cash flow* was $4.8 billion versus $6.4 billion in the year-ago
quarter as the Company continued to drive a more ratable quarterly free
cash flow cadence.
Full-Year Financial Results
-- Revenues for the full year totaled $122.3 billion versus $122.4 billion
in 2023, down 0.1%, primarily driven by lower revenues from Business
Wireline service revenue and Mobility equipment revenue, offset by
higher Mobility service and Consumer Wireline, and Mexico revenues.
-- Operating expenses for the full year were $103.3 billion versus $99.0
billion in 2023, primarily due to a $4.4 billion non-cash goodwill
impairment in the third quarter. Additionally, the annual increase was
driven by our Open RAN network modernization efforts, including
accelerated depreciation on wireless network equipment and restructuring
costs, and higher depreciation from continued fiber investment and
network upgrades, partially offset by lower Mobility equipment costs
from lower sales volumes and benefits from continued transformation
efforts, including lower personnel.
-- Operating income for the full year was $19.0 billion versus $23.5
billion in 2023. When adjusting for certain items, adjusted operating
income* was $24.2 billion versus $24.7 billion a year ago.
-- Equity in net income of affiliates for the full year was $2.0 billion,
primarily from the DIRECTV investment. With adjustment for our
proportionate share of intangible amortization, adjusted equity in net
income from the DIRECTV investment* for full-year 2024 was $2.8 billion.
-- Net income for the full year was $12.3 billion versus $15.6 billion a
year ago.
-- Net income attributable to common stock for the full year was $10.7
billion versus $14.2 billion a year ago. Earnings per diluted common
share was $1.49 versus $1.97 for full-year 2023. With adjustments for
both years, adjusted earnings per diluted common share* was $2.26
compared to $2.41 for full-year 2023.
-- Adjusted earnings per diluted common share, excluding DIRECTV*, was
$1.95 for full-year 2024.
-- Adjusted EBITDA* for the full year was $44.8 billion versus $43.4
billion a year ago.
-- Cash from operating activities for the full year was $38.8 billion, up
$0.5 billion from a year ago, reflecting working capital timing and
operational improvements, partially offset by higher cash tax payments.
-- Capital expenditures were $20.3 billion for the full year versus $17.9
billion a year ago. Capital investment* totaled $22.1 billion for the
full year versus $23.6 billion a year ago. Cash payments for vendor
financing totaled $1.8 billion versus $5.7 billion a year ago.
-- Free cash flow* was $17.6 billion for the full year compared to $16.8
billion a year ago.
-- Free cash flow, excluding DIRECTV*, was $15.3 billion for full-year
2024.
-- Total debt was $123.5 billion at the end of the fourth-quarter 2024, and
net debt* was $120.1 billion.
Segment and Business Unit Results
Communications Segment
Dollars in millions
Fourth Quarter Percent
Unaudited 2024 2023 Change
Operating Revenues $31,139 $30,797 1.1
%
Operating Income 6,189 6,608 (6.3)
%
Operating Income Margin 19.9
% 21.5
% (160) BP
Communications segment revenues were $31.1 billion, up 1.1% year over year, with operating income down 6.3% year over year.
Mobility
Dollars in millions; Subscribers in thousands
Fourth Quarter Percent
Unaudited 2024 2023 Change
Operating Revenues $23,129 $22,393 3.3
%
Service 16,563 16,039 3.3
%
Equipment 6,566 6,354 3.3
%
Operating Expenses 17,005 16,179 5.1
%
Operating Income 6,124 6,214 (1.4)
%
Operating Income Margin 26.5
% 27.7
% (120) BP
EBITDA* $8,888 $8,376 6.1
%
EBITDA Margin* 38.4
% 37.4
% 100 BP
EBITDA Service Margin* 53.7
% 52.2
% 150 BP
Total Wireless Net Adds (excl. Connected Devices)(1) 1,813 962
Postpaid 839 759
Postpaid Phone 482 526
Postpaid Other 357 233
Prepaid Phone (119) (132)
Postpaid Churn 1.00
% 1.01
% (1) BP
Postpaid Phone-Only Churn 0.85
% 0.84
% 1 BP
Prepaid Churn 2.73
% 2.97
% (24) BP
Postpaid Phone ARPU $56.72 $56.23 0.9
%
Mobility service revenue grew 3.3% year over year driving EBITDA service margin* expansion of 150 basis points. Postpaid phone net adds were 482,000 with postpaid phone churn of 0.85%, up 1 basis point year over year.
Mobility revenues were up 3.3% year over year driven by service revenue growth of 3.3% from subscriber gains and postpaid phone average revenue per subscriber (ARPU) growth, and equipment revenue growth of 3.3% from higher volumes of non-phone sales and higher priced phone sales. Operating expenses were up 5.1% year over year due to higher depreciation expense from Open RAN deployment and continued network transformation, higher equipment expenses resulting from higher sales and higher network costs, including storm impacts. Operating income was $6.1 billion, down 1.4% year over year. EBITDA* was $8.9 billion, up $512 million year over year, driven by service revenue growth. This was the Company's highest-ever fourth-quarter Mobility EBITDA*.
Business Wireline
Dollars in millions
Fourth Quarter Percent
Unaudited 2024 2023 Change
Operating Revenues $4,545 $5,052 (10.0)
%
Operating Expenses 4,756 4,887 (2.7)
%
Operating Income/(Loss) (211) 165 %
Operating Income Margin (4.6)
% 3.3
% (790) BP
EBITDA* $1,197 $1,534 (22.0)
%
EBITDA Margin* 26.3
% 30.4
% (410) BP
Business Wireline revenues and profitability declined year over year driven by continued secular pressures on legacy voice and data services that were partially offset by growth in fiber and other advanced connectivity services.
Business Wireline revenues were down 10.0% year over year, primarily due to lower demand for legacy voice and data services as well as product simplification, partially offset by growth in connectivity services. Revenue declines were also impacted by the absence of revenues from our cybersecurity business that was contributed to LevelBlue during the second quarter of 2024. Operating expenses were down 2.7% year over year due to lower personnel and customer support expenses, as well as the contribution of our cybersecurity business. Operating income was $(211) million versus $165 million in the prior-year quarter, and EBITDA* was $1.2 billion, down $337 million year over year.
Consumer Wireline
Dollars in millions; Subscribers in thousands
Fourth Quarter Percent
Unaudited 2024 2023 Change
Operating Revenues $3,465 $3,352 3.4
%
Broadband 2,911 2,700 7.8
%
Operating Expenses 3,189 3,123 2.1
%
Operating Income 276 229 20.5
%
Operating Income Margin 8.0
% 6.8
% 120 BP
EBITDA* $1,218 $1,109 9.8
%
EBITDA Margin* 35.2
% 33.1
% 210 BP
Broadband Net Adds (excluding DSL) 123 19
Fiber 307 273
Non Fiber (184) (254)
AT&T Internet Air 158 67
Broadband ARPU $69.69 $65.62 6.2
%
Fiber ARPU $71.71 $68.50 4.7
%
Consumer Wireline achieved strong broadband revenue growth with improving EBITDA margin*. Consumer Wireline also delivered positive broadband net adds for the sixth consecutive quarter, driven by 307,000 AT&T Fiber net adds and 158,000 AT&T Internet Air net adds.
Consumer Wireline revenues were up 3.4% year over year driven by growth in broadband revenues attributable to fiber revenues, which grew 17.8%, partially offset by declines in legacy voice and data services and other services. Operating expenses were up 2.1% year over year, primarily due to higher depreciation expense driven by fiber investment and higher network costs, including storm impacts, partially offset by savings from cost initiatives and lower marketing costs. Operating income was $276 million versus $229 million in the prior-year quarter, and EBITDA* was $1.2 billion, up $109 million year over year.
Latin America Segment - Mexico
Dollars in millions; Subscribers in thousands
Fourth Quarter Percent
Unaudited 2024 2023 Change
Operating Revenues $1,044 $1,090 (4.2)
%
Service 634 671 (5.5)
%
Equipment 410 419 (2.1)
%
Operating Expenses 1,023 1,133 (9.7)
%
Operating Income/(Loss) 21 (43) %
EBITDA* $171 $137 24.8
%
Total Wireless Net Adds 665 562
Postpaid 204 151
Prepaid 490 450
Reseller (29) (39)
Latin America segment revenues were down 4.2% year over year, primarily due to unfavorable impacts of foreign exchange rates, offset by higher equipment sales and subscriber growth. Operating expenses were down 9.7% due to favorable impacts of foreign exchange rates, partially offset by higher equipment and selling costs attributable to subscriber growth. Operating income was $21 million compared to $(43) million in the year-ago quarter. EBITDA* was $171 million, up $34 million year over year.
(1) Effective with our first-quarter 2024 reporting, we have removed connected devices from our total Mobility subscribers, consistent with industry standards and our key performance metrics. Connected devices include data-centric devices such as session-based tablets, monitoring devices and primarily
wholesale automobile systems.
About AT&T
We help more than 100 million U.S. families, friends and neighbors, plus nearly 2.5 million businesses, connect to greater possibility. From the first phone call 140+ years ago to our 5G wireless and multi-gig internet offerings today, we @ATT innovate to improve lives. For more information about AT&T Inc. (NYSE: T), please visit us at about.att.com. Investors can learn more at investors.att.com.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the Company's website at https://investors.att.com.
Non-GAAP Measures and Reconciliations to GAAP Measures
Schedules and reconciliations of non-GAAP financial measures cited in this document to the most directly comparable financial measures under generally accepted accounting principles (GAAP) can be found at https://investors.att.com and in our Form 8-K dated January 27, 2025. Adjusted diluted EPS, adjusted operating income, EBITDA, adjusted EBITDA, free cash flow, net debt and net debt-to-adjusted EBITDA are non-GAAP financial measures frequently used by investors and credit rating agencies.
Adjusted diluted EPS is calculated by excluding from operating revenues, operating expenses, other income (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, actuarial gains and losses, significant abandonments and impairments, benefit-related gains and losses, employee separation and other material gains and losses. Non-operational items arising from asset acquisitions and dispositions include the amortization of intangible assets. While the expense associated with the amortization of certain wireless licenses and customer lists is excluded, the revenue of the acquired companies is reflected in the measure and those assets contribute to revenue generation. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in 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 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, in these cases, we use the actual tax expense or combined marginal rate of approximately 25%. For 4Q24, adjusted EPS of $0.54 is diluted EPS of $0.56 adjusted for $0.01 of net actuarial loss and other benefit-related, transaction and other costs, minus $0.03 benefit from tax items. For 4Q23, adjusted EPS of $0.54 is diluted EPS of $0.30 adjusted for $0.18 actuarial loss on benefit plans, $0.06 restructuring and impairments, $0.03 proportionate share of intangible amortization at the DIRECTV equity method investment, and $0.01 benefit-related, transaction and other costs, minus $0.04 benefit from tax items.
For 2024, adjusted EPS of $2.26 is diluted EPS of $1.49 adjusted for $0.72 restructuring and impairments, $0.09 proportionate share of intangible amortization at the DIRECTV equity method investment, and $0.01 actuarial loss on benefit plans, minus $0.03 benefit from tax items and $0.02 of benefit-related, transaction and other costs. For 2023, adjusted EPS of $2.41 is diluted EPS of $1.97 adjusted for $0.18 restructuring and impairments, $0.17 net actuarial and settlement loss on benefit plans, and $0.14 proportionate share of intangible amortization at the DIRECTV equity method investment, minus $0.04 benefit from tax items and $0.01 of benefit-related, transaction and other costs.
Beginning with reporting of first-quarter 2025 results, the company plans to revise its definition of adjusted EPS to remove the equity in net income from our investment in DIRECTV, which we have agreed to sell to TPG. For 2024, Adjusted EPS excluding DIRECTV of $1.95 is diluted EPS of $1.49 adjusted for $0.72 restructuring and impairments, and $0.01 actuarial loss on benefit plans, minus $0.22 equity in net income of DIRECTV, $0.03 benefit from tax items and $0.02 of benefit-related, transaction and other costs. The Company expects adjustments to 2025 reported diluted EPS to include an adjustment to remove equity in net income of DIRECTV, a non-cash mark-to-market benefit plan gain/loss, and other items. The adjustment to remove the equity in net income of DIRECTV is dependent upon cash distributions from DIRECTV and the timing of the closing of the sale of our DIRECTV investment, which is expected in mid-2025. The Company expects the mark-to-market adjustment, which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be a significant item. Our projected 2025 adjusted EPS excluding DIRECTV depends on future levels of revenues and expenses, most of which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between this projected non-GAAP metric and the most comparable GAAP metric without unreasonable effort.
Adjusted operating income is operating income adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. For 4Q24, adjusted operating income of $5.4 billion is calculated as operating income of $5.3 billion plus $0.1 billion of adjustments. For 4Q23, adjusted operating income of $5.8 billion is calculated as operating income of $5.3 billion plus $0.5 billion of adjustments. For 2024, adjusted operating income of $24.2 billion is calculated as operating income of $19.0 billion plus $5.2 billion of adjustments. For 2023, adjusted operating income of $24.7 billion is calculated as operating income of $23.5 billion plus $1.2 billion of adjustments. Adjustments for all periods are detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated January 27, 2025.
EBITDA is net income plus income tax, interest, and depreciation and amortization expenses minus equity in net income of affiliates and other income (expense) - net. Adjusted EBITDA is calculated by excluding from EBITDA certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, significant abandonments and impairments, benefit-related gains and losses, employee separation and other material gains and losses. Adjusted EBITDA, Mobility EBITDA, Business Wireline EBITDA and Consumer Wireline EBITDA estimates depend on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide reconciliations between these projected non-GAAP metrics and the most comparable GAAP metrics without unreasonable effort.
For 4Q24, adjusted EBITDA of $10.8 billion is calculated as net income of $4.4 billion, plus income tax expense of $0.9 billion, plus interest expense of $1.7 billion, minus equity in net income of affiliates of $1.1 billion, minus other income (expense) - net of $0.6 billion, plus depreciation and amortization of $5.4 billion, plus adjustments of $0.1 billion. For 4Q23, adjusted EBITDA of $10.6 billion is calculated as net income of $2.6 billion, plus income tax expense of $0.4 billion, plus interest expense of $1.7 billion, minus equity in net income of affiliates of $0.3 billion, plus other income (expense) - net of $(0.9) billion, plus depreciation and amortization of $4.8 billion, plus adjustments of $0.5 billion. For 2024, adjusted EBITDA of $44.8 billion is calculated as net income of $12.3 billion, plus income tax expense of $4.4 billion, plus interest expense of $6.8 billion, minus equity in net income of affiliates of $2.0 billion, minus other income (expense) - net of $2.4 billion, plus depreciation and amortization of $20.6 billion, plus adjustments of $5.1 billion. For 2023, adjusted EBITDA of $43.4 billion is calculated as net income of $15.6 billion, plus income tax expense of $4.2 billion, plus interest expense of $6.7 billion, minus equity in net income of affiliates of $1.7 billion, minus other income (expense) - net of $1.4 billion, plus depreciation and amortization of $18.8 billion, plus adjustments of $1.2 billion. Adjustments for all periods are detailed in the Discussion and Reconciliation of Non-GAAP Measures included in our Form 8-K dated January 27, 2025.
At the segment or business unit level, EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues. EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.
Free cash flow for 4Q24 of $4.8 billion is cash from operating activities of $11.9 billion, minus capital expenditures of $6.8 billion and cash paid for vendor financing of $0.2 billion (there were no cash distributions from DIRECTV classified as investing activities in 4Q24). For 4Q23, free cash flow of $6.4 billion is cash from operating activities of $11.4 billion, plus cash distributions from DIRECTV classified as investing activities of $0.6 billion, minus capital expenditures of $4.6 billion and cash paid for vendor financing of $1.0 billion. For 2024, free cash flow of $17.6 billion is cash from operating activities of $38.8 billion, plus cash distributions from DIRECTV classified as investing activities of $0.9 billion, minus capital expenditures of $20.3 billion and cash paid for vendor financing of $1.8 billion. For 2023, free cash flow of $16.8 billion is cash from operating activities of $38.3 billion, plus cash distributions from DIRECTV classified as investing activities of $2.0 billion, minus capital expenditures of $17.9 billion and cash paid for vendor financing of $5.7 billion.
Beginning with the reporting of first-quarter 2025 results, the Company plans to revise its definition of free cash flow to remove cash flows related to DIRECTV (distributions reported in both operating and investing activities). Free cash flow excluding DIRECTV is expected to be defined as cash from operations minus cash flows related to our DIRECTV equity method investment (cash distributions less cash taxes paid from DIRECTV), minus capital expenditures and cash paid for vendor financing (classified as financing activities). For 2024, free cash flow excluding DIRECTV of $15.3 billion is cash from operating activities of $38.8 billion, less cash distributions from DIRECTV classified as operating activities of $2.0 billion, plus cash taxes paid on DIRECTV of $0.7 billion, minus capital expenditures of $20.3 billion and cash paid for vendor financing of $1.8 billion. Due to high variability and difficulty in predicting items that impact cash from operating activities, capital expenditures and vendor financing payments, the Company is not able to provide a reconciliation between projected free cash flow excluding DIRECTV and the most comparable GAAP metric without unreasonable effort.
Capital investment provides a comprehensive view of cash used to invest in our networks, product developments and support systems. In connection with capital improvements, we have favorable payment terms of 120 days or more with certain vendors, referred to as vendor financing, which are excluded from capital expenditures and reported as financing activities. Capital investment includes capital expenditures and cash paid for vendor financing ($0.2 billion in 4Q24, $1.0 billion in 4Q23, $1.8 billion in 2024, and $5.7 billion in 2023). Due to high variability and difficulty in predicting items that impact capital expenditures and vendor financing payments, the Company is not able to provide a reconciliation between projected capital investment and the most comparable GAAP metrics without unreasonable effort.
Adjusted equity in net income from DIRECTV investment of $2.8 billion for 2024 is calculated as equity income from DIRECTV of $2.0 billion reported in Equity in Net Income of Affiliates and excludes $0.8 billion of AT&T's proportionate share of the non-cash depreciation and amortization of fair value accretion from DIRECTV's revaluation of assets and purchase price allocation.
Net debt of $120.1 billion at December 31, 2024, is calculated as total debt of $123.5 billion less cash and cash equivalents of $3.3 billion and time deposits (i.e. deposits at financial institutions that are greater than 90 days) of $0.2 billion. Net debt-to-adjusted EBITDA is calculated by dividing net debt by the sum of the most recent four quarters of adjusted EBITDA. Net debt and adjusted EBITDA are calculated as defined above. Net debt and adjusted EBITDA estimates depend on future levels of revenues, expenses and other metrics which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between projected net debt-to-adjusted EBITDA and the most comparable GAAP metrics and related ratios without unreasonable effort.
Discussion and Reconciliation of Non-GAAP Measures
We believe the following measures are relevant and useful information to investors 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 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. These measures should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with U.S. generally accepted accounting principles (GAAP).
Free Cash Flow
Free cash flow is defined as cash from operations and cash distributions from DIRECTV classified as investing activities minus capital expenditures and cash paid for vendor financing (classified as financing activities). Free cash flow after dividends is defined as cash from operations and cash distributions from DIRECTV classified as investing activities, minus capital expenditures, cash paid for vendor financing and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including capital expenditures and vendor financing, and from our continued economic interest in the U.S. video operations as part of our DIRECTV equity method investment, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.
Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Net cash provided by operating activities(1) $11,896 $11,378 $38,771 $38,314
Add: Distributions from DIRECTV classified as investing activities - 602 928 2,049
Less: Capital expenditures (6,843) (4,601) (20,263) (17,853)
Less: Cash paid for vendor financing (221) (1,006) (1,792) (5,742)
Free Cash Flow 4,832 6,373 17,644 16,768
Less: Dividends paid (2,037) (2,020) (8,208) (8,136)
Free Cash Flow after Dividends $2,795 $4,353 $9,436 $8,632
Free Cash Flow Dividend Payout Ratio 42.2 31.7 46.5
% %
% % 48.5
(1) Includes distributions from DIRECTV of $1,072 and $2,027 in the fourth quarter and for the year ended December 31, 2024, and $332
and $1,666 in the fourth quarter and for the year ended December 31, 2023.
Beginning with our first-quarter 2025 reporting, as shown in the table below, we plan to revise our definition of free cash flow to remove cash flow related to our DIRECTV equity method investment, which we have agreed to sell to TPG Capital (TPG). Free cash flow is expected to be defined as cash from operations minus cash flows related to our DIRECTV equity method investment (cash distributions minus cash taxes paid from DIRECTV), minus capital expenditures and cash paid for vendor financing (classified as financing activities).
Free Cash Flow Excluding DIRECTV
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Net cash provided by operating activities $11,896 $11,378 $38,771 $38,314
Less: Distributions from DIRECTV classified as operating activities (1,072) (332) (2,027) (1,666)
Less: Cash taxes paid on DIRECTV 254 236 656 782
Less: Capital expenditures (6,843) (4,601) (20,263) (17,853)
Less: Cash paid for vendor financing (221) (1,006) (1,792) (5,742)
Free Cash Flow Excluding DIRECTV 4,014 5,675 15,345 13,835
Cash Paid for Capital Investment
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.
Cash Paid for Capital Investment
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Capital Expenditures $(6,843) $(4,601) $(20,263) $(17,853)
Cash paid for vendor financing (221) (1,006) (1,792) (5,742)
Cash paid for Capital Investment $(7,064) $(5,607) $(22,055) $(23,595)
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) - net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.
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 cash generation potential with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which management is responsible and upon which we evaluate performance.
We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Mobility business unit operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, 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 EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. For market comparability, management analyzes performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Net Income $4,408 $2,582 $12,253 $15,623
Additions:
Income Tax Expense (Benefit) 900 354 4,445 4,225
Interest Expense 1,661 1,726 6,759 6,704
Equity in Net (Income) of Affiliates (1,074) (337) (1,989) (1,675)
Other (Income) Expense - Net (569) 946 (2,419) (1,416)
Depreciation and amortization 5,374 4,766 20,580 18,777
EBITDA 10,700 10,037 39,629 42,238
Transaction and other cost 22 26 123 98
Benefit-related (gain) loss 55 (97) (67) (129)
Asset impairments and abandonments and restructuring 14 589 5,075 1,193
Adjusted EBITDA(1) $10,791 $10,555 $44,760 $43,400
1 See "Adjusting Items" section for additional discussion and reconciliation of adjusted items.
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Communications Segment
Operating Income $6,189 $6,608 $27,095 $27,801
Add: Depreciation and amortization 5,114 4,411 19,433 17,363
EBITDA 11,303 11,019 46,528 45,164
Total Operating Revenues 31,139 30,797 117,652 118,038
Operating Income Margin 19.9 21.5 23.0
% %
% % 23.6
EBITDA Margin 36.3 35.8 39.5
% %
% % 38.3
Mobility
Operating Income $6,124 $6,214 $26,314 $25,861
Add: Depreciation and amortization 2,764 2,162 10,217 8,517
EBITDA 8,888 8,376 36,531 34,378
Total Operating Revenues 23,129 22,393 85,255 83,982
Service Revenues 16,563 16,039 65,373 63,175
Operating Income Margin 26.5 27.7 30.9
% %
% % 30.8
EBITDA Margin 38.4 37.4 42.8
% %
% % 40.9
EBITDA Service Margin 53.7 52.2 55.9
% %
% % 54.4
Business Wireline
Operating Income $(211) $165 $(88) $1,289
Add: Depreciation and amortization 1,408 1,369 5,555 5,377
EBITDA 1,197 1,534 5,467 6,666
Total Operating Revenues 4,545 5,052 18,819 20,883
Operating Income Margin (4.6) 3.3 (0.5)
% %
% % 6.2
EBITDA Margin 26.3 30.4 29.1
% %
% % 31.9
Consumer Wireline
Operating Income $276 $229 $869 $651
Add: Depreciation and amortization 942 880 3,661 3,469
EBITDA 1,218 1,109 4,530 4,120
Total Operating Revenues 3,465 3,352 13,578 13,173
Operating Income Margin 8.0 6.8 6.4
% %
% % 4.9
EBITDA Margin 35.2 33.1 33.4
% %
% % 31.3
Latin America Segment
Operating Income $21 $(43) $40 $(141)
Add: Depreciation and amortization 150 180 657 724
EBITDA 171 137 697 583
Total Operating Revenues 1,044 1,090 4,232 3,932
Operating Income Margin 2.0 (3.9) 0.9
% %
% % (3.6)
EBITDA Margin 16.4 12.6 16.5
% %
% % 14.8
Adjusting Items
Adjusting items include revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions, including the amortization of intangible assets. While the expense associated with the amortization of certain wireless licenses and customer lists is excluded, the revenue of the acquired companies is reflected in the measure and that those assets contribute to revenue generation. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (we immediately recognize this gain or loss in 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 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, in these cases we use the actual tax expense or combined marginal rate of approximately 25%.
Adjusting Items
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Operating Expenses
Transaction and other costs $22 $26 $123 $98
Benefit-related (gain) loss 55 (97) (67) (129)
Asset impairments and abandonments and restructuring 14 589 5,075 1,193
Adjustments to Operations and Support Expenses 91 518 5,131 1,162
Amortization of intangible assets 10 21 53 76
Adjustments to Operating Expenses 101 539 5,184 1,238
Other
DIRECTV intangible amortization (proportionate share) - 294 797 1,269
Benefit-related (gain) loss, impairments of investment and other 10 76 156 390
Actuarial and settlement (gain) loss - net 56 1,739 56 1,594
Adjustments to Income Before Income Taxes 167 2,648 6,193 4,491
Tax impact of adjustments 37 632 401 1,038
Tax-related items 222 271 222 271
Adjustments to Net Income $(92) $1,745 $5,570 $3,182
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, other income (expense) and income tax expense, certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, actuarial gains and losses, significant abandonments and impairments, benefit-related gains and losses, employee separation and other material gains and losses. 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.
Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted 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 and Adjusted EBITDA Margin
Dollars in millions
Fourth Quarter
Year Ended
2024 2023 2024 2023
Operating Income $5,326 $5,271 $19,049 $23,461
Adjustments to Operating Expenses 101 539 5,184 1,238
Adjusted Operating Income 5,427 5,810 24,233 24,699
EBITDA 10,700 10,037 39,629 42,238
Adjustments to Operations and Support Expenses 91 518 5,131 1,162
Adjusted EBITDA 10,791 10,555 44,760 43,400
Total Operating Revenues 32,298 32,022 122,336 122,428
Operating Income Margin 16.5 16.5 15.6
% %
% % 19.2
Adjusted Operating Income Margin 16.8 18.1 19.8
% %
% % 20.2
Adjusted EBITDA Margin 33.4 33.0 36.6
% %
% % 35.4
Adjusted Diluted EPS
Fourth Quarter
Year Ended
2024 2023 2024 2023
Diluted Earnings Per Share (EPS) $0.56 $0.30 $1.49 $1.97
DIRECTV intangible amortization (proportionate share) 0.03 0.09 0.14
Actuarial and settlement (gain) loss - net(1) 0.01 0.18 0.01 0.17
Restructuring and impairments 0.06 0.72 0.18
Benefit-related, transaction and other costs 0.01 (0.02) (0.01)
Tax-related items (0.03) (0.04) (0.03) (0.04)
Adjusted EPS $0.54 $0.54 $2.26 $2.41
Year-over-year growth - Adjusted % -6.2
%
Weighted Average Common Shares Outstanding 7,215 7,191 7,204 7,258
with Dilution (000,000)
(1) Includes adjustments for actuarial gains or losses associated with our pension and postemployment benefit plans, which we
immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses.
We recorded a total net actuarial loss of $0.1 billion in 2024. As a result, adjusted EPS reflects an expected return on plan
assets of $2.3 billion (based on an average expected return on plan assets of 7.75% for our pension trust and 4.00% for our VEBA
trusts), rather than the actual return on plan assets of $0.4 billion (actual pension return of 1.4% and VEBA return of 8.0%),
included in the GAAP measure of income.
Beginning with our first-quarter 2025 reporting, as shown in the table below, we plan to remove from adjusted earnings equity in net income from our investment in DIRECTV, which we have agreed to sell to TPG.
Adjusted Diluted EPS Excluding DIRECTV
Fourth Quarter
Year Ended
2024 2023 2024 2023
Diluted Earnings Per Share (EPS) $0.56 $0.30 $1.49 $1.97
Equity in net income of DIRECTV (0.12) (0.04) (0.22) (0.18)
Actuarial and settlement (gain) loss - net 0.01 0.18 0.01 0.17
Restructuring and impairments 0.06 0.72 0.18
Benefit-related, transaction and other costs 0.01 0.01 (0.02)
Tax-related items (0.03) (0.04) (0.03) (0.04)
Adjusted EPS $0.43 $0.47 $1.95 $2.10
Year-over-year growth - Adjusted -8.5 -7.1
% %
Weighted Average Common Shares Outstanding 7,215 7,191 7,204 7,258
with Dilution (000,000)
Net Debt to Adjusted EBITDA
Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and deposits at financial institutions that are greater than 90 days (e.g., certificates of deposit and time deposits), from the sum of debt maturing within one year and long-term debt.
Net Debt to Adjusted EBITDA - 2024
Dollars in millions
Three Months Ended
March 31, June 30, Sept. 30, Dec. 31, Four Quarters
2024 1 2024 1 2024 1 2024
Adjusted EBITDA $11,046 $11,337 $11,586 $10,791 $44,760
End-of-period current debt 5,089
End-of-period long-term debt 118,443
Total End-of-Period Debt 123,532
Less: Cash and Cash Equivalents 3,298
Less: Time Deposits 150
Net Debt Balance 120,084
Annualized Net Debt to Adjusted EBITDA Ratio 2.68
(1) As reported in AT&T's Form 8-K filed October 23, 2024.
Net Debt to Adjusted EBITDA - 2023
Dollars in millions
Three Months Ended
March 31, June 30, Sept. 30, Dec. 31, Four
Quarters
2023 1 2023 1 2023 (1) 2023 (1)
Adjusted EBITDA $10,589 $11,053 $11,203 $10,555 $43,400
End-of-period current debt 9,477
End-of-period long-term debt 127,854
Total End-of-Period Debt 137,331
Less: Cash and Cash Equivalents 6,722
Less: Time Deposits 1,750
Net Debt Balance 128,859
Annualized Net Debt to Adjusted EBITDA Ratio 2.97
1 As reported in AT&T's Form 8-K filed October 23, 2024.
Supplemental Operational Measures
As a supplemental presentation to our Communications segment operating results, we are providing a view of our AT&T Business Solutions results which includes both wireless and fixed operations. This combined view presents a complete profile of the entire business customer relationship and underscores the importance of mobile solutions to serving our business customers. Our supplemental presentation of business solutions operations is calculated by combining our Mobility and Business Wireline business units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.
Supplemental Operational Measure
Fourth Quarter
December 31, 2024
December 31, 2023
Adj.
Mobility Business (1) Business Mobility Business Adj.(1) Business Percent
Wireline Solutions Wireline Solutions Change
Operating Revenues
Wireless service $16,563
$ - $(14,088) $2,475 $16,039
$ - $(13,648) $2,391 3.5 %
Wireline service - 4,376 4,376 4,873 4,873 (10.2) %
Wireless equipment 6,566 (5,602) 964 6,354 (5,451) 903 6.8 %
Wireline equipment - 169 169 179 179 (5.6) %
Total Operating Revenues 23,129 4,545 (19,690) 7,984 22,393 5,052 (19,099) 8,346 (4.3) %
Operating Expenses
Operations and support 14,241 3,348 (11,830) 5,759 14,017 3,518 (11,683) 5,852 (1.6) %
EBITDA 8,888 1,197 (7,860) 2,225 8,376 1,534 (7,416) 2,494 (10.8) %
Depreciation and amortization 2,764 1,408 (2,259) 1,913 2,162 1,369 (1,765) 1,766 8.3 %
Total Operating Expenses 17,005 4,756 (14,089) 7,672 16,179 4,887 (13,448) 7,618 0.7 %
Operating Income $6,124 $(211) $(5,601) $312 $6,214 $165 $(5,651) $728 (57.1) %
Operating Income Margin 3.9 8.7
% %
(1) Non-business wireless reported in the Communications segment under the Mobility business unit.
Supplemental Operational Measure
Year Ended
December 31, 2024
December 31, 2023
Adj.
Mobility Business (1) Business Mobility Business Adj.(1) Business Percent
Change
Wireline Solutions Wireline Solutions
Operating Revenues
Wireless service $65,373
$ - $(55,561) $9,812 $63,175
$ - $(53,752) $9,423 4.1 %
Wireline service - 18,064 18,064 20,274 20,274 (10.9) %
Wireless equipment 19,882 (16,630) 3,252 20,807 (17,585) 3,222 0.9 %
Wireline equipment - 755 755 609 609 24.0 %
Total Operating Revenues 85,255 18,819 (72,191) 31,883 83,982 20,883 (71,337) 33,528 (4.9) %
Operating Expenses
Operations and support 48,724 13,352 (40,010) 22,066 49,604 14,217 (40,980) 22,841 (3.4) %
EBITDA 36,531 5,467 (32,181) 9,817 34,378 6,666 (30,357) 10,687 (8.1) %
Depreciation and amortization 10,217 5,555 (8,353) 7,419 8,517 5,377 (6,951) 6,943 6.9 %
Total Operating Expenses 58,941 18,907 (48,363) 29,485 58,121 19,594 (47,931) 29,784 (1.0) %
Operating Income $26,314 $(88) $(23,828) $2,398 $25,861 $1,289 $(23,406) $3,744 (36.0) %
Operating Income Margin 7.5 11.2
% %
1 Non-business wireless reported in the Communications segment under the Mobility business unit.
* Further clarification and explanation of non-GAAP measures and reconciliations to their most comparable GAAP measures can be found in the "Non-GAAP Measures and Reconciliations to GAAP Measures" section of the release and at https://investors.att.com.
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