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FORM10-K

UNITEDSTATES
SECURITIESANDEXCHANGECOMMISSION
Washington,D.C.20549
(MarkOne)
ANNUALREPORTPURSUANTTOSECTION
13OR15(d)
OFTHESECURITIESEXCHANGEACTOF1934

ForthefiscalyearendedDecember31,2015

OR

TRANSITION REPORT PURSUANT TO


SECTION13OR15(d)
OFTHESECURITIESEXCHANGEACTOF1934

Forthetransitionperiodfromto

CommissionFileNumber:1-8610

AT&TINC.

IncorporatedunderthelawsoftheStateofDelaware
I.R.S.EmployerIdentificationNumber43-1301883

208S.AkardSt.,Dallas,Texas,75202
TelephoneNumber210-821-4105

SecuritiesregisteredpursuanttoSection12(b)oftheAct:(SeeattachedScheduleA)

SecuritiesregisteredpursuanttoSection12(g)oftheAct:None.

Indicatebycheckmarkiftheregistrantisawell-knownseasonedissuer,asdefinedinRule405oftheSecuritiesAct.Yes[X]No[]

IndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.Yes[]No[X]

Indicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12
months(orforsuchshorterperiodthattheregistrantwasrequiredtofilesuchreports),and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.Yes[X]No[]

IndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyandpostedonitscorporateWebsite,ifany,everyInteractiveDataFilerequiredtobesubmittedand
postedpursuanttoRule405ofRegulationS-Tduringthepreceding12months(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitandpostsuchfiles).Yes[X]
No[]

IndicatebycheckmarkifdisclosureofdelinquentfilerspursuanttoItem405ofRegulationS-Kisnotcontainedherein,andwillnotbecontained,tothebestofregistrant's
knowledge,indefinitiveproxyorinformationstatementsincorporatedbyreferenceinPartIIIofthisForm10-KoranyamendmenttothisForm10-K.[X]

Indicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfilerorasmallerreportingcompany.Seedefinitionof"large
acceleratedfiler,""acceleratedfiler"and"smallerreportingcompany"inRule12b-2oftheExchangeAct.
Largeacceleratedfiler[X] Acceleratedfiler[]
Non-acceleratedfiler[] Smallerreportingcompany[]
(Donotcheckifasmallerreportingcompany)

Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct).
Yes[]No[X]

Basedontheclosingpriceof$35.52pershareonJune30,2015,theaggregatemarketvalueofourvotingandnon-votingcommonstockheldbynon-affiliateswas$184billion.

AtFebruary10,2016,commonsharesoutstandingwere6,151,208,898.
DOCUMENTSINCORPORATEDBYREFERENCE

(1) PortionsofAT&TInc.'sAnnualReporttoStockholdersforthefiscalyearendedDecember31,2015(PartsIandII).

(2) PortionsofAT&TInc.'sNoticeof2016AnnualMeetingandProxyStatementdatedonoraboutMarch11,2016tobefiledwithintheperiodpermittedunderGeneral
InstructionG(3)(PartsIIIandIV).
SCHEDULEA

SecuritiesRegisteredPursuantToSection12(b)OfTheAct:

Nameofeachexchange
Titleofeachclass onwhichregistered

CommonShares(ParValue$1.00Per NewYorkStockExchange
Share)

5.875%AT&TInc. NewYorkStockExchange
GlobalNotesdueApril28,2017

FloatingRateAT&TInc. NewYorkStockExchange
GlobalNotesdueJune4,2019

1.875%AT&TInc. NewYorkStockExchange
GlobalNotesdueDecember4,2020

2.65%AT&TInc. NewYorkStockExchange
GlobalNotesdueDecember17,2021

1.45%AT&TInc. NewYorkStockExchange
GlobalNotesdueJune1,2022

2.50%AT&TInc. NewYorkStockExchange
GlobalNotesdueMarch15,2023

1.30%AT&TInc. NewYorkStockExchange
GlobalNotesdueSeptember5,2023

2.40%AT&TInc. NewYorkStockExchange
GlobalNotesdueMarch15,2024

3.50%AT&TInc. NewYorkStockExchange
GlobalNotesdueDecember17,2025

2.60%AT&TInc. NewYorkStockExchange
GlobalNotesdueDecember17,2029

3.55%AT&TInc. NewYorkStockExchange
GlobalNotesdueDecember17,2032

3.375%AT&TInc. NewYorkStockExchange
GlobalNotesdueMarch15,2034

2.45%AT&TInc. NewYorkStockExchange
GlobalNotesdueMarch15,2035

7.00%AT&TInc. NewYorkStockExchange
GlobalNotesdueApril30,2040

4.25%AT&TInc. NewYorkStockExchange
GlobalNotesdueJune1,2043

4.875%AT&TInc. NewYorkStockExchange
GlobalNotesdueJune1,2044


TABLEOFCONTENTS

Item Page
PARTI

1. Business 1
1A. RiskFactors 12
2. Properties 14
3. LegalProceedings 14
4. MineSafetyDisclosures 14

ExecutiveOfficersoftheRegistrant 15


PARTII

5. MarketforRegistrant'sCommonEquity,RelatedStockholderMatters 16
andIssuerPurchasesofEquitySecurities
6. SelectedFinancialData 17
7. Management'sDiscussionandAnalysisofFinancialCondition 17
andResultsofOperations
7A. QuantitativeandQualitativeDisclosuresaboutMarketRisk 17
8. FinancialStatementsandSupplementaryData 17
9. ChangesinandDisagreementswithAccountantsonAccounting 17
andFinancialDisclosure
9A. ControlsandProcedures 17
9B. OtherInformation 18


PARTIII

10. Directors,ExecutiveOfficersandCorporateGovernance 18
11. ExecutiveCompensation 18
12. SecurityOwnershipofCertainBeneficialOwnersand 18
ManagementandRelatedStockholderMatters
13. CertainRelationshipsandRelatedTransactions,andDirectorIndependence 19
14. PrincipalAccountantFeesandServices 19


PARTIV

15. ExhibitsandFinancialStatementSchedules 19


AT&TInc.

PARTI

ITEM1.BUSINESS

GENERAL

AT&TInc.("AT&T,""we"orthe"Company")isaholdingcompanyincorporatedunderthelawsoftheStateofDelawarein1983andhasitsprincipalexecutiveofficesat208
S.AkardSt.,Dallas,Texas,75202(telephonenumber210-821-4105).WemaintainanInternetwebsiteatwww.att.com.(Thiswebsiteaddressisforinformationonlyandisnot
intendedtobeanactivelinkortoincorporateanywebsiteinformationintothisdocument.)Wemakeavailable,freeofcharge,onourwebsiteourannualreportonForm10-K,
ourquarterlyreportsonForm10-Q,currentreportsonForm8-Kandallamendmentstothosereportsassoonasreasonablypracticableaftersuchreportsareelectronicallyfiled
with,orfurnishedto,theSecuritiesandExchangeCommission(SEC).Wealsomakeavailableonthatwebsite,andinprint,ifanystockholderorotherpersonsorequests,our
"CodeofEthics"applicabletoallemployeesandDirectors,our"CorporateGovernanceGuidelines,"andthechartersforallcommitteesofourBoardofDirectors,including
Audit,HumanResourcesandCorporateGovernanceandNominating.AnychangestoourCodeofEthicsorwaiverofourCodeofEthicsforseniorfinancialofficers,executive
officersorDirectorswillbepostedonthatwebsite.

History
AT&T,formerlyknownasSBCCommunicationsInc.(SBC),wasformedasoneofseveralregionalholdingcompaniescreatedtoholdAT&TCorp.'s(ATTC)localtelephone
companies.OnJanuary1,1984,wewerespun-offfromATTCpursuanttoananti-trustconsentdecree,becominganindependentpublicly-tradedtelecommunicationsservices
provider.Atformation,weprimarilyoperatedinfivesouthwesternstates.OursubsidiariesmergedwithPacificTelesisGroupin1997,SouthernNewEngland
TelecommunicationsCorporationin1998andAmeritechCorporationin1999,therebyexpandingourwirelineoperationsastheincumbentlocalexchangecarrier(ILEC)intoa
totalof13states.InNovember2005,oneofoursubsidiariesmergedwithATTC,creatingoneoftheworld'sleadingtelecommunicationsproviders.Inconnectionwiththe
merger,wechangedthenameofourcompanyfrom"SBCCommunicationsInc."to"AT&TInc."InDecember2006,oneofoursubsidiariesmergedwithBellSouthCorporation
(BellSouth)makingustheILECinanadditionalninestates.WiththeBellSouthacquisition,wealsoacquiredBellSouth's40percenteconomicinterestinAT&TMobilityLLC
(AT&TMobility),formerlyCingularWirelessLLC,resultingin100percentownershipofAT&TMobility.In2014,wecompletedtheacquisitionofwirelessproviderLeap
WirelessInternational,Inc.(Leap)andsoldourILECoperationsinConnecticut,whichwehadpreviouslyacquiredin1998.In2015,wecompletedacquisitionsofwireless
propertiesinMexicoandDIRECTV,aleadingproviderofdigitaltelevisionentertainmentservicesinboththeUnitedStatesandLatinAmerica.Ourservicesandproductsare
marketedundertheAT&T,Cricket,DIRECTV,SKY,Iusacell,UnefonandNextelMexicobrandnames.

Scope
WearealeadingproviderofcommunicationsanddigitalentertainmentservicesintheUnitedStatesandtheworld.WeofferourservicesandproductstoconsumersintheU.S.,
MexicoandLatinAmericaandtobusinessesandotherprovidersoftelecommunicationsservicesworldwide.Wealsoownandoperatethreeregionalsportsnetworks,andretain
non-controllinginterestsinanotherregionalsportsnetworkandanetworkdedicatedtogame-relatedprogrammingaswellasInternetinteractivegameplaying.

Theservicesandproductsthatweoffervarybymarket,andinclude:wirelesscommunications,data/broadbandandInternetservices,digitalvideoservices,localandlong-
distancetelephoneservices,telecommunicationsequipment,managednetworking,andwholesaleservices.InconjunctionwithourJuly24,2015acquisitionofDIRECTV,we
re-organizedouroperatingsubsidiariesasfollows,correspondingtoouroperatingsegmentsforfinancialreportingpurposes:
BusinessSolutionsbusinessunitsprovideservicestobusiness,governmentalandwholesalecustomersandindividualsubscriberswhopurchasewirelessservicesthrough
employer-sponsoredplans.WeprovideadvancedIP-basedservicesincludingVirtualPrivateNetworks(VPN),Ethernet-relatedproductsandbroadband,collectively
referredtoasstrategicbusinessservices,aswellastraditionaldataandvoiceproducts.Weutilizeourwirelessandwirednetworkandaremarketedtoprovideacomplete
communicationssolutiontoourbusinesscustomers.
EntertainmentGroupbusinessunitsprovidevideo,internetandvoicecommunicationservicestoresidentialcustomerslocatedintheU.S.orinU.S.territories.Weutilize
ourcopperandIP-based(referredtoas"wired"or"wireline")networkand/oroursatellitetechnology.
ConsumerMobilitybusinessunitsprovidenationwidewirelessservicetoconsumers,andwirelesswholesaleandresalesubscriberslocatedintheU.S.orinU.S.territories.
WeutilizeourU.S.wirelessnetworktoprovidevoiceanddataservices,includinghighspeedinternet,videoentertainmentandhomemonitoringservices.

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AT&TInc.

InternationalbusinessunitsprovideentertainmentservicesinLatinAmericaandwirelessservicesinMexico.Videoentertainmentservicesareprovidedtoprimarily
residentialcustomersusingsatellitetechnology.WeutilizeourregionalandnationalnetworksinMexicotoprovideconsumerandbusinesscustomerswithwirelessdataand
voicecommunicationservices.

OurCorporateandOtherinformationincludesunallocatedcorporateexpenses,operationsthatarenolongerintegraltoouroperationsorwhichwenolongeractivelymarket,our
portionofresultsfromourequityinvestmentsandimpactsfromcorporate-widedecisionsforwhichtheindividualoperatingsegmentsarenotbeingevaluated.

Withcontinuingadvancesintechnologyandinresponsetochangingdemandsfromourcustomers,inrecentyearswehavefocusedonprovidingbroadband,videoandvoice
services.In2015,wepurchasedDIRECTVtoexpandourinvolvementinthedigitalentertainmentspace.ThenationwidereachofDIRECTVandsuperiorcontent-owner
relationshipssignificantlyimprovestheeconomicsandexpandsthegeographicreachofourpre-existingAT&TU-versevideoservice.Wealsopurchasedwirelessoperations
inMexico,movingquicklytobuildaworld-classmobilebusinessinacountrywithastrongeconomicoutlook,agrowingmiddleclassandclosetrade,culturalandgeographic
tiestotheU.S.Theseacquisitionsandourcontinuedinvestmentinapremiernetworkexperiencemakeourcustomers'livesmoreconvenientandproductiveandfoster
competitionandfurtherinnovationinthecommunicationsandentertainmentindustry.In2016,weplantofocusontheareasdiscussedbelow.

Wireless
AT&TMobilitybeganoperationsinOctober2000asajointventurebetweenusandBellSouthand,in2004,acquiredAT&TWirelessServices,Inc.Uponouracquisitionof
BellSouthin2006,AT&TMobilitybecameawholly-ownedsubsidiary.

IntheUnitedStates,wenowcoverallmajormetropolitanareasandmorethan300millionpeoplewithourLTEtechnology.Wealsoprovide4Gcoverageusinganother
technology(HSPA+),andwhencombinedwithourupgradedbackhaulnetwork,weareabletoenhanceournetworkcapabilitiesandprovidesuperiormobilebroadbandspeeds
fordataandvideoservices.OurwirelessnetworkalsoreliesonotherGSMdigitaltransmissiontechnologiesfor3Gand2Gdatacommunications.AsofDecember31,2015,we
servedmorethan128millionsubscribers.

Asthewirelessindustrycontinuestomature,webelievethatfuturewirelessgrowthwillincreasinglydependonourabilitytoofferinnovativevideoanddataservicesanda
wirelessnetworkthathassufficientspectrumandcapacitytosupporttheseinnovations.Wecontinuetofacesignificantspectrumandcapacityconstraintsonourwireless
networkincertainmarkets.Weexpectsuchconstraintstoincreaseandexpandtoadditionalmarketsinthecomingyears.Whilewearecontinuingtoinvestsignificantcapitalin
expandingournetworkcapacity,ourcapacityconstraintscouldaffectthequalityofexistingvoiceanddataservicesandourabilitytolaunchnew,advancedwirelessbroadband
services,unlessweareabletoobtainmorespectrum.Anylong-termspectrumsolutionwillrequirethattheFCCmakeadditionalspectrumavailabletothewirelessindustryto
meettheexpandingneedsofoursubscribers.Wewillcontinuetoattempttoaddressspectrumandcapacityconstraintsonamarket-by-marketbasis.Tothatend,wesubmitted
winningbidsfor251AdvancedWirelessService(AWS)spectrumlicensesforanear-nationwidecontiguousblockofhigh-qualityAWSspectrumintheAWS-3Auction(FCC
Auction97).TheFCCannouncedthatthe600MHzAuction(Auction1000)isscheduledtobeginonMarch29,2016.

Alsoaspartofoureffortstoimproveournetworkperformanceandhelpaddresstheneedforadditionalspectrumcapacity,weareredeployingspectrumcurrentlyusedforbasic
2GservicestosupportmoreadvancedmobileInternetservicesonour3Gand4Gnetworks.Wearemanagingthisprocessconsistentwithpreviousnetworkupgradesandare
transitioningcustomersonamarket-by-marketbasisfrom2Gnetworkstoourmoreadvanced3Gand4Gnetworks.Weexpecttofullydiscontinueserviceonour2Gnetworks
byapproximatelyJanuary1,2017.AsofDecember31,2015,about1percentofAT&T'spostpaidsubscribersusedhandsetsonlycapableofusing2Gservices.Wedonotexpect
thistransitiontohaveamaterialimpactonouroperatingresults.

BusinessSolutions
Weexpecttocontinuetostrengthenthereachandsophisticationofournetworkfacilitiesandourabilitytoofferavarietyofcommunicationsservices,bothfixedandmobile,to
businesses,governmentalandwholesalecustomersworldwide.

InternetProtocolTechnology
IPisgenerallyusedtodescribethetransmissionofdata,whichcanincludevoice(calledvoiceoverIPorVoIP),usingasoftware-basedtechnologyratherthanatraditionalwire
andphysicalswitch-basedtelephonenetwork.Acompanyusingthistechnologycanprovidevoiceanddataservicesatalowercostbecausethistechnologyusesbandwidthmore
efficientlythanatraditionalnetwork.Usingthistechnologyalsopresentsgrowthopportunitiesespeciallyinprovidingdataandvideoservicestobothfixedlocationsandmobile
devices.Totakeadvantageofboththesegrowthandcost-savingsopportunities,wehaveencouragedthemigrationofwirelinecustomersinourcurrent21-stateILECservice
areatoservicesusingIP,andexpecttocontinuethistransitionthroughatleast2020.

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AT&TInc.

IntegrationofData/BroadbandandEntertainmentServices
AsthecommunicationsindustrycontinuestomovetowardInternet-basedtechnologiesthatarecapableofblendingtraditionalwirelineandwirelessservices,weplantooffer
servicesthattakeadvantageofthesenewandmoresophisticatedtechnologies.Inparticular,weintendtocontinuetofocusonexpandingourhigh-speedInternetandvideo
offeringsandondevelopingIP-basedservicesthatallowcustomerstounitetheirhomeorbusinessfixedserviceswiththeirmobileservice.During2016,wewillcontinueto
developandprovideuniqueintegratedvideo,mobileandbroadbandsolutions.

International
WebelievethatthewirelessmodelintheU.S.,withexplodingdemandformobileInternetserviceandtheassociatedeconomicbenefits,willberepeatedaroundtheworldas
companiesinvestinhigh-speedmobilenetworks.DueinparttorecentchangesinthelegalandregulatoryframeworkinMexico,during2015weinvestedinMexicanwireless
operationstoestablishaunique,seamless,cross-borderNorthAmericanwirelessnetworkcovering355millionpeopleandbusinessesintheU.S.andMexico.During2016,we
willcontinuetobuildaworld-classmobilebusinessandnetworkinMexico.

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AT&TInc.

BUSINESSOPERATIONS

OPERATINGSEGMENTS
Oursegmentsarestrategicbusinessunitsthatofferproductsandservicestodifferentcustomersegmentsovervarioustechnologyplatformsand/orindifferentgeographiesthat
aremanagedaccordingly.Weanalyzeouroperatingsegmentsbasedonsegmentcontribution,whichconsistsofoperatingincome,excludingacquisition-relatedcostsandother
significantitems,andequityinnetincomeofaffiliateforinvestmentsmanagedwithineachoperatingsegment.Wehavefourreportablesegments:(1)BusinessSolutions,
(2)EntertainmentGroup,(3)ConsumerMobilityand(4)International.

Additionalinformationaboutoursegments,includingfinancialinformation,isincludedundertheheading"SegmentResults"onpages13through19andinNote4ofthe
AnnualReportandisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

BUSINESSSOLUTIONS
OurBusinessSolutionssegmentprovidesservicestobusiness,governmentalandwholesalecustomersandindividualsubscriberswhopurchasewirelessservicesthrough
employer-sponsoredplans.Servicesinthissegmentaremarketedtoprovideacompletecommunicationssolutiontocustomers.TheBusinessSolutionssegmentprovided
approximately49%of2015segmentoperatingrevenuesand59%ofour2015totalsegmentcontribution.WedivideBusinessSolutionsrevenueintothefollowingcategories:
wirelessservice,fixedstrategicservices,legacyvoiceanddataservices,otherservicesandwirelessequipment.

WirelessServiceWeofferacomprehensiverangeofhigh-qualitynationwidewirelessvoiceanddatacommunicationsservicesinavarietyofpricingplanstoapproximately
73.7millionBusinessSolutionswirelesssubscribers.Ourofferingsaretailoredtomeetthecommunicationsneedsoftargetedcustomercategories,includingyouth,family,
professionals,smallbusinesses,governmentandbusiness.Weclassifyoursubscribersaseitherpostpaid,connecteddeviceorreseller.

Wirelessdataservicescontinuetobeagrowingareaforthissegment,representinganincreasingshareofoverallsubscriberrevenue.Weareexperiencingsolidgrowthasan
increasingnumberofoursubscribershaveupgradedtheirhandsetstomoreadvancedintegrateddevices,areusingdata-centricdevicessuchastabletsandconnectedcarsandare
utilizingthenetworktoconnectandcontrolphysicaldevicesusingembeddedcomputingsystemsand/orsoftware,ortheInternetofThings(IoT).WeofferMobileShareplans
whichallowsharingofvoice,textanddataacrossmultipledevices,AT&TNextSM(AT&TNext),aprogramallowingsubscriberstomorefrequentlyupgradehandsetsusingan
installmentpaymentplanandinJanuary2015beganofferingRolloverDataonMobileShareplans,whichallowsunusedshareableplandatatoberolledoverandusedwithin
thenextmonth.Suchofferingsareintendedtoencourageexistingsubscriberstoupgradetheircurrentservicesand/oraddconnecteddevices,attractsubscribersfromother
providers,andminimizesubscriberchurn.Participationintheseplanscontinuestoincrease.Customersinour"connecteddevice"category(e.g.,usersofsession-basedtablets,
monitoringdevicesandautomobilesystems)purchasethosedevicesfromthird-partysuppliersthatbuydataaccesssupportedbyournetwork.Wecontinuetoupgradeour
networkandcoordinatewithequipmentmanufacturersandapplicationsdevelopersinordertofurthercapitalizeonthecontinuedgrowthinthedemandforwirelessdataservices.

During2015,weofferedpostpaidwirelessserviceundertwoalternatives:(1)forsubscriberspurchasingadeviceoninstallmentsundertheAT&TNextprogramorforthosethat
bringtheirowndevice,noannualservicecontractissignedbutthedevicemustbepaidinfullifthecustomerchoosestodroptheirservicefromAT&T;and(2)forsubscribers
whopurchasetheirhandsetunderthetraditionaldevicesubsidymodel,servicecontractsarefortwoyearperiodswithanincreasingportionofthesesubscribersreceiving
unlimitedvoiceandtextingservicesinconjunctionwithdataservicespurchasedthroughourMobileShareplans.InlateDecember2015,weannouncedanendtooffering
subsidizedhandsetsformostofourcustomers.Ourwirelessservicesincludedataandvoiceservices,includinglong-distanceserviceandroamingservices.Roamingservices
enableoursubscriberstoutilizeothercarriers'networkswhentheyare"roaming"outsideournetworkfootprint.

FixedStrategicServicesFixedstrategicservices(previouslyknownasstrategicbusinessservices)areourmostadvancedbusinesssolutions.Ourofferingsusehigh-capacity
digitalcircuits,andallowcustomerstocreateinternaldatanetworksandtoaccessexternaldatanetworks.SwitchedTransportservicestransmitdatausingswitchingequipment
totransferthedatabetweenmultiplelinesbeforereachingitsdestination.Dedicatedtransportservicesuseasingledirectlinetotransmitdatabetweendestinations.

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AT&TInc.

WeprovidebusinessesvoiceapplicationsoverIP-basednetworks(i.e.,EnhancedVirtualPrivateNetworksor"EVPN").Overthepastseveralyears,wehavebuiltoutournew
IP/MPLS(InternetProtocol/MultiProtocolLabelSwitching)network,tosupplementourIP-basedproductset,andeventuallyreplaceouroldercircuit-basednetworksand
services.Theseproductsallowustoprovidehighlycomplexglobaldatanetworks.AdditionalIP-basedservicesincludeInternetaccessandnetworkintegration,dedicated
Internetandenterprisenetworkingservices.TheseadvancedIP-basedservicescontinuedtogrowduring2015ascustomersshiftfromouroldercircuit-basedservices.Weexpect
thistrendtocontinuein2016ascustomerscontinuetousemoreservicesbasedonInternetaccessanddemandever-increasingtransmissionspeeds,especiallyforvideo.Toalign
withthesetrends,wecontinuetoreconfigureourwirelinenetworktotakeadvantageofthelatesttechnologiesandservices.

Networkintegrationservicesincludeinstallationofbusinessdatasystems,localareanetworkingandotherdatanetworkingofferings.Internetaccessservicesincludeawide
rangeofproductsincludingaccessservice,dedicatedaccess,webhosting,managedservices,e-mailandhigh-speedaccessservices.Ourmanagedweb-hostingservicesfor
businessesprovidenetwork,serverandsecurityinfrastructureaswellasbuilt-indatastorageandincludeapplicationperformancemanagement,databasemanagement,hardware
andoperatingsystemmanagement.Ourhostingservicesalsoprovidecustomerswithsecureaccesstodetailedreportinginformationabouttheirinfrastructureandapplications.
Theseservicesarerapidlyevolvingtoaclouddeliverymodel,providingcustomerswithon-demanddatastorageandcomputingcapabilitiesfromacentrally-managednetwork
(referredtoasthecloud)accessiblefromavarietyofdifferentdevicesandlocations.

Packetservicesconsistofdatanetworksusingpacketswitchingandtransmissiontechnologies,includingtraditionalcircuit-basedandIPconnectivityservices.Packetservices
enablecustomerstotransmitlargevolumesofdataeconomicallyandsecurelyandareusedforlocalareanetwork(LAN)interconnectionandinter-officecommunications.High-
speedpacketservicesareusedextensivelybyenterprise(largebusiness)customers.

Enterprisenetworkingservicesprovidecomprehensivesupportfromnetworkdesign,implementationandinstallationtoongoingnetworkoperationsandmanagementfor
networksofvaryingscales,includingLANsandvirtualprivatenetworks.Theseservicesincludeapplicationssuchase-mail,orderentrysystems,employeedirectories,human
resourcetransactionsandotherdatabaseapplications.WealsoofferWi-Fiservice.

LegacyVoiceandDataServicesVoiceservicesincludetraditionallocalandlong-distanceserviceprovidedtobusinessandgovernmentalcustomers,andwholesaleaccessto
ournetworkandindividualnetworkelementsprovidedtocompetitors.Wealsoprovidewholesaleswitchedaccessservicetootherserviceproviders.Ourcircuit-based,
traditionaldataproductsincludeswitchedanddedicatedtransportservicesthatallowbusinesscustomerstotransmitdataathighspeeds,aswellasDSLInternetaccess.

RevenuesfromourtraditionalvoiceservicescontinuetodeclineascustomersswitchtowirelessorVoIPservicesprovidedbyeitherus,cableorotherInternet-basedproviders.
Inaddition,thecontinuingsloweconomicgrowthandbusinessstartshaveledsomewirelinecustomerstoterminatetheirbusinessphoneservice.Wehaverespondedbyoffering
packagesofcombinedvoiceanddataservices,includingbroadbandandvideo,andintendtocontinuethisstrategyduring2016.

OtherServicesOtherservicerevenuesincludeproject-basedrevenue,whichisnonrecurringinnature,aswellasrevenuesfromothermanagedservices,outsourcing,
governmentprofessionalserviceandequipment.

Weprovideintrastate,interstateandinternationalwholesalenetworkingcapacitytootherserviceproviders.Weofferacombinationofhigh-volumetransmissioncapacityand
conventionaldedicatedlineservicesonaregional,nationalandinternationalbasistoourwholesalecustomers,whichareprimarilywirelesscarriers,interexchangecarriers,
Internetserviceproviders(ISPs)andfacility-basedandswitchlessresellers.

WirelessEquipmentWesellawidevarietyofhandsets,wirelesslyenabledcomputers(e.g.,tabletsandnotebooks)andpersonalcomputerwirelessdatacardsmanufactured
byvarioussuppliersforusewithourvoiceanddataservices.Wesellthroughourowncompany-ownedstores,agentsorthird-partyretailstores.Likeotherwirelessservice
providers,wehavehistoricallyprovidedpostpaidcontractsubscriberssubstantialequipmentsubsidiestoinitiate,reneworupgradeservice.Toreducethesesubsidiesand
provideourcustomerswithmoreserviceoptions,in2013,welaunchedourAT&TNextprogram,whichallowscustomerstobuyhandsetsonaninstallmentbasisinexchange
fordiscountedservicecharges,alongwithotherbenefits,andwealsooffernewcustomerstheopportunitytobringtheirowndevice.Duetothepopularityofthisprogram,in
lateDecember2015,weannouncedthatwewouldnolongeroffersubsidizedequipmenttothemajorityofcustomers.Accordingly,weexpectequipmentrevenuestocontinueto
increasein2016alongwithaproportionatedeclineinservicerevenues.Wealsosellaccessories,suchascarryingcases,hands-freedevices,andotheritems,toconsumers,as
wellastoagentsandthird-partydistributorsforresale.

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AdditionalinformationonourBusinessSolutionssegmentiscontainedintheAnnualReportinthe"OperatingEnvironmentOverview"sectionbeginningonpage22andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

ENTERTAINMENTGROUP
OurEntertainmentGroupsegmentprovidesvideo,InternetandvoicecommunicationservicestoresidentialcustomersintheU.S.andU.S.territories.InJuly2015,weacquired
DIRECTV,aleadingproviderofdigitaltelevisionentertainmentengagedinacquiring,promoting,sellinganddistributingdigitalentertainmentprogrammingprimarilyvia
satellitetosubscribers.TheEntertainmentGroupsegmentprovidedapproximately24%of2015segmentoperatingrevenuesand7%ofour2015totalsegmentcontribution.We
dividethissegment'srevenueintothefollowingcategories:videoentertainment,high-speedInternet,legacyvoiceanddataservices,andequipmentandother.

VideoEntertainmentWeoffervideoentertainmentservicesusingsatelliteandIP-basedtechnologies.Ourofferingsarestructuredtoprovidecustomerswiththebestvideo
experiencebothinsideandoutsideofthehomebyofferingsubscribersattractiveprogramming,technologyandcustomerservice.Duetotherisingcostofprogrammingaswell
ashighercoststoacquirenewsubscribersinanincreasinglycompetitiveindustry,itisevenmoreimportanttodistinguishandelevateourvideoentertainmentexperienceforour
newandexistingcustomers.

Weprovideapproximately25.4millionsubscriberswithaccesstohundredsofchannelsofdigital-qualityvideoentertainmentandaudioprogramming.Foroursatellite
subscribers,weprovidevideo-on-demand(VOD)by"pushing"top-ratedmoviesontocustomers'digitalvideorecorders(DVRs)forinstantviewing,aswellasviabroadbandto
oursubscriberswhohaveconnectedtheirset-topreceivertotheirbroadbandservice.Inaddition,ourvideoentertainmentsubscribershavetheabilitytousetheInternetand/or
ourmobileapplicationsforsmartphonesandtabletstoviewauthorizedcontent,searchprogramlistingsandscheduleDVRrecordings.

Webelieveitiscriticalthatwecontinuetoextendourbrandleadershipasthepremiumpay-TVproviderinthemarketplacebyprovidingthebestvideoexperiencebothathome
andonmobiledevices.Webelievethatourflexibleplatformthatusesacombinationofsatellite,IP-basedandcloudinfrastructurewithabroadbandandwirelessconnectionis
themostefficientwaytotransportcontenttosubscriberswhenandwheretheywantit.Throughthisintegratedapproach,we'reabletooptimizetheuseofstorageinthehomeas
wellasinthecloud,whilealsoprovidingaseamlessserviceforconsumersacrossscreensandlocations.

High-SpeedInternetWeofferbroadbandandInternetservicesto12.4millionresidentialsubscribers.OurIP-basedtechnologyprovidesmoreadvancedhigh-speedInternet
services.

LegacyVoiceandDataServicesVoiceservicesincludetraditionallocalandlong-distanceserviceprovidedtoresidentialcustomers.Ourcircuit-based,traditionaldata
productsincludeDSLInternetaccess.

RevenuesfromourtraditionalvoiceservicescontinuetodeclineascustomersswitchtowirelessorVoIPservicesprovidedbyeitherus,cableorotherInternet-basedproviders.
Wehaverespondedbyofferingpackagesofcombinedvoiceanddataservices,includingbroadband,videoandwireless,andintendtocontinuethisstrategyduring2016.

EquipmentandOtherOtherservicerevenuesincluderevenuefromvoiceservicesprovidedoverIP-basedtechnology(VoIP)aswellasrevenuesassociatedwithtechnical
supportandothercustomerservicefunctionsandequipment.

AdditionalinformationonourEntertainmentGroupsegmentiscontainedintheAnnualReportinthe"OperatingEnvironmentOverview"sectionbeginningonpage22andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

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AT&TInc.

CONSUMERMOBILITY
ThissegmentconsistsofAT&TMobilityoperationsthatprovidewirelessservicestoconsumers,andwirelesswholesaleandresalesubscriberslocatedintheU.S.orU.S.
territories.Wirelessservicesincludedataandvoiceservices,includinglong-distanceserviceandroamingservices.Roamingservicesenableoursubscriberstoutilizeother
carriers'networkswhentheyare"roaming"outsideournetworkfootprint.TheConsumerMobilitysegmentprovidedapproximately24%of2015totalsegmentoperating
revenuesand35%ofour2015totalsegmentcontribution.Weclassifyoursubscribersaseitherpostpaid,prepaid,connecteddeviceorreseller.AtDecember31,2015,weserved
nearly55.0millionConsumerMobilitysubscribers,including28.8millionpostpaid,11.5millionprepaid,13.7millionresellerand929,000connecteddevices.Wedivideour
revenueintothefollowingcategories:postpaidwireless,prepaidwireless,otherservices,andequipment.

PostpaidWirelessWeofferacomprehensiverangeofhigh-qualitynationwidewirelessvoiceanddatacommunicationsservicesinavarietyofpricingplans.Wirelessdata
servicescontinuetobeagrowingareaofConsumerMobility'sbusiness,representinganincreasingshareofoverallsubscriberrevenue.Subscriberscontinuetoupgradetheir
handsetstomoreadvancedintegrateddevices,contributingtogrowthfromwirelessdataservices.WeofferMobileShareplanswhichallowsharingofvoice,textanddataacross
multipledevices,AT&TNext,aprogramallowingsubscriberstomorefrequentlyupgradehandsetsusinganinstallmentpaymentplanandinJanuary2015beganoffering
RolloverDataonMobileShareplans,whichallowsunusedshareableplandatatoberolledoverandusedwithinthenextmonth.Suchofferingsareintendedtoencourage
existingsubscriberstoupgradetheircurrentservicesand/oraddconnecteddevices,attractsubscribersfromotherproviders,andminimizesubscriberchurn.Participationinthese
planscontinuestoincrease.Customersinour"connecteddevice"category(e.g.,usersofsession-basedtablets,monitoringdevicesandautomobilesystems)purchasethose
devicesfromthird-partysuppliersthatbuydataaccesssupportedbyournetwork.Wecontinuetoupgradeournetworkandcoordinatewithequipmentmanufacturersand
applicationsdevelopersinordertofurthercapitalizeonthecontinuedgrowthinthedemandforwirelessdataservices.

During2015,weofferedpostpaidwirelessserviceundertwoalternatives:(1)forsubscriberspurchasingadeviceoninstallmentsundertheAT&TNextprogramorforthosethat
bringtheirowndevice,noannualservicecontractissignedbutthedevicemustbepaidinfullifthecustomerchoosestodroptheirservicefromAT&T;and(2)forsubscribers
whopurchasetheirequipmentunderthetraditionaldevicesubsidymodel,servicecontractsarefortwoyearperiodswithanincreasingportionofthesesubscribersreceiving
unlimitedvoiceandtextingservicesinconjunctionwithdataservicespurchasedthroughourMobileShareplans.Marketmaturity,competitionandthemigrationofsubscribers
toemployerplansofferedbyourBusinessSolutionssegmenthaveslowedthegrowthinsubscribers.

PrepaidWirelessWeoffernationwidewirelessvoiceanddatacommunicationstocertaincustomerswhoprefertopayinadvance.ServicesareofferedundertheCricketor
GoPhonebrandsandaretypicallymonthlyprepaidservices.

OtherServiceOtherservicesincludesconsulting,revenuesfromadvertising,applicationandco-locationservicesaswellasfeeswechargetoothercarriersforproviding
roamingservicestotheircustomerswhentheircustomersutilizeournetwork.

EquipmentWesellawidevarietyofhandsets,wirelesslyenabledcomputers(e.g.,tabletsandnotebooks)andpersonalcomputerwirelessdatacardsmanufacturedbyvarious
suppliersforusewithourvoiceanddataservices.Wesellthroughourowncompany-ownedstores,agentsorthird-partyretailstores.Likeotherwirelessserviceproviders,we
havehistoricallyprovidedpostpaidcontractsubscriberssubstantialequipmentsubsidiestoinitiate,reneworupgradeservice.Toreducethesesubsidiesandprovideour
customerswithmoreserviceoptions,in2014,welaunchedourAT&TNextprogram,whichallowscustomerstobuyhandsetsonaninstallmentbasisinexchangefordiscounted
servicecharges,alongwithotherbenefits,andwealsooffernewcustomerstheopportunitytobringtheirowndevice.Duetothepopularityofthisprogram,inlateDecember
2015,weannouncedthatwewouldnolongeroffersubsidizedequipment.Accordingly,weexpectequipmentrevenuestocontinuetoincreasein2016alongwithaproportionate
declineinservicerevenues.Wealsosellaccessories,suchascarryingcases,hands-freedevices,andotheritems,toconsumers,aswellastoagentsandthird-partydistributors
forresale.

AdditionalinformationonourConsumerMobilitysegmentiscontainedintheAnnualReportinthe"OperatingEnvironmentOverview"sectionbeginningonpage22andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

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AT&TInc.

INTERNATIONAL
OurInternationalsegmentbusinessunitsprovidevideoentertainmentservicestoresidentialcustomersinLatinAmericaandwirelessdataandvoicecommunicationservicesto
consumerandbusinesscustomersinMexico.TheInternationalsegmentprovidedapproximately3%of2015segmentoperatingrevenues.Wedivideourrevenueintothe
followingcategories:videoentertainment,wireless,andequipment.

VideoEntertainmentWearealeadingproviderofdigitaltelevisionservicesthroughoutLatinAmerica,providingawideselectionoflocalandinternationaldigital-quality
videoentertainmentandaudioprogrammingundertheDIRECTVandSKYbrands.Webelieveweprovideoneofthemostextensivecollectionsofprogrammingavailableinthe
LatinAmericapaytelevisionmarket,includingHDsportsvideocontentandthemostinnovativeinteractivetechnologyacrosstheregion.Inaddition,wehavetheuniqueability
tosellsuperiorofferingsofourdifferentiatedproductsandservicesonacontinent-widebasiswithanoperationalcoststructurethatwebelievetobelowerthanthatofour
competition.

Wehaveapproximately12.5millionvideosubscribersinLatinAmerica.Ouroperationsarecomprisedof:PanAmericana,whichprovidesservicesinArgentina,Chile,
Colombia,Ecuador,Peru,Venezuelaandcertainothercountriesintheregion,andSKYBrasilServicosLtda.,orSKYBrasil,whichisa93%ownedsubsidiary.OurLatin
Americanoperationsalsoincludeour41%equitymethodinvestmentinInnova,S.deR.L.deC.V.,orSKYMexico,whichweincludeinourInternationalsegment.Asof
December31,2015,PanAmericanahadapproximately7.1millionsubscribers,SKYBrasilhadapproximately5.4millionsubscribers.

TosubscribetotheDIRECTVorSKYservice,customerssignupforourvideoservicedirectlythroughusorourregionalretailers,orindependentsatellitetelevisionretailersor
dealers.Weofferpostpaidproductsandservicestocustomerswhomeetourstandardrequirements.Forthesecustomers,dealersoroneofourhomeserviceprovidersinstallthe
receivingequipment.Inaddition,weofferprepaidserviceforcustomersthatdesirepaymentandcommitmentflexibility.Thesecustomersmaypurchaseastandard-definition
receiverandantennaandpre-paytheirDIRECTVservicethroughoneormoremeans,suchasthepurchaseofarechargeablecardthattheycanacquireataretailerorlocal
kiosk.Thevideoservicewillautomaticallydisconnectoncethebalanceofthecustomer'spre-paymentexpires.

Inadditiontotraditionalpay-televisionservices,inLatinAmericawecontinuetofocusonselectivelypursuingopportunitiestoacquirewirelessspectrumand,wherewehave
acquiredspectrum,tobuildoutatechnologicallyrobustandprofitablefixedwirelessbroadbandserviceinareaswherewehaveanexistingsubscriberbaseandthereareweak
competitivewirelineofferingsoraccesstobroadbandislimited.Wecurrentlyhavespectrumholdingsthatcoverapproximately50millionhouseholdsacrossArgentina,Brazil,
Colombia,VenezuelaandPeru.

WirelessWeofferpostpaidandprepaidwirelessservicestoapproximately8.7millionsubscribersundertheAT&T,Iusacell,UnefonandNextelMexicobrands.Postpaid
servicesallow(1)forsubscriberspurchasingadeviceoninstallmentsorforthosethatbringtheirowndevice,noannualservicecontractissignedbutthedevicemustbepaidin
fullifthecustomerchoosestodroptheirservicefromAT&T;and(2)forsubscriberswhopurchasetheirequipmentunderthetraditionaldevicesubsidymodel,servicecontracts
areforperiodsupto24months.AllplansoffernoroamingchargestotheU.S.orCanada,unlimitedminutesandmessagestotheextendedAT&Tcommunityandunlimited
socialnetworking.Wealsoofferprepaidservicestocertaincustomerswhoprefertopayinadvance.

EquipmentWesellawidevarietyofhandsets,includingsmartphonesmanufacturedbyvarioussuppliersforusewithourvoiceanddataservices.Wesellthroughourown
company-ownedstores,agentsorthird-partyretailstores.

AdditionalinformationonourInternationalsegmentiscontainedintheAnnualReportinthe"OperatingEnvironmentOverview"sectionbeginningonpage22andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

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AT&TInc.

MAJORCLASSESOFSERVICE

Thefollowingtablesetsforththepercentageoftotalconsolidatedreportedoperatingrevenuesbyanyclassofservicethataccountedfor10%ormoreofourconsolidatedtotal
operatingrevenuesinanyofthelastthreefiscalyears:

PercentageofTotal
ConsolidatedOperatingRevenues
2015 2014 2013
BusinessSolutionsSegment
Wirelessservice 21% 23 % 23 %
Legacyvoiceanddataservices 12 15 17
Equipment1 6 6 4
EntertainmentGroupSegment
Videoentertainment 14 5 5
Legacyvoiceanddataservices 4 6 8
Equipment2 - - -
ConsumerMobilitySegment
Wirelessservice3 20 23 25
Equipment 4 4 3
InternationalSegment
Wirelessservice 1 - -
Videoentertainment 1 - -
Equipment - - -
1Includescustomerpremisesequipmentof$929millionin2015,$979millionin2014,and$1,046millionin2013thatisreportedasotherserviceandequipmentrevenuesinourBusiness
Solutionssegment.
2Includescustomerpremisesequipmentof$22millionin2015,$40millionin2014,and$66millionin2013thatisreportedasotherserviceandequipmentrevenuesinourEntertainment
Groupsegment.
3Includesthecombinedservicerevenuesforpostpaidandprepaidservices.

AdditionalinformationonourgeographicaldistributionofrevenuesiscontainedintheAnnualReportinthe"SegmentGeography"sectionbeginningonpage55andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

GOVERNMENTREGULATION

WirelesscommunicationsprovidersmustbelicensedbytheFederalCommunicationsCommission(FCC)toprovidecommunicationsservicesatspecifiedspectrumfrequencies
withinspecifiedgeographicareasandmustcomplywiththerulesandpoliciesgoverningtheuseofthespectrumasadoptedbytheFCC.TheFCC'sruleshaveadirectimpacton
whetherthewirelessindustryhassufficientspectrumavailabletosupportthehighquality,innovativeservicesourcustomersdemand.Wirelesslicensesareissuedforafixed
timeperiod,typicallytenyears,andwemustseekrenewaloftheselicenses.WhiletheFCChasgenerallyrenewedlicensesgiventooperatingcompaniessuchasus,theFCChas
authoritytobothrevokealicenseforcauseandtodenyalicenserenewalifarenewalisnotinthepublicinterest.Additionally,whilewirelesscommunicationsproviders'prices
andserviceofferingsaregenerallynotsubjecttoregulation,thefederalgovernmentandvariousstatesareconsideringnewregulationsandlegislationrelatingtovariousaspects
ofwirelessservices.

TheCommunicationsActof1934andotherrelatedactsgivetheFCCbroadauthoritytoregulatetheU.S.operationsofoursatelliteservices,whicharelicensedbytheFCC.In
addition,statesrepresentingamajorityofourlocalserviceaccesslineshaveadoptedlegislationthatenablesustoprovideIP-basedvideoservicethroughasinglestatewideor
state-approvedfranchise(asopposedtotheneedtoacquirehundredsoreventhousandsofmunicipal-approvedfranchises)tooffercompetitivevideoservices.Wealsoare
supportingeffortstoupdateandimproveregulatorytreatmentforretailservices.Regulatoryreformandpassageoflegislationisuncertainanddependsonmanyfactors.

InFebruary2015,theFCCreleasedanorderinresponsetotheD.C.Circuit'sJanuary2014decisionadoptingnewrules,andreclassifyingbothfixedandmobileconsumer
broadbandInternetaccessservicesastelecommunicationsservices,subjecttocomprehensiveregulationundertheTelecommunicationsActof1996.TheFCC'sdecision
significantlyexpandstheFCC'sexistingauthoritytoregulatetheprovisionoffixedandmobilebroadbandInternetaccessservices.TheFCCalsoassertedjurisdictionover
Internetinterconnectionarrangements,whichuntilnowhavebeenunregulated.Theseactionscouldhaveanadverseimpactonourfixedandmobilebroadbandservicesand
operatingresults.AT&Tandseveralotherparties,includingUSTelecomandCTIAtradegroups,haveappealedtheFCC'sorder.

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OurILECsubsidiariesaresubjecttoregulationbystategovernments,whichhavethepowertoregulateintrastateratesandservices,includinglocal,long-distanceandnetwork
accessservices,providedsuchstateregulationisconsistentwithfederallaw.Somestateshaveeliminatedorreducedregulationsonourretailofferings.Thesesubsidiariesare
alsosubjecttothejurisdictionoftheFCCwithrespecttointercarriercompensation,interconnection,andinterstateandinternationalratesandservices,includinginterstateaccess
charges.Accesschargesareaformofintercarriercompensationdesignedtocompensateourwirelinesubsidiariesfortheuseoftheirnetworksbyothercarriers.

OursubsidiariesoperatingoutsidetheUnitedStatesaresubjecttothejurisdictionofnationalandsupranationalregulatoryauthoritiesinthemarketwhereserviceisprovided.

AdditionalinformationrelatingtoregulationofoursubsidiariesiscontainedintheAnnualReportundertheheadings"OperatingEnvironmentOverview"beginningonpage22
and"RegulatoryDevelopments"beginningonpage24andisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

IMPORTANCE,DURATIONANDEFFECTOFLICENSES

Certainofoursubsidiariesownorhavelicensestovariouspatents,copyrights,trademarksandotherintellectualpropertynecessarytoconductbusiness.Manyofoursubsidiaries
alsoholdgovernment-issuedlicensesorfranchisestoprovidewireline,satelliteorwirelessservicesandregulationaffectingthoserightsiscontainedintheAnnualReportunder
theheading"OperatingEnvironmentOverview"beginningonpage22andisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).Weactivelypursuepatents,
trademarksandservicemarkstoprotectourintellectualpropertywithintheU.S.andabroad.Wemaintainasignificantglobalportfolioofpatents,trademarksandservicemark
registrations.Wehavealsoenteredintoagreementsthatpermitothercompanies,inexchangeforfeesandsubjecttoappropriatesafeguardsandrestrictions,toutilizecertainof
ourtrademarksandservicemarks.Weperiodicallyreceiveoffersfromthirdpartiestoobtainlicensesforpatentsandotherintellectualrightsinexchangeforroyaltiesorother
payments.Wealsoreceivenoticesassertingthatourproductsorservicesinfringeontheirpatentsandotherintellectualpropertyrights.Theseclaims,whetheragainstusdirectly
oragainstthird-partysuppliersofproductsorservicesthatwe,inturn,selltoourcustomers,suchaswirelesshandsets,couldrequireustopaydamages,royalties,stopoffering
therelevantproductsorservicesand/orceaseotheractivities.Whiletheoutcomeofanylitigationisuncertain,wedonotbelievethattheresolutionofanyoftheseinfringement
claimsortheexpirationornon-renewalofanyofourintellectualpropertyrightswouldhaveamaterialadverseeffectonourresultsofoperations.

MAJORCUSTOMER

Nocustomeraccountedfor10%ormoreofourconsolidatedrevenuesin2015,2014or2013.

COMPETITION

InformationrelatingtocompetitionineachofouroperatingsegmentsiscontainedintheAnnualReportundertheheading"Competition"beginningonpage24,andis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

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RESEARCHANDDEVELOPMENT

AT&Tscientistsandengineersconductresearchinavarietyofareas,includingIPnetworking;advancednetworkdesignandarchitecture;networkandcybersecurity;network
operationssupportsystems;satellitetechnology;anddataminingtechniques.ThemajorityofthedevelopmentactivitiesareperformedbyAT&TServices,Inc.Thedevelopers
withinAT&TServices,Inc.workwithourbusinessunitstocreatenewservicesandinventtoolsandsystemstomanagesecureandreliablenetworksforusandourcustomers.
Inrecentyears,weinitiatedatechnologyoutreacheffortaimedatventurecapitalfundedstartupswiththeobjectiveofrapidlyintroducingnewsolutions,productsand
applicationsdevelopedbythirdparties.WealsohavearesearchagreementwithEricsson.Researchanddevelopmentexpenseswere$1,693millionin2015,$1,730millionin
2014,and$1,488millionin2013.

EMPLOYEES

AsofJanuary31,2016,weemployedapproximately281,000persons.Approximately45percentofouremployeesarerepresentedbytheCommunicationsWorkersofAmerica,
theInternationalBrotherhoodofElectricalWorkersorotherunions.Four-yearcontractscoveringapproximately24,000traditionalwirelineemployeesinourSoutheastregion
wereratifiedonDecember4,2015.Contractscoveringapproximately9,000mobilityemployeesintheSouthwestregionandnearly16,000traditionalwirelineemployeesinour
Westregionwillexpirein2016.Afterexpirationofthecurrentagreements,workstoppagesorlabordisruptionsmayoccurintheabsenceofnewcontractsorotheragreements
beingreached.Aseparatecontractcoveringonlybenefitswithapproximately40,000employeesinourmobilitybusinessexpiresin2016,thoughthereisanostrike/nolock-out
clause.Contractscoveringwagesandothernon-benefitworkingtermsforthesemobilityemployeesarestructuredonaregionalbasis.

AtDecember31,2015,wehadapproximately322,422retireeswho,alongwiththeirdependents,wereeligibletoreceiveretireebenefits.

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AT&TInc.

ITEM1A.RISKFACTORS

InformationrequiredbythisItemisincludedintheAnnualReportundertheheading"RiskFactors"onpages36through39whichisincorporatedhereinbyreferencepursuant
toGeneralInstructionG(2).

CAUTIONARYLANGUAGECONCERNINGFORWARD-LOOKINGSTATEMENTS

Informationsetforthinthisreportcontainsforward-lookingstatementsthataresubjecttorisksanduncertainties,andactualresultscoulddiffermaterially.Manyofthesefactors
arediscussedinmoredetailinthe"RiskFactors"section.Weclaimtheprotectionofthesafeharborforforward-lookingstatementsprovidedbythePrivateSecuritiesLitigation
ReformActof1995.

Thefollowingfactorscouldcauseourfutureresultstodiffermateriallyfromthoseexpressedintheforward-lookingstatements:
Adverseeconomicand/orcapitalaccesschangesinthemarketsservedbyusorincountriesinwhichwehavesignificantinvestments,includingtheimpactoncustomer
demandandourabilityandoursuppliers'abilitytoaccessfinancialmarketsatfavorableratesandterms.
Changesinavailabletechnologyandtheeffectsofsuchchanges,includingproductsubstitutionsanddeploymentcosts.
Increasesinourbenefitplans'costs,includingincreasesduetoadversechangesintheUnitedStatesandforeignsecuritiesmarkets,resultinginworse-than-assumed
investmentreturnsanddiscountrates;adversechangesinmortalityassumptions;adversemedicalcosttrends,andunfavorableordelayedimplementationofhealthcare
legislation,regulationsorrelatedcourtdecisions.
ThefinaloutcomeofFCCandotherfederalorstateagencyproceedings(includingjudicialreview,ifany,ofsuchproceedings)involvingissuesthatareimportanttoour
business,including,withoutlimitation,intercarriercompensation,interconnectionobligations,pendingNoticesofApparentLiability,thetransitionfromlegacy
technologiestoIP-basedinfrastructureincludingthewithdrawaloflegacyTDM-basedservices,universalservice,broadbanddeployment,E911services,competition
policy,netneutrality,includingtheFCC'sorderreclassifyingbroadbandasTitleIIservicessubjecttomuchmorefulsomeregulation,unbundlednetworkelementsandother
wholesaleobligations,multi-channelvideoprogrammingdistributorservicesandequipment,availabilityofnewspectrumfromtheFCConfairandbalancedterms,and
wirelessandsatellitelicenseawardsandrenewals.
Thefinaloutcomeofstateandfederallegislativeeffortsinvolvingissuesthatareimportanttoourbusiness,includingderegulationofIP-basedservices,relieffromCarrier
ofLastResortobligations,andeliminationofstatecommissionreviewofthewithdrawalofservices.
Enactmentofadditionalstate,federaland/orforeignregulatoryandtaxlawsandregulationspertainingtooursubsidiariesandforeigninvestments,includinglawsand
regulationsthatreduceourincentivetoinvestinournetworks,resultinginlowerrevenuegrowthand/orhigheroperatingcosts.
Ourabilitytoabsorbrevenuelossescausedbyincreasingcompetition,includingofferingsthatusealternativetechnologiesordeliverymethods(e.g.,cable,wireless,VoIP
andOverTheTopVideoservice)andourabilitytomaintaincapitalexpenditures.
Theextentofcompetitionincludingfromgovernmentalnetworksandotherprovidersandtheresultingpressureoncustomerandaccesslinetotalsandsegmentoperating
margins.
Ourabilitytodevelopattractiveandprofitableproduct/serviceofferingstooffsetincreasingcompetition.
Theabilityofourcompetitorstoofferproduct/serviceofferingsatlowerpricesduetolowercoststructuresandregulatoryandlegislativeactionsadversetous,including
stateregulatoryproceedingsrelatingtounbundlednetworkelementsandnonregulationofcomparablealternativetechnologies(e.g.,VoIP).
ThecontinueddevelopmentanddeliveryofattractiveandprofitablevideoofferingsthroughsatelliteandU-verse;theextenttowhichregulatoryandbuild-outrequirements
applytoourofferings;andtheavailability,costand/orreliabilityofthevarioustechnologiesand/orcontentrequiredtoprovidesuchofferings.
Ourcontinuedabilitytoattractandofferadiverseportfolioofwirelessserviceanddevices,devicefinancingplans,andmaintainmargins.
Theavailabilityandcostofadditionalwirelessspectrumandregulationsandconditionsrelatingtospectrumuse,licensing,obtainingadditionalspectrum,technical
standardsanddeploymentandusage,includingnetworkmanagementrules.
Ourabilitytomanagegrowthinwirelessdataservices,includingnetworkqualityandacquisitionofadequatespectrumatreasonablecostsandterms.
Theoutcomeofpending,threatenedorpotentiallitigation,includingwithoutlimitation,patentandproductsafetyclaimsbyoragainstthirdparties.

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AT&TInc.

Theimpactonournetworks,includingsatellitesoperatedbyDIRECTV,andbusinessfrommajorequipmentfailures;securitybreachesrelatedtothenetworkorcustomer
information;ourinabilitytoobtainhandsets,equipment/softwareorhavehandsets,equipment/softwareserviced,andinthecaseofsatelliteslaunched,inatimelyandcost-
effectivemannerfromsuppliers;orsevereweatherconditions,naturaldisasters,pandemics,energyshortages,warsorterroristattacks.
TheissuancebytheFinancialAccountingStandardsBoardorotheraccountingoversightbodiesofnewaccountingstandardsorchangestoexistingstandards.
TheissuancebytheInternalRevenueServiceand/orstateorforeigntaxauthoritiesofnewtaxregulationsorchangestoexistingstandardsandactionsbyfederal,state,local
orforeigntaxagenciesandjudicialauthoritieswithrespecttoapplyingapplicabletaxlawsandregulationsandtheresolutionofdisputeswithanytaxingjurisdictions.
OurabilitytointegrateouracquisitionofDIRECTV.
Ourabilitytoadequatelyfundourwirelessoperations,includingpaymentforadditionalspectrum,networkupgradesandtechnologicaladvancements.
OurincreasedexposuretovideocompetitionandforeigneconomiesduetoourrecentacquisitionsofDIRECTVandMexicanwirelessproperties,includingforeign
exchangefluctuations,aswellasregulatoryandpoliticaluncertaintyinLatinAmerica.
Changesinourcorporatestrategies,suchaschangingnetworkrequirementsoracquisitionsanddispositions,whichmayrequiresignificantamountsofcashorstock,to
respondtocompetitionandregulatory,legislativeandtechnologicaldevelopments.
Theuncertaintysurroundingfurthercongressionalactiontoaddressspendingreductions,whichmayresultinasignificantreductioningovernmentspendingandreluctance
ofbusinessesandconsumerstospendingeneralandonourproductsandservicesspecifically,duetothisfiscaluncertainty.

Readersarecautionedthatotherfactorsdiscussedinthisreport,althoughnotenumeratedhere,alsocouldmateriallyaffectourfutureearnings.

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AT&TInc.

ITEM2.PROPERTIES

Ourpropertiesdonotlendthemselvestodescriptionbycharacterandlocationofprincipalunits.AtDecember31,2015,centralofficeequipmentrepresented30%;outsideplant
(includingcable,wiringandothernon-centralofficenetworkequipment)representedapproximately25%;satellitesrepresented1%;otherequipment,comprisedprincipallyof
wirelessnetworkequipmentattachedtotowers,furnitureandofficeequipmentandvehiclesandotherworkequipment,represented26%;land,buildingandwireless
communicationstowersrepresented12%;andothermiscellaneouspropertyrepresented6%.

Substantiallyalloftheinstallationsofcentralofficeequipmentarelocatedinbuildingsandonlandweown.Manygarages,administrativeandbusinessoffices,wirelesstowers,
telephonecentersandretailstoresareleased.Property,onwhichcommunicationtowersarelocated,maybeeitherownedorleased.

ITEM3.LEGALPROCEEDINGS

Weareapartytonumerouslawsuits,regulatoryproceedingsandothermattersarisingintheordinarycourseofbusiness.Asofthedateofthisreport,wedonotbelieveany
pendinglegalproceedingstowhichweoroursubsidiariesaresubjectarerequiredtobedisclosedasmateriallegalproceedingspursuanttothisitem.

Wearesubjectfromtimetotimetojudicialandadministrativeproceedingsbroughtbyvariousgovernmentalauthoritiesunderfederal,stateorlocalenvironmental
laws.WearerequiredtodiscussthreeoftheseproceedingsinourForms10-Qand10-K,becauseeachcouldresultinmonetarysanctions(exclusiveofinterestandcosts)ofone
hundredthousanddollarsormore.However,wedonotbelievethatanyofthemcurrentlypendingwillhaveamaterialadverseeffectonourresultsofoperations.

(a) WasteDisposalInquiryInvolvingDIRECTVInAugust2012,agovernmentinvestigationunitorganizedbytheCaliforniaAttorneyGeneralandtheDistrict
AttorneyforAlamedaCounty,CalifornianotifiedDIRECTVthattheunitwasinvestigatingallegationsthatDIRECTVhadfailedtoproperlymanage,store,transport
anddisposeofHazardousandUniversalWasteinaccordancewiththeCaliforniaHealth&SafetyCode.Nolitigationhasbeenfiled.DIRECTViscooperatingwiththe
investigatorsandisseekingtoresolveallclaims.Atthistime,itispossiblethatwecouldfacecivilpenaltiesinexcessofonehundredthousanddollarsbutnotinan
amountthatwouldbematerial.
(b) SanDiegoCountyInquiryInvolvingCricketCommunications,Inc.InFebruary2014,theSanDiegoCountyAirPollutionControlDistrictinitiatedinvestigation
intoallegedviolationsofCaliforniaregulationsgoverningremoval,handlinganddisposalofasbestoscontainingmaterialsarisingfromanindependentdealer's
demolitionandconstructionactivityinpreparationtoinstallupgradedpointofpurchaseandfixturesinaccordancewithCricketDealerGuidelines.Whilethe
independentdealerwasinsolecontrolofcontractorsperformingtheworkatissue,theCountyhasfocusedonCricketCommunicationsdealeragreementtermsand
interactionswiththeindependentdealerasabasisforassertingdirectliabilityagainstCricketCommunications,Inc.Afterexchangesofinformationanddiscussions,in
November2015,theCountyissuedapenaltydemandinexcessofonehundredthousanddollars.WecontinuecommunicationswiththeCountywithaviewfor
resolutionofthismatter,andinnoeventexpectmonetarysettlementamountsincludingpenaltieswillbematerial.
(c) SouthCoastAirQualityOnJanuary15,2016,AT&TMobilityreceivedanoffertoenterintoanadministrativesettlementwithCalifornia'sSouthCoastAirQuality
ManagementDistrictassociatedwithaNoticeofViolation(NOV)receivedpreviously,in2015.The2015NOVallegedviolationsoflocalenvironmentalairpermitting
andemissionsrulesissuedbytheDistrictinconnectionwithoperationofaback-uppowergeneratorsystematoneAT&TMobilityfacility.TheJanuary2016letter
followeddiscussionsdirectedtoresolutionoftheissuesraisedintheNOV.Basedonthetermsoftheoffer,itislikelythatAT&TMobilitymaypaycivilpenaltiesin
excessofonehundredthousanddollars,butinnoeventanamountthatwouldbematerial.

ITEM4.MINESAFETYDISCLOSURES

Notapplicable.

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AT&TInc.

EXECUTIVEOFFICERSOFTHEREGISTRANT
(AsofFebruary1,2016)

Name Age Position HeldSince



RandallL.Stephenson 55 ChairmanoftheBoard,ChiefExecutiveOfficerandPresident 6/2007
WilliamA.BlaseJr. 60 SeniorExecutiveVicePresidentHumanResources 6/2007
JamesW.Cicconi 63 SeniorExecutiveVicePresidentExternalandLegislativeAffairs 11/2008
RalphdelaVega 64 ViceChairman,AT&TInc.andChiefExecutiveOfficer,AT&T 2/2016
BusinessSolutionsandAT&TInternational,LLC
JohnM.Donovan 55 ChiefStrategyOfficerandGroupPresidentAT&TTechnologyand 2/2016
Operations
DavidS.Huntley 57 ChiefComplianceOfficer 12/2014
LoriM.Lee 50 SeniorExecutiveVicePresidentandGlobalMarketingOfficer 4/2015
DavidR.McAteeII 47 SeniorExecutiveVicePresidentandGeneralCounsel 10/2015
JohnT.Stankey 53 ChiefExecutiveOfficer-AT&TEntertainmentGroup,AT&TServices, 7/2015
Inc.
JohnJ.Stephens 56 SeniorExecutiveVicePresidentandChiefFinancialOfficer 6/2011

Alloftheaboveexecutiveofficershaveheldhigh-levelmanagerialpositionswithAT&Toritssubsidiariesformorethanthepastfiveyears,exceptforMr.McAtee.Mr.
McAteewasapartnerofHaynesandBoone,LLP,alawfirmbasedinDallas,Texas,fromJanuary2002toDecember2011.Mr.McAteejoinedAT&TasSeniorVicePresident
andAssistantGeneralCounselinJanuary2012.HeservedasSeniorAssociateGeneralCounselfromMarch2015toSeptember2015.Executiveofficersarenotappointedtoa
fixedtermofoffice.

15
AT&TInc.

PARTII

ITEM5.MARKETFORREGISTRANT'SCOMMONEQUITY,RELATED
STOCKHOLDERMATTERSANDISSUERPURCHASESOFEQUITYSECURITIES

(a)OurcommonstockislistedontheNewYorkStockExchange.ThenumberofstockholdersofrecordasofDecember31,2015and2014was1,074,894and1,093,818.The
numberofstockholdersofrecordasofFebruary10,2016,was1,070,877.Wedeclareddividends,onaquarterlybasis,totaling$1.89persharein2015and$1.85persharein
2014.

OtherinformationrequiredbythisItemisincludedintheAnnualReportundertheheadings"QuarterlyFinancialInformation"onpage79,"SelectedFinancialandOperating
Data"onpage10,and"StockTradingInformation"onthebackcover,whichareincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

(c)InJuly2012,theBoardofDirectorsapprovedanauthorizationtorepurchase300millionshares,whichwecompletedinMay2013.InMarch2013,ourBoardofDirectors
approvedanauthorizationtorepurchaseuptoanadditional300millionsharesofourcommonstock.InMarch2014,ourBoardofDirectorsapprovedanotherauthorizationto
repurchaseuptoanadditional300millionsharesofourcommonstock.FortheyearendedDecember31,2015,werepurchased8millionsharesfordistributionthroughour
employeebenefitplanstotaling$269undertheMarch2013authorization.FortheyearendedDecember31,2014,werepurchased48millionsharestotaling$1,617underthe
March2013authorization.WiththecompletionoftheDIRECTVacquisition,ourprioritywillbetousefreecashflow(operatingcashflowslessconstructionandcapital
expenditures)afterdividendstopaydowndebt.

Toimplementtheseauthorizations,weusedopenmarketrepurchaseprograms,relyingonRule10b5-1oftheSecuritiesExchangeActof1934wherefeasible.

Wewillcontinuetofundanysharerepurchasesthroughacombinationofcashfromoperations,borrowingsdependentonmarketconditions,orcashfromthedispositionof
certainnon-strategicinvestments.

Asummaryofourrepurchasesofcommonstockduringthefourthquarterof2015isasfollows:

ISSUERPURCHASESOFEQUITYSECURITIES

(a) (b) (c) (d)

MaximumNumber(or
TotalNumberof ApproximateDollar
Shares(orUnits) Value)ofShares(or
TotalNumberof PurchasedasPartof Units)ThatMayYetBe
Shares(orUnits) AveragePricePaid PubliclyAnnounced PurchasedUnderThe
Period Purchased1,2 PerShare(orUnit) PlansorPrograms1 PlansorPrograms

October1,2015-
October31,2015 5,912 $ - - 414,550,000
November1,2015-
November30,2015 2,500,377 33.14 2,500,000 412,050,000
December1,2015-
December31,2015 5,511,183 33.77 5,500,000 406,550,000
Total 8,017,472 $ 33.57 8,000,000
1 InMarch2014,ourBoardofDirectorsapprovedanauthorizationtorepurchaseupto300millionsharesofourcommonstock.InMarch2013,ourBoardofDirectorsapprovedan
authorizationtorepurchaseupto300millionsharesofourcommonstock.Theauthorizationshavenoexpirationdate.
2 Ofthesharespurchased,17,472shareswereacquiredthroughthewithholdingoftaxesonthevestingofrestrictedstockorthroughthepaymentinstockoftaxesontheexerciseprice
ofoptions.

16
AT&TInc.

ITEM6.SELECTEDFINANCIALDATA

InformationrequiredbythisItemisincludedintheAnnualReportundertheheading"SelectedFinancialandOperatingData"onpage10,whichisincorporatedhereinby
referencepursuanttoGeneralInstructionG(2).

ITEM7.MANAGEMENT'SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATION

InformationrequiredbythisItemisincludedintheAnnualReportonpages11through40,whichisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

ITEM7A.QUANTITATIVEANDQUALITATIVEDISCLOSURESABOUTMARKETRISK

InformationrequiredbythisItemisincludedintheAnnualReportundertheheading"MarketRisk"onpage35,whichisincorporatedhereinbyreferencepursuanttoGeneral
InstructionG(2).

ITEM8.FINANCIALSTATEMENTSANDSUPPLEMENTARYDATA

InformationrequiredbythisItemisincludedintheAnnualReportonpages41through79,whichisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

ITEM9.CHANGESINANDDISAGREEMENTSWITHACCOUNTANTSONACCOUNTING
ANDFINANCIALDISCLOSURE

Duringourtwomostrecentfiscalyears,therehasbeennochangeintheindependentaccountantengagedastheprincipalaccountanttoauditourfinancialstatementsandthe
independentaccountanthasnotexpressedrelianceonotherindependentaccountantsinitsreportsduringsuchtimeperiod.

ITEM9A.CONTROLSANDPROCEDURES

DisclosureControlsandProcedures

Theregistrantmaintainsdisclosurecontrolsandproceduresthataredesignedtoensurethatinformationrequiredtobedisclosedbytheregistrantisrecorded,processed,
summarized,accumulatedandcommunicatedtoitsmanagement,includingitsprincipalexecutiveandprincipalfinancialofficers,toallowtimelydecisionsregardingrequired
disclosure,andreportedwithinthetimeperiodsspecifiedintheSEC'srulesandforms.TheChiefExecutiveOfficerandChiefFinancialOfficerhaveperformedanevaluationof
theeffectivenessofthedesignandoperationoftheregistrant'sdisclosurecontrolsandproceduresasofDecember31,2015.Basedonthatevaluation,theChiefExecutive
OfficerandChiefFinancialOfficerconcludedthattheregistrant'sdisclosurecontrolsandprocedureswereeffectiveasofDecember31,2015.

InternalControlOverFinancialReporting

(a)Management'sAnnualReportonInternalControloverFinancialReporting
ThemanagementofAT&Tisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting.AT&T'sinternalcontrolsystemwasdesignedto
providereasonableassuranceastotheintegrityandreliabilityofthepublishedfinancialstatements.AT&Tmanagementassessedtheeffectivenessofthecompany'sinternal
controloverfinancialreportingasofDecember31,2015.Inmakingthisassessment,itusedthecriteriasetforthbytheCommitteeofSponsoringOrganizationsoftheTreadway
Commission(COSO)inInternal
Control

Integrated
Framework
(2013framework)
.Wehaveexcludedfromthescopeofourassessmentofinternalcontroloverfinancial
reportingtheoperationsandrelatedassetsofDIRECTVandMexicowirelessoperations(Mexico),whichweacquiredin2015.AtDecember31,2015andfortheperiodfrom
acquisitionthroughDecember31,2015,totalassetsandoperatingrevenuessubjecttoDIRECTV'sinternalcontroloverfinancialreportingrepresented20.3%and9.9%of
AT&T'sconsolidatedtotalassetsandtotalrevenuesasofandfortheyearendedDecember31,2015.AtDecember31,2015andfortheperiodfromacquisitionthrough
December31,2015,totalassetsandoperatingrevenuessubjecttoMexico'sinternalcontroloverfinancialreportingrepresented1.6%and1.3%ofAT&T'sconsolidatedtotal
assetsandtotalrevenuesasofandfortheyearendedDecember31,2015.Basedonitsassessment,AT&Tmanagementbelievesthat,asofDecember31,2015,theCompany's
internalcontroloverfinancialreportingiseffectivebasedonthosecriteria.

17
AT&TInc.

(b)AttestationReportoftheIndependentRegisteredPublicAccountingFirm
TheindependentregisteredpublicaccountingfirmthatauditedthefinancialstatementsincludedintheAnnualReportcontainingthedisclosurerequiredbythisItem,Ernst&
YoungLLP,hasissuedanattestationreportontheCompany'sinternalcontroloverfinancialreporting.TheattestationreportissuedbyErnst&YoungLLPisincludedinthe
AnnualReportonpage81,whichisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(2).

ITEM9B.OTHER INFORMATION

ThereisnoinformationthatwasrequiredtobedisclosedinareportonForm8-Kduringthefourthquarterof2015butwasnotreported.

PARTIII

ITEM10.DIRECTORS,EXECUTIVEOFFICERSANDCORPORATEGOVERNANCE

InformationregardingexecutiveofficersrequiredbyItem401ofRegulationS-KisfurnishedinaseparatedisclosureattheendofPartIofthisreportsincetheregistrantdidnot
furnishsuchinformationinitsdefinitiveproxystatementpreparedinaccordancewithSchedule14A.InformationregardingdirectorsrequiredbyItem401ofRegulationS-Kis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(3)fromtheregistrant'sdefinitiveproxystatement,datedonoraboutMarch11,2016(ProxyStatement)under
theheading"ElectionofDirectors."

Theregistranthasaseparately-designatedstandingauditcommitteeestablishedinaccordancewithSection3(a)(58)(A)oftheSecuritiesExchangeActof1934.Themembersof
thecommitteeareMessrs.DiPiazza,Jr.,Madonna,McCallister,andMses.TaylorandTyson.TheadditionalinformationrequiredbyItem407(d)(5)ofRegulationS-Kis
incorporatedhereinbyreferencepursuanttoGeneralInstructionG(3)fromtheregistrant'sProxyStatementundertheheading"AuditCommittee."

Theregistranthasadoptedacodeofethicsentitled"CodeofEthics"thatappliestotheregistrant'sprincipalexecutiveofficer,principalfinancialofficer,principalaccounting
officer,orcontrollerorpersonsperformingsimilarfunctions.TheadditionalinformationrequiredbyItem406ofRegulationS-Kisprovidedinthisreportundertheheading
"General"underPartI,Item1.Business.

ITEM11.EXECUTIVECOMPENSATION

InformationrequiredbyItem402(k)ofRegulationS-KisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(3)fromtheregistrant'sProxyStatementunderthe
heading"CompensationofDirectors."Informationregardingofficersisincludedintheregistrant'sProxyStatementonthepagesbeginningwiththeheading"Compensation
DiscussionandAnalysis"andendingwith,andincluding,thepagesundertheheading"PotentialPaymentsuponChangeinControl"whichareincorporatedhereinbyreference
pursuanttoGeneralInstructionG(3).InformationrequiredbyItem407(e)(5)ofRegulationS-Kisincludedintheregistrant'sProxyStatementundertheheading"Compensation
CommitteeReport"andisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(3)andshallbedeemedfurnishedinthisAnnualReportonForm10-Kandwillnot
bedeemedincorporatedbyreferenceintoanyfilingundertheSecuritiesActof1933ortheSecuritiesExchangeActof1934.

InformationrequiredbythisItemisincludedintheregistrant'sProxyStatement,undertheheading"CompensationofDirectors,"andthepagesbeginningwiththeheading
"SummaryCompensationTable,"andendingwith,andincluding,thepageimmediatelybeforetheheading"EquityCompensationPlanInformation"whichareincorporated
hereinbyreferencepursuanttoGeneralInstructionG(3).

ITEM12.SECURITYOWNERSHIPOFCERTAINBENEFICIALOWNERSAND
MANAGEMENTANDRELATEDSTOCKHOLDERMATTERS

InformationrequiredbyItem403ofRegulationS-Kisincludedintheregistrant'sProxyStatementundertheheading"Common

StockOwnership,"whichisincorporated
hereinbyreferencepursuanttoGeneralInstructionG(3).

InformationrequiredbyItem201(d)ofRegulationS-KisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(3)fromtheregistrant'sProxyStatementunderthe
heading"EquityCompensationPlanInformation."

18
AT&TInc.

ITEM13.CERTAINRELATIONSHIPSANDRELATEDTRANSACTIONS,ANDDIRECTORINDEPENDENCE

InformationrequiredbyItem404ofRegulationS-Kisincludedintheregistrant'sProxyStatementundertheheading"RelatedPersonTransactions,"whichisincorporated
hereinbyreferencepursuanttoGeneralInstructionG(3).InformationrequiredbyItem407(a)ofRegulationS-Kisincludedintheregistrant'sProxyStatementundertheheading
"IndependenceofDirectors,"whichisincorporatedhereinbyreferencepursuanttoGeneralInstructionG(3).

ITEM14.PRINCIPALACCOUNTANTFEESANDSERVICES

InformationrequiredbythisItemisincludedintheregistrant'sProxyStatementundertheheading"PrincipalAccountantFeesandServices,"whichisincorporatedhereinby
referencepursuanttoGeneralInstructionG(3).

PartIV

ITEM15.EXHIBITSandFINANCIALSTATEMENTSCHEDULES
(a)Documentsfiledasapartofthereport:
Page
(1)ReportofIndependentRegisteredPublicAccountingFirm*
FinancialStatementscoveredbyReportofIndependentRegisteredPublicAccountingFirm:
ConsolidatedStatementsofIncome*
ConsolidatedStatementsofComprehensiveIncome*
ConsolidatedBalanceSheets*
ConsolidatedStatementsofCashFlows*
ConsolidatedStatementsofChangesinStockholders'Equity*
NotestoConsolidatedFinancialStatements*

* Incorporatedhereinbyreferencetotheappropriateportionsoftheregistrant'sAnnualReporttoStockholdersforthefiscalyearendedDecember31,2015.(SeePartII.)
Page
(2)FinancialStatementSchedules:
II-ValuationandQualifyingAccounts24

Financialstatementschedulesotherthanthoselistedabovehavebeenomittedbecausetherequiredinformationiscontainedinthefinancialstatementsandnotesthereto,
orbecausesuchschedulesarenotrequiredorapplicable.

(3)Exhibits:

Exhibitsidentifiedinparenthesesbelow,onfilewiththeSEC,areincorporatedhereinbyreferenceasexhibitshereto.Unlessotherwiseindicated,allexhibitsso
incorporatedarefromFileNo.1-8610.

Exhibit

Number
2 AgreementandPlanofMerger,datedasofMay18,2014,amongAT&TInc.,DIRECTVandSteamMergerSubLLC.(Exhibit10.1to
Form8-KdatedMay18,2014.)

3-a RestatedCertificateofIncorporation,filedwiththeSecretaryofStateofDelawareonDecember13,2013.(Exhibit3.1toForm8-Kdated
December13,2013.)

3-b BylawsamendedDecember18,2015.(Exhibit3toForm8-KdatedDecember18,2015.)

4-a Noinstrumentwhichdefinestherightsofholdersoflong-termdebtoftheregistrantandallofitsconsolidatedsubsidiariesisfiledherewith
pursuanttoRegulationS-K,Item601(b)(4)(iii)(A),exceptfortheinstrumentsreferredtoin4-b,4-c,4-d,4-e,4-f,4-g,4-h,4-i,and4-j
below.Pursuanttothisregulation,theregistrantherebyagreestofurnishacopyofanysuchinstrumentnotfiledherewithtotheSECupon
request.

19
AT&TInc.

4-b GuarantyofcertainobligationsofPacificBellTelephoneCo.andSouthwesternBellTelephoneCo.(Exhibit4-ctoForm10-Kfor2011.)

4-c GuarantyofcertainobligationsofAmeritechCapitalFundingCorp.,IndianaBellTelephoneCo.Inc.,MichiganBellTelephoneCo.,
PacificBellTelephoneCo.,SouthwesternBellTelephoneCompany,IllinoisBellTelephoneCompany,TheOhioBellTelephone
Company,TheSouthernNewEnglandTelephoneCompany,SouthernNewEnglandTelecommunicationsCorporation,andWisconsin
Bell,Inc.(Exhibit4-dtoForm10-Kfor2011.)

4-d GuaranteeofcertainobligationsofAT&TCorp.(Exhibit4-etoForm10-Kfor2011.)

4-e GuaranteeofcertainobligationsofBellSouthCorp.(Exhibit4-ftoForm10-Kfor2011.)

4-f CingularThirdSupplementalIndenture.(Exhibit4-gtoForm10-Kfor2011.)

4-g Indenture,datedasofMay15,2013,betweenAT&TInc.andTheBankofNewYorkMellonTrustCompany,N.A.asTrustee.(Exhibit
4.1toForm8-KdatedMay15,2013.)

4-h IndenturedatedasofNovember1,1994betweenSBCCommunicationsInc.andTheBankofNewYork,asTrustee.(Exhibit4-htoForm
10-Kfor2013.)

4-i 2020NotesSupplementalIndenture,datedasofMarch13,2014,amongAT&TInc.,CricketCommunications,Inc.,LeapWireless
International,Inc.,asGuarantor,CricketLicenseCompany,LLC,asGuarantor,andWellsFargoBank,N.A.,astrustee.(Exhibit4.2to
Form8-KdatedMarch14,2014.)

4-j ConvertibleNotesSupplementalIndenture,datedasofMarch13,2014,amongLeapWirelessInternational,Inc.,AT&TInc.andWells
FargoBank,N.A.,astrustee.(Exhibit4.4toForm8-KdatedMarch14,2014.)

10-a 2011IncentivePlan,amendedSeptember24,2015.(Exhibit10-atoForm10-QfiledforSeptember30,2015.)

10-b SupplementalLifeInsurancePlan,amendedandrestatedeffectiveSeptember24,2015.(Exhibit10-etoForm10-QfiledforSeptember30,
2015.)

10-c SupplementalRetirementIncomePlan,amendedandrestatedDecember31,2008.(Exhibit10-etoForm10-Kfor2013.)

10-d 2005SupplementalEmployeeRetirementPlan,amendedDecember18,2014.(Exhibit10.1toForm8-KdatedDecember18,2014.)

10-e SeniorManagementDeferredCompensationProgramof1988(effectiveforUnitsofParticipationHavingaUnitStartDateofJanuary1,
1988orlater)asamendedthroughApril1,2002.(Exhibit10-gtoForm10-Kfor2013.)

10-f SalaryandIncentiveAwardDeferralPlan,datedDecember31,2004.(Exhibit10-ktoForm10-Kfor2011.)

10-g StockSavingsPlan,datedDecember31,2004.(Exhibit10-ltoForm10-Kfor2011.)

10-h StockPurchaseandDeferralPlan,amendedSeptember24,2015.(Exhibit10-dtoForm10-QfiledforSeptember30,2015.)


20
AT&TInc.

10-i CashDeferralPlan,amendedandrestatedSeptember24,2015.(Exhibit10-btoForm10-QfiledforSeptember30,2015.)

10-j MasterTrustAgreementforAT&TInc.DeferredCompensationPlansandOtherExecutiveBenefitPlansandsubsequentamendments
datedAugust1,1995andNovember1,1999.(Exhibit10-ddtoForm10-Kfor2009.)

10-k OfficerDisabilityPlan,amendedandrestatedeffectiveJanuary1,2010.(Exhibit10-itoForm10-QfiledforJune30,2009.)

10-l AT&TInc.HealthPlan,amendedJuly28,2015andeffectiveJanuary1,2016.

10-m PensionBenefitMakeupPlanNo.1,amendedandrestatedDecember31,2011.

10-n AT&TInc.EquityRetentionandHedgingPolicy.(Exhibit10.2toForm8-KdatedDecember15,2011.)

10-o AdministrativePlan,amendedandrestatedeffectiveSeptember24,2015.(Exhibit10-ctoForm10-QfiledforSeptember30,2015.)

10-p AT&TInc.Non-EmployeeDirectorStockandDeferralPlan,amendedSeptember25,2015.(Exhibit99.1toForm8-KdatedSeptember
25,2015.)

10-q AT&TInc.Non-EmployeeDirectorStockPurchasePlan,effectiveJune27,2008.(Exhibit10-ttoForm10-Kfor2013.)

10-r CommunicationsConcessionProgramforDirectors,amendedandrestatedFebruary1,2013.(Exhibit10-aatoForm10-Kfor2012.)

10-s FormofIndemnityAgreement,effectiveJuly1,1986,betweenSBC(nowAT&TInc.)anditsdirectorsandofficers.(Exhibit10-bbto
Form10-Kfor2011.)

10-t TransitionAgreementbyandbetweenBellSouthCorporationandRafaeldelaVega,datedDecember29,2003.(Exhibit10-cctoForm
10-Kfor2011.)

10-u AT&TCorp.ExecutiveDeferredCompensationPlan(formerlyknownasAT&TCorp.SeniorManagementIncentiveAwardDeferral
Plan),amendedandrestatedJanuary1,2008.(Exhibit10-aatoForm10-Kfor2013.)

10-v MasterTrustAgreementforAT&TCorp.DeferredCompensationPlansandOtherExecutiveBenefitPlans,effectiveJanuary13,1994.
(Exhibit10-nntoForm10-Kfor2011.)

10- FirstAmendmenttoMasterTrustAgreement,effectiveDecember23,1997.(Exhibit10-nn(i)toForm10-Kfor2011.)
v(i)

10-w AT&TCorp.Non-QualifiedPensionPlan,asamendedandrestatedeffectiveDecember31,2008.(Exhibit10-cctoForm10-Kfor2013.)

10-x AT&TCorp.ExcessBenefitandCompensationPlan,asamendedandrestatedeffectiveDecember31,2008.(Exhibit10-ddtoForm10-K
for2013.)

10-y BellSouthCorporationNonqualifiedDeferredCompensationPlan,datedJanuary1,2005.(Exhibit10-sstoForm10-Kfor2011.)

10-z BellSouthCorporationDeferredCompensationPlanforNon-EmployeeDirectors,datedMarch9,1984.(Exhibit10-uutoForm10-Kfor
2011.)

21
AT&TInc.

10-aa BellSouthCorporationDirector'sCompensationDeferralPlan,asamendedandrestatedeffectiveasofJanuary1,2005.(Exhibit10-vvto
Form10-Kfor2011.)

10-bb BellSouthCorporationStockandIncentiveCompensationPlan,asamendedJune28,2004.(Exhibit10-qqforForm10-Kfor2009.)

10- FirstAmendmenttotheBellSouthCorporationStockandIncentiveCompensationPlan,datedSeptember26,2005.(Exhibit
bb(i) 10-xx(i)toForm10-Kfor2011.)

10- SecondAmendmenttoBellSouthCorporationStockandIncentiveCompensationPlan,effectiveJune26,2008.(Exhibit10-
bb(ii) hh(ii)toForm10-Kfor2013.)

10-cc BellSouthCorporationSupplementalExecutiveRetirementPlan,amendedDecember18,2014.(Exhibit10.2toForm8-KdatedDecember
18,2014.)

10-dd BellSouthNonqualifiedDeferredIncomePlan,asamendedandrestatedMay1,2012.(Exhibit10-ffftoForm10-Kfor2012.)

10-ee CingularWirelessCashDeferralPlan,effectiveNovember1,2001.(Exhibit10-hhhtoForm10-Kfor2011.)

10-ff AT&TMobility2005CashDeferralPlan,effectiveJanuary1,2005.(Exhibit10-llltoForm10-Kfor2011.)

10-gg EqualizationAgreementforJohnStankey.(Exhibit10.1toForm8-KdatedAugust20,2015.)

10-hh AgreementbetweenD.WayneWattsandAT&TInc.(Exhibit10.2toForm8-KdatedAugust20,2015.)

10-ii $9,155,000,000TermLoanCreditAgreement,datedJanuary21,2015,amongAT&T,certainlendersnamedthereinandMizuhoBank,
Ltd.,asadministrativeagent.(Exhibit10.1toForm8-KdatedJanuary21,2015.)

10-jj $2,000,000,000TermLoanCreditAgreement,datedJanuary21,2015,betweenAT&TandMizuhoBank,Ltd.,asinitiallenderandagent.
(Exhibit10.2toForm8-KdatedJanuary21,2015.)

10-kk $12,000,000,000AmendedandRestatedCreditAgreement,datedDecember11,2015,
amongAT&T,certainlendersnamedthereinandCitibank,N.A.,asadministrativeagent.(Exhibit10toForm8-KdatedDecember15,
2015.)

12 ComputationofRatiosofEarningstoFixedCharges.

13 PortionsofAT&T'sAnnualReporttoStockholdersforthefiscalyearendedDecember31,2015.Onlytheinformationincorporatedby
referenceintothisForm10-Kisincludedintheexhibit.

21 SubsidiariesofAT&TInc.

23 ConsentofErnst&YoungLLP,independentregisteredpublicaccountingfirmforAT&T.

24 PowersofAttorney.

31 Rule13a-14(a)/15d-14(a)Certifications

22
AT&TInc.

31.1 CertificationofPrincipalExecutiveOfficer

31.2 CertificationofPrincipalFinancialOfficer

32 Section1350Certification

99 SupplementalInterimFinancialInformation

101 XBRLInstanceDocument

Wewillfurnishtostockholdersuponrequest,andwithoutcharge,acopyoftheAnnualReporttoStockholdersandtheProxyStatement,portionsofwhichareincorporatedby
referenceintheForm10-K.Wewillfurnishanyotherexhibitatcost.

23
ScheduleII-Sheet1

AT&TINC.
SCHEDULEII-VALUATIONANDQUALIFYINGACCOUNTS
AllowanceforDoubtfulAccounts
DollarsinMillions

COL.A COL.B COL.C COL.D COL.E


Additions
(1) (2) (3)
Balanceat Chargedto Chargedto
Beginningof Costsand Other BalanceatEnd
Period Expenses(a) Accounts(b) Acquisitions(c) Deductions(d) ofPeriod

Year2015 $ 454 1,416 - 214 1,380 $ 704
Year2014 $ 483 1,032 (32) - 1,029 $ 454
Year2013 $ 547 954 (30) - 988 $ 483

(a) Includesamountspreviouslywrittenoffwhichwerecrediteddirectlytothisaccountwhenrecovered.Excludesdirectchargesandcreditstoexpensefornontrade
receivablesintheconsolidatedstatementsofincome.
(b) Includesamountsrelatedtolong-distancecarrierreceivableswhichwerebilledbyAT&T.
(c) AcquisitionsofDIRECTVandwirelesspropertiesinMexicoin2015.
(d) Amountswrittenoffasuncollectible,orrelatedtodivestedentities.

24
ScheduleII-Sheet2

AT&TINC.
SCHEDULEII-VALUATIONANDQUALIFYINGACCOUNTS
AllowanceforDeferredTaxAssets
DollarsinMillions

COL.A COL.B COL.C COL.D COL.E


Additions
(1) (2) (3)
Balanceat Chargedto Chargedto
Beginningof Costsand Other BalanceatEnd
Period Expenses Accounts(a) Acquisitions(b) Deductions(c) ofPeriod

Year2015 $ 1,182 283 373 420 117 $ 2,141
Year2014 $ 927 - 445 - 190 $ 1,182
Year2013 $ 886 94 - - 53 $ 927

(a) Includescurrentyearreclassificationsfromotherbalancesheetaccounts.
(b) AcquisitionsofDIRECTVandwirelesspropertiesinMexicoin2015.
(c)Reductionstovaluationallowancesrelatedtodeferredtaxassets.

25
SIGNATURES

PursuanttotherequirementsofSection13or15(d)oftheSecuritiesExchangeActof1934,theregistranthasdulycausedthisreporttobesignedonitsbehalfbythe
undersigned,thereuntodulyauthorized,onthe18thdayofFebruary,2016.

AT&TINC.

/s/JohnJ.Stephens
JohnJ.Stephens
SeniorExecutiveVicePresident
andChiefFinancialOfficer

PursuanttotherequirementsoftheSecuritiesExchangeActof1934,thisreporthasbeensignedbelowbythefollowingpersonsonbehalfoftheregistrantandinthe
capacitiesandonthedateindicated.

PrincipalExecutiveOfficer:
RandallStephenson*
ChairmanoftheBoard,ChiefExecutiveOfficer
andPresident

PrincipalFinancialandAccountingOfficer:
JohnJ.Stephens
SeniorExecutiveVicePresident
andChiefFinancialOfficer

/s/JohnJ.Stephens
JohnJ.Stephens,asattorney-in-fact
andonhisownbehalfasPrincipal
FinancialOfficerandPrincipal
AccountingOfficer


February18,2016

Directors:
RandallL.Stephenson* MichaelB.McCallister*
SamuelA.DiPiazza,Jr.* JohnB.McCoy*
RichardW.Fisher* BethE.Mooney*
ScottT.Ford* JoyceM.Roch*
GlennH.Hutchins* MatthewK.Rose*
WilliamE.Kennard* CynthiaB.Taylor*
JonC.Madonna* LauraD'AndreaTyson*
*bypowerofattorney
Exhibit 10-l

AT&T HEALTH PLAN

Effective: January 1, 1987


Previously Amended and Restated: January 1, 2015
Amended and Restated Effective: January 1, 2016 (unless otherwise provided herein)
AT&T HEALTH PLAN

ARTICLE 1 PURPOSE
The AT&T Health Plan ("Plan") provides Participants with supplemental medical, dental, and vision benefits. Effective March 23,
2010, the Plan shall be frozen to new Participants, as further described in Section 2.16. The Company intends this Plan to be a
"grandfathered health plan" under the Patient Protection and Affordable Care Act (the "Affordable Care Act"). Appendix C hereto
contains the required Participant disclosure regarding the Plan's grandfathered status under the Affordable Care Act.

ARTICLE 2 DEFINITIONS
For purposes of this Plan, the following words and phrases shall have the meanings indicated, unless the context clearly indicates
otherwise:

2.1 Active Participant . "Active Participant" shall mean an Active Employee Participant and his Dependents.

2.2 Active Employee Participant . "Active Employee Participant" shall mean an Eligible Employee electing to
participate in the Plan while in active service, on a Leave of Absence or while receiving short term disability benefits
under the Officer Disability Plan.

2.3 Annual Deductible . "Annual Deductible" shall mean the amount the Active Participant must pay for Covered
Health Services in a Plan Year before the Plan will begin paying for Covered Benefits in that calendar year. The Annual
Deductible applies to all Covered Health Services. The Annual Deductible does not apply to Preventive Care, Dental
Services and Vision Services. Solely for purposes of this Plan, the Annual Deductible will operate on a combined basis
with the Annual Deductible (both the "Network/ONA" and "Non-Network Benefit" annual deductibles) applicable in the
AT&T Medical Plan. Once the Participant meets his applicable Annual Deductible, the Plan will begin to pay Covered
Benefits, subject to any required Coinsurance, in accordance with and as governed by Section 4.1. The applicable
Annual Deductible is set forth in Appendix A to this Plan.

2.4 Annual Out-of-Pocket Maximum . "Annual Out-of-Pocket Maximum" shall mean the maximum amount of
Covered Health Services an Active Participant must pay out-of-pocket every calendar year, including the Participant's
Annual Deductible. Solely for purposes of this Plan, the Annual Out-of-Pocket Maximum will operate on a combined
basis with the Annual Out-of-Pocket Maximum (both the "Network/ONA" and "Non-Network Benefit annual out-of-pocket
maximums) applicable in the AT&T Medical Plan (or the Annual Out-of-Pocket Maximum in the AT&T International
Health Plan for Officers serving in expatriate positions with the Company). Once the Participant reaches the applicable
Annual Out-of-Pocket Maximum, Covered Benefits for those Covered Health Services that apply to the Annual Out-of-
Pocket Maximum are payable in accordance with and as governed by Section 4.1 during the rest of that Plan Year. The
following costs shall never apply toward the Annual Out-of-Pocket Maximum: (a) any applicable Monthly Contributions
and (b) any charges for Non-Covered Health Services. Even when the Annual Out-of-Pocket Maximum has been
reached, Covered Benefits will not be provided for the following: (a) any applicable Monthly Contributions and (b) any
charges for Non-Covered Health Services. The applicable Annual Out-of-Pocket Maximum is set forth in Appendix A to
this Plan.
2.5 AT&T . "AT&T" shall mean AT&T Inc. References to "Company" shall mean AT&T.

2.6 Basic Plan(s) . "Basic Plan(s)" shall mean AT&T's group medical (known as the "Silver Option" in the "AT&T
Medical Plan" (or the "AT&T International Health Plan" for Officers serving in expatriate positions with the Company)),
dental (non-DHMO option), and vision care plans (including the AT&T Retiree Vision Care Program). For a Participant
who Retired on or before August 31, 1992, Basic Plans shall mean the AT&T Medical and Group Life Insurance Plan
CustomCare ("CustomCare") and dental (non-DHMO option) plans. For this purpose, the Plan Administrator maintains
governing records setting forth the names of those Participants who Retired on or before August 31, 1992.

2.7 CEO . "CEO" shall mean the Chief Executive Officer of AT&T Inc.

2.8 COBRA . " COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

2.9 Coinsurance . "Coinsurance" shall mean the amount an Active Participant must pay each time he receives
Covered Health Services, after he meets the applicable Annual Deductible. Coinsurance payments are calculated as a
percentage of Covered Health Services, rather than a set dollar amount. Coinsurance does not apply to Preventive
Care, Dental Services and Vision Services (or Medical Services for Retired Participants as provided in Section 4.1(c)).
The applicable Coinsurance percentage is set forth in Appendix A to this Plan.

2.10 Committee . "Committee" shall mean the Human Resources Committee of the Board of Directors of AT&T Inc.

2.11 Covered Benefits . "Covered Benefits" shall mean the benefits provided by the Plan, as provided for and
governed by Section 4.1 of the Plan.

2.12 Covered Health Services . "Covered Health Services" means all Medical Services or Preventive Care that
would qualify as deductible medical expenses for federal income tax purposes, whether deducted or not. Dental
Services and Vision Services are not included in the definition of Covered Health Services.

2.13 Dental Services . "Dental Services" shall mean services for dental and orthodontic care. The Plan
Administrator, in its sole discretion, shall determine whether a particular service is classified as Preventive Care or a
Dental, Medical or Vision Service.

2.14 Dependent(s) . "Dependent(s)" shall mean those individuals who would qualify as a Participant's dependent(s)
under the terms of the group medical Basic Plan in which the Participant participates (or last previously participated
with respect to Medicare Eligible Retired Participants (the "Prior Basic Plan"), or, if applicable, Substitute Basic
Coverage.

2.15 Disability . "Disability" shall mean qualification for long term disability benefits under Section 3.1 of the Officer
Disability Plan.
2.16 Eligible Employee . "Eligible Employee" shall mean an Officer. Notwithstanding the foregoing, the CEO may,
from time to time, exclude any Officer or group of Officers from being an "Eligible Employee" under this Plan.
Employees of a company acquired by AT&T shall not be considered an Eligible Employee unless designated as such
by the CEO. Notwithstanding the foregoing, only the Committee shall have the authority to exclude from participation
or take any action with respect to Executive Officers.

Notwithstanding the foregoing provisions, individuals hired, rehired or promoted to an Officer level position on or after March
23, 2010 shall be excluded from the term Eligible Employee, and such individuals (and their Dependents) shall not be
eligible to participate in this Plan.

2.17 Employer . "Employer" shall mean AT&T Inc. or any of its Subsidiaries.

2.18 Executive Officer . "Executive Officer" shall mean any executive officer of AT&T, as that term is used under the
Securities Exchange Act of 1934.

2.19 Leave of Absence . "Leave of Absence" shall mean a Company-approved leave of absence.

2.20 Medical Services . "Medical Services" shall mean medical/surgical, mental health/substance abuse and
prescription pharmacy services. The Plan Administrator, in its sole discretion, shall determine whether a particular
service is classified as Preventive Care or a Medical, Dental or Vision Service. Medical Services do not include Dental
Services and Vision Services.

2.21 Monthly Contributions . "Monthly Contributions" shall mean the monthly premiums or contributions required for
participation in this Plan as further governed by Article 7 of the Plan. The applicable Monthly Contributions are set forth
in Exhibit A to this Plan.

2.22 Non-Covered Health Services . "Non-Covered Health Services" shall mean any Medical Services or
Preventive Care which do not meet the definition of Covered Health Services.

2.23 Officer . "Officer" shall mean an individual who is designated as an officer level employee for compensation
purposes on the records of AT&T.

2.24 Participant . "Participant" shall mean an Active Participant or Retired Participant or both, as the context
indicates.

2.25 Plan Administrator . "Plan Administrator" shall mean the SEVP-HR, or any other person or persons whom the
Committee may appoint to administer the Plan; provided that the Committee may act as the Plan Administrator at any
time.

2.26 Plan Year . "Plan Year" shall mean the calendar year.

2.27 Preventive Care . "Preventive Care" shall have the same meaning as such term has in the AT&T Medical Plan.
The plan administrator for the AT&T Medical Plan shall determine whether a particular service constitutes Preventive
Care and the Plan Administrator for this Plan shall rely upon such determination.
2.28 Qualified Dependent . "Qualified Dependent" shall mean a Dependent who loses coverage under a COBRA
eligible program due to a Qualifying Event.

2.29 Qualifying Event . "Qualifying Event" shall mean any of the following events if, but for COBRA continuation
coverage, they would result in a Participant's loss of coverage under this Plan:

(1) death of a covered Eligible Employee;


(2) termination (other than by reason of such Eligible Employee's gross misconduct) of an Employee's
employment;
(3) reduction in hours of an Eligible Employee;
(4) divorce or legal separation of an Eligible Employee or dissolution of an Eligible Employee's registered
domestic partnership;
(5) an Eligible Employee's entitlement to Medicare benefits; or
(6) a Dependent child ceasing to qualify as a Dependent under the group medical Basic Plan,(or, if applicable,
Substitute Basic Coverage) or with respect to a Dependent child who is a Medicare Eligible Retired
Participant, the child's ceasing to otherwise qualify under the Prior Basic Plan .

2.30 Retire, Retired or Retirement . "Retire," "Retired" or "Retirement" shall mean the termination of an Active
Employee Participant's employment with AT&T or any of its Subsidiaries, for reasons other than death, on or after the
earlier of the following dates: (1) the date such Active Employee Participant has attained age 55, and, for an Active
Employee Participant on or after January 1, 2002, has five (5) years of service, or (2) the date the Active Employee
Participant has attained one of the following combinations of age and service at termination of employment on or after
April 1, 1997:

Net Credited Service Age


25 years or more 50 or older
30 years or more Any age

2.31 Retired Participant . "Retired Participant" shall mean a Retired Employee Participant and his Dependents.

2.32 Retired Employee Participant . "Retired Employee Participant" shall mean a former Active Employee Participant
who has Retired within the meaning of Section 2.30 and who meets the additional requirements of Section 3.2 to be eligible
for coverage in Retirement.

2.33 SEVP-HR . "SEVP-HR" shall mean AT&T's highest ranking Officer, specifically responsible for human resources
matters.

2.34 Subsidiary . "Subsidiary" shall mean any corporation, partnership, venture or other entity in which AT&T holds,
directly or indirectly, a 50% or greater ownership interest. The Committee may, at its sole discretion, designate any other
corporation, partnership, venture or other entity a Subsidiary for the purpose of participating in this Plan. Notwithstanding
anything herein to the contrary, unless designated a "Subsidiary" pursuant to the immediately preceding sentence, Cingular
Wireless LLC, Sterling Commerce, Inc., and their respective subsidiaries shall not be considered a Subsidiary under this
Plan.
2.35 Vision Services . "Vision Services" shall mean services for vision care. The Plan Administrator, in its sole
discretion, shall determine whether a particular service is classified as Preventive Care or a Vision, Medical or Dental
Service.

2.36 Medicare Eligible Retired Participant . "Medicare Eligible Retired Participant" shall mean a Retired Participant
who is eligible for Medicare due to reaching the eligible age for Medicare.

ARTICLE 3 ELIGIBILITY

3.1 Active Participants . Each Eligible Employee shall be eligible to participate in this Plan along with his/her
Dependent(s) beginning on the effective date of the employee becoming an Eligible Employee.

Upon becoming an Eligible Employee, he/she shall have 90 days to elect to participate in this Plan. In order to continue
participation, the Active Participant must pay all applicable Monthly Contributions. If an Active Employee Participant
terminates participation in this Plan at any time for any reason, that Participant and his/her Dependent(s) shall be ineligible
to participate in the Plan at any time in the future.

3.2 Retired Participants . Provisions of this Plan will continue in effect during Retirement for each Retired Employee
Participant and his/her Dependent(s) with respect to any Eligible Employee who became a Participant before January 1,
1999. Neither an Eligible Employee who became a Participant after December 31, 1998 nor his/her Dependent(s) shall
be eligible for participation hereunder on or after such Participant's Retirement. Coverage for Retired Participants shall
be subject to the payment of all applicable Monthly Contributions, as governed by Article 7. The provisions of this Plan
related to Retired Participants, including the level of Covered Benefits and the applicable Monthly Premiums, shall begin
to apply on the first day of the month following the month in which the Active Employee Participant Retires. If a Retired
Employee Participant terminates participation at any time for any reason, participation of that Retired Employee
participant and his/her Dependent(s) may not be reinstated for any reason.

3.3 Requirement to Enroll and Participate in Basic Plans and Medicare . Notwithstanding any provision in this
plan to the contrary, as a condition to participation in the Plan, each Participant must be enrolled in, paying for, and
participating in (i) the Basic Plans if such Participant is eligible for coverage under the terms of the Basic Plans, or, if
applicable, Substitute Basic Coverage, and (ii) all parts of Medicare for which such Participant is eligible and for which
Medicare would be primary if enrolled therein, except for Medicare Part D relating to prescription drug coverage.

Notwithstanding any other provision of the Plan to the contrary, an individual who first becomes an Eligible Employee in the
middle of a Plan Year and who is enrolled in AT&T sponsored group health plans other than the Basic Plans, will be allowed
to participate in the Plan for the remainder of the Plan Year along with his/her Dependent(s) who are enrolled in such other
AT&T sponsored health plans, as if they were participating in the Basic Plans. At the next group enrollment opportunity for
the Basic Plans, the Active Employee Participant and his/her Dependent(s) must enroll in the Basic Plans to continue
participation in this Plan.
ARTICLE 4 BENEFITS

4.1 Covered Benefits . Subject to the limitations in this Plan (including but not limited to the loyalty conditions set
forth in Article 8 below) , this Plan provides the benefits described below. Monthly Contributions for participation in this
Plan, the Basic Plans, Medicare, or any other health plan are not considered "services", and are therefore are not
Covered Benefits under this Plan.

(a) Active Participants (Medical Services and Preventive Care) -

Medical Services - After the Annual Deductible has been met, 100% payment of Covered Health Services not paid under
the AT&T Medical Plan (or AT&T International Health Plan with respect to Officers serving in expatriate positions with the
Company) or Medicare minus the amount of Coinsurance, until the Active Participant reaches the Annual Out-of-Pocket
Maximum, at which time coverage is 100% of Covered Health Services not paid under the AT&T Medical Plan (or AT&T
International Health Plan with respect to Officers serving in expatriate positions with the Company) .

Preventive Care - Preventive Care, whether received as a "Network/ONA" service or "Non-Network" service, as defined in
the AT&T Medical Plan, is covered at 100%, not subject to the Annual Deductible or Coinsurance.

(b) Active Participants (Dental Services and Vision Services) -

100% payment, through reimbursement or otherwise, of all Dental Services and Vision Services not paid under the Active
Participant's (i) Basic Plans or (ii) Medicare, provided expenses for such services would qualify as deductible medical
expenses for federal income tax purposes, whether deducted or not.

(c) Retired Participants

100% payment, through reimbursement or otherwise, of all Medical, Dental, Vision and Preventive services not paid under
the Retired Participant's (i) Basic Plans or Substitute Basic Coverage, if either is applicable or (ii) Medicare, provided
expenses for such services would qualify as deductible medical expenses for federal income tax purposes, whether
deducted or not.

4.2 Covered Benefit Limits . RESERVED

4.3 Priority of Paying Covered Claims . Claims for benefits will be applied against the various health plans, as
applicable, and coordinated with Medicare in the following order:
(1) Medicare, to the extent the Participant is eligible therefore and such claim is actually paid by Medicare,
(2) Basic Plans, if applicable,
(3) CarePlus, if elected,
(4) Long Term Care Plan, if elected,
(5) this Plan.
4.4 Substitute Basic Coverage . Notwithstanding any other provision of this Plan to the contrary, if a Retired
Employee Participant, other than a Medicare Eligible Retired Participant, is eligible for participation under this Plan
during Retirement, but not eligible to participate under the Basic Plans, the Plan shall provide medical, dental, and vision
benefits for the Retired Employee Participant and his/her Dependent(s) substantially equivalent to the benefits under the
Basic Plans through an insured product (hereinafter, "Substitute Basic Coverage"). Eligibility for Substitute Basic
Coverage is conditioned upon the Retired Participant's payment of contributions in the same amount that a similarly
situated retired Basic Plan participant is required to pay under the Basic Plans. Such Substitute Basic Coverage shall
constitute such Retired Participant's Basic Plans for all purposes under this Plan. The costs of Substitute Basic
Coverage (except for the required monthly contributions referenced in this paragraph) shall be borne by AT&T, and the
costs of Substitute Basic Coverage shall not be included in the determination of any Retired Participant's annual Plan
contribution amount as provided in Article 7. In addition, certain other Retired Employee Participants participate in the
"Separation Medical Plan" rather than the Basic Plans. References to Substitute Basic Coverage throughout this Plan
shall be deemed to include the Separation Medical Plan. The Plan Administrator maintains records governing the
names of those Retired Employee Participants who have Substitute Basic Coverage or Separation Medical Plan
coverage.

ARTICLE 5 TERMINATION OF PARTICIPATION

5.1 Termination of Participation . Participation will cease on the last day of the month in which one of the following
conditions occurs:

(1) The Participant, other than a Medicare Eligible Retired Participant, is no longer a participant in the Basic
Plans or Substitute Basic Coverage, in which case participation ceases for such Participant;

(2) A Participant ceases to meet the definition of a Dependent (as set forth in Section 2.14 of this Plan) for any
reason, in which case participation ceases for such Participant;

(3) A Participant eligible to enroll in Medicare is no longer a participant in all parts of Medicare for which such
Participant is eligible to enroll and for which Medicare would be primary if enrolled therein, except for
Medicare Part D relating to prescription drug coverage, in which case participation ceases for such
Participant;

(4) The Active Employee Participant's termination of employment for reasons other than Death, Disability, or
Retirement by an individual who meets the applicable requirements of Section 3.2 in order to qualify for
Plan benefits in Retirement, in which case participation ceases for the Participant and his/her
Dependent(s);

(5) The demotion or designation of an Active Employee Participant so as to no longer be eligible to participate
in the Plan, in which case participation ceases for the Participant and his/her Dependent(s);
(6) The Active Employee Participant (or Retired Employee Participant) participates in an activity that
constitutes engaging in competitive activity with AT&T or engaging in conduct disloyal to AT&T under
Article 8, in which case participation ceases for the Active Employee Participant (or Retired Employee
Participant) and his/her Dependent(s); or

(7) Discontinuance of the Plan by AT&T, or, with respect to a Subsidiary's Active Employee Participants (or
Retired Employee Participants), such Subsidiary's failure to make the benefits hereunder available to
Active Employee Participants employed by it (or its Retired Employee Participants).

5.2 Dependents Failure to Participate in Basic Plans . If a Dependent, other than a Medicare Eligible Retired
Participant, ceases participation under a Basic Plan or, if applicable, Substitute Basic Coverage, such Dependent's
participation under this Plan will cease with the same effective date.

5.3 Death . In the event of the Active Employee Participant's (or Retired Employee's Participant's) death, his
Dependents may continue participation in this Plan as follows:

(1) In the event of the death of a Retired Employee Participant such Retired Employee Participant's
Dependents may continue participation in this Plan, eligible for the Covered Benefits described in Section
4.1(c) of the Plan, for so long as such Dependents are participating in the Basic Plans (or, if applicable,
Substitute Basic Coverage) or with respect to a Dependent who is a Medicare Eligible Retired Participant,
for so long as such Dependent would have otherwise been eligible for participation under the terms of the
Prior Basic Plan and are paying any applicable contributions for this Plan as provided in Article 7. If a
surviving spouse of such deceased Active Employee Participant otherwise eligible for participation in the
Plan remarries, his/her participation and the participation of any otherwise eligible Dependents will cease
with the effective date of his/ her marriage.

(2) In the event of an in-service death of an Active Employee Participant eligible to participate in the Plan in
Retirement as provided under Article 3.2, who was Retirement eligible, within the meaning of Section 2.30,
at the time of death, such Active Employee Participant's surviving Dependents may continue participation in
this Plan, eligible for the Covered Benefits described in Section 4.1(a) and (b), for so long as such
Dependents are participating in the Basic Plans (or, if applicable Substitute Basic Coverage) or with
respect to a Dependent who is a Medicare Eligible Retired Participant, for so long as such Dependent
would have otherwise been eligible for participation under the terms of the Prior Basic Plan and are paying
any applicable contributions for this Plan as provided in Article 7. If a surviving spouse of such deceased
Active Employee Participant otherwise eligible for participation in the Plan remarries, his/her participation
and the participation of any otherwise eligible Dependents will cease with the effective date of his/ her
marriage.
(3) In the event of (i) an in-service death of an Active Employee Participant not eligible to participate in the Plan
in Retirement as provided in Article 3.2 or (ii) an in-service death of an Active Employee Participant eligible
to participate in the Plan in Retirement as provided in Article 3.2 but the individual was not Retirement
eligible, within the meaning of Section 2.30, at the time of death, such Active Employee Participant's
Dependent(s) may continue participation in this Plan, eligible for the Covered Benefits described in
Sections 4.1(a) and (b), for a 36-month period commencing the month following the month in which such
Active Employee Participant dies as long as such Dependent(s) are participating in the Basic Plans (or with
respect to a Dependent who is a Medicare Eligible Retired Participant, for so long as such Dependent
would have otherwise been eligible for participation under the terms of the Prior Basic Plan) and subject to
the payment of Active Participant Contributions for the first 12 months and payment of Active COBRA
Contributions for the remaining 24 months, as provided by Articles 7 and 10.1. If the Active Employee
Participant's Dependent(s) are eligible for COBRA, they will automatically be enrolled in COBRA so that
there is no lapse in coverage, and this 36-month coverage will be integrated and run concurrently with
COBRA coverage.

ARTICLE 6 DISABILITY

6.1 Disability . With respect to any Active Employee Participant who commences receipt of short term or long term
disability benefits under the Officer Disability Plan, participation under this Plan will be as follows:

(1) The Participant will continue to participate in this Plan, eligible for the Covered Benefits described in
Section 4.1(a) and (b), for as long as he/she receives short term disability benefits under the Officer
Disability Plan and pays the applicable contributions for this Plan as provided by Article 7.

(2) An Active Employee Participant not eligible to participate in the Plan in Retirement as provided in Article 3.2
who commences long term disability benefits under the Officer Disability Plan or an Active Employee
Participant eligible to participate in the Plan in Retirement as provided in Article 3.2 but who is not
Retirement eligible, within the meaning of Section 2.30, at the time long term disability benefits under the
Officer Disability Plan commence, will cease participation in this Plan (along with his/her Dependents)
effective as of the last day of the calendar month in which such long term disability benefits commence,
unless such benefits commence on the first day of a calendar month, in which case participation in this
Plan shall cease effective as of the last day of the prior month.

(3) An Active Employee Participant eligible to participate in the Plan in Retirement as provided in Article 3.2
,who is Retirement eligible, within the meaning of Section 2.30, at the time long term disability benefits
under the Officer Disability Plan commence, will be eligible to continue participation in this Plan on the
same terms and conditions that participation would be available to such Participant in Retirement, subject
to the payment of applicable contributions for this Plan as provided by Article 7, regardless of his/her
continued receipt of long term disability benefits under the Officer Disability Plan.
ARTICLE 7 COSTS

7.1 Provision of Benefits under the Plan . Except as provided below in this Article 7 with respect to required
Monthly Contributions or with respect to any required Coinsurance, the benefits available to Participants under this Plan
shall be provided through an insurance policy maintained by AT&T.

7.2 Active Participant Contributions . An Active Participant electing to participate in the Plan will pay Monthly
Contributions to participate in the Plan while in active service, while on Leave of Absence or while receiving short term
disability benefits under the Officer Disability Plan. The Monthly Contribution for participation may change annually,
effective at the beginning of each Plan Year. Contributions to be made by Active Participants electing to participate in
the Plan shall be set annually by the SEVP-HR, determined in the SEVP-HR's sole and absolute discretion. The SEVP-
HR may adopt tiered rates for similarly situated groups of Participants based on factors such as the number of
Dependents covered or Medicare eligibility. Notwithstanding the foregoing, required Monthly Contributions for Executive
Officers shall be approved by the Committee.

7.3 Retired Participant Contributions . Retired Participants who elect to participate will pay Monthly Contributions
to participate in the Plan. The Monthly Contribution for participation may change annually, effective at the beginning of
each Plan Year. Contributions to be made by Retired Participants who elect to participate shall be set annually by the
SEVP-HR (in his/her sole and absolute discretion), to the extent their contributions have not previously been provided for
in a separate agreement.

7.4 Survivor Contributions. Upon the death of a Participant, the Participant's Dependents shall be required to pay
Monthly Contributions to participate in the Plan. The Monthly Contributions shall be set annually by the SEVP-HR, in the
SEVP-HR's sole and absolute discretion. Any changes to the Monthly Contributions shall be effective at the beginning of
each Plan Year.

7.5 Contributions for Participants on Disability . Participants continuing benefits while on Disability shall be
required to pay Monthly Contributions to participate in the Plan. The Monthly Contributions shall be set annually by the
SEVP-HR, determined in the SEVP-HR's sole and absolute discretion. Any changes to the Monthly Contributions shall
be effective at the beginning of each Plan Year.
ARTICLE 8 LOYALTY CONDITIONS

8.1 Participants acknowledge that no coverage and benefits would be provided under this Plan on and after January
1, 2010 but for the loyalty conditions and covenants set forth in this Article, and that the conditions and covenants herein
are a material inducement to AT&T's willingness to sponsor the Plan and to offer Plan coverage and benefits for the
Participants on or after January 1, 2010. Accordingly, as a condition of receiving coverage and any Plan benefits on or
after January 1, 2010, each Participant is deemed to agree that he shall not, without obtaining the written consent of the
Plan Administrator in advance, participate in activities that constitute engaging in competition with AT&T or engaging in
conduct disloyal to AT&T, as those terms are defined in this Section. Further and notwithstanding any other provision of
this Plan, all coverage and benefits under this Plan on and after January 1, 2010 with respect to a Participant and his or
her Dependents shall be subject in their entirety to the enforcement provisions of this Section if the Participant, without
the Plan Administrator's consent, participates in an activity that constitutes engaging in competition with AT&T or
engaging in conduct disloyal to AT&T, as defined below. The provisions of this Article 8 as in effect immediately before
such date shall be applicable to Participants who retire before January 1, 2010.

8.2 Definitions . For purposes of this Article and of the Plan generally

(1) an "Employer Business" shall mean AT&T, any Subsidiary, or any business in which AT&T or a
Subsidiary or an affiliated company of AT&T has a substantial ownership or joint venture interest;

(2) "engaging in competition with AT&T" shall mean, while employed by an Employer Business or within
two (2) years after the Participant's termination of employment, engaging by the Participant in any business
or activity in all or any portion of the same geographical market where the same or substantially similar
business or activity is being carried on by an Employer Business. "Engaging in competition with AT&T"
shall not include owning a nonsubstantial publicly traded interest as a shareholder in a business that
competes with an Employer Business. "Engaging in competition with AT&T" shall include representing or
providing consulting services to, or being an employee or director of, any person or entity that is engaged in
competition with any Employer Business or that takes a position adverse to any Employer Business.

(3) "engaging in conduct disloyal to AT&T" means, while employed by an Employer Business or within
two (2) years after the Participant's termination of employment, (i) soliciting for employment or hire,
whether as an employee or as an independent contractor, for any business in competition with an Employer
Business, any person employed by AT&T or its affiliates during the one (1) year prior to the termination of
the Participant's employment, whether or not acceptance of such position would constitute a breach of such
person's contractual obligations to AT&T and its affiliates; (ii) soliciting, encouraging, or inducing any
vendor or supplier with which Participant had business contact on behalf of any Employer Business during
the two (2) years prior to the termination of the Participant's employment, for any reason to terminate,
discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with AT&T or its affiliate; or (iii) soliciting,
encouraging, or inducing any customer or active prospective customer with whom Participant had business
contact, whether in person or by other media, on behalf of any Employer Business during the two (2) years
prior to the termination of Participant's employment for any reason ("Customer"), to terminate, discontinue,
renegotiate, reduce, or otherwise cease or modify its relationship with any Employer Business, or to
purchase competing goods or services from a business competing with any Employer Business, or
accepting or servicing business from such Customer on behalf of himself or any other business. "Engaging
in conduct disloyal to AT&T" also means, disclosing Confidential Information to any third party or using
Confidential Information, other than for an Employer Business, or failing to return any Confidential
Information to the Employer Business following termination of employment.

(4) "Confidential Information" shall mean all information belonging to, or otherwise relating to, an
Employer Business, which is not generally known, regardless of the manner in which it is stored or
conveyed to the Participant, and which the Employer Business has taken reasonable measures under the
circumstances to protect from unauthorized use or disclosure. Confidential Information includes trade
secrets as well as other proprietary knowledge, information, know-how, and non-public intellectual property
rights, including unpublished or pending patent applications and all related patent rights, formulae,
processes, discoveries, improvements, ideas, conceptions, compilations of data, and data, whether or not
patentable or copyrightable and whether or not it has been conceived, originated, discovered, or developed
in whole or in part by the Participant. For example, Confidential Information includes, but is not limited to,
information concerning the Employer Business' business plans, budgets, operations, products, strategies,
marketing, sales, inventions, designs, costs, legal strategies, finances, employees, customers, prospective
customers, licensees, or licensors; information received from third parties under confidential conditions; or
other valuable financial, commercial, business, technical or marketing information concerning the Employer
Business, or any of the products or services made, developed or sold by the Employer Business.
Confidential Information does not include information that (i) was generally known to the public at the time
of disclosure; (ii) was lawfully received by the Participant from a third party; (iii) was known to the
Participant prior to receipt from the Employer Business; or (iv) was independently developed by the
Participant or independent third parties; in each of the foregoing circumstances, this exception applies only
if such public knowledge or possession by an independent third party was without breach by the Participant
or any third party of any obligation of confidentiality or non-use, including but not limited to the obligations
and restrictions set forth in this Plan.
8.3 Forfeiture of Benefits . Subject to the provisions of Section 1001(5) of the Affordable Care Act, coverage and
benefits shall be forfeited and shall not be provided under this Plan for any period as to which the Plan Administrator
determines that, within the time period and without the written consent specified, Participant has been either engaging in
competition with AT&T or engaging in conduct disloyal to AT&T.

8.4 Equitable Relief . The parties recognize that any Participant's breach of any of the covenants in this Article 8 will
cause irreparable injury to AT&T, will represent a failure of the consideration under which AT&T (in its capacity as
creator and sponsor of the Plan) agreed to provide the Participant with the opportunity to receive Plan coverage and
benefits, and that monetary damages would not provide AT&T with an adequate or complete remedy that would warrant
AT&T's continued sponsorship of the Plan and payment of Plan benefits for all Participants. Accordingly, in the event of
a Participant's actual or threatened breach of the covenants in this Article, the Plan Administrator, in addition to all other
rights and acting as a fiduciary under ERISA on behalf of all Participants, shall have a fiduciary duty (in order to assure
that AT&T receives fair and promised consideration for its continued Plan sponsorship and funding) to seek an injunction
restraining the Participant from breaching the covenants in this Article 8. In addition, AT&T shall pay for any Plan
expenses that the Plan Administrator incurs hereunder, and shall be entitled to recover from the Participant its
reasonable attorneys' fees and costs incurred in obtaining such injunctive remedies. To enforce its repayment rights with
respect to a Participant, the Plan shall have a first priority, equitable lien on all Plan benefits provided to or for the
Participant and his or her Dependents. In the event the Plan Administrator succeeds in enforcing the terms of this Article
through a written settlement with the Participant or a court order granting an injunction hereunder, the Participant shall
be entitled to collect Plan benefits collect Plan benefits prospectively, if the Participant is otherwise entitled to such
benefits, net of any fees and costs assessed pursuant hereto (which fees and costs shall be paid to AT&T as a
repayment on behalf of the Participant), provided that the Participant complies with said settlement or injunction.

8.5 Uniform Enforcement . In recognition of AT&T's need for nationally uniform standards for the Plan
administration, it is an absolute condition in consideration of any Participant's accrual or receipt of benefits under the
Plan after January 1, 2010 that each and all of the following conditions apply to all Participants and to any benefits that
are paid or are payable under the Plan:

(1) ERISA shall control all issues and controversies hereunder, and the Committee shall serve for
purposes hereof as a "fiduciary" of the Plan, and as its "named fiduciary" within the meaning of ERISA.

(2) All litigation between the parties relating to this Article shall occur in federal court, which shall have
exclusive jurisdiction, any such litigation shall be held in the United States District Court for the Northern
District of Texas, and the only remedies available with respect to the Plan shall be those provided under
ERISA.
(3) If the Plan Administrator determines in its sole discretion either (I) that AT&T or its affiliate that
employed the Participant terminated the Participant's employment for cause, or (II) that equitable relief
enforcing the Participant's covenants under this Article 8 is either not reasonably available, not ordered by a
court of competent jurisdiction, or circumvented because the Participant has sued in state court, or has
otherwise sought remedies not available under ERISA, then in any and all of such instances the Participant
shall not be entitled to collect any Plan benefits, and if any Plan benefits have been paid to the, the
Participant shall immediately repay all Plan benefits to the Plan (with such repayments being used within
such year for increased benefits for other Participants in any manner determined in the Plan Administrator's
discretion) upon written demand from the Plan Administrator. Furthermore, the Participant shall hold AT&T
and its affiliates harmless from any loss, expense, or damage that may arise from any of the conduct
described in clauses (I) and (II) hereof.

ARTICLE 9 MISCELLANEOUS

9.1 Administration . The Plan Administrator is the named fiduciary of the Plan and has the power and duty to do all
things necessary to carry out the terms of the Plan. The Plan Administrator has the sole and absolute discretion to
interpret the provisions of the Plan, to make findings of fact, to determine the rights and status of Participants and other
under the Plan, to determine which expenses and benefits qualify as Covered Health Services or Covered Benefits, to
make all benefit determinations under the Plan, to decide disputes under the Plan and to delegate all or a part of this
discretion to third parties and insurers. To the fullest extent permitted by law, such interpretations, findings,
determinations and decisions shall be final, binding and conclusive on all persons for all purposes of the Plan. The Plan
Administrator may delegate any or all of its authority and responsibility under the Plan to other individuals, committees,
third party administrators, claims administrators or insurers for any purpose, including, but not limited to the processing of
benefits and claims related thereto. In carrying out these functions, these individuals or entities have been delegated
responsibility and discretion for interpreting the provisions of the Plan, making findings of fact, determining the rights and
status of Participants and others under the Plan, and deciding disputes under the Plan and such interpretations, findings,
determinations and decisions shall be final, binding and conclusive on all persons for all purposes of the Plan.

9.2 Amendments and Termination . This Plan may be modified or terminated at any time in accordance with the
provisions of AT&T's Schedule of Authorizations.

9.3 Newborns' and Mothers' Health Protection Act of 1996 . To the extent this Plan provides benefits for hospital
lengths of stay in connection with childbirth, the Plan will cover the minimum length of stay required for deliveries (i.e., a
48-hour hospital stay after a vaginal delivery or a 96-hour stay following a delivery by Cesarean section.) The mother's
or newborn's attending physician, after consulting with the mother, may discharge the mother or her newborn earlier than
the minimum length of stay otherwise required by law. Such coverage shall be subject to all other provisions of this Plan.
9.4 Women's Health and Cancer Rights Act of 1998 . To the extent this Plan provides benefits for mastectomies, it
will provide, for an individual who is receiving benefits in connection with a mastectomy and who elects breast
reconstruction in connection with such mastectomy, coverage for reconstruction on the breast on which the mastectomy
was performed, surgery and reconstruction on the other breast to give a symmetrical appearance, and prosthesis and
coverage for physical complications of all stages of the mastectomy, including lymphedemas. Such coverage shall be
subject to all other provisions of this Plan.

9.5 Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 . To the extent
this Plan provides mental health benefits or substance use disorder benefits it will not place annual or lifetime maximums
for such benefits that are lower than the annual and lifetime maximums for physical health benefits. In addition, the
financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of
coverage) that apply to mental health benefits or substance use disorder benefits will not be more restrictive than the
predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits;
mental health benefits and substance use disorder benefits will not be subject to any separate cost sharing requirements
or treatment limitations that only apply to such benefits; if the Plan provides for out of network medical/surgical or
substance use disorder benefits, it will provide for out of network mental health and substance use disorder benefits and
standards for medical necessity determinations and reasons for any denial of benefits relating to mental health benefits
and substance use disorder benefits will be made available upon request to plan participants. Such coverage shall be
subject to all other provisions of this Plan.

9.6 Continuation of Coverage During Family or Medical Leave . During any period which an Active Employee
Participant is on a family or medical leave as defined in the Family or Medical Leave Act, any benefit elections in force
for such Participant shall remain in effect. While the Participant is on paid leave, contributions shall continue. If the
Participant is on an unpaid leave, the Participant may elect to prepay required contributions on a pre-tax basis before the
commencement of such unpaid leave. Alternatively, the Participant may elect to make such payments on an after-tax
basis monthly in accordance with an arrangement that the Plan Administrator shall provide. If coverage is not continued
during the entire period of the family or medical leave because the Participant declines to pay the premium, the coverage
must be reinstated upon reemployment with no exclusions or waiting periods, notwithstanding any other provision of this
Plan to the contrary. If the Participant does not return to work upon completion of the leave, the Participant must pay the
full cost of any health care coverage that was continued on his/her behalf during the leave. These rules apply to the
COBRA eligible programs.

9.7 Rights While on Military Leave . Pursuant to the provisions of the Uniformed Services Employment and
Reemployment Rights Act of 1994, an Active Employee Participant on military leave will be considered to be on a Leave
of Absence and will be entitled during the leave to the health and welfare benefits that would be made available to other
similarly situated employees if they were on a Leave of Absence. This entitlement will end if the individual provides
written notice of intent not to return to work following the completion of the military leave. The individual shall have the
right to continue his/her coverage, including any Dependent coverage, for the lesser of the length of the leave or 18
months. If the military leave is for a period of 31 days or more, the individual may be required to pay 102 percent of the
total premium (determined in the same manner as a COBRA continuation coverage premium). If coverage is not
continued during the entire period of the military leave because the individual declines to pay the premium or the leave
extends beyond 18 months, the coverage must be reinstated upon reemployment with no pre-existing condition
exclusions (other than for service-related illnesses or injuries) or waiting periods (other than those applicable to all
Eligible Employees).

9.8 Qualified Medical Child Support Orders . The Plan will comply with any Qualified Medical Child Support Order
issued by a court of competent jurisdiction or administrative body that requires the Plan to provide medical coverage to a
Dependent child of an Active Employee or Retired Employee Participant. The Plan Administrator will establish
reasonable procedures for determining whether a court order or administrative decree requiring medical coverage for a
Dependent child meets the requirements for a Qualified Medical Child Support Order. The cost of coverage or any
additional cost of such coverage, if any, shall be borne by the Participant.

9.9 Right of Recovery . If the Plan has made an erroneous or excess payment to any Participant, the Plan
Administrator shall be entitled to recover such excess from the individual or entity to whom such payments were made.
The recovery of such overpayment may be made by offsetting the amount of any other benefit or amount payable by the
amount of the overpayment under the Plan.

ARTICLE 10 COBRA

10.1 Continuation of Coverage Under COBRA . Participants shall have all COBRA continuation rights required by
federal law and all conversion rights. COBRA continuation coverage shall be continued as provided in this Article 10.

10.2 COBRA Continuation Coverage for Terminated Participants . A covered Active Employee Participant may
elect COBRA continuation coverage, at his/her own expense, if his participation under this Plan would terminate as a
result of one of the following Qualifying Events: an Employee's termination of employment or reduction of hours with an
Employer.

10.3 COBRA Continuation Coverage for Dependents . A Qualified Dependent may elect COBRA continuation
coverage, at his/her own expense, if his/her participation under this Plan would terminate as a result of a Qualifying
Event.

10.4 Period of Continuation Coverage for Covered Participants . A covered Active Employee Participant who
qualifies for COBRA continuation coverage as a result of a Participant's termination of employment or reduction in
hours of employment described in Subsection 10.2 may elect COBRA continuation coverage for up to 18 months
measured from the date of the Qualifying Event.
Coverage under this Subsection 10.4 may not continue beyond the:

(1) date on which the Active Employee Participant's Employer ceases to maintain this Plan;
(2) last day of the month for which premium payments have been made with respect to this Plan, if the individual
fails to make premium payments on time, in accordance with Subsection 10.6;
(3) date the covered Active Employee Participant becomes entitled to Medicare; or
(4) date the covered Participant is no longer subject to a pre-existing condition exclusion under the Participant's
other coverage or new employer plan for the type of coverage available under the COBRA eligible program for
which the COBRA election was made.

10.5 Period of COBRA Continuation Coverage for Dependents . If a Qualified Dependent elects COBRA
continuation coverage under a COBRA eligible program as a result of the an Active Employee Participant's termination
of employment as described in Subsection 10.2, continuation coverage may be continued for up to 18 months
measured from the date of the Qualifying Event. COBRA continuation coverage for all other Qualifying Events may
continue for up to 36 months.

Continuation coverage under this Subsection 10.5 with respect to a COBRA eligible program may not continue beyond the
date:

(1) on which premium payments have not been made, in accordance with Subsection 10.6 below;
(2) the Qualified Dependent becomes entitled to Medicare;
(3) on which the Employer ceases to maintain this Plan; or
(4) the Qualified Dependent is no longer subject to a pre-existing condition exclusion under the Participant's other
coverage or new employer plan for the type of coverage available under this Plan.

10.6 Contribution Requirements for COBRA Continuation Coverage . Covered Participants and Qualified
Dependents who elect COBRA continuation coverage as a result of a Qualifying Event will be required to pay
continuation coverage payments. Continuation coverage payments are the payments required for COBRA continuation
coverage that is an amount equal to a reasonable estimate of the cost to this Plan of providing coverage for all covered
Participants at the time of the Qualifying Event plus a 2% administrative expense. In the case of a disabled individual
who receives an additional 11-month extended coverage under COBRA, the Employer may assess up to 150% of the
cost for this extended coverage period. Such cost shall be determined on an actuarial basis and take into account such
factors as the Secretary of the Treasury may prescribe in regulations.
Covered Participants and Qualified Dependents must make the continuation coverage payment prior to the first day of
the month in which such coverage will take effect. However, a covered Participant or Qualified Dependent has 45 days
from the date of an affirmative election to pay the continuation coverage payment for the first month's payment and the
cost for the period between the date medical coverage would otherwise have terminated due to the Qualifying Event
and the date the covered Participant and/or Qualified Dependent actually elects COBRA continuation coverage.

The covered Participant and/or Qualified Dependent shall have a 30-day grace period to make the continuation
coverage payments due thereafter. Continuation coverage payments must be postmarked on or before the completion
of the 30-day grace period. If continuation coverage payments are not made on a timely basis, COBRA continuation
coverage will terminate as of the last day of the month for which timely premiums were made. The 30-day grace
period shall not apply to the 45-day period for the first month's payment of COBRA premiums as set out in the section
above.

If payment is received that is significantly less than the required continuation coverage payment, then continuation
coverage will terminate as of the last day of the month for which premiums were paid. A payment is considered
significantly less than the amount due if it is greater than the lesser of $50 or 10% of the required continuation
coverage payment. Upon receipt of a continuation coverage payment that is insignificantly less than the required
amount, the Plan Administrator must notify the covered Participant or Qualified Dependent of the amount of the
shortfall and provide them with an additional 30-day grace period from the date of the notice for this payment only.

10.7 Limitation on Participant's Rights to COBRA Continuation Coverage .

(1) If a Qualified Dependent loses, or will lose medical coverage under this Plan as a result of divorce, legal
separation, entitlement to Medicare, or ceasing to be a Dependent, such Qualified Dependent is
responsible for notifying the Plan Administrator in writing within 60 days of the Qualifying Event. Failure to
make timely notification will terminate the Qualified Dependent's rights to COBRA continuation coverage
under this Article.
(2) A Participant must complete and return the required enrollment materials within 60 days from the later of
(a) the date of loss of coverage, or (b) the date the Plan Administrator sends notice of eligibility for COBRA
continuation coverage. Failure to enroll for COBRA continuation coverage during this 60-day period will
terminate all rights to COBRA continuation coverage under this Article. An affirmative election of COBRA
continuation coverage by a Participant or his/her spouse shall be deemed to be an election for that
Participant's Dependent(s) who would otherwise lose coverage under the Plan.

10.8 Subsequent Qualifying Event . If a second Qualifying Event occurs during an 18-month extension explained
above, coverage may be continued for a maximum of 36 months from the date of the first Qualifying Event. In the
event the Dependent loses coverage due to a Qualifying Event and after such date the Participant becomes entitled to
Medicare, the Dependent shall have available up to 36 months of coverage measured from the date of the Qualifying
Event that causes the loss of coverage. If the Participant was entitled to Medicare prior to the Qualifying Event, the
Dependent shall have up to 36 months of coverage measured from the date of entitlement to Medicare.
10.9 Extension of COBRA Continuation Period for Disabled Individuals . The period of continuation shall be
extended to 29 months in total (measured from the date of the Qualifying Event) in the event the individual is disabled
as determined by the Social Security laws within 60 days of the Qualifying Event. The individual must provide evidence
to the Plan Administrator of such Social Security determination prior to the earlier of 60 days after the date of the Social
Security determination, or the expiration of the initial 18 months of COBRA continuation coverage. In such event, the
Employer may charge the individual up to 150% of the COBRA cost of the coverage.

ARTICLE 11 PRIVACY OF MEDICAL INFORMATION

11.1 Definitions . For purposes of this Article 11, the following defined terms shall have the meaning assigned to
such terms in this subsection:
(1) "Business Associate" shall have the meaning assigned to such phrase at 45 C.F.R. 160.103;

(2) "Health Care Operations" shall have the meaning assigned to such phrase at 45 C.F.R. 164.501;

(3) "HIPAA" shall mean Parts 160 ("General Administrative Requirements") and 164 ("Security and Privacy")
of Title 45 of the Code of Federal Regulations as such parts are amended from time to time;

(4) "Payment" shall have the meaning assigned to such phrase at 45 C.F.R 160.103;

(5) "Protected Health Information" or "PHI" shall have the meaning assigned to such phrase at 45 C.F.R.
160.103; and

(6) "Treatment" shall have the meaning assigned to such phrase at 45 C.F.R. 164.501.

11.2 Privacy Provisions Relating to Protected Health Information ("PHI") . The Plan and its Business Associates
shall use and disclose PHI to the extent permitted by, and in accordance with, HIPAA, for purposes of providing
benefits under the Plan and for purposes of administering the plan, including, by way of illustration and not by way of
limitation, for purposes of Treatment, Payment, and Health Care Operations.
11.3 Disclosure of De-Identified or Summary Health Information . The HIPAA Plan, or, with respect to the HIPAA
Plan, a health insurance issuer, may disclose summary health information (as that phrase is defined at 45 C.F.R.
160.5049a)) to the Plan Sponsor of the HIPAA Plan (and its affiliates) if such entity requests such information for the
purpose of:

(1) Obtaining premium bids from health plans for providing health
insurance coverage under the HIPAA Plan;
(2) Modifying, amending or terminating the group health benefits
under the HIPAA Plan.

In addition, the HIPAA Plan or a health insurance insurer with respect to the HIPAA Plan may disclose to the Plan Sponsor
of the HIPAA Plan (or its affiliates) information on whether an individual is participating in the group health benefits provided
by the HIPAA Plan or is enrolled in, or has ceased enrollment with health insurance offered by the HIPAA Plan.

11.4 The HIPAA Plan Will Use and Disclose PHI as Required by Law
or as Permitted by the Authorization of the Participant or Beneficiary .

Upon submission of an authorization signed by a Participant, beneficiary, subscriber or personal representative that meets
HIPAA requirements, the HIPAA Plan will disclose PHI.

In addition, PHI will be disclosed to the extent permitted or required by law, without the submission of an authorization form.

11.5 Disclosure of PHI to the Plan Sponsor . The HIPAA Plan will disclose information to the Plan Sponsor only
upon certification from the Plan Sponsor that the HIPAA Plan documents have been amended to incorporate the
assurances provided below.

The Plan Sponsor agrees to:

(1) not use or further disclose PHI other than as permitted or required by the HIPAA Plan document or as required
by law;

(2) ensure that any affiliates or agents, including a subcontractor, to whom the Plan Sponsor provides PHI
received from the HIPAA Plan, agrees to the same restrictions and conditions that apply to the Plan Sponsor
with respect to such PHI;

(3) not use or disclose PHI for employment-related actions and decisions unless authorized by the individual to
whom the PHI relates;

(4) not use or disclose PHI in connection with any other benefits or employee benefit plan of the Plan Sponsor or
its affiliates unless permitted by the Plan or authorized by an individual to whom the PHI relates;

(5) report to the Plan any PHI use or disclosure that is inconsistent with the uses or disclosures provided for of
which it becomes aware;

(6) make PHI available to an individual in accordance with HIPAA's access rules;

(7) make PHI available for amendment and incorporate any amendments to PHI in accordance with HIPAA;
(8) make available the information required to provide an accounting
of disclosures;

(9) make internal practices, books and records relating to the use and disclosure of PHI received from the HIPAA
Plan available to the Secretary of the United States Department of Health and Human Resources for purposes
of determining the Plan's compliance with HIPAA; and

(10) if feasible, return or destroy all PHI received from the HIPAA Plan that the Plan Sponsor still maintains in any
form, and retain no copies of such PHI when no longer needed for the purpose for which disclosure was made
(or if return or destruction is not feasible, limit further uses and disclosures to those purposes that make the
return or destruction infeasible).

11.6 Separation Between the Plan Sponsor and the HIPAA Plan . In accordance with HIPAA, only the following
employees and Business Associate personnel shall be given access to PHI:

(1) employees of the AT&T Benefits and/or AT&T Executive Compensation organizations responsible for
administering group health plan benefits under the HIPAA Plan, including those employees whose functions in
the regular course of business include Payment, Health Care Operations or other matters pertaining to the
health care programs under a HIPAA Plan;

(2) employees who supervise the work of the employees described in (1), above;

(3) support personnel, including other employees outside of the AT&T Benefits or AT&T Executive Compensation
organizations whose duties require them to rule on health plan-related appeals or perform functions
concerning the HIPAA Plan;

(4) investigatory personnel to the limited extent that such PHI is necessary to conduct investigations of possible
fraud;

(5) outside and in-house legal counsel providing counsel to the HIPAA Plan;

(6) consultants providing advice concerning the administration of the HIPAA Plan; and

(7) the employees of Business Associates charged with providing services to the HIPAA Plan.

The persons identified above shall have access to and use PHI to the extent that such access and use is necessary
for the administration of group health benefits under a HIPAA Plan. If these persons do not comply with this Plan
document, the Plan Sponsor shall provide a mechanism for resolving issues of noncompliance, including disciplinary
sanctions.
11.7 Enforcement .
Enforcement of this Article 11 shall be as provided for by HIPAA. In particular, participants and beneficiaries are not
authorized to sue with regard to purported breaches of this Article 11 except as explicitly permitted by HIPAA.

ARTICLE 12 CLAIM AND APPEAL PROCESS

12.1 Claims for Benefits under the Plan . See Appendix B.

12.2 Claims Related to Basic Eligibility for Coverage under the Plan and Claims Related to the Article 8
Loyalty Conditions .

(a) Claims. A person who believes that he or she is being denied a benefit to which he or she is entitled under this Plan
(hereinafter referred to as a "Claimant") based on a claim for basic eligibility for coverage under the Plan or a claim related to the
Article 8 Loyalty Conditions may file a written request for such benefit with the Executive Compensation Administration
Department, setting forth his or her claim. The request must be addressed to the AT&T Executive Compensation Administration
Department at its then principal place of business.

(b) Claim Decision. Upon receipt of a claim, the AT&T Executive Compensation Administration Department shall
review the claim and provide the Claimant with a written notice of its decision within a reasonable period of time, not to exceed
ninety (90) days, after the claim is received. If the AT&T Executive Compensation Administration Department determines that
special circumstances require an extension of time beyond the initial ninety (90)- day claim review period, the AT&T Executive
Compensation Administration Department shall notify the Claimant in writing within the initial ninety (90)-day period and explain the
special circumstances that require the extension and state the date by which the AT&T Executive Compensation Administration
Department expects to render its decision on the claim. If this notice is provided, the AT&T Executive Compensation Administration
Department may take up to an additional ninety (90) days (for a total of one hundred eighty (180) days after receipt of the claim) to
render its decision on the claim.

If the claim is denied by the AT&T Executive Compensation Administration Department, in whole or in part, the AT&T
Executive Compensation Administration Department shall provide a written decision using language calculated to be understood
by the Claimant and setting forth: (i) the specific reason or reasons for such denial; (ii) specific references to pertinent provisions
of this Plan on which such denial is based; (iii) a description of any additional material or information necessary for the Claimant to
perfect his or her claim and an explanation of why such material or such information is necessary; (iv) a description of the Plan's
procedures for review of denied claims and the steps to be taken if the Claimant wishes to submit the claim for review; (v) the time
limits for requesting a review of a denied claim under this section and for conducting the review under this section ; and (vi) a
statement of the Claimant's right to bring a civil action under Section 502(a) of ERISA if the claim is denied following review under
this section.
(c) Request for Review. Within sixty (60) days after the receipt by the Claimant of the written decision on the claim
provided for in this section, the Claimant may request in writing that the Plan Administrator review the determination of the AT&T
Executive Compensation Administration Department. Such request must be addressed to the Plan Administrator at the address
provided in the written decision regarding the claim. To assist the Claimant in deciding whether to request a review of a denied
claim or in preparing a request for review of a denied claim, a Claimant shall be provided, upon written request to the Plan
Administrator and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the
claim. The Claimant or his or her duly authorized representative may, but need not, submit a statement of the issues and
comments in writing, as well as other documents, records or other information relating to the claim for consideration by the
Committee. If the Claimant does not request a review by the Plan Administrator of the AT&T Executive Compensation
Administration Department's decision within such sixty (60)-day period, the Claimant shall be barred and estopped from
challenging the determination of the AT&T Executive Compensation Administration Department.

(d) Review of Decision. Within sixty (60) days after the Plan Administrator's receipt of a request for review, the
Plan Administrator will review the decision of the AT&T Executive Compensation Administration Department. If the Plan
Administrator determines that special circumstances require an extension of time beyond the initial sixty (60)-day review period,
the Plan Administrator shall notify the Claimant in writing within the initial sixty (60)-day period and explain the special
circumstances that require the extension and state the date by which the Plan Administrator expects to render its decision on the
review of the claim. If this notice is provided, the Plan Administrator may take up to an additional sixty (60) days (for a total of one
hundred twenty (120) days after receipt of the request for review) to render its decision on the review of the claim.

During its review of the claim, the Plan Administrator shall:

(1) Take into account all comments, documents, records, and other information submitted by the Claimant relating
to the claim, without regard to whether such information was submitted or considered in the initial review of the claim conducted
pursuant to this section;

(2) Follow reasonable procedures to verify that its benefit determination is made in accordance with the applicable
Plan documents; and

(3) Follow reasonable procedures to ensure that the applicable Plan provisions are applied to the Participant to
whom the claim relates in a manner consistent with how such provisions have been applied to other similarly-situated Participants.

After considering all materials presented by the Claimant, the Plan Administrator will render a decision, written in a
manner designed to be understood by the Claimant. If the Plan Administrator denies the claim on review, the written decision will
include (i) the specific reasons for the decision; (ii) specific references to the pertinent provisions of this Plan on which the decision
is based; (iii) a statement that the Claimant is entitled to receive, upon request to the Plan Administrator and free of charge,
reasonable access to, and copies of, all documents, records, and other information relevant to the claim; and (iv) a statement of
the Claimant's right to bring a civil action under Section 502(a) of ERISA.

In any case, a Participant or Beneficiary may have further rights under ERISA. The Plan provisions require that
Participants or Beneficiary pursue all claim and appeal rights described in this section before they seek any other legal recourse
regarding claims for benefits.
Appendix A

AT&T Health Plan

2016 Monthly Contributions, Annual Deductible, Coinsurance Percentages and


Annual Out-of-Pocket Maximum

Active Participants
Monthly Contributions Individual - $67
Individual + Spouse - $83
Individual + 1 or More Children - $67
Individual + Spouse + 1 or More Children - $162
Annual Deductible (combined with group Individual - $1,500
medical plan annual deductible) Individual + 1 or More - $3,000
Individual + Spouse + 1 or More Children - $2,600
Coinsurance Percentage (Note 1) 10% after the Annual Deductible is met. Coinsurance applies until the Annual Out-of-
Pocket Maximum is reached.
Annual Out-of-Pocket Maximum Individual - $4,000
Individual + 1 or More - $8,000
Note 1: For prescription pharmacy services, the Coinsurance shall equal the lesser of (i) the Coinsurance Percentage multiplied
by the amount of the Covered Health Services or (ii) the amount payable by the Participant for such services under the Basic
Plan.

Retired Participants Monthly Contributions


Retired Prior to August 31, 1992 and Surviving Individual - $183
Spouses Individual + Spouse - $183
Individual + 2 or More - $183

Retired on or after September 1, 1992 and Class A Individual - $461
Surviving Spouses Individual + Spouse - $754
Individual + 1 or More Children - $461
Note: The Plan Administrator shall maintain Individual + Spouse + 1 or More Children - $717
records governing whether a Retired Class B Individual - $564
Participant is in Class A, B, C or D. Individual + Spouse - $922
Individual + 1 or More Children - $564
Individual + Spouse + 1 or More Children - $878
Class C Individual - $712
Individual + Spouse - $1,153
Individual + 1 or More Children - $712
Individual + Spouse + 1 or More Children - $1,108
Class D Individual - $868
Individual + Spouse - $1,777
Individual + 1 or More Children - $868
Individual + Spouse + 1 or More Children - $1,760

Monthly Contributions for COBRA Continuation Coverage


Active COBRA Individual - $769
Individual + Spouse - $1,577
Individual + 1 or More Children - $1,270
Individual + Spouse + 1 or More Children - $2,202
Retired Prior to August 31, 1992 and Surviving Individual - $1,284
Spouses COBRA Individual + 1 - $2,631
Individual + 2 or More - $3,615
Retired on or after September 1, 1992 and Individual - $1,286
Surviving Spouses COBRA Individual + Spouse - $2,635
Individual + 1 or More Children - $2,315
Individual + Spouse + 1 or More Children - $3,859
Appendix B

Claims Procedure Applicable to Claims for Benefits under the Plan

Claim for Benefits Procedures


You, your covered dependents or a duly authorized person has the right under ERISA and the Plan to file a written claim for benefits under the
Plan. The following describes the procedures used by the Plan to process claims for benefits, along with your rights and responsibilities. These
procedures were designed to comply with the rules of the Department of Labor (DOL) concerning claims for Benefits. It is important that you follow
these procedures to make sure that you receive full benefits under the Plan.
The Plan is an ERISA plan, and you may file suit in federal court if you are denied benefits you believe are due you under the Plan. However, you
must complete the full claims and appeal process offered under the Plan before filing a lawsuit.
Filing a Claim for Benefits
When filing a claim for benefits, you should file the claim with the Claims Administrator. The Claims Administrator is the third party to whom claims
and appeal responsibility has been delegated as permitted under Section 9.1 of the Plan.
The following are not considered claims for benefits under the Plan:
A claim related to basic eligibility for coverage under the Plan (See Section 12.2 of the Plan).

A claim related to the Loyalty Conditions contained in Article 8 of the Plan (See Section 12.2 of the Plan).

Claim Filing Limits


A request for payment of benefits must be submitted within one year after the date of service or the date the prescription was provided.
Required Information
When you request payment of benefits from the Plan, you must provide certain information as requested by the Claims Administrator.
Benefit Determinations
Post-Service Claims
Post-service claims are those claims that are filed for payment of benefits after medical care has been received. If your post-service claim is denied,
you will receive a written notice from the Claims Administrator within 30 days of receipt of the claim, as long as all needed information identified
above and any other information that the Claims Administrator may request in connection with services rendered to you was provided with the
claim. The Claims Administrator will notify you within this 30-day period if additional information is needed to process the Claim and may request a
one-time extension not longer than 15 days and pend your Claim until all information is received.
Once notified of the extension, you then have 45 days to provide this information. If all of the needed information is received within the 45-day time
frame and the claim is denied, the claims Administrator will notify you of the denial within 15 days after the information is received. If you don't
provide the needed information within the 45-day period, your claim will be denied.
A denial notice will explain the reason for denial, refer to the part of the Plan on which the denial is based, and provide the claim appeal procedures.
Pre-Service Claims
Pre-service claims are those claims that require notification or approval prior to receiving medical care or require notification within a specified time
period after service begins as required under the Plan provisions. If your claim is a pre-service claim and is submitted properly with all needed
information, you will receive written notice of the claim decision from the Claims Administrator within 15 days of receipt of the claim. If you file a pre-
service claim improperly, the Claims Administrator will notify you of the improper filing and how to correct it within five days after the pre-service
claim is received. If additional information is needed to process the pre-service claim, the Claims Administrator will notify you of the information
needed within 15 days after the claim was received and may request a one-time extension not longer than 15 days and pend your claim until all
information is received. Once notified of the extension, you then have 45 days to provide this information. If all of the needed information is received
within the 45-day time frame, the Claims Administrator will notify you of the determination within 15 days after the information is received. If you
don't provide the needed information within the 45-day period, your claim will be denied. A denial notice will explain the reason for denial, refer to
the part of the Plan on which the denial is based, and provide the claim appeal procedures.
Urgent Care Claims That Require Immediate Action
Urgent care claims are those claims that require notification or approval prior to receiving medical care in which a delay in treatment could seriously
jeopardize your life or health or the ability to regain maximum function or, in the opinion of a physician with knowledge of your medical condition,
could cause severe pain. In these situations:
You will receive notice of the benefit determination in writing or electronically within 72 hours after the Claims Administrator receives all
necessary information, taking into account the seriousness of your condition.

Notice of denial may be oral with a written or electronic confirmation to follow within three days.

If you filed an urgent claim improperly, the Claims Administrator will notify you of the improper filing and how to correct it within 24 hours after the
urgent claim was received. If additional information is needed to process the claim, the Claims Administrator will notify you of the information
needed within 24 hours after the claim was received. You then have 48 hours to provide the requested information.
You will be notified of a determination no later than 48 hours after either:
The Claims Administrator's receipt of the requested information.

The end of the 48-hour period within which you were to provide the additional information, if the information is not received within that time.

A denial notice will explain the reason for denial, refer to the part of the Plan on which the denial is based, and provide the claim appeal procedures.
Concurrent Care Claims
If an ongoing course of treatment was previously approved for a specific period of time or number of treatments, and your request to extend the
treatment is an urgent care claim as defined above, your request will be decided within 24 hours, provided your request is made at least 24 hours
prior to the end of the approved treatment. The Claims Administrator will make a determination on your request for the extended treatment within 24
hours from receipt of your request.
If your request for extended treatment is not made at least 24 hours prior to the end of the approved treatment, the request will be treated as an
urgent care claim and decided according to the time frames described above. If an ongoing course of treatment was previously approved for a
specific period of time or number of treatments, and you request to extend treatment in a non-urgent circumstance, your request will be considered
a new claim and decided according to post-service or pre-service timeframes, whichever applies.
How to Appeal a Claim Decision
If you disagree with a pre-service or post-service claim determination after following the above steps, you can contact the applicable Claims Administrator in
writing to formally request an appeal. Your first appeal request must be submitted to the Claims Administrator within 180 days after you receive the Claim
denial.

Appeal Process
A qualified individual who was not involved in the decision being appealed will be appointed to decide the appeal. The Claims Administrator may
consult with, or seek the participation of, medical experts as part of the appeal resolution process. You must consent to this referral and the sharing
of pertinent medical claim information. Upon written request and free of charge you have the right to reasonable access to and copies of all
documents, records and other information relevant to your claim for benefits.
Appeals Determinations
Pre-Service and Post-Service Claim Appeals
You will be provided written or electronic notification of the decision on your appeal as follows:
For appeals of pre-service claims, the first-level appeal will be conducted and you will be notified by the Claims Administrator of the decision
within 15 days from receipt of a request for appeal of a denied Claim. The second-level appeal will be conducted and you will be notified by the
Claims Administrator of the decision within 15 days from receipt of a request for review of the first-level appeal decision.

For appeals of post-service claims, the first-level appeal will be conducted and you will be notified by the Claims Administrator of the decision
within 30 days from receipt of a request for appeal of a denied claim. The second-level appeal will be conducted and you will be notified by the
Claims Administrator of the decision within 30 days from receipt of a request for review of the first-level appeal decision.

For procedures associated with urgent Claims, refer to the following "Urgent Claim Appeals That Require Immediate Action" section.

If you are not satisfied with the first-level appeal decision of the Claims Administrator, you have the right to request a second-level appeal from
the Claims Administrator. Your second level appeal request must be submitted to the Claims Administrator in writing within 60 days from receipt
of the first-level appeal decision.

For pre-service and post-service claim appeals, the Plan Administrator has delegated to the Claims Administrator the exclusive right to interpret
and administer the provisions of the Plan. The Claims Administrator's decisions are conclusive and binding.

Please note that the Claims Administrator's decision is based only on whether or not benefits are available under the Plan for the proposed
treatment or procedure. The determination as to whether the pending health service is necessary or appropriate is between you and your physician.
Urgent Claim Appeals That Require Immediate Action
Your appeal may require immediate action if a delay in treatment could significantly increase the risk to your health or the ability to regain maximum
function or cause severe pain.
In these urgent situations, the appeal does not need to be submitted in writing. You or your physician should call the Claims Administrator as soon
as possible. The Claims Administrator will provide you with a written or electronic determination within 72 hours following receipt by the Claims
Administrator of your request for review of the determination taking into account the seriousness of your condition.
For urgent claim appeals, the Plan Administrator has delegated to the applicable Claims Administrator the exclusive right to interpret and administer
the provisions of the Plan. The Claims Administrator's decisions are conclusive and binding.
In any case, a Participant or Beneficiary may have further rights under ERISA. The Plan provisions require that
Participants or Beneficiary pursue and exhaust all claim and appeal rights described in this section before they seek
any other legal recourse regarding claims for benefits.
APPENDIX C

DISCLOSURE OF GRANDFATHERED STATUS

MODEL NOTICE

AT&T, as plan sponsor, believes this Plan is a "grandfathered health plan" under the Patient Protection and Affordable Care Act
(the "Affordable Care Act"). As permitted by the Affordable Care Act, a grandfathered health plan can preserve certain basic
health coverage that was already in effect when that law was enacted. Being a grandfathered health plan means that the plan may
not include certain consumer protections of the Affordable Care Act that apply to other plans, for example, the requirement for the
provision of preventive health services without any cost sharing. However, grandfathered health plans must comply with certain
other consumer protections of the Affordable Care Act, for example, the elimination of lifetime limits on benefits.

Questions regarding which protections apply and which protections do not apply to a grandfathered health plan and what might
cause a plan to change from grandfathered health plan status can be directed to the plan administrator at P.O. Box 30558, Salt
Lake City, Utah 84130-0558 . You may also contact the Employee Benefits Security Administration, U.S. Department of labor at
1-866-444-3272 or www.dol.gov/ebsa/healthreform . This website has a table summarizing which protections do and do not apply
to grandfathered health plans.
Exhibit10-m

AT&TPENSIONBENEFIT
MAKEUPPLANNO.1

Effective:January1,2005
RestatedDecember31,2008
AmendedDecember31,2011
AT&TPENSIONBENEFITMAKEUPPLANNO.1

SECTION1:PurposeandHistory

1.1.Purpose.TheprimarypurposeoftheAT&TPensionBenefitMakeUpPlanNo.1(the"Plan")istosupplementthebenefitsa
ParticipantisentitledtoreceiveunderapensionplanthatisqualifiedunderCodeSection401(a)andissponsoredbyAT&TInc.("AT&T"or
the"Company")oroneofitsSubsidiaries(collectively,the"PensionPlans").ThisPlanrecognizescompensationearnedbyanindividualwho
iseligibletoparticipateinthisPlanasprovidedinSection2(a"Participant")thatisnotrecognizedinthedeterminationofbenefitsunderthe
Participant'sPensionPlan,andthisPlanisintendedtomakeupbenefitsthatwouldotherwisebelostbecauseofsuchPensionPlanlimitations.

ThePlanisintendedtoprovidedeferredcompensationbenefitsbyrecognizingcompensationearnedbyaParticipantthatisinexcessofthe
amountthatisrecognizedunderSection401(a)(17)oftheInternalRevenueCodeof1986,asamended(the"Code"),andtoprovidebenefitsto
theextentsuchParticipant'sPensionPlanbenefitsarelimitedbytheprovisionsofCodeSection415.

1.2.History.ThePlaniseffectiveasofJanuary1,2005,andconstitutesanamendmentandrestatementoftheplanslistedinAttachmentA
(the"PredecessorPlans").AT&Tandcompanieswhoseequityinterestsareowned100%,directlyorindirectly,byAT&T("Subsidiary")
sponsoredthePredecessorPlansforthebenefitoftheirrespectiveeligibleemployees.NoadditionalbenefitsshallaccrueunderthePredecessor
PlansafterDecember31,2004,andbenefitsofParticipantswhoterminateemploymentonorafterJanuary1,2005shallbepaidsolelyunder
thisPlan.ThePredecessorPlanswereintendedtosupplementparticipants'PensionPlanbenefitsby(i)recognizingcompensationthatisnot
eligibletoberecognizedforpurposesofcalculatingPensionPlanbenefits,eitherasaresultofstatutorylimitationsorPensionPlanlimitations,
and/or(ii)providingbenefitsinexcessofthelimitationsofCodeSection415.ThisPlanisintendedtoaggregateallofsuchPredecessorPlans
andprovidesubstantiallysimilarbenefits,onagoingforwardbasis.Further,thisPlanisintendedtosatisfytherequirementsofCodeSection
409A,effectivewithrespecttoamountsdeferredafterDecember31,2004.DuringtheperiodfromJanuary1,2005toDecember31,2008,the
PlanhasbeenoperatedingoodfaithcompliancewiththeprovisionsofCodeSection409A,InternalRevenueServiceNotice2005-1,andthe
finalTreasuryRegulationsforCodeSection409A,andanyothergenerallyapplicableguidancepublishedintheInternalRevenueService
BulletinwithaneffectivedatepriortoJanuary1,2009.OnorafterJanuary1,2009,thisPlanshallbeinterpretedandconstruedconsistentwith
therequirementsofCodeSection409Aandallapplicableguidanceissuedthereunder.
SECTION2:EligibilityandParticipation

2.1.Eligibility.BenefitaccrualinthisPlanislimitedtoeachemployeeofanySubsidiaryofAT&Twho:

(a) participatesinaPensionPlan;

(b) isaGeneralManagementleveloraboveemployee;

(c) isnoteligibleforbenefitsunderthe2005AT&TSupplementalEmployeeRetirementPlan;and

(d) receivestypesofcompensationthatareusedtodeterminetheemployee'sPensionPlanbenefit(e.g.,basesalaryorshortterm
incentivecompensation)inanycalendaryear,butthatcompensationisnotrecognizedforpurposesofdeterminingsuch
employee'sPensionPlanbenefit,orwhosePensionPlanbenefitislimitedbyCodeSection415.

(e) isnotanemployeeofacompanyacquiredbyAT&TonorafterSeptember1,2005unlessdesignatedaseligiblebyAT&T's
highestrankingofficerspecificallyresponsibleforhumanresourcematters;provided,however,effectiveJanuary1,2009,this
section2.1(e)shallnotapplytoanyemployeewhosatisfiestheeligibilityprovisionsofthissection2.1(a),(b),(c),and(d)andis
employedbyAT&TInc.oranyofitsSubsidiariesonorafterJanuary1,2009,otherthananemployeewhoisaparticipantinthe
BellSouthCorporationSupplementalExecutiveRetirementPlan,theAT&TCorp.NonqualifiedPensionPlan,ortheAT&T
Corp.ExcessPensionPlan.

(f) additionally,anemployeewho(i)meetstherequirementsofparagraphs(a),(b),(c),and(d),(ii)isemployedbyAT&TInc.or
anyofitsSubsidiariesonorafterJanuary1,2009and(iii)either(x)participatesintheBellSouthCorporationSupplemental
ExecutiveRetirementPlan("BLSSERP")solelywithatotallyfrozenBLSSERPbenefitfollowingajobdemotionintoan
ineligiblepositionpriortoDecember31,2011or(y)previouslyparticipatedintheBLSSERPbutwhoseannualizedbenefit
undertheBLSSERPasofDecember31,2011was$0andisnotdueanybenefitundertheBLSSERPpursuanttothe
amendmenttoSection4.(a)(I)(A)ofsuchplaneffectiveDecember31,2011,mayparticipateinthePlan.
2.2.ConstructionofEligibilityProvisions.TheeligibilityprovisionsofSection2.1,above,shallbeinterpretedinthebroadestpossible
senseinorderthatthisPlancanrecognizeallbasesalaryandshorttermincentivecompensation,wheneverearned,forthepurposeofmakingup
anybenefitthatwouldotherwisebelostduetothefactthatthePensionPlanisunabletorecognizeanysuchcompensationindetermining
retirementbenefits.

2.3.LossofEligibility.IntheeventthatanyParticipantceasestosatisfytheeligibilityconditionsofSection2.1,suchParticipantshall
neverthelesscontinuetobeeligibletoreceivebenefitsunderthisPlan,however,noadditionalbenefitsshallaccrueunderthePlanunlessand
untilheorsheshallre-attaineligibilityhereunder.

2.4.IneligibleParticipant.NotwithstandinganyotherprovisionofthisPlantothecontrary,ifanyParticipantisdeterminednottobe"ina
selectgroupofmanagementorhighlycompensatedemployees"withinthemeaningoftheEmployeeRetirementIncomeSecurityActof1974,
asamended("ERISA"),ortheregulationsthereunder,suchParticipantshallnotbeeligibletocontinuetoaccrueabenefitunderthisPlanonor
aftersuchdatetotheextentbenefitshereunderareattributabletocompensationinexcessoftheamountunderCodeSection401(a)(17)andnot
attributabletothelimitationsimposedbytheprovisionsofCodeSection415.

2.5NoDuplicationofBenefits.NotwithstandinganyprovisionofthisPlantothecontrary,ifaParticipantceasestoaccruebenefitsunder
thisPlanandbecomeseligibletoreceivetheequivalentofhis/herbenefitunderthisPlanpursuanttothePensionBenefitMakeUpPlanNo.2,
totheextentsuchbenefitispaidpursuanttosuchotherplan,noduplicationofsuchpaymentshallbemadepursuanttothisPlan.

SECTION3:AmountofPlanBenefits

3.1.AmountofPlanBenefits.SubjecttothetermsandconditionsofthePlan,thePlanbenefitspayableto,oronaccountof,aParticipant
underthePlanasofanydateshallbeanamountasdescribedintheparagraphsbelow.Aparticipant'sPensionPlanProgramisoneofthenon-
bargainedprogramsthataredefinedandoperatedaspartoftheAT&TPensionBenefitPlan:SoutheastManagementProgram,AT&TLegacy
ManagementProgram,ManagementCashBalanceProgram,NonbargainedProgram,andWirelessProgram.ThePlanbenefitisequalto:

(a)theamountoftheParticipant'sbenefitundertheapplicablePensionPlanProgramandperiodofemploymentinwhichheorshe
activelyparticipates(i.e.,accruesbenefits)onthedateofhisorherterminationofemploymentthatwouldhavebeenpayabletooron
accountoftheParticipantundersuchPensionPlanProgramasofthatdate,determinedwithoutregardtothelimitationsimposedby
eitherCodeSection401(a)(17)or415anddeterminedasifalltypesofcompensationthatareusedtodeterminetheemployee'sPension
Planbenefit(e.g.,basesalaryandshort-termincentivecompensationthattheParticipantiseligibletoreceive)wererecognizedfor
purposesofcalculatingsuchamount;
(i) iftheParticipantisalsoeligibleforaseparatefrozenbenefitunderanotherPensionPlanProgramforapriorperiodof
employment,suchamountisnotincludedintheamountdeterminedunderthissubsection(a);exceptinthefollowing
case:

(ii) iftheParticipant'sservicewasbridgedspecificallyduetotheSixthAmendmenttotheAT&TPensionBenefitPlan,
wheresuchamendmentwasapprovedinNovember2010andeffectiveJanuary1,2010,incaseswhereaPensionPlan
participanttransferredemploymentfromtheLegacyAT&TcompanyorLegacyBellSouthcompanytoCingular
Wireless,afterthejointventureformationofCingularandpriortoAT&T'sacquisitionofBellSouth,thenthetotal
PensionPlanbenefit(fromthefrozenseparatePensionPlanProgramandcurrentPensionPlanProgram)willbeincluded
intheamountdeterminedunderthissubsection(a);

REDUCEDBY

(b)theamountoftheParticipant'sbenefitactuallypaidundertheapplicablePensionPlanProgramandperiodofemploymentin
whichheorsheactivelyparticipates(i.e.,accruesbenefits)onthedateofhisorherterminationofemployment;

(i) iftheParticipantisalsoeligibleforaseparatefrozenbenefitunderanotherPensionPlanProgramforapriorperiodof
employment,suchamountisnotincludedintheamountdeterminedunderthissubsection(b);exceptinthefollowing
case:

(ii) iftheParticipant'sservicewasbridgedspecificallyduetotheSixthAmendmenttotheAT&TPensionBenefitPlan,
wheresuchamendmentwasapprovedinNovember2010andeffectiveJanuary1,2010,incaseswhereaPensionPlan
participanttransferredemploymentfromaLegacyAT&TcompanyorLegacyBellSouthcompanytoCingularWireless,
afterthejointventureformationofCingularandpriortoAT&T'sacquisitionofBellSouth,thenthetotalPensionPlan
benefit(fromthefrozenseparatePensionPlanProgramandcurrentPensionPlanProgram)willbeincludedintheamount
determinedunderthissubsection(b).

Theamountdeterminedundersubsection(a),above,shallbecalculatedinthesamemannerthatisusedforcalculatingtheamountunder
subsection(b),usingthebenefitcalculationmethodologyandthefactorsineffectundersuchPensionPlanasofthedateofhisterminationof
employment;theonlydifferencebeingtheamountofcompensationusedforcalculatingsuchamount.
ThePlanbenefitisFURTHERREDUCEDBY:

(c)amountofaBLSSERPparticipant'sfrozenBLSSERPbenefit.

Notwithstandingtheabovedescriptions,foranyParticipantwhoceasedtosatisfytheeligibilityconditionsofSection2.1(c)duetoinitial
participationintheAT&TSupplementalEmployeeRetirementPlanonorbeforeDecember31,2008shallhaveaPlanbenefitequalto
thegreaterof(d)or(e)describedbelow:

(d) theamountdescribedbyparagraphs3.1(a),3.1(b)and3.1(c)abovedeterminedasoftheParticipant'sactualtermination-of-
employmentdate.

(e) theamountdescribedbyparagraphs3.1(a),3.1(b)and3.1(c)abovedeterminedasiftheParticipanthadterminatedemployment
effectiveDecember31,2008.

3.2.ParticipantsinPredecessorPlans.IfaParticipantparticipatedinoneormorePredecessorPlanspriortobecomingaParticipantunder
thisPlan,benefitsunderthisPlanshallbenolessthanthebenefitsaccruedunderthePredecessorPlans,andthebenefitsunderthisPlanshallbe
inlieuofallbenefitsotherwisepayabletohimunderthePredecessorPlans.

SECTION4:PaymentofPlanBenefits

4.1DistributionofPlanBenefits.BenefitshereundershallbecalculatedanddistributeduponaParticipant'sterminationofemployment;
provided,however,distributionofPlanbenefitsofanyParticipantwhoisalsoanofficeroftheCompanyshallcommenceonthesixthmonth
anniversaryofsuchParticipant'sterminationofemployment.

4.2.FormofPlanBenefits.Benefitshereundershallbepaidintheformofalumpsum;provided,however,iftheamountoftheParticipant's
lumpsumbenefitexceeds$50,000asofhisterminationofemployment,thePlanbenefitshallbepaidinmonthlyinstallmentsoveraperiodof
ten(10)years..Notwithstandingtheforegoing,withrespecttoanyParticipantwho,priortoterminationofemploymentceasestosatisfythe
eligibilityconditionsofSection2.1,theformofsuchParticipant'sbenefit(lumpsumorten(10)yearmonthlyannuity)shallbedeterminedasof
thedatesuchParticipantceasestosatisfytheeligibilityconditionsofSection2.1.

Ifbenefitsaredistributedintheformofamonthlyannuityforten(10)years,themonthlypaymentsshallbecalculatedinthesame
mannerthatafinancialinstitutionwouldcalculatethemonthlypaymentsfora10-yearfixedinterestloan.
NothwithstandinganyotherprovisionofthisPlan,thebenefitsofanyParticipantwhowasaparticipantinandaccruedbenefitsunder
theCingularWirelessSBCExecutive2005TransitionPensionMakeUpPlan(whichisaPredecessorPlans)shallhavetheirbenefitsdistributed
exclusivelyinalumpsum.

4.3ConvertingFormofBenefit.ForallpurposesunderthePlan,thelumpsumbenefitandtenyearmonthlyinstallmentformofbenefit
shallbetheactuariallydeterminedequivalentofoneanother,asdeterminedbythePlanAdministratorinthePlanAdministrator'scompleteand
solediscretion,andtheamountofsuchbenefitsunderthePlanshallbedeterminedonthebasisoftheParticipant'sageandtherates,tables,and
factorswhichwouldbeutilizedtodeterminesuchbenefitunderthePensionPlanasofthedaterequiredformakingsuchdetermination..

SECTION5:GeneralandAdministrativeProvisions

5.1.PlanAdministration.TheCompanyshallbethePlanAdministratorofthePlan.ThePlanAdministrator'sresponsibilitieshereunder
shallbecarriedoutbyitsSeniorExecutiveVicePresidentresponsibleforHumanResourcesmatters.Theauthoritytocontrolandmanagethe
operationandadministrationofthePlanshallbevestedinthePlanAdministrator.ThePlanAdministratorhastheexclusiverightanddiscretion
toconstrue,interpretandapplytheprovisionsofthePlanandtheentitlementtobenefitsunderthePlaninaccordancewithitsterms.ThePlan
Administratormayestablish,adoptorrevisesuchrulesandregulationsasthePlanAdministratormaydeemnecessaryoradvisableforthe
administrationofthePlan.AnydecisionmadebythePlanAdministratoronanymatterwithinthePlanAdministrator'sdiscretionisconclusive,
finalandbindingonallpersons,andnotsubjecttofurtherreview.TheBenefitPlanCommitteeoftheCompanyshallgrantordenyclaimsfor
benefitsunderthePlanandauthorizedisbursements.Adequatenotice,pursuanttoapplicablelawandprescribedCompanypractices,shallbe
providedinwritingtoanyParticipantorBeneficiarywhoseclaimhasbeendenied,settingforththespecificreasonsforsuchdenial.Thereview
andappealproceduresforanyParticipantorBeneficiarywhoseclaimhasbeendeniedshallbethesameasthoseproceduressetforthinthe
PensionPlanunderwhichsuchParticipantorBeneficiaryisentitledtoorreceivedbenefits.
5.2.SourceofBenefits;UnsecuredCreditor.TheobligationsoftheCompanyunderthePlanaresolelycontractual.Anyamountpayable
underthetermsofthePlanshallbepaidfromthegeneralassetsoftheCompanyoraSubsidiary.Alternatively,amountspayableunderthe
termsofthePlanmaybepaidfromoneormoretruststhattheCompanyoraSubsidiarymightelecttoestablish,theassetsofwhichwillbe
subjecttotheclaimsofthegeneralcreditorsoftheCompanyortheSubsidiarythatcreatedthetrust.Participantsandtheirbeneficiariesshall
havenolegalorequitablerights,interest,orclaimsinanypropertyorassetsoftheCompanyoranySubsidiary.AnyandalloftheCompany's
oraSubsidiary'sassetsshallbe,andremain,thegeneral,unpledged,unrestrictedassetsoftheCompanyoranysuchSubsidiary.The
Company'soraSubsidiary'sobligationunderthePlanshallbemerelythatofanunfundedandunsecuredpromiseoftheCompanyoranysuch
SubsidiarytodistributecashunderthePlaninthefuture.IfaParticipant'stermofemploymentincludesservicebytwoSubsidiariesorbythe
CompanyandoneormoreSubsidiaries,theCompanyorSubsidiarywhichlastemployedtheParticipantshallbesolelyresponsibleforthe
entirebenefitpayableunderthePlan.

5.3.Notices.AnynoticeordocumentrequiredtobegiventoorfiledwiththePlanAdministratorshallbeconsideredtobegivenorfiledif
deliveredtothePlanAdministratorormailedbyregisteredmail,postageprepaid,tothePlanAdministrator.

5.4.ApplicableLaws.ThePlanshallbeconstruedandadministeredinaccordancewiththelawsoftheStateofTexas,totheextentthat
suchlawsarenotpreemptedbyERISAoranyotherlawsoftheUnitedStatesofAmerica.

5.5.GenderandNumber.Wherethecontextrequires,wordsinanygendershallincludeanyothergender,wordsinthesingularshall
includethepluralandthepluralshallincludethesingular.

5.6.BenefitsDeterminedasofTerminationofEmployment.ExceptasotherwisespecificallyprovidedinthePlan,therighttobenefits
underthePlanandtheamountofbenefitsofaParticipantwhohasterminatedorterminatesemploymentwiththeCompanyoraSubsidiary
shallbedeterminedinaccordancewiththeprovisionsofthePlanasineffectimmediatelypriortothatterminationofemployment.

5.7.BenefitsUnderPredecessorPlans.NotwithstandinganyprovisionofthisPlantothecontrary,nothingshallreduceorimpairthe
interestsofindividualswithrespecttobenefitsthatarebeingpaidunderaPredecessorPlanasoftheeffectivedateofthisPlanwithoutthe
consentoftheaffectedParticipant.NotwithstandinganyprovisionofthisPlantothecontrary,nothingshallreduceorimpairtheinterestsof
individualswithrespecttobenefitsthatareaccruedunderaPredecessorPlanasoftheeffectivedateofthisPlanwithouttheconsentofthe
affectedParticipant;provided,however,benefitsaccruedasofDecember31,2004underthetermsofaPredecessorPlanshallonlybe
distributedandpaidunderthetermsofSection4ofthisPlan.
5.8.PlanNotContractofEmployment.ThePlandoesnotconstituteacontractofemployment,andnothinginthePlanoranyactiontaken
hereundershallbeconstruedasacontractofemploymentortogiveanyemployeeorParticipanttherighttoberetainedintheemployofthe
CompanyoraSubsidiary.

5.9.BenefitsMayNotBeAssignedorAlienated.Benefitspayableto,oronaccountof,anyindividualunderthePlanmaynotbe
voluntarilyorinvoluntarilyassigned,pledged,transferred,mortgaged,alienated,conveyedinadvanceofactualreceiptorotherwise
encumbered.Nosuchamountsshallbesubjecttoseizureorsequestrationforthepaymentofanydebts,judgments,alimonyorseparation
maintenanceowedbyaParticipantoranyotherperson,norbetransferablebyoperationoflawintheeventofaParticipant'soranyother
person'sbankruptcyorinsolvency.Anysuchattemptedassignmentstotransfershallbevoid.PriortothedeathofanyParticipant,noother
personshallhaveanyrightsunderthePlanwithrespecttothatParticipant.

5.10.BeneficiaryDesignation.ParticipantsshallhavetherighttodesignateaBeneficiarytoreceivetheirbenefitsunderthePlanshould
suchParticipantdiepriortocommencementoforcompletedistributionofbenefitshereunder.TheAT&TRulesforBeneficiaryDesignations
asmayhereafterbeamendedfromtimetotime(the"Rules"),whichRulesareincorporatedhereinbythisreference,shallapply.Forpurposes
ofthisPlan,"Beneficiary"shallmeananybeneficiarydesignatedbyaParticipanttoreceivehisorherbenefitsunderthisPlanintheeventofthe
Participant'sdeath,orasotherwisedeterminedundertheRulestotheextenttheParticipantfailstodesignateabeneficiary.

5.11.AmendmentsandTermination.ThePlanmaybeamendedorterminatedatanytimeinaccordancewiththeprovisionsoftheAT&T
ScheduleofAuthorizations,asamendedfromtime-to-time,butsuchamendmentsorterminationshallnotadverselyaffecttherightsofany
Participant,withouthisorherconsent,toanybenefitpayableunderthePlantowhichsuchParticipanthaspreviouslybecomeentitledpriorto
theeffectivedateofsuchamendmentortermination.

5.12.TaxWithholding.Allapplicablefederal,stateandlocaltaxesrequiredbylawtobewithheldshallbedeductedfrombenefitspaid
underthisPlan.

5.13.OffsetsandOverpayments.IfanyoverpaymentismadebythePlanforanyreason,thePlanshallhavetherighttorecoversuch
overpayment.TheParticipantshallcooperatefullywiththePlantorecoveranyoverpaymentandprovideanynecessaryinformationand
requireddocuments.IfaParticipantentitledtodistributionofbenefitshereunderowesanyamounttoAT&ToranySubsidiary,suchamount
maybewithheldfrombenefitspayablehereundertosatisfysuchobligation.AnyoverpaymentorParticipantdebttoAT&ToranySubsidiary
maybedeductedfromfuturebenefitspayabletooronbehalfoftheParticipantfromthisPlan.
AttachmentA
PredecessorPlans

1. TheAT&TPensionBenefitMakeUpPlanNo.1,whichisalsothesuccessorplan,effectiveJanuary1,2000,totheSNETPension
BenefitPlanand,effectiveJanuary1,1999,tothePacificTelesisGroupExcessBenefitPlan.

2. Section4.10.2oftheAT&TPensionBenefitPlanNon-BargainedProgram,whicharethe415ExcessBenefitProvisionsofsuch
plan

3. TheAmeritechCorporateResourceSupplementalPensionPlan,whichisasuccessortotheAmeritechSeniorManagement
RetirementandSurvivorProtectionPlanandwasestablishedbyAmeritechCorporationeffectiveasofJanuary1,1986,which,inturn
wasanamendment,restatementandcontinuationofthefollowingpredecessorplans:theAmeritechManagementSupplementalPension
Plan,theAmeritechSeniorManagementNon-QualifiedPensionPlan,theAmeritechMid-CareerPensionPlan,andtheretirementand
survivorbenefitprovisionsoftheAmeritechSeniorManagementLongTermDisabilityandSurvivorProtectionPlan.

4. TheAmeritechManagementSupplementalPensionBenefitPlan

5. EffectiveJanuary1,2009,TheCingularWirelessSBCExecutiveTransitionPensionMakeUpPlanandTheCingularWireless
SBCExecutive2005TransitionPensionMakeUpPlan
EXHIBIT12
AT&TINC.
COMPUTATIONOFRATIOSOFEARNINGSTOFIXEDCHARGES
DollarsinMillions



YearEndedDecember31,
2015 2014 2013 2012 2011
Earnings:
Incomefromcontinuingoperationsbeforeincometaxes $ 20,692 $ 10,355 $ 28,050 $ 10,496 $ 6,998
Equityinnetincomeofaffiliatesincludedabove (79) (175) (642) (752) (784)
Fixedcharges 6,592 5,295 5,452 4,876 4,835
Distributedincomeofequityaffiliates 30 148 318 137 161
Interestcapitalized (797) (234) (284) (263) (162)

Earnings,asadjusted $ 26,438 $ 15,389 $ 32,894 $ 14,494 $ 11,048

FixedCharges:
Interestexpense $ 4,120 $ 3,613 $ 3,940 $ 3,444 $ 3,535
Interestcapitalized 797 234 284 263 162
Portionofrentalexpenserepresentativeofinterestfactor 1,675 1,448 1,228 1,169 1,138

FixedCharges $ 6,592 $ 5,295 $ 5,452 $ 4,876 $ 4,835

RatioofEarningstoFixedCharges 4.01 2.91 6.03 2.97 2.29

SelectedFinancialandOperatingData
Dollarsinmillionsexceptpershareamounts

AtDecember31andfortheyearended: 2015 20141 20131 20121 20111
AsAdjusted
FinancialData
Operatingrevenues $ 146,801 $ 132,447 $ 128,752 $ 127,434 $ 126,723
Operatingexpenses $ 122,016 $ 120,235 $ 98,000 $ 114,380 $ 117,223
Operatingincome $ 24,785 $ 12,212 $ 30,752 $ 13,054 $ 9,500
Interestexpense $ 4,120 $ 3,613 $ 3,940 $ 3,444 $ 3,535
Equityinnetincomeofaffiliates $ 79 $ 175 $ 642 $ 752 $ 784
Otherincome(expense)-net $ (52) $ 1,581 $ 596 $ 134 $ 249
Incometaxexpense $ 7,005 $ 3,619 $ 9,328 $ 2,922 $ 2,639
NetIncome $ 13,687 $ 6,736 $ 18,722 $ 7,574 $ 4,359
Less:NetIncomeAttributabletoNoncontrollingInterest $ (342) $ (294) $ (304) $ (275) $ (240)
NetIncomeAttributabletoAT&T $ 13,345 $ 6,442 $ 18,418 $ 7,299 $ 4,119
EarningsPerCommonShare:
NetIncomeAttributabletoAT&T $ 2.37 $ 1.24 $ 3.42 $ 1.26 $ 0.69
EarningsPerCommonShare-AssumingDilution:
NetIncomeAttributabletoAT&T $ 2.37 $ 1.24 $ 3.42 $ 1.26 $ 0.69
Totalassets $ 402,672 $ 296,834 $ 281,423 $ 275,834 $ 273,467
Long-termdebt $ 118,515 $ 75,778 $ 69,091 $ 66,152 $ 61,091
Totaldebt $ 126,151 $ 81,834 $ 74,589 $ 69,638 $ 64,544
Constructionandcapitalexpenditures $ 20,015 $ 21,433 $ 21,228 $ 19,728 $ 20,272
Dividendsdeclaredpercommonshare $ 1.89 $ 1.85 $ 1.81 $ 1.77 $ 1.73
Bookvaluepercommonshare $ 20.12 $ 17.40 $ 18.10 $ 17.14 $ 18.34
Ratioofearningstofixedcharges 4.01 2.91 6.03 2.97 2.29
Debtratio 50.5% 47.5% 44.1% 42.1% 37.3%
Weighted-averagecommonsharesoutstanding(000,000) 5,628 5,205 5,368 5,801 5,928
Weighted-averagecommonsharesoutstandingwithdilution(000,000) 5,646 5,221 5,385 5,821 5,950
Endofperiodcommonsharesoutstanding(000,000) 6,145 5,187 5,226 5,581 5,927
OperatingData
Totalwirelesscustomers(000) 137,324 120,554 110,376 106,957 103,247
Videoconnections(000) 37,934 5,943 5,460 4,536 3,791
In-regionnetworkaccesslinesinservice(000) 16,670 19,896 24,639 29,279 34,054
Broadbandconnections(000) 15,778 16,028 16,425 16,390 16,427
Numberofemployees 281,450 243,620 243,360 241,810 256,420
1Financialdatafor2011-2014hasbeenadjustedtoreflectourchangeinaccountingforcustomerfulfillmentcostsandtheearlyadoptionofASU2015-03andASU2015-17.SeeNote1to
ourconsolidatedfinancialstatements.

1
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations
Dollarsinmillionsexceptpershareamounts

RESULTSOFOPERATIONS

Foreaseofreading,AT&TInc.isreferredtoas"we,""AT&T"orthe"Company"throughoutthisdocument,andthenamesoftheparticularsubsidiariesandaffiliatesproviding
theservicesgenerallyhavebeenomitted.AT&Tisaholdingcompanywhosesubsidiariesandaffiliatesoperateinthecommunicationsanddigitalentertainmentservices
industry.Oursubsidiariesandaffiliatesprovideservicesandequipmentthatdelivervoice,videoandbroadbandservicesbothdomesticallyandinternationally.During2015,we
completedouracquisitionsofDIRECTVandwirelesspropertiesinMexicoandhaveincludedtheresultsofthoseoperationsfortheperiodfromacquisitionthroughDecember
31,2015.InaccordancewithU.S.generallyacceptedaccountingprinciples(GAAP),operatingresultsfromDIRECTVpriortotheacquisitionareexcluded.Youshouldreadthis
discussioninconjunctionwiththeconsolidatedfinancialstatementsandaccompanyingnotes.Areferencetoa"Note"inthissectionreferstotheaccompanyingNotesto
ConsolidatedFinancialStatements.Inthetablesthroughoutthissection,percentageincreasesanddecreasesthatarenotconsideredmeaningfularedenotedwithadash.Certain
amountshavebeenreclassifiedtoconformtothecurrentperiod'spresentation,includingourchangeinaccountingforcustomerfulfillmentcosts(seeNote1).

ConsolidatedResultsOurfinancialresultsaresummarizedinthetablebelow.Wethendiscussfactorsaffectingouroverallresultsforthepastthreeyears.Thesefactorsare
discussedinmoredetailinour"SegmentResults"section.Wealsodiscussourexpectedrevenueandexpensetrendsfor2016inthe"OperatingEnvironmentandTrendsofthe
Business"section.

PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
OperatingRevenues
Service $ 131,677 $ 118,437 $ 119,252 11.2% (0.7)%
Equipment 15,124 14,010 9,500 8.0 47.5
TotalOperatingRevenues 146,801 132,447 128,752 10.8 2.9
Operatingexpenses
Costofservicesandsales
Equipment 19,268 18,946 16,644 1.7 13.8
Broadcast,programmingandoperations 11,996 4,075 3,308 - 23.2
Othercostofservices 35,782 37,124 31,239 (3.6) 18.8
Selling,generalandadministrative 32,954 39,697 28,414 (17.0) 39.7
Abandonmentofnetworkassets - 2,120 - - -
Depreciationandamortization 22,016 18,273 18,395 20.5 (0.7)
TotalOperatingExpenses 122,016 120,235 98,000 1.5 22.7
OperatingIncome 24,785 12,212 30,752 - (60.3)
Interestexpense 4,120 3,613 3,940 14.0 (8.3)
Equityinnetincomeofaffiliates 79 175 642 (54.9) (72.7)
Otherincome(expense)net (52) 1,581 596 - -
IncomeBeforeIncomeTaxes 20,692 10,355 28,050 99.8 (63.1)
NetIncome 13,687 6,736 18,722 - (64.0)
NetIncomeAttributabletoAT&T $ 13,345 $ 6,442 $ 18,418 - (65.0)%

Overview
Operatingrevenuesincreased$14,354,or10.8%in2015andincreased$3,695,or2.9%in2014.

Service
revenuesincreased$13,240,or11.2%,in2015anddecreased$815,or0.7%,in2014.Theincreasein2015wasprimarilyduetoouracquisitionofDIRECTV,
ournewwirelessoperationsinMexico,andgainsinfixedstrategicbusinessservicesandAT&TU-verse(U-verse)services.Thedecreasein2014wasprimarilydue
tocustomerschoosingtopurchasedevicesthroughinstallmentpaymentagreementswhichentitlesthemtoalowerservicerateinourwirelessMobileShareplans,
continueddeclinesinourlegacywirelinevoiceanddataproductsandtheOctober2014saleofourConnecticutoperations,partiallyoffsetbystrongrevenuesfromU-
verse,fixedstrategicbusinessservicesandrevenuesfromtheMarch2014acquisitionofLeapWirelessInternational,Inc.(Leap).

2
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Equipment
revenuesincreased$1,114,or8.0%,in2015and$4,510,or47.5%,in2014.Theincreasesin2015and2014wereduetothecontinuingtrendbyour
postpaidwirelesssubscriberstopurchasedevicesoninstallmentpaymentagreementsratherthanthedevicesubsidymodel,whichresultedinincreasedequipment
revenuerecognizedfordevicesales.

Operatingexpensesincreased$1,781,or1.5%,in2015and$22,235,or22.7%,in2014.

Equipment
expensesincreased$322,or1.7%,in2015and$2,302,or13.8%,in2014.Expenseincreasesin2015and2014areprimarilyduetothecontinuingtrendof
customerschoosinghigher-pricedwirelessdevices.Theexpenseincreasein2014alsoreflectshigherupgradeequipmentsales.

Broadcast,
programming
and
operations
expensesincreased$7,921in2015and$767,or23.2%,in2014.Broadcastcostsincreasedin2015duetoouracquisitionof
DIRECTV.Alsocontributingtotheincreasesin2015and2014werehighercontentcostsforourU-versesubscribers.

Other
cost
of
services
expensesdecreased$1,342,or3.6%,in2015andincreased$5,885,or18.8%,in2014.Theexpensedecreasein2015wasprimarilyduetoa
$3,078changeinourannualpensionandpostemploymentbenefitactuarialadjustment,whichwasagainin2015andalossin2014.Alsocontributingtothe2015
decreasewerehigherHighCostFundandConnectAmericaFundreceiptsfromtheUniversalServiceFundandthefourthquarter2014saleofourConnecticutwireline
operations,offsetbytheadditionofDIRECTV,increasednetworkrationalizationchargesrelatedtoLeap,mergerandintegrationchargesandwirelesshandset
insurancecosts.

Theexpenseincreasein2014includeda$4,406changeresultingfromtheannualremeasurementofourbenefitplans,whichwasanactuariallossin2014andagainin
2013.Theincreasealsoreflectedhigherwirelessnetworkcosts,U-versecontentcostsandsubscribergrowth,andemployee-relatedcharges.

Selling,
general
and
administrative
expensesdecreased$6,743,or17.0%,in2015andincreased$11,283,or39.7%,in2014.2015expensesdecreased$6,943asa
resultofrecordinganactuarialgainin2015andanactuariallossin2014.The2015decreasewasalsoduetoloweremployee-relatedchargesresultingfromworkforce
reductions,lowerwirelesscommissionsandthefourth-quarter2014saleofourConnecticutwirelineoperations,offsetbycostsresultingfromtheacquisitionof
DIRECTV.

Theexpenseincreasein2014includedan$11,047changeresultingfromtheannualremeasurementofourbenefitplans,whichwasanactuariallossin2014andagain
in2013.Expenseincreasesin2014alsoreflecthighersellingandadministrativeexpensesinourwirelessbusinessandgainsonspectrumtransactionsin2013.These
increaseswerepartiallyoffsetbyloweremployee-relatedcostsandwirelesscommissionsexpenses.

Abandonment
of
network
assets
In2014,werecordedanoncashchargeof$2,120fortheabandonmentinplaceofcertainnetworkassets(seeNote6).Duringthe
fourthquarterof2014,wecompletedastudyofournetworkassetsanddeterminedthatspecificcopperassetswouldnotbenecessarytosupportfuturenetworkactivity,
duetodecliningcustomerdemandforourlegacyvoiceanddataproductsandthetransitionofournetworkstonextgenerationIP-basedtechnology.

Depreciation
and
amortization
expenseincreased$3,743,or20.5%,in2015anddecreased$122,or0.7%,in2014.The2015amortizationexpenseincreased$2,198
duetotheamortizationofintangiblesfromrecentacquisitions.The2014amortizationexpensedecreased$145duetoloweramortizationofintangiblesforcustomer
lists.

Depreciationexpenseincreased$1,545,or8.7%,in2015.TheincreasewasprimarilyduetotheacquisitionsofDIRECTVandourwirelesspropertiesinMexicoand
ongoingcapitalspendingfornetworkupgrades.Theincreaseswerepartiallyoffsetbytheabandonmentofcertainwirelinenetworkassets,whichoccurredin2014,and
certainnetworkassetsbecomingfullydepreciated.The2014depreciationexpenseincreased$23duetoongoingcapitalspendingfornetworkupgradesandexpansion
andadditionalexpenseassociatedwiththeassetsacquiredfromLeap.Theseincreaseswerelargelyoffsetbyextendingtheestimatedusefullifeofsoftwareandcertain
networkassetsbecomingfullydepreciatedassets.

3
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Operatingincomeincreased$12,573in2015anddecreased$18,540,or60.3%in2014.Ouroperatingmarginwas16.9%in2015,comparedto9.2%in2014and23.9%in
2013.Contributing$10,021totheincreaseinoperatingincomein2015wasanoncashactuarialgainof$2,152andanactuariallossof$7,869in2014.Theincreaseinoperating
incomefor2015alsoincludedhigheracquisition-relatedchargesandexpensesrelatingtogrowthareasofourbusinessin2015.Contributing$15,453tothedecreaseinoperating
incomein2014wasanoncashactuariallossof$7,869relatedtopensionandpostemploymentbenefitplans,andanactuarialgainof$7,584in2013.Operatingincomefor2014
alsoincludedanoncashchargeof$2,120relatedtoanabandonmentofnetworkassets,higherwirelessequipmentcostsresultingfromhigherdevicesalesandcustomers
choosinghigher-priceddevices,increasedexpensessupportingU-versesubscribergrowth,andcontinueddeclinesinourtraditionalvoiceanddataservices.

Interestexpenseincreased$507,or14.0%,in2015anddecreased$327,or8.3%,in2014.Theincreasein2015wasprimarilyduetohigheraveragedebtbalances,including
debtissuedanddebtacquiredinconnectionwithouracquisitionofDIRECTVandspectrumacquiredintheAdvancedWirelessService(AWS)-3Auction.Theseincreaseswere
partiallyoffsetbyloweraverageinterestratesandanincreaseincapitalizedinterestresultingfromspectrumacquiredintheAWS-3Auction(seeNote5).

Thedecreasein2014wasprimarilyduetoa$581chargerelatedtodebttenderoffersin2013andlowerinterestratesresultingfromrefinancingactivity,partiallyoffsetby
interestexpenserelatedtoourDecember2013towertransaction(seeNote16),higherdebtbalancesandchargesassociatedwiththeearlyredemptionofdebtduring2014.

Equityinnetincomeofaffiliatesdecreased$96,or54.9%,in2015and$467,or72.7%,in2014.Thedecreasein2015primarilyresultedfromthesaleofourinvestmentin
AmricaMvil,S.A.deC.V.(AmricaMvil)inJune2014(seeNote5),combinedwithlowerearningsfromYPHoldingsLLC(YPHoldings)andincreasedexpensesinOtter
MediaHoldings.Thedecreasein2015wasslightlyoffsetbyearningsfrominvestmentsacquiredinourpurchaseofDIRECTV(seeNote8).Thesaleoftheinvestmentin
AmricaMvil,lowerearningsfromYPHoldingsandourinvestmentinthemobilepaymentjointventureSoftcardTM(Softcard)contributedtolowerequityinnetincomeof
affiliatesin2014.

2015 2014 2013


YPHoldings $ 101 $ 134 $ 182
GameShowNetwork 14 - -
MLBNetwork 9 - -
SKYMexico (2) - -
OtterMediaHoldings (31) (2) -
Softcard (15) (112) (75)
AmricaMvil - 153 532
Other 3 2 3
Equityinnetincomeofaffiliates $ 79 $ 175 $ 642

Otherincome(expense)netWehadotherexpenseof$52in2015,andotherincomeof$1,581and$596in2014and2013,respectively.Resultsfor2015includedforeign
exchangelossesof$74,netlossesonthesaleofinvestmentsof$87andinterestanddividendincomeof$95.

Otherincomefor2014includedacombinednetgainof$1,470onthesaleofAmricaMvilshares,ourConnecticutoperationsandotherinvestmentsandinterestanddividend
incomeof$68.Resultsfor2013includedanetgainonthesaleofAmricaMvilsharesandotherinvestmentsof$498andinterestanddividendincomeof$68.

Incometaxexpenseincreased$3,386in2015anddecreased$5,709in2014.Theincreasein2015anddecreasein2014wereprimarilyduetoachangeinincomebeforeincome
taxes.Oureffectivetaxratewas33.9%in2015,34.9%in2014and33.3%in2013(seeNote11).

4
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

SegmentResults

Oursegmentsarestrategicbusinessunitsthatofferdifferentproductsandservicesovervarioustechnologyplatformsand/orindifferentgeographiesthataremanaged
accordingly.OuroperatingsegmentresultspresentedinNote4anddiscussedbelowforeachsegmentfollowourinternalmanagementreporting.Weanalyzeouroperating
segmentsbasedonsegmentcontribution,whichconsistsofoperatingincome,excludingacquisition-relatedcostsandothersignificantitems,andequityinnetincomeof
affiliatesforinvestmentsmanagedwithineachoperatingsegment.Eachsegment'spercentagecalculationoftotalsegmentoperatingrevenueandincomeisderivedfromour
segmentresultstableinNote4,andmaytotalmorethan100percentduetolossesinoneormoresegments.Wehavefourreportablesegments:(1)BusinessSolutions,
(2)EntertainmentGroup,(3)ConsumerMobilityand(4)International.

Wealsoevaluatesegmentperformancebasedonsegmentoperatingincomebeforedepreciationandamortization,whichwerefertoasEBITDAand/orEBITDAmargin.We
believeEBITDAtobearelevantandusefulmeasurementtoourinvestorsasitispartofourinternalmanagementreportingandplanningprocessesanditisanimportantmetric
thatmanagementusestoevaluateoperatingperformance.EBITDAdoesnotgiveeffecttocashusedfordebtservicerequirementsandthusdoesnotreflectavailablefundsfor
distributions,reinvestmentorotherdiscretionaryuses.EBITDAmarginisoperatingincomebeforedepreciationandamortization,dividedbytotalrevenues.

TheBusiness
Solutions
segment
accountedforapproximately49%ofour2015totalsegmentoperatingrevenuesascomparedto54%in2014and59%ofour2015total
segmentcontributionascomparedto66%in2014.Thissegmentprovidesservicestobusiness,governmentalandwholesalecustomers,andindividualsubscriberswhopurchase
wirelessservicesthroughemployer-sponsoredplans.WeprovideadvancedIP-basedservicesincludingVirtualPrivateNetworks(VPN),Ethernet-relatedproductsand
broadband,collectivelyreferredtoasstrategicbusinessservices,aswellastraditionaldataandvoiceproducts.Weutilizeourwirelessandwirednetworkandaremarketedto
provideacompletecommunicationssolutiontoourbusinesscustomers.

TheEntertainment
Group
segment
accountedforapproximately24%ofour2015totalsegmentoperatingrevenuesascomparedto17%in2014and7%ofour2015total
segmentcontributionascomparedtoalossin2014.Thissegmentprovidesvideo,InternetandvoicecommunicationservicestoresidentialcustomerslocatedintheU.S.orin
U.S.territories.WeutilizeourcopperandIP-based(referredtoas"wired"or"wireline")wirednetworkand/oroursatellitetechnology.

TheConsumer
Mobility
segment
accountedforapproximately24%ofour2015totalsegmentoperatingrevenuesascomparedto28%in2014and35%ofour2015total
segmentcontributionascomparedto39%in2014.Thissegmentprovidesnationwidewirelessservicetoconsumers,andwirelesswholesaleandresalesubscriberslocatedinthe
U.S.orinU.S.territories.WeutilizeourU.S.wirelessnetworktoprovidevoiceanddataservices,includinghigh-speedInternet,videoentertainmentandhomemonitoring
services.

TheInternational
segment
accountedforapproximately3%ofour2015totalsegmentoperatingrevenues.ThissegmentprovidesentertainmentservicesinLatinAmericaand
wirelessservicesinMexico.Videoentertainmentservicesareprovidedtoprimarilyresidentialcustomersusingsatellitetechnology.Weutilizeourregionalandnational
networksinMexicotoprovideconsumerandbusinesscustomerswithwirelessdataandvoicecommunicationservices.Ourinternationalsubsidiariesconductbusinessintheir
localcurrencyandoperatingresultsareconvertedtoU.S.dollarsusingofficialexchangerates.OurInternationalsegmentissubjecttoforeigncurrencyfluctuations.

Ouroperatingassetsareutilizedbymultiplesegmentsandconsistofourwirelessandwirednetworksaswellasaninternationalsatellitefleet.Wemanageourassetstoprovide
forthemostefficient,effectiveandintegratedservicetoourcustomers,notbyoperatingsegment,andthereforeassetinformationandcapitalexpendituresbyoperatingsegment
arenotpresented.Depreciationisallocatedbasedonnetworkusageorassetutilizationbysegment.

Wediscusscapitalexpendituresin"LiquidityandCapitalResources."

5
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

BusinessSolutions
SegmentResults
PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
Segmentoperatingrevenues
Wirelessservice $ 30,687 $ 30,182 $ 29,696 1.7% 1.6%
Fixedstrategicservices 10,910 9,666 8,444 12.9 14.5
Legacyvoiceanddataservices 18,019 19,857 21,669 (9.3) (8.4)
Otherserviceandequipment 3,558 3,860 3,878 (7.8) (0.5)
Wirelessequipment 7,953 7,041 3,960 13.0 77.8
TotalSegmentOperatingRevenues 71,127 70,606 67,647 0.7 4.4

Segmentoperatingexpenses
Operationsandsupport 44,946 45,826 43,442 (1.9) 5.5
Depreciationandamortization 9,789 9,355 8,965 4.6 4.4
TotalSegmentOperatingExpenses 54,735 55,181 52,407 (0.8) 5.3
SegmentOperatingIncome 16,392 15,425 15,240 6.3 1.2
SegmentContribution $ 16,392 $ 15,425 $ 15,240 6.3% 1.2%

ThefollowingtablehighlightsotherkeymeasuresofperformancefortheBusinessSolutionssegment:

PercentChange
2015vs. 2014vs.
(in000s) 2015 2014 2013 2014 2013
BusinessWirelessSubscribers
Postpaid 48,290 45,160 40,811 6.9% 10.7%
Reseller 85 11 (1) - -
Connecteddevices1 25,284 19,943 16,326 26.8 22.2
TotalBusinessWirelessSubscribers 73,659 65,114 57,136 13.1 14.0

BusinessWirelessNetAdditions2
Postpaid 1,203 2,064 1,381 (41.7) 49.5
Reseller 13 6 - - -
Connecteddevices1 5,315 3,439 2,032 54.6 69.2
BusinessWirelessNetSubscriberAdditions 6,531 5,509 3,413
18.6 61.4

BusinessWirelessPostpaidChurn2,3 0.99% 0.90% 0.89% 9BP 1BP

BusinessIPBroadbandConnections 911 822 631 10.8 30.3
BusinessIPBroadbandNetAdditions 89 191 327 (53.4)% (41.6)%
1Includesdata-centricdevicessuchassession-basedtablets,monitoringdevicesandautomobilesystems.Excludespostpaidtablets.
2ExcludesmigrationsbetweenAT&Tsegmentsand/orsubscribercategoriesandacquisition-relatedadditionsduringtheperiod.
3Calculatedbydividingtheaggregatenumberofwirelesssubscriberswhocanceledserviceduringaperioddividedbythetotalnumberofwirelesssubscribersatthebeginning
ofthatperiod.Thechurnratefortheperiodisequaltotheaverageofthechurnrateforeachmonthofthatperiod.

Operatingrevenuesincreased$521,or0.7%,in2015and$2,959,or4.4%,in2014.Revenuegrowthwasdrivenbywirelessrevenuesandcontinuedgrowthinfixedstrategic
businessservices,partiallyoffsetbycontinueddeclinesinourlegacyvoiceanddataservicesandforeignexchangepressures.

6
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Wireless
service
revenuesincreased$505,or1.7%,in2015and$486,or1.6%,in2014.Therevenueincreasesreflectsmartphoneandtabletgainsaswellascustomermigrations
fromourConsumerMobilitysegment.

Businesswirelesssubscribersincreased13.1%,to73.7millionsubscribersatDecember31,2015comparedto14.0%,to65.1millionsubscribersatDecember31,2014.Postpaid
subscribersincreased6.9%in2015comparedto10.7%in2014reflectingtheadditionofnewcustomersaswellasmigrationsfromourConsumerMobilitysegment,partially
offsetbycontinuingcompetitivepressuresintheindustry.Connecteddevices,whichhaveloweraveragerevenueperaveragesubscriber(ARPU)andlowerchurn,increased
26.8%in2015comparedto22.2%in2014reflectinggrowthinbusinesscustomersusingtracking,monitoringandothersensor-embeddeddevicesontheirequipment.

Theeffectivemanagementofsubscriberchurniscriticaltoourabilitytomaximizerevenuegrowthandtomaintainandimprovemargins.Businesswirelesspostpaidchurn
increasedto0.99%in2015from0.90%in2014and0.89%in2013.

Fixed
strategic
services
revenuesincreased$1,244,or12.9%,in2015and$1,222,or14.5%,in2014.Ourrevenues,whichwerenegativelyimpactedbyforeignexchangerates,
increasedin2015and2014dueto:Ethernetincreasesof$389and$340,U-verseservicesincreasesof$247and$170,EthernetaccesstoManagedInternetServicesincreasesof
$190and$163andVPNincreasesof$116and$359.

Legacy
wired
voice
and
data
service
revenuesdecreased$1,838,or9.3%,in2015and$1,812,or8.4%,in2014.Traditionaldatarevenuesin2015and2014decreased$1,040
and$1,318andlong-distanceandlocalvoicerevenuesdecreased$797and$475.Thedecreaseswereprimarilyduetolowerdemandascustomerscontinuetoshifttoourmore
advancedIP-basedofferingsorourcompetitors.

Other
service
revenuesdecreased$302,or7.8%,in2015and$18,or0.5%,in2014.Otherservicerevenuesincludeproject-basedrevenue,whichisnonrecurringinnature,as
wellasrevenuesfromothermanagedservices,outsourcing,governmentprofessionalserviceandcustomerpremisesequipment.Thedeclinesin2015and2014areprimarilydue
tolowerproject-basedandequipmentrevenues,aswellasimpactsfromforeignexchangerates.

Wireless
equipment
revenuesincreased$912,or13.0%,in2015and$3,081,or77.8%,in2014.TheincreasewasprimarilyduetotheincreaseinhandsetssoldunderourAT&T
NextSM(AT&TNext)programandtheincreaseinsalesofhigher-pricedsmartphones.

Operationsandsupportexpensesdecreased$880,or1.9%,in2015andincreased$2,384,or5.5%,in2014.Operationsandsupportexpensesconsistofcostsincurredto
provideourproductsandservices,includingcostsofoperatingandmaintainingournetworksandpersonnelcosts,suchascompensationandbenefits.

Expensedecreasesin2015wereprimarilydueto:
Lowercommissioncostsof$995primarilyduetoloweraveragecommissionratesandfewerupgradetransactions.
Loweremployee-relatedchargesof$508resultingfromworkforcereductionsandothercostinitiatives.
Reductionsof$269inaccesscosts,primarilyduetolowerinterconnect,roamingandtrafficcompensationcosts.
Lowercustomerservicecostsof$146primarilyresultingfromoursimplifiedofferingsandincreasedeffortstoresolvecustomerinquiriesontheirfirstcall.

Partiallyoffsettingthedecreasesin2015were:
Higherwirelesshandsetinsurancecostof$370resultingfromhigherclaimratesandcostsperclaim.
Increasedequipmentexpenseof$304duetothecontinuingtrendofcustomerschoosinghigher-costdevices.
Higherbaddebtexpenseof$173resultingfromahigherAT&TNextsubscriberbase.

Expenseincreasesin2014wereprimarilydueto:
Increasedequipmentexpenseof$1,779duetoincreasedsalesandthecontinuingtrendofcustomerschoosinghigher-costdevices.
Networksystemcostsincreased$315duetoincreasedleasefees,highermaintenanceandenergycostsresultingfromtheincreaseinthenumberofcellsitesand
expensesrelatedtoournetworkenhancementefforts.
Higherwirelesshandsetinsurancecostof$159resultingfromhigherclaimratesandcostsperclaim.

7
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Depreciationexpenseincreased$434,or4.6%,in2015and$390,or4.4%,in2014.Theincreaseswereprimarilyduetotheincreaseinongoingcapitalspendingfornetwork
upgradesandexpansionpartiallyoffsetbyfullydepreciatedassets.

Operatingincomeincreased$967,or6.3%,in2015and$185,or1.2%,in2014.OurBusinessSolutionssegmentoperatingincomemarginwas23.0%in2015,comparedto
21.8%in2014and22.5%in2013.OurBusinessSolutionsEBITDAmarginwas36.8%in2015,comparedto35.1%in2014and35.8%in2013.

EntertainmentGroup
SegmentResults
PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
Segmentoperatingrevenues
Videoentertainment $ 20,271 $ 6,826 $ 5,810 - 17.5%
High-speedInternet 6,601 5,522 4,219 19.5 30.9
Legacyvoiceanddataservices 5,914 7,592 9,667 (22.1) (21.5)
Otherserviceandequipment 2,508 2,293 1,846 9.4 24.2
TotalSegmentOperatingRevenues 35,294 22,233 21,542 58.7 3.2

Segmentoperatingexpenses
Operationsandsupport 28,345 18,992 17,943 49.2 5.8
Depreciationandamortization 4,945 4,473 4,815 10.6 (7.1)
TotalSegmentOperatingExpenses 33,290 23,465 22,758 41.9 3.1
SegmentOperatingIncome(Loss) 2,004 (1,232) (1,216) - (1.3)
EquityinNetIncome(Loss)ofAffiliates (4) (2) - - -
SegmentContribution $ 2,000 $ (1,234) $ (1,216) - (1.5)%

8
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

ThefollowingtablehighlightsotherkeymeasuresofperformancefortheEntertainmentGroupsegment:

PercentChange
2015vs. 2014vs.
(in000s) 2015 2014 2013 2014 2013
VideoConnections
Satellite 19,784 - - - -
U-verse 5,614 5,920 5,257 (5.2) 12.6
TotalVideoConnections 25,398 5,920 5,257 - 12.6

VideoNetAdditions1
Satellite 240 - - - -
U-verse (306) 663 889 - (25.4)
NetVideoAdditions (66) 663 889 - (25.4)

BroadbandConnections
IP 12,356 11,383 9,484 8.5 20.0
DSL 1,930 3,061 4,829 (36.9) (36.6)
TotalBroadbandConnections 14,286 14,444 14,313 (1.1) 0.9

BroadbandNetAdditions
IP 973 1,899 2,266 (48.8) (16.2)
DSL (1,130) (1,768) (2,103) 36.1 15.9
NetBroadbandAdditions (157) 131 163 - (19.6)

RetailConsumerSwitchedAccessLines 7,286 9,243 12,013 (21.2) (23.1)
U-verseConsumerVoIPConnections 5,212 4,759 3,701 9.5 28.6
TotalRetailConsumerVoiceConnections 12,498 14,002 15,714 (10.7)% (10.9)%
1Excludesacquisition-relatedadditionsduringtheperiod.

Operatingrevenuesincreased$13,061,or58.7%,in2015and$691,or3.2%,in2014.OurJuly2015acquisitionofDIRECTVwaslargelyresponsibleforhigherrevenues
beginninginthethirdquarterof2015.AlsocontributingtotheincreaseswascontinuedstronggrowthinconsumerIPbroadbandandU-versevideo,whichmorethanoffset
lowerrevenuesfromlegacyvoiceanddataproducts.

Video
entertainment
revenuesincreased$13,445in2015and$1,016,or17.5%,in2014.The2015increasewasprimarilyrelatedtoouracquisitionofDIRECTV.Withour
acquisitionofDIRECTV,wearenowfocusingoursaleseffortsonsatelliteserviceastherearelowercontentcostsforsatellitesubscribers.U-versevideorevenueincreased
$932in2015.The2014increasewasprimarilyduetoa12.6%increaseinU-versevideoconnections,whencomparedto2013.

High-speed
Internet
revenuesincreased$1,079,or19.5%,in2015and$1,303,or30.9%,in2014.Whencomparedto2014,IPbroadbandconnectionsincreased8.5%,to12.4
millionconnectionsatDecember31,2015;however,2015netadditionswerelowerduetofewerU-versesalespromotionsintheyearandchurnofvideocustomers,someof
whomalsopurchasedbroadbandservice.Whencomparedto2013,IPbroadbandconnectionsincreased20.0%,to11.4millionconnectionsatDecember31,2014.

Legacy
voice
and
data
service
revenuesdecreased$1,678,or22.1%,in2015and$2,075,or21.5%,in2014.Therevenuedecreaseswereduetoa$1,083and$1,367decreasein
long-distanceandlocalvoicerevenues,respectively,anda$593and$710decreaseintraditionaldatarevenues,whichincludecircuit-basedservices.

Other
service
and
equipment
revenuesincreased$215,or9.4%,in2015and$447,or24.2%,in2014.

9
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Operationsandsupportexpensesincreased$9,353,or49.2%,in2015and$1,049,or5.8%,in2014.Operationsandsupportexpensesconsistofcostsincurredtoprovideour
productsandservices,includingcostsofoperatingandmaintainingournetworks,providingvideocontentandpersonnelcosts,suchascompensationandbenefits.

Increasedoperationsandsupportexpensesin2015wereprimarilyduetoouracquisitionofDIRECTV,whichincreasedourEntertainmentGroupoperationsandsupport
expenses$9,683.TheincreaseswereprimarilyduetoouradditionofDIRECTVandcontentcostincreasesforourU-verseservices.

Increasedoperationsandsupportexpensesin2014resultedfromanincreaseof$763incontentcosts,reflectinganincreasednumberofsubscribersandincreasingcontentcosts;
anincreaseof$192forinstallationcosts;andanincreaseof$90forsellingandcommissionexpensesresultingfromtheoverallgrowthofourU-verseservices.

Partiallyoffsettingtheincreasedexpensesinbothyearswereloweremployeechargesresultingfromongoingworkforcereductions,ourfocusoncostinitiativesandlower
equipmentcosts.

Depreciationexpensesincreased$472,or10.6%,in2015anddecreased$342,or7.1%,in2014.Our2015increasewasprimarilyduetoouracquisitionofDIRECTVand
ongoingcapitalspendingfornetworkupgradesandexpansion,partiallyoffsetbyfullydepreciatedassets.Our2014decreasewasprimarilyduetoextendingtheestimateduseful
lifeofsoftware,partiallyoffsetbyongoingcapitalspendingfornetworkupgradesandexpansion.

Operatingincomeincreased$3,236in2015anddecreased$16,or1.3%,in2014.OurEntertainmentGroupsegmentoperatingincomemarginwas5.7%in2015,(5.5)%in
2014,and(5.6)%in2013.OurEntertainmentGroupEBITDAmarginwas19.7%in2015,14.6%in2014,and16.7%in2013.

ConsumerMobility
SegmentResults
PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
Segmentoperatingrevenues
Postpaidwireless $ 22,030 $ 24,282 $ 27,140 (9.3)% (10.5)%
Prepaidwireless 4,662 4,205 2,317 10.9 81.5
Otherservicerevenue 2,458 2,363 2,399 4.0 (1.5)
Equipment 5,916 5,919 4,387 (0.1) 34.9
TotalSegmentOperatingRevenues 35,066 36,769 36,243 (4.6) 1.5

Segmentoperatingexpenses
Operationsandsupport 21,477 23,891 22,545 (10.1) 6.0
Depreciationandamortization 3,851 3,827 3,683 0.6 3.9
TotalSegmentOperatingExpenses 25,328 27,718 26,228 (8.6) 5.7
SegmentOperatingIncome 9,738 9,051 10,015 7.6 (9.6)
EquityinNetIncome(Loss)ofAffiliates - (1) - - -
SegmentContribution $ 9,738 $ 9,050 $ 10,015 7.6% (9.6)%

10
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

ThefollowingtablehighlightsotherkeymeasuresofperformancefortheConsumerMobilitysegment:

PercentChange
2015vs. 2014vs.
(in000s) 2015 2014 2013 2014 2013
ConsumerMobilitySubscribers
Postpaid 28,814 30,610 31,827 (5.9)% (3.8)%
Prepaid 11,548 9,965 5,817 15.9 71.3
Reseller 13,690 13,844 14,028 (1.1) (1.3)
Connecteddevices1 929 1,021 1,567 (9.0) (34.8)
TotalConsumerMobilitySubscribers 54,981 55,440 53,239 (0.8) 4.1

ConsumerMobilityNetAdditions2
Postpaid 463 1,226 395 (62.2) -
Prepaid 1,364 (311) 377 - -
Reseller (168) (351) (1,074) 52.1 67.3
Connecteddevices1 (131) (465) (390) 71.8 (19.2)
ConsumerMobilityNetSubscriberAdditions 1,528 99 (692) - -

ConsumerMobilityPostpaidChurn2,3 1.25% 1.22% 1.26% 3BP (4)BP
TotalConsumerMobilityChurn2,3 1.94% 2.06% 1.84% (12)BP 22BP
1Includesdata-centricdevicessuchassession-basedtablets,monitoringdevicesandautomobilesystems.Excludespostpaidtablets.
2ExcludesmigrationsbetweenAT&Tsegmentsand/orsubscribercategoriesandacquisition-relatedadditionsduringtheperiod.
3Calculatedbydividingtheaggregatenumberofwirelesssubscriberswhocanceledserviceduringaperioddividedbythetotalnumberofwirelesssubscribersatthe
beginningofthatperiod.Thechurnratefortheperiodisequaltotheaverageofthechurnrateforeachmonthofthatperiod.

Operatingrevenuesdecreased$1,703,or4.6%,in2015andincreased$526,or1.5%,in2014.Decreasedrevenuesin2015reflectdeclinesinpostpaidservicerevenuesdueto
customerschoosingMobileShareplansandmigratingtoourBusinessSolutionssegment,partiallyoffsetbyhigherprepaidservicerevenues.Ourbusinesswirelessofferings
allowforindividualsubscriberstopurchasewirelessservicesthroughemployer-sponsoredplansforareducedprice.ThemigrationofthesesubscriberstotheBusinessSolutions
segmentnegativelyimpactedourconsumerpostpaidsubscribertotalandservicerevenuegrowth.

Increasedrevenuesin2014areprimarilyduetoanincreaseinprepaidservicesattributabletoouracquisitionofLeapandincreasedequipmentrevenues.Theseincreaseswere
partiallyoffsetbycustomerschoosingMobileShareplansandmigratingtoourBusinessSolutionssegment.

Postpaid
wireless
revenuesdecreased$2,252,or9.3%,in2015and$2,858,or10.5%,in2014.Thesedecreaseswerelargelyduetocustomerscontinuingtoshifttono-device-
subsidyplans,whichallowfordiscountedmonthlyservicechargesunderourMobileShareplansandthemigrationofsubscriberstoBusinessSolutions.Withoutthemigration
ofcustomerstoBusinessSolutions,postpaidwirelessrevenueswouldhavedecreasedapproximately4.0%in2015and5.4%for2014.

Prepaid
wireless
revenuesincreased$457,or10.9%,in2015and$1,888,or81.5%,in2014.Ourprepaidservices,whichincludeservicessoldundertheCricketbrand,are
monthlyprepaidservices.Prepaidwirelessrevenuesincreasedin2015primarilyduetogrowthinthesubscriberbase.Theincreasein2014wasprimarilyduetoourMarch2014
acquisitionofLeap.

Other
service
revenue
increased$95,or4.0%,in2015anddecreased$36,or1.5%,in2014.

11
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Equipment
revenuedecreased$3,or0.1%,in2015andincreased$1,532,or34.9%,in2014.Theincreasein2014wasprimarilyrelatedtotheincreaseindevicessoldunderour
AT&TNextprogramandtheincreaseinsalesofhigher-pricedsmartphones.

Operationsandsupportexpensesdecreased$2,414,or10.1%,in2015andincreased$1,346,or6.0%,in2014.Operationsandsupportexpensesconsistofcostsincurredto
provideourproductsandservices,includingcostsofoperatingandmaintainingournetworksandpersonnelcosts,suchascompensationandbenefits.

Decreasedoperationsandsupportexpensesin2015wereprimarilyduetothefollowing:

Sellingandcommissionexpensesdecreased$861primarilyduetoloweraveragecommissionrates,includingthosepaidundertheAT&TNextprogram,combined
withfewerupgradetransactions.
Networkcostsdecreased$434primarilyduetolowerinterconnectcostsresultingfromourongoingnetworktransitiontomoreefficientEthernet/IP-basedtechnologies.
Equipmentcostsdecreased$406primarilyduetothedecreaseinvolumeofequipmentsales,partiallyoffsetbyanincreaseinthecostofsmartphones.
Customerservicecostsdecreased$275primarilyduetoreducedsalariesandbenefits,lowervendorandprofessionalservicesfromreducedcallvolumes.
Othercostofservicedecreased$209primarilyduetoincollectroamingfeeratedeclines,whichwerepartiallyoffsetbyincreaseddatavolume.

Increasedoperationsandsupportexpensesin2014wereprimarilyduetothefollowing:
Equipmentcostsincreased$613,reflectingincreasedsalesandcustomerschoosingmoreexpensivesmartphones.
Handsetinsurancecostincreased$283duetoanincreaseinthecostofreplacementphones.
Networkcostsincreased$222duetoincreasedleasefees,highermaintenanceandenergycostsresultingfromtheincreaseinthenumberofcellsitesandexpenses
relatedtoournetworkenhancementefforts.Theseincreaseswerepartiallyoffsetbylowerinterconnectcostsresultingfromourongoingnetworktransitiontomore
efficientEthernet/IP-basedtechnologies.
Othercostofserviceincreased$190primarilyduetoequipment/deviceservice-relatedcostsassociatedwithhomemonitoringservicesandhigherincollectroaming
costsresultingfromincreaseddatavolume,whichwaspartiallyduetotheacquisitionofLeap.Theseincreaseswerepartiallyoffsetbyincollectroamingfeerate
declines.

Partiallyoffsettingtheseincreasesin2014werelowersellingandcommissionexpensesof$253,whichwereprimarilyduetoloweraveragecommissionrates,includingthose
paidundertheAT&TNextprogram.

Depreciationexpenseincreased$24,or0.6%,in2015and$144,or3.9%,in2014.Theincreasein2015wasprimarilyduetoongoingcapitalspendingfornetworkupgradesand
expansionthatwaslargelyoffsetbyfullydepreciatedassets.Theincreasein2014wasprimarilyduetoongoingcapitalspendingfornetworkupgradesandexpansion,aswellas
theacquisitionofLeappartiallyoffsetbyfullydepreciatedassetsandextendingtheestimatedusefullifeofsoftware.

Operatingincomeincreased$687,or7.6%,in2015anddecreased$964,or9.6%,in2014.OurConsumerMobilitysegmentoperatingincomemarginwas27.8%in2015,
comparedto24.6%in2014and27.6%in2013.OurConsumerMobilityEBITDAmarginwas38.8%in2015,comparedto35.0%in2014and37.8%in2013.

12
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

International
SegmentResults
PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
Segmentoperatingrevenues
Videoentertainment $ 2,150 $ - $ - - -
Wireless 1,647 - - - -
Equipment 305 - - - -
TotalSegmentOperatingRevenues 4,102 - - - -

Segmentoperatingexpenses
Operationsandsupport 3,930 - - - -
Depreciationandamortization 655 - - - -
TotalSegmentOperatingExpenses 4,585 - - - -
SegmentOperatingIncome(Loss) (483) - - - -
EquityinNetIncome(Loss)
ofAffiliates (5) 153 532 - (71.2)
SegmentContribution $ (488) $ 153 $ 532 - (71.2)%

OperatingResults
OurInternationalsegmentconsistsoftheLatinAmericaoperationsacquiredinourJuly2015acquisitionofDIRECTVaswellastheMexicanwirelessoperationsacquired
earlierin2015(seeNote7).For2015,ourInternationalsegmentoperatingincomemarginwas(11.8)%andourInternationalEBITDAmarginwas4.2%.

Our2015operatingrevenueswere$4,102,with$1,952attributabletowirelessrevenuesinMexicoand$2,150invideoservicesinLatinAmerica.Operationsandsupport
expensesconsistofcostsincurredtoprovideourproductsandservices,includingcostsofoperatingandmaintainingournetworks,providingvideocontentandpersonnelcosts,
suchascompensationandbenefits.Our2015operatingexpenseswere$3,930andoperatinglosswas$483.

ConnectionsSummary
AtDecember31,2015,wehadapproximately8.7millionwirelesssubscribersinMexicoand12.5millionvideoconnectionsinLatinAmerica,including5.4millioninBrazil.
Sinceacquisition,ourMexicowirelessbusinesshadanetlossof96,000subscribers,mainlyprepaidcustomers,andourLatinAmericaoperationshadanetlossof147,000video
connections.

13
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

SupplementalOperatingInformation

Asasupplementaldiscussionofouroperatingresults,forcomparisonpurposes,weareprovidingaviewofourcombineddomesticwirelessoperations(AT&TMobility).

AT&TMobilityResults
PercentChange
2015vs. 2014vs.
2015 2014 2013 2014 2013
Operatingrevenues
Service $ 59,837 $ 61,032 $ 61,552 (2.0)% (0.8)%
Equipment 13,868 12,960 8,347 7.0 55.3
TotalOperatingRevenues 73,705 73,992 69,899 (0.4) 5.9

Operatingexpenses
Operationsandsupport 45,789 48,348 44,508 (5.3) 8.6
EBITDA 27,916 25,644 25,391 8.9 1.0
Depreciationandamortization 8,113 7,744 7,249 4.8 6.8
TotalOperatingExpenses 53,902 56,092 51,757 (3.9) 8.4
OperatingIncome $ 19,803 $ 17,900 $ 18,142 10.6% (1.3)%

14
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

ThefollowingtablehighlightsotherkeymeasuresofperformanceforAT&TMobility:

PercentChange
2015vs. 2014vs.
(in000s) 2015 2014 2013 2014 2013
WirelessSubscribers1
Postpaidsmartphones 58,073 56,644 51,874 2.5% 9.2%
Postpaidfeaturephonesanddata-centricdevices 19,032 19,126 20,764 (0.5) (7.9)
Postpaid 77,105 75,770 72,638 1.8 4.3
Prepaid5 11,548 9,965 5,817 15.9 71.3
Reseller 13,774 13,855 14,028 (0.6) (1.2)
Connecteddevices2 26,213 20,964 17,893 25.0 17.2
TotalWirelessSubscribers 128,640 120,554 110,376 6.7 9.2

NetAdditions3
Postpaid 1,666 3,290 1,776 (49.4) 85.2
Prepaid5 1,364 (311) 377 - -
BrandedNetAdds 3,030 2,979 2,153 1.7 38.4
Reseller (155) (346) (1,074) 55.2 67.8
Connecteddevices2 5,184 2,975 1,642 74.3 81.2
NetSubscriberAdditions 8,059 5,608 2,721 43.7 -

Brandedsmartphones 67,200 62,443 54,262 7.6 15.1
MobileShareconnections 61,275 52,370 21,143 17.0 -
Smartphonesunderourinstallmentprogramat
endofperiod 26,670 15,308 1,488 74.2 -
Smartphonessoldunderourinstallmentprogram
duringperiod 17,320 15,268 1,540 13.4% -

TotalChurn4 1.39% 1.45% 1.37% (6)BP 8BP
PostpaidChurn4 1.09% 1.04% 1.06% 5BP (2)BP
1Represents100%ofAT&TMobilitywirelesssubscribers.
2Includesdata-centricdevicessuchassession-basedtablets,monitoringdevicesandautomobilesystems.Excludespostpaidtablets.
3Excludesacquisition-relatedadditionsduringtheperiod.
4Calculatedbydividingtheaggregatenumberofwirelesssubscriberswhocanceledserviceduringaperioddividedbythetotalnumberofwirelesssubscribersatthe
beginningofthatperiod.Thechurnratefortheperiodisequaltotheaverageofthechurnrateforeachmonthofthatperiod.
5In2015,session-basedtabletswerereclassifiedtoconnecteddevices.Priorperiodamountsreflectthecurrentperiodpresentation.

Operatingincomeincreased$1,903,or10.6%,in2015anddecreased$242,or1.3%,in2014.TheoperatingincomemarginofAT&TMobilitywas26.9%in2015,compared
to24.2%in2014and26.0%in2013.AT&TMobility'sEBITDAmarginwas37.9%in2015,comparedto34.7%in2014and36.3%in2013.AT&TMobility'sEBITDAservice
marginwas46.7%in2015,comparedto42.0%in2014and41.3%in2013.(EBITDAservicemarginisoperatingincomebeforedepreciationandamortization,dividedbytotal
servicerevenues.)

SubscriberRelationships
Asthewirelessindustrycontinuestomature,webelievethatfuturewirelessgrowthwillincreasinglydependonourabilitytoofferinnovativeservices,plansanddevicesanda
wirelessnetworkthathassufficientspectrumandcapacitytosupporttheseinnovationsonasbroadageographicbasisaspossible.Toattractandretainsubscribersinamaturing
market,wehavelaunchedawidevarietyofplans,includingMobileShareandAT&TNext.

15
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

ARPU
Postpaidphone-onlyARPU(averagerevenueperaveragewirelesssubscriber)decreased4.0%in2015and6.6%in2014reflectingsubscribers'continuedadoptionofAT&T
NextandMobileShareplans.Postpaidphone-onlyARPUplusAT&TNextsubscriberinstallmentbillings(postpaidphone-onlyARPUplusAT&TNext)increased3.4%in
2015duetothecontinuinggrowthoftheAT&TNextprogram.Postpaidphone-onlyARPUplusAT&TNextdecreased2.4%in2014.

Churn
Theeffectivemanagementofsubscriberchurniscriticaltoourabilitytomaximizerevenuegrowthandtomaintainandimprovemargins.Totalchurnwaslowerin2015.
Postpaidchurnwasslightlyhigherin2015reflectingcontinuingcompetitivepressureintheindustry.

Postpaid
Postpaidsubscribersincreased1.8%and4.3%in2015and2014,respectively.AtDecember31,2015,87%ofourpostpaidphonesubscriberbaseusedsmartphones,compared
to83%atDecember31,2014and77%atDecember31,2013.About98%ofourpostpaidsmartphonesubscribersareonplansthatprovideforserviceonmultipledevicesat
reducedrates,andsuchsubscriberstendtohavehigherretentionandlowerchurnrates.Agrowingpercentageofourpostpaidsmartphonesubscribersareonusage-baseddata
plans,withapproximately51.1millionsubscribersontheseplansascomparedto48.5millionand38.7million,respectively,inthepriortwoyears.AbouthalfofourMobile
Shareaccountshavechosendataplanswith10gigabytesorhigher.DeviceconnectionsonourMobileShareplansnowrepresentover79%ofourpostpaidcustomerbase.Such
offeringsareintendedtoencourageexistingsubscriberstoupgradetheircurrentservicesand/oraddconnecteddevices,attractsubscribersfromotherprovidersandminimize
subscriberchurn.

During2015,weofferedpostpaidwirelessserviceundertwoalternatives:(1)forsubscriberspurchasingadeviceoninstallmentsundertheAT&TNextprogramorforthosethat
bringtheirowndevice,noannualservicecontractissigned;however,thedevicemustbepaidinfullundertheAT&TNextcontractifthecustomerchoosestodroptheirservice
fromAT&T;and(2)forsubscriberswhopurchasetheirequipmentunderthetraditionaldevicesubsidymodel,servicecontractsarefortwo-yearperiodswithanincreasing
portionofthesesubscribersreceivingunlimitedvoiceandtextingservicesinconjunctionwithdataservicespurchasedthroughourMobileShareplans.Approximately69%of
allpostpaidsmartphonegrossadsandupgradesduring2015choseAT&TNext.WhileBYODcustomersdonotgenerateequipmentrevenueorincuradditionalexpensesfor
devicesubsidy,theservicerevenuehelpsimproveourmargins.InlateDecember2015,weannouncedanendtoofferingsubsidizedhandsetsformostofourcustomers.

OurAT&TNextprogramallowsforpostpaidsubscriberstopurchasecertaindevicesininstallmentsoveraperiodofupto30months.Additionally,afteraspecifiedperiodof
time,theyalsohavetherighttotradeintheoriginaldeviceforanewdevicewithanewinstallmentplanandhavetheremainingunpaidbalancesatisfied.Forcustomerswho
electtheseinstallmentprograms,werecognizeequipmentrevenueatthetimeofthesalefortheamountofthecustomerreceivable,netofthefairvalueofthetrade-inright
guaranteeandimputedinterest.AsignificantpercentageofourcustomersontheAT&TNextprogrampayalowermonthlyservicecharge,whichresultsinlowerservice
revenuerecordedforthesesubscribers.

Prepaid
In2015,weupdatedourdefinitionofprepaidsubscriberstoexcludesession-basedtablets,whicharenowincludedwithconnecteddevices.Prepaidsubscribersnowconsist
primarilyofphoneusers.Prepaidsubscribersincreased15.9%and71.3%in2015and2014,respectively.

Connected
Devices
Connecteddevicesincludesdata-centricdevicessuchassession-basedtablets,monitoringdevicesandautomobilesystems.Connecteddevicesubscribersincreased25.0%and
17.2%in2015and2014,respectively.During2015,weaddedapproximately3.9million"connected"carsthroughagreementswithvariouscarmakers.Webelievethatthese
connectedcaragreementsgiveustheopportunitytocreatefutureretailrelationshipswiththecarowners.

OPERATINGENVIRONMENTANDTRENDSOFTHEBUSINESS

2016RevenueTrendsWeexpectouroperatingenvironmentin2016tobeverycompetitive,especiallyinthewirelessarea,ascompaniesandconsumerscontinuetodemand
instantconnectivityandyetwefacearegulatoryenvironmentthatappearsincreasinglyunfriendlytoinvestmentinbroadbandservices.Despitethesechallenges,weexpectto
growourconsolidatedoperatingrevenuesin2016,drivenbyourabilitytoofferintegratedwireless,videoandwirelineservices,aswellascontinuinggrowthinfixedstrategic
services.WeexpectthatrobustcompetitioninthewirelessindustrywillcontinuetopressureservicerevenueandARPU.OurAT&TNextprogramisexpectedtogenerate
continuedgrowthinequipmentrevenue,whichhasthecorrespondingimpactofloweringservicerevenues.InlateDecember2015,weannouncedanendtoofferingsubsidized
handsetsformostofourcustomers.WeexpectthatallourmajorcustomercategorieswillcontinuetoincreasetheiruseofInternet-basedbroadband/dataservices.Weexpect
continuingdeclinesintraditionaltelephoneservicerevenues.Weexpectour2015acquisitionsofDIRECTVandwirelesspropertiesinMexicotoincreaserevenues,althoughwe
expecttoincursignificantintegrationcostsinthesameperiod.

16
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

2016ExpenseTrendsWeexpectstableconsolidatedoperatingincomemarginsin2016asgrowthinAT&TNextisreducingsubsidizedhandsetcostsovertimeandwelower
ourmarginalcostofprovidingvideoservicesandoperatingournetwork.Weexpecttocontinueourfocusoncostreductions,drivingsavingsthroughautomation,supplychain,
benefits,digitizingtransactionsandoptimizingnetworkcosts.Inaddition,thetransitionofournetworktoamoreefficientsoftware-basedtechnologyisexpectedtocontributeto
favorableexpensetrendsoverthenextseveralyears.Expensesrelatedtogrowthareasofourbusiness,includingwirelessdata,andintegrationofDIRECTV'soperations,will
applyoffsettingpressuretoouroperatingincomemargin.

MarketConditionsDuring2015,theongoingslowrecoveryinthegeneraleconomycontinuedtonegativelyaffectourcustomers.Certainindustries,suchasenergyandexport-
drivenbusinessesarebeingespeciallycautiouswhileresidentialcustomerscontinuetobepricesensitiveinselectingofferings,especiallyinthewirelessarea,andcontinueto
focusonofferingsthatgivethemefficientaccesstovideoandbroadcastservices.Weexpectcontinuedpressureonpricingduring2016aswerespondtothisintense
competition,especiallyinthewirelessbusiness.

Includedonourconsolidatedbalancesheetsareassetsheldbybenefitplansforthepaymentoffuturebenefits.Ourpensionplansaresubjecttofundingrequirementsofthe
EmployeeRetirementIncomeSecurityActof1974,asamended(ERISA).InSeptember2013,wemadeavoluntarycontributionofapreferredequityinterestinAT&TMobility
IILLCtothetrustusedtopaypensionbenefits.Thetrustisentitledtoreceivecumulativeannualcashdistributionsof$560,whichwillresultina$560contributionduring2016.
Inaddition,wewillcontribute$175nolaterthantheduedateforourfederalincometaxreturnfor2015.Wedonothavesignificantadditionalcontributionrequirementstoour
pensionplansfor2016.However,aweaknessintheequity,fixedincomeandrealassetmarketscouldrequireusinfutureyearstomakecontributionstothepensionplansin
ordertomaintainminimumfundingrequirementsasestablishedbyERISA.InvestmentreturnsontheseassetsdependlargelyontrendsintheU.S.securitiesmarketsandthe
U.S.economy.Inaddition,ourpolicyofrecognizingactuarialgainsandlossesrelatedtoourpensionandotherpostretirementplansintheperiodinwhichtheyarisesubjectsus
toearningsvolatilitycausedbychangesinmarketconditions.Changesinourdiscountrate,whicharetiedtochangesinthebondmarket,andchangesintheperformanceof
equitymarkets,mayhavesignificantimpactsonthevaluationofourpensionandotherpostretirementobligationsattheendof2016(see"AccountingPoliciesandEstimates").

OPERATINGENVIRONMENTOVERVIEW

AT&TsubsidiariesoperatingwithintheUnitedStatesaresubjecttofederalandstateregulatoryauthorities.AT&TsubsidiariesoperatingoutsidetheUnitedStatesaresubjectto
thejurisdictionofnationalandsupranationalregulatoryauthoritiesinthemarketswhereserviceisprovided.

IntheTelecommunicationsActof1996(TelecomAct),Congressestablishedanationalpolicyframeworkintendedtobringthebenefitsofcompetitionandinvestmentin
advancedtelecommunicationsfacilitiesandservicestoallAmericansbyopeningalltelecommunicationsmarketstocompetitionandreducingoreliminatingregulatoryburdens
thatharmconsumerwelfare.However,sincetheTelecomActwaspassed,theFederalCommunicationsCommission(FCC)andsomestateregulatorycommissionshave
maintainedorexpandedcertainregulatoryrequirementsthatwereimposeddecadesagoonourtraditionalwirelinesubsidiarieswhentheyoperatedaslegalmonopolies.Weare
pursuing,atboththestateandfederallevels,additionallegislativeandregulatorymeasurestoreduceregulatoryburdensthatarenolongerappropriateinacompetitive
telecommunicationsmarketandthatinhibitourabilitytocompetemoreeffectivelyandofferserviceswantedandneededbyourcustomers,includinginitiativestotransition
servicesfromtraditionalnetworkstoallIP-basednetworks.Atthesametime,wealsoseektoensurethatlegacyregulationsarenotfurtherextendedtobroadbandorwireless
services,whicharesubjecttovigorouscompetition.

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InFebruary2015,theFCCreleasedanorderreclassifyingbothfixedandmobileconsumerbroadbandInternetaccessservicesastelecommunicationsservices,subjectto
comprehensiveregulationundertheTelecomAct.TheFCC'sdecisionsignificantlyexpandstheFCC'sexistingauthoritytoregulatetheprovisionoffixedandmobilebroadband
Internetaccessservices.AT&TandotherprovidersofbroadbandInternetaccessserviceshavechallengedtheFCC'sdecisionbeforetheU.S.CourtofAppealsfortheD.C.
Circuit.WeexpectadecisiononAT&T'sappealinthefirsthalfof2016.

WeprovidesatellitevideoservicethroughoursubsidiaryDIRECTV,whosesatellitesarelicensedbytheFCC.TheCommunicationsActof1934andotherrelatedactsgivethe
FCCbroadauthoritytoregulatetheU.S.operationsofDIRECTV.Inaddition,statesrepresentingamajorityofourlocalserviceaccesslineshaveadoptedlegislationthat
enablesustoprovideU-versevideoservicethroughasinglestatewideorstate-approvedfranchise(asopposedtotheneedtoacquirehundredsoreventhousandsofmunicipal-
approvedfranchises)tooffercompetitivevideoservices.Wealsoaresupportingeffortstoupdateandimproveregulatorytreatmentforretailservices.Regulatoryreformand
passageoflegislationisuncertainanddependsonmanyfactors.

Weprovidewirelessservicesinrobustlycompetitivemarkets,butthoseservicesaresubjecttosubstantialandincreasinggovernmentalregulation.Wirelesscommunications
providersmustobtainlicensesfromtheFCCtoprovidecommunicationsservicesatspecifiedspectrumfrequencieswithinspecifiedgeographicareasandmustcomplywiththe
FCCrulesandpoliciesgoverningtheuseofthespectrum.Whilewirelesscommunicationsproviders'pricesandserviceofferingsaregenerallynotsubjecttostateregulation,
statessometimesattempttoregulateorlegislatevariousaspectsofwirelessservices,suchasintheareaofconsumerprotection.

TheFCChasrecognizedthattheexplosivegrowthofbandwidth-intensivewirelessdataservicesrequirestheU.S.Governmenttomakemorespectrumavailable.InFebruary
2012,CongresssetforthspecificspectrumblockstobeauctionedandlicensedbyFebruary2015(the"AWS-3Auction"),andalsoauthorizedtheFCCtoconductan"incentive
auction,"tomakeavailableforwirelessbroadbandusecertainspectrumthatiscurrentlyusedbybroadcasttelevisionlicensees(the"600MHzAuction").Weparticipatedinthe
AWS-3Auction.TheFCCannouncedthatthe600MHzAuction(Auction1000)isscheduledtobeginonMarch29,2016.

InMay2014,inaseparateproceeding,theFCCissuedanorderrevisingitspoliciesgoverningmobilespectrumholdings.TheFCCrejectedtheimpositionofcapsontheamount
ofspectrumanycarriercouldacquire,retainingitscase-by-casereviewpolicy.Moreover,itincreasedtheamountofspectrumthatcouldbeacquiredbeforeexceedingan
aggregation"screen"thatwouldautomaticallytriggercloserscrutinyofaproposedtransaction.Ontheotherhand,itindicatedthatitwillseparatelyconsideranacquisitionof
"lowband"spectrumthatexceedsone-thirdoftheavailablelowbandspectrumaspresumptivelyharmfultocompetition.Inaddition,theFCCimposedlimitsoncertainbidders
inthe600MHzAuction,includingAT&T,restrictingthemfrombiddingonupto40percentoftheavailablespectrumintheincentiveauctioninmarketsthatcoverasmuchas
70-80percentoftheU.S.population.Onbalance,theorderandthenewspectrumscreenshouldallowAT&Ttoobtainadditionalspectrumtomeetourcustomers'needs,but
becauseAT&Tusesmore"lowband"spectruminitsnetworkthansomeothernationalcarriers,theseparateconsiderationoflowbandspectrumacquisitionsmightaffect
AT&T'sabilitytoexpandcapacityinthesebands("lowband"spectrumhasbetterpropagationcharacteristicsthan"highband"spectrum).Weseektoensurethatwehavethe
opportunity,throughtheauctionprocessandotherwise,toobtainthespectrumweneedtoprovideourcustomerswithhigh-qualityserviceinthefuture.

ExpectedGrowthAreas
Overthenextfewyears,weexpectourgrowthtocomefromIP-basedbroadbandservices,videoentertainmentandwirelessservicesfromourexpandedNorthAmerican
footprint.Withour2015acquisitionsofDIRECTVandwirelesspropertiesinMexico,ourrevenuemixismuchmorediversified.Wecannowprovideintegratedservicesto
diversegroupsofcustomersintheU.S.ondifferenttechnologicalplatforms,includingwireless,satelliteandwireline.In2016,weexpectourlargestrevenuestreamtocome
frombusinesscustomers,followedbyU.S.consumervideoandbroadband,U.S.consumermobilityandtheninternationalvideoandmobility.

IntegrationofData/BroadbandandEntertainmentServicesAsthecommunicationsindustrycontinuestomovetowardInternet-basedtechnologiesthatarecapableof
blendingwireline,satelliteandwirelessservices,weplantoofferservicesthattakeadvantageofthesenewandmoresophisticatedtechnologies.Inparticular,weintendto
continuetofocusonexpandingourhigh-speedInternetandvideoofferingsandondevelopingIP-basedservicesthatallowcustomerstounitetheirhomeorbusinessfixed
serviceswiththeirmobileservice.During2016,wewillcontinuetodevelopandprovideuniqueintegratedvideo,mobileandbroadbandsolutions.InJanuary2016,webegan
offeringanunlimitedmobiledataplantocustomerswhoalsopurchaseDIRECTVorU-versevideoservice,therebyfacilitatingourcustomers'desiretoviewvideoanywhereon
demandandencouragingcustomerretention.

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WirelessWeexpecttodelivercontinuedrevenuegrowthinthecomingyears.Weareinaperiodofrapidgrowthinwirelessdatausageandbelievethattherearesubstantial
opportunitiesavailablefornext-generationconvergedservicesthatcombinetechnologiesandservices.Forexample,weenteredintoagreementswithmanyautomobile
manufacturersandbeganprovidingvehicle-embeddedsecurityandentertainmentservices.

IntheUnitedStates,wenowcoverallmajormetropolitanareasandmorethan310millionpeoplewithourLTEtechnology.Wealsoprovide4Gcoverageusinganother
technology(HSPA+),andwhencombinedwithourupgradedbackhaulnetwork,weareabletoenhanceournetworkcapabilitiesandprovidesuperiormobilebroadbandspeeds
fordataandvideoservices.OurwirelessnetworkalsoreliesonotherGSMdigitaltransmissiontechnologiesfor3Gand2Gdatacommunications.AsofDecember31,2015,we
servedmorethan128millionU.S.subscribers.

Asthewirelessindustrycontinuestomature,webelievethatfuturewirelessgrowthwillincreasinglydependonourabilitytoofferinnovativevideoanddataservicesanda
wirelessnetworkthathassufficientspectrumandcapacitytosupporttheseinnovations.Wecontinuetofacespectrumandcapacityconstraintsonourwirelessnetworkincertain
markets.Weexpectsuchconstraintstoincreaseandexpandtoadditionalmarketsinthecomingyears.Whilewearecontinuingtoinvestsignificantcapitalinexpandingour
networkcapacity,ourcapacityconstraintscouldaffectthequalityofexistingvoiceanddataservicesandourabilitytolaunchnew,advancedwirelessbroadbandservices,unless
weareabletoobtainmorespectrum.Anylong-termspectrumsolutionwillrequirethattheFCCmakeadditionalspectrumavailabletothewirelessindustrytomeetthe
expandingneedsofoursubscribers.Wewillcontinuetoattempttoaddressspectrumandcapacityconstraintsonamarket-by-marketbasis.

In2015,weacquiredtwoMexicanwirelessproviders.ThesetwoacquisitionsgiveusaGSMnetworkcoveringboththeU.S.andMexicoandenableourcustomerstouse
wirelessserviceswithoutroamingonothercompanies'networks.Webelievethisseamlessaccesswillproveattractivetocustomersandprovideasignificantgrowthopportunity.
Wealsoannouncedin2015ourplantoinvest$3,000toupgradethenetworkinMexicotoprovideLTEcoverageto100millionpeopleandbusinessesbyyear-end2018.Asof
year-end2015,thisLTEnetworkcoveredapproximately44millionpeopleandbusinessesinMexico.

REGULATORYDEVELOPMENTS

Setforthbelowisasummaryofthemostsignificantregulatoryproceedingsthatdirectlyaffectedouroperationsduring2015.Industry-wideregulatorydevelopmentsare
discussedaboveinOperatingEnvironmentOverview.Whiletheseissuesmayapplyonlytocertainsubsidiaries,thewords"we,""AT&T"and"our"areusedtosimplifythe
discussion.Thefollowingdiscussionsareintendedasacondensedsummaryoftheissuesratherthanasacomprehensivelegalanalysisanddescriptionofallofthesespecific
issues.

International
Regulation

OursubsidiariesoperatingoutsidetheUnitedStatesaresubjecttothejurisdictionofregulatoryauthoritiesinthemarketwhereserviceisprovided.
Ourlicensing,complianceandadvocacyinitiativesinforeigncountriesprimarilyenabletheprovisionofenterprise(i.e.,largebusiness)services.AT&Tisengagedinmultiple
effortswithforeignregulatorstoopenmarketstocompetition,reducenetworkcosts,fosterconditionsfavorabletoinvestment,andincreaseourscopeoffullyauthorized
networkservicesandproducts.

Federal
Regulation

InFebruary2015,theFCCreleasedanorderinresponsetotheD.C.Circuit'sJanuary2014decisionadoptingnewrules,andreclassifyingbothfixedand
mobileconsumerbroadbandInternetaccessservicesastelecommunicationsservices,subjecttocomprehensiveregulationundertheTelecomAct.TheFCC'sdecision
significantlyexpandstheFCC'sexistingauthoritytoregulatetheprovisionoffixedandmobilebroadbandInternetaccessservices.TheFCCalsoassertedjurisdictionover
Internetinterconnectionarrangements,whichuntilnowhavebeenunregulated.Theseactionscouldhaveanadverseimpactonourfixedandmobilebroadbandservicesand
operatingresults.AT&Tandseveralotherparties,includingUSTelecomandCTIAtradegroups,haveappealedtheFCC'sorder.Briefingandoralargumentontheappealhave
beencompleted.TheD.C.Circuitisexpectedtoruleontheappealinthefirsthalfof2016.

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COMPETITION

Competitioncontinuestoincreaseforcommunicationsanddigitalentertainmentservices.Technologicaladvanceshaveexpandedthetypesandusesofservicesandproducts
available,whichhasexpandedopportunitiesinsignificantportionsofourbusiness,includingour2015acquisitionsofDIRECTVandtwoMexicanwirelessproviders.Certainof
ourcompetitorsmayhavelowercostsforcomparablealternativeserviesduetoalackoforareducedlevelofregulation.

Wefacesubstantialandincreasingcompetitioninourwirelessbusinesses.UndercurrentFCCrules,multiplelicensees,whoprovidewirelessservicesonthecellular,PCS,
AdvancedWirelessServices,700MHzandotherspectrumbands,mayoperateineachofourserviceareas.OurcompetitorsincludebrandssuchasVerizonWireless,Sprint,T-
Mobile/MetroPCS,alargernumberofregionalprovidersofcellular,PCSandotherwirelesscommunicationsservicesandresellersofthoseservices.Inaddition,weface
competitionfromproviderswhooffervoice,textmessagingandotherservicesasapplicationsondatanetworks.Morethan98percentoftheU.S.populationliveinareaswithat
leastthreemobiletelephoneoperators,andmorethan94percentofthepopulationliveinareaswithatleastfourcompetingcarriers.WeareoneofthreeprovidersinMexico,
withthemostsignificantmarketsharecontrolledbyAmricaMvil.Wemayexperiencesignificantcompetitionfromcompaniesthatprovidesimilarservicesusingother
communicationstechnologiesandservices.Whilesomeofthesetechnologiesandservicesarenowoperational,othersarebeingdevelopedormaybedeveloped.Wecompetefor
customersbasedprincipallyonservice/deviceofferings,price,callquality,coverageareaandcustomerservice.

Oursubsidiariesprovidingcommunicationsanddigitalentertainmentserviceswillfacecontinuedcompetitivepressurein2016frommultipleproviders,includingwireless,
satellite,cableandotherVoIPproviders,onlinevideoproviders,andinterexchangecarriersandresellers.Inaddition,thedesireforhigh-speeddataondemand,includingvideo,
andlingeringeconomicsluggishnessarecontinuingtoleadcustomerstoterminatetheirtraditionalwiredservicesanduseourorcompetitors'wireless,satelliteandInternet-
basedservices.Inmostmarkets,wecompeteforcustomers,oftenonpricingofbundledservices,withlargecablecompanies,suchasComcastCorporation,Cox
CommunicationsInc.andTimeWarnerCableInc.,forhigh-speedInternet,videoandvoiceservicesandothersmallertelecommunicationscompaniesforbothlong-distanceand
localservices.Inaddition,inLatinAmericancountriesservedbyourDIRECTVsubsidiary,wealsofacecompetitionfromothervideoproviders,includingAmricaMviland
Telefnica.

OurEntertainmentGroupandBusinessSolutionssegmentsgenerallyremainsubjecttoregulationforcertainlegacywirelinewholesaleservicesbystateregulatorycommissions
forintrastateservicesandbytheFCCforinterstateservices.UndertheTelecomAct,companiesseekingtointerconnecttoournetworksandexchangelocalcallsenterinto
interconnectionagreementswithus.Anyunresolvedissuesinnegotiatingthoseagreementsaresubjecttoarbitrationbeforetheappropriatestatecommission.Theseagreements
(whetherfullyagreed-uponorarbitrated)arethensubjecttoreviewandapprovalbytheappropriatestatecommission.

OurEntertainmentGroupandBusinessSolutionssegmentsoperateportionsoftheirbusinessunderstate-specificformsofregulationforretailservicesthatwereeither
legislativelyenactedorauthorizedbytheappropriatestateregulatorycommission.Moststatesderegulatethecompetitiveservices;imposepricecapsforsomeserviceswhere
thepricesfortheseservicesarenottiedtothecostofprovidingtheservicesortorate-of-returnrequirements;oradoptaregulatoryframeworkthatincorporatesderegulationand
pricecaps.Somestatesmayimposeminimumcustomerservicestandardswithrequiredpaymentsifwefailtomeetthestandards.

Wecontinuetoloselegacyvoiceanddatasubscribersduetocompetitors(e.g.,wireless,cableandVoIPproviders)whocanprovidecomparableservicesatlowerprices
becausetheyarenotsubjecttotraditionaltelephoneindustryregulation(ortheextentofregulationisindispute),utilizedifferenttechnologies,orpromoteadifferentbusiness
model(suchasadvertisingbased).Inresponsetothesecompetitivepressures,foranumberofyearswehaveusedabundlingstrategythatrewardscustomerswhoconsolidate
theirservices(e.g.,telephone,high-speedInternet,wirelessandvideo)withus.Wecontinuetofocusonbundlingservices,includingcombinedpackagesofwirelessdataand
voiceandvideoservice.WewillcontinuetodevelopinnovativeandintegratedservicesthatcapitalizeonourwirelessandIP-basednetworkandsatellites.

Additionally,weprovidelocalandinterstatetelephoneandswitchedservicestootherserviceproviders,primarilylargeInternetServiceProvidersusingthelargestclassof
nationwideInternetnetworks(Internetbackbone),wirelesscarriers,othertelephonecompanies,cablecompaniesandsystemsintegrators.Theseservicesaresubjecttoadditional
competitivepressuresfromthedevelopmentofnewtechnologies,theintroductionofinnovativeofferingsandincreasingsatellite,wireless,fiber-opticandcabletransmission
capacityforservices.Wefaceanumberofinternationalcompetitors,includingOrangeBusinessServices,BritishTelecom,SingaporeTelecommunicationsLimitedandVerizon
CommunicationsInc.,aswellascompetitionfromanumberoflargesystemsintegrators,suchasHPEnterpriseServices.

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ACCOUNTINGPOLICIESANDSTANDARDS

CriticalAccountingPoliciesandEstimatesBecauseofthesizeofthefinancialstatementlineitemstheyrelatetoortheextentofjudgmentrequiredbyourmanagement,
someofouraccountingpoliciesandestimateshaveamoresignificantimpactonourconsolidatedfinancialstatementsthanothers.Thefollowingpoliciesarepresentedinthe
orderinwhichthetopicsappearinourconsolidatedstatementsofincome.

AllowanceforDoubtfulAccountsWerecordexpensetomaintainanallowancefordoubtfulaccountsforestimatedlossesthatresultfromthefailureorinabilityofour
customerstomakerequiredpayments.Whendeterminingtheallowance,weconsidertheprobabilityofrecoverabilitybasedonpastexperience,takingintoaccountcurrent
collectiontrendsaswellasgeneraleconomicfactors,includingbankruptcyrates.Creditrisksareassessedbasedonhistoricalwrite-offs,netofrecoveries,aswellasan
analysisoftheagedaccountsandinstallmentreceivablebalanceswithreservesgenerallyincreasingasthereceivableages.Accountsreceivablemaybefullyreservedfor
whenspecificcollectionissuesareknowntoexist,suchaspendingbankruptcyorcatastrophes.Theanalysisofreceivablesisperformedmonthly,andtheallowancesfor
doubtfulaccountsareadjustedthroughexpenseaccordingly.A10%changeintheamountsestimatedtobeuncollectiblewouldresultinachangeintheprovisionfor
uncollectibleaccountsofapproximately$142.

PensionandPostretirementBenefitsOuractuarialestimatesofretireebenefitexpenseandtheassociatedsignificantweighted-averageassumptionsarediscussedinNote
12.Ourassumeddiscountrateforpensionandpostretirementbenefitsof4.60%and4.50%,respectively,atDecember31,2015,reflectsthehypotheticalrateatwhichthe
projectedbenefitobligationscouldbeeffectivelysettledorpaidouttoparticipants.Wedeterminedourdiscountratebasedonarangeoffactors,includingayieldcurve
composedoftheratesofreturnonseveralhundredhigh-quality,fixedincomecorporatebondsavailableatthemeasurementdateandtherelatedexpecteddurationforthe
obligations.ThesebondswereallratedatleastAa3orAA-byoneofthenationallyrecognizedstatisticalratingorganizations,denominatedinU.S.dollars,andneither
callable,convertiblenorindexlinked.FortheyearendedDecember31,2015,weincreasedourpensiondiscountrateby0.30%,resultinginadecreaseinourpensionplan
benefitobligationof$1,977andincreasedourpostretirementdiscountrateby0.30%,resultinginadecreaseinourpostretirementbenefitobligationof$854.Fortheyear
endedDecember31,2014,wedecreasedourpensiondiscountrateby0.70%,resultinginanincreaseinourpensionplanbenefitobligationof$4,854anddecreasedour
postretirementdiscountrate0.80%,resultinginanincreaseinourpostretirementbenefitobligationof$2,786.

Ourexpectedlong-termrateofreturnonpensionplanassetsis7.75%for2016and2015.Ourexpectedlong-termrateofreturnonpostretirementplanassetsis5.75%for
2016and2015.Ourexpectedreturnonplanassetsiscalculatedusingtheactualfairvalueofplanassets.Ifallotherfactorsweretoremainunchanged,weexpectthata
0.50%decreaseintheexpectedlong-termrateofreturnwouldcause2016combinedpensionandpostretirementcosttoincrease$232,whichunderouraccountingpolicy
wouldbeadjustedtoactualreturnsinthecurrentyearaspartofourfourth-quarterremeasurementofourretireebenefitplans.In2015,theactualreturnonourcombined
pensionandpostretirementplanassetswas1.3%,resultinginanactuariallossof$3,070.

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Werecognizegainsandlossesonpensionandpostretirementplanassetsandobligationsimmediatelyinouroperatingresults.Thesegainsandlossesaregenerallymeasured
annuallyasofDecember31andaccordinglywillnormallyberecordedduringthefourthquarter,unlessanearlierremeasurementisrequired.Shouldactualexperience
differfromactuarialassumptions,theprojectedpensionbenefitobligationandnetpensioncostandaccumulatedpostretirementbenefitobligationandpostretirementbenefit
costwouldbeaffectedinfutureyears.Note12alsodiscussestheeffectsofcertainchangesinassumptionsrelatedtomedicaltrendratesonretireehealthcarecosts.

DepreciationOurdepreciationofassets,includinguseofcompositegroupdepreciationandestimatesofusefullives,isdescribedinNotes1and6.Weassignusefullives
basedonperiodicstudiesofactualassetlives.During2014,wecompletedstudiesevaluatingtheperiodsthatwewereutilizingoursoftwareassets,whichresultedinour
extendingourestimatedusefullivesforcertaincapitalizedsoftwaretofiveyearstobetterreflecttheestimatedperiodsduringwhichtheseassetswillremaininservice,
whichisalsoconsistentwiththeestimatedusefullivesusedintheindustry.Priorto2014,allcapitalizedsoftwarecostswereprimarilyamortizedoverathree-yearperiod.

Ifallotherfactorsweretoremainunchanged,weexpectthataone-yearincreaseintheusefullivesofourplantinservicewouldhaveresultedinadecreaseof
approximately$3,550inour2015depreciationexpenseandthataone-yeardecreasewouldhaveresultedinanincreaseofapproximately$4,886inour2015depreciation
expense.

AssetValuationsandImpairmentsWeallocatethepurchasepriceofacquiredbusinessestotheassetsacquiredandliabilitiesassumedbasedontheirestimatedfair
values.Theestimatedfairvaluesofintangibleassetsacquiredarebasedontheexpecteddiscountedcashflowsoftheidentifiedcustomerrelationships,patents,tradenames,
orbitalslotsandwirelesslicenses(spectrum).Indeterminingthefuturecashflows,weconsiderdemand,competitionandothereconomicfactors.

Customerrelationships,whicharefinite-livedintangibleassets,areprimarilyamortizedusingthesum-of-the-months-digitsmethodofamortizationovertheperiodinwhich
thoserelationshipsareexpectedtocontributetoourfuturecashflows.Thesum-of-the-months-digitsmethodisaprocessofallocationandreflectsourbeliefthatweexpect
greaterrevenuegenerationfromthesecustomerrelationshipsduringtheearlierperiodsafteracquisition.Amortizationofotherintangibles,includingpatentsandcertain
tradenames,isdeterminedusingthestraight-linemethodofamortizationovertheexpectedremainingusefullivesorspecifiedcontractualterms.

Goodwillandotherindefinitelivedintangibleassetsarenotamortizedbuttestedatleastannuallyforimpairment.WeconductourimpairmenttestsasofOctober1.Wetest
goodwillonareportingunitbasis,andsomereportingunitscoincidewithoursegments,whileothersareonelevelbelowoursegments.If,duetochangesinhowwe
managethebusiness,wemoveaportionofareportingunittoanotherreportingunit,wedeterminetheamountofgoodwilltoreallocatetothenewreportingunitbasedon
therelativefairvalueoftheportionofthebusinessmovedandtheportionofthebusinessremaininginthereportingunit.Thegoodwillimpairmenttestisatwo-step
process.Thefirststepinvolvesdeterminingthefairvalueofthereportingunitandcomparingthatmeasurementtothebookvalue.Ifthefairvalueexceedsthebookvalue,
thennofurthertestingisrequired.Ifthefairvalueislessthanthebookvalue(i.e.,anindicationofimpairmentexists),thenweperformthesecondstep.

Inthesecondstep,wedeterminethefairvaluesofalloftheassetsandliabilitiesofthereportingunit,includingthosethatmaynotbecurrentlyrecorded.Thedifference
betweenthesumofallofthosefairvaluesandtheoverallreportingunit'sfairvalueisanewimpliedgoodwillamount,whichwecomparetotherecordedgoodwill.If
impliedgoodwillislessthantherecordedgoodwill,thenwerecordanimpairmentoftherecordedgoodwill.Theamountofthisimpairmentmaybemoreorlessthanthe
differencebetweentheoverallfairvalueandbookvalueofthereportingunit.Itmayevenbezeroifthefairvaluesofotherassetsarelessthantheirbookvalues.

AsshowninNote7,allofourgoodwillresidesintheBusinessSolutions,EntertainmentGroup,ConsumerMobilityandInternationalsegments.Foreachofthereporting
unitsinthosesegments,weassesstheirfairvaluesusinganincomeapproach(alsoknownasadiscountedcashflow)andamarketmultipleapproach.Theincomeapproach
utilizesa10-yearcashflowprojectionwithaperpetuityvaluediscountedusinganappropriateweightedaveragecostofcapitalrateforeachreportingunit.Themarket
multipleapproachusesamultipleofacompany'sEBITDA.Wedeterminedthemultiplesofthepubliclytradedcompanieswhoseservicesarecomparabletothoseoffered
bythereportingunitandthencalculatedaweighted-averageofthosemultiples.Usingthoseweightedaverages,wethencalculatedfairvaluesforeachofthosereporting
units.In2015,thecalculatedfairvalueofthereportingunitexceededbookvalueinallcircumstances,andnoadditionaltestingwasnecessary.Intheeventofa10%dropin
thefairvaluesofthereportingunits,thefairvalueswouldhavestillexceededthebookvaluesofthereportingunits,andadditionaltestingwouldstillhavenotbeen
necessary.

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Wirelesslicenses(spectrum)intheU.S.aretestedforimpairmentonanaggregatebasis,consistentwithuseofthelicensestosupporttheBusinessSolutionsandConsumer
Mobilitysegmentsonanationalscope.Asinprioryears,weperformedourtestofthefairvaluesoflicensesusingadiscountedcashflowmodel(theGreenfieldApproach).
WealsocorroboratedthevalueofwirelesslicenseswithamarketapproachastheAWS-3auctionprovidedmarketpriceinformationfornationalwirelesslicenses.The
GreenfieldApproachassumesacompanyinitiallyownsonlythewirelesslicenses,andthenmakesinvestmentsrequiredtobuildanoperationcomparabletotheonethat
currentlyutilizesthelicenses.Weutilizeda17-yeardiscreteperiodtoisolatecashflowsattributabletothelicenses,includingmodelingthehypotheticalbuild-out.The
projectedcashflowsarebasedoncertainfinancialfactors,includingrevenuegrowthrates,EBITDAmarginsandchurnrates.Forimpairmenttestingpurposes,weassumed
wirelessrevenuegrowthtotrendupfromour2015declineof0.4%toalong-termgrowthratethatreflectsexpectedlong-terminflationtrends.Weassumedourchurnrates
willincreasein2016fromourrateof1.39%in2015,inlinewithexpectedtrendsintheU.S.industrybutataratecomparablewithindustry-leadingchurn.EBITDA
marginswereassumedtotrendtoward40%annually,andEBITDAservicemarginswereassumedtocontinuetotrendtoatleast40%annually.

Thismodelthenincorporatescashflowassumptionsregardinginvestmentinthenetwork,developmentofdistributionchannelsandthesubscriberbase,andotherinputsfor
makingthebusinessoperational.Webasedtheassumptionsonacombinationofaveragemarketplaceparticipantdataandourhistoricalresults,trendsandbusinessplans.
Wealsousedoperatingmetricssuchascapitalinvestmentpersubscriber,acquisitioncostspersubscriber,minutesofusepersubscriber,etc.,todeveloptheprojectedcash
flows.Sinceweincludedthecashflowsassociatedwiththeseotherinputsintheannualcashflowprojections,thepresentvalueoftheunleveredfreecashflowsofthe
segment,afterinvestmentinthenetwork,subscribers,etc.,isattributabletothewirelesslicenses.Theterminalvalueofthesegment,whichincorporatesanassumed
sustainablegrowthrate,isalsodiscountedandislikewiseattributedtothelicenses.Weusedadiscountrateof8.25%,basedontheoptimallong-termcapitalstructureofa
marketparticipantanditsassociatedcostofdebtandequity,tocalculatethepresentvalueoftheprojectedcashflows.Thisdiscountrateisalsoconsistentwithratesweuse
tocalculatethepresentvalueoftheprojectedcashflowsoflicensesacquiredfromthirdparties.

Ifeithertheprojectedrateoflong-termgrowthofcashflowsorrevenuesdeclinedby0.5%,orifthediscountrateincreasedby0.5%,thefairvaluesofthewirelesslicenses,
whilelessthancurrentlyprojected,wouldstillbehigherthanthebookvalueofthelicenses.Thefairvalueofthelicensesexceededthebookvaluebymorethan10%.

Wereviewcustomerrelationshipsandotherlong-livedassetsforimpairmentwhenevereventsorcircumstancesindicatethatthecarryingamountmaynotberecoverable
overtheremaininglifeoftheassetorassetgroup.Todeterminethattheassetisrecoverable,weverifythattheexpectedundiscountedfuturecashflowsdirectlyrelatedto
thatassetexceeditsbookvalue.

Weevaluateourinvestmentstodeterminewhethermarketdeclinesaretemporaryandaccordinglyreflectedinaccumulatedothercomprehensiveincome,orother-than-
temporaryandrecordedasanexpensein"Otherincome(expense)net"intheconsolidatedstatementsofincome.Thisevaluationisbasedonthelengthoftimeandthe
severityofdeclineintheinvestment'svalue.In2014,weidentifiedanimmaterialother-than-temporarydeclineinthevalueofequitymethodinvestmentsandvariouscost
investments.

IncomeTaxesOurestimatesofincometaxesandthesignificantitemsgivingrisetothedeferredassetsandliabilitiesareshowninNote11andreflectourassessmentof
actualfuturetaxestobepaidonitemsreflectedinthefinancialstatements,givingconsiderationtobothtimingandprobabilityoftheseestimates.Actualincometaxescould
varyfromtheseestimatesduetofuturechangesinincometaxlaworthefinalreviewofourtaxreturnsbyfederal,stateorforeigntaxauthorities.

Weuseourjudgmenttodeterminewhetheritismorelikelythannotthatwewillsustainpositionsthatwehavetakenontaxreturnsand,ifso,theamountofbenefitto
initiallyrecognizewithinourfinancialstatements.Weregularlyreviewouruncertaintaxpositionsandadjustourunrecognizedtaxbenefits(UTBs)inlightofchangesin
factsandcircumstances,suchaschangesintaxlaw,interactionswithtaxingauthoritiesanddevelopmentsincaselaw.TheseadjustmentstoourUTBsmayaffectour
incometaxexpense.Settlementofuncertaintaxpositionsmayrequireuseofourcash.

23
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

NewAccountingStandards

SeeNote1foradiscussionofrecentlyissuedoradoptedaccountingstandards.

OTHERBUSINESSMATTERS

DIRECTVInJuly2015,wecompletedouracquisitionofDIRECTV,aleadingproviderofdigitaltelevisionentertainmentservicesinboththeUnitedStatesandLatinAmerica.
Theacquisitiongivesusauniqueandcomplementarysetofassetsandtheopportunitytoachievesubstantialcostsynergiesovertime,aswellasincreasingrevenuefrom
bundlingandintegratingservices.Ourdistributionscaleenablesustoofferconsumersattractivecombinationsofvideo,high-speedbroadbandandmobileservices,usingallthe
saleschannelsofbothcompanies.Webelievethecombinedcompanywillbeacontentdistributionleaderacrossmobile,videoandbroadbandplatforms.

Underthemergeragreement,eachshareofDIRECTVstockwasexchangedfor$28.50cashplus1.892sharesofourcommonstock.Afteradjustmentforsharesissuedtotrusts
consolidatedbyAT&T,stockbasedpaymentarrangementsandfractionalshares,whichweresettledincash,AT&Tissued954,407,524sharestoDIRECTVshareholders,
givingthemanapproximate16%stakeinthecombinedcompany,basedoncommonsharesoutstanding.Basedonour$34.29pershareclosingstockpriceonJuly24,2015,the
aggregatevalueofconsiderationpaidtoDIRECTVshareholderswas$47,409,including$32,727ofAT&Tstockand$14,378incash,$299forshare-basedpayment
arrangementsand$5forDIRECTVsharespreviouslypurchasedontheopenmarketbytrustsconsolidatedbyAT&T.

TheFCCapprovedthetransactionsubjecttothefollowingconditions:
FibertothePremisesDeploymentWithinfouryears,wewillofferourall-fiberInternetaccessservicetoatleast12.5millioncustomerlocationssuchasresidences,
homeofficesandverysmallbusinesses.Combinedwithourexistinghigh-speedbroadbandnetwork,atleast25.7millioncustomerlocationswillhaveaccessto
broadbandspeedsof45Mbpsorhigherbytheendofthefour-yearbuild.Whiletheadditionofmediumandlargebusinessesdonotcounttowardsthecommitments,we
willhavetheopportunitytoprovideservicestothosecustomersaspartofthisexpansion.Inaddition,wewilloffer1GbpsfiberInternetaccessservicepursuantto
applicableE-raterulestoanyeligibleschoolorlibraryrequestingthatservicewithinorcontiguoustoourall-fiberfootprint.
DiscountedBroadbandServicesProgramWithinour21-statearea,wewillofferadiscountedfixedbroadbandservicetolow-incomehouseholdsthatqualifyforthe
government'sSupplementalNutritionAssistanceProgram.Inlocationswhereitisavailable,servicewithspeedsofatleast10Mbpswillbeofferedfortendollarsper
month.Elsewhere,5Mbpsservicewillbeofferedfortendollarspermonthor,insomelocations,3Mbpsservicewillbeofferedforfivedollarspermonth.
Non-DiscriminatoryUsage-BasedPracticesWearerequiredtorefrainfromusingusage-basedallowancesorotherretailtermsandconditionsonourfixedbroadband
Internetaccessservice,asdefinedintheorder,todiscriminateinfavorofourownonlinevideoservices.Wecanandwillcontinuetoofferdiscountsonintegrated
bundlesofourvideoandfixedbroadbandservices.
InternetInterconnectionDisclosureRequirementsWewillsubmittotheFCCnewinterconnectionagreementsweenterintowithpeeringnetworksandwith"on-net"
customersthatpurchaseManagedInternetServicetoexchangeInternettrafficwithotherAT&Tcustomers.Wewilldevelop,togetherwithanindependentexpert,a
methodologyformeasuringtheperformanceofourInternettrafficexchangeandregularlyreportthesemetricstotheFCC.
ComplianceProgramandReportingWehaveappointedaCompanyComplianceOfficertodevelopandimplementaplantoensurecompliancewiththesemerger
conditions.Wewillengageanindependent,third-partycomplianceofficertoevaluatetheplanandourimplementation.BothAT&Tandtheindependentcompliance
officerwillsubmitperiodicreportstotheFCC.
TheconditionswillremainineffectforfouryearsfromJuly24,2015.AconditionmaybeextendedoncefortwoyearsiftheFCCmakesaformalfindingthatwehaveviolated
theconditioninwholeorinpart.

LitigationChallengingDIRECTV'sNFLSundayTicketMorethanadozenputativeclassactionshavebeenfiledintheU.S.DistrictCourtsfortheCentralDistrictof
CaliforniaandtheSouthernDistrictofNewYorkagainstDIRECTVandtheNationalFootballLeague(NFL)allegingthattheNFLandDIRECTVviolatedfederalantitrustlaw
inconnectionwiththeNFLSundayTicketpackage.Amongotherthings,thecomplaintsallegethatplaintiffshavebeenoverchargedforthetelevisedpresentationofout-of-
marketNFLgamesduetoDIRECTV'sexclusiveagreementwiththeNFLtobroadcastout-of-marketgamesthroughtheSundayTicketpackage.Thecomplaintsseek
unspecifiedtrebledamagesandattorneys'feesalongwithinjunctiverelief.Thefirstcomplaint,Abrahamianv.NationalFootballLeague,Inc.,etal.,wasservedinJune2015.In
December2015,theJudicialPanelonMultidistrictLitigationtransferredthecasesoutsidetheCentralDistrictofCaliforniatothatcourtforconsolidationandmanagementof
pre-trialproceedings.Wevigorouslydisputetheallegationsthecomplaintshaveasserted.

24
Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

FederalTradeCommissionLitigationInvolvingDIRECTVInMarch2015,theFederalTradeCommission(FTC)filedacivilsuitintheU.S.DistrictCourtfortheNorthern
DistrictofCaliforniaagainstDIRECTVseekinginjunctivereliefandunspecifiedmoneydamagesunderSection5oftheFederalTradeCommissionActandSection4ofthe
RestoreOnlineShoppers'ConfidenceAct.TheFTC'sallegationsconcernDIRECTV'sadvertising,marketingandsaleofprogrammingpackages.TheFTCallegesthat
DIRECTVdidnotadequatelydiscloseallrelevantterms.Wearedisputingtheseallegationsvigorously.

UnlimitedDataPlanClaimsInOctober2014,theFTCfiledacivilsuitintheU.S.DistrictCourtfortheNorthernDistrictofCaliforniaagainstAT&TMobility,LLCseeking
injunctivereliefandunspecifiedmoneydamagesunderSection5oftheFederalTradeCommissionAct.TheFTC'sallegationsconcernAT&T'sMaximumBitRate(MBR)
program,whichtemporarilyreducesthedownloadspeedsofasmallportionofourlegacyUnlimitedDataPlancustomerseachmonth.MBRisanindustry-standardpracticethat
isdesignedtoaffectonlythemostdata-intensiveapplications(suchasvideostreaming).Texts,emails,tweets,socialmediaposts,Internetbrowsingandmanyotherapplications
aretypicallyunaffected.ContrarytotheFTC'sallegations,whichwevigorouslydispute,ourMBRprogramispermittedbyourcustomercontracts,wasfullydisclosedin
advancetoourUnlimitedDataPlancustomers,andwasimplementedtoprotectthenetworkforthebenefitofallcustomers.InMarch2015,ourmotiontodismissthelitigation
onthegroundsthattheFTClackedjurisdictiontofilesuitwasdenied.InMay2015,theCourtgrantedourmotiontocertifyitsdecisionforimmediateappeal.TheUnitedStates
CourtofAppealsfortheNinthCircuitsubsequentlygrantedourpetitiontoaccepttheappeal,andtheappealisnowpendingbeforethatCourtwhilelimiteddiscoveryproceeds
intheDistrictCourt.InadditiontotheFTCcase,severalclassactionshavebeenfiledalsochallengingourMBRprogram.Wevigorouslydisputetheallegationsthecomplaints
haveasserted.

OnJune17,2015,theFCCissuedaNoticeofApparentLiabilityandOrder(NAL)toAT&TMobility,LLCconcerningourMBRpolicythatappliestoUnlimitedDataPlan
customers.TheNALallegesthatweviolatedtheFCC'sOpenInternetTransparencyRulebyusingtheterm"unlimited"inconnectionwiththeofferingssubjecttotheMBR
policyandbyfailingadequatelytodisclosethespeedreductionsthatapplyonceacustomerreachesaspecifieddatathreshold.TheNALproposesaforfeiturepenaltyof$100,
andfurtherproposestoorderustocorrectanymisleadingandinaccuratestatementsaboutourunlimitedplans,informcustomersoftheallegedviolation,reviseourdisclosures
toaddresstheallegedviolationandinformthesecustomersthattheymaycanceltheirplanswithoutpenaltyafterreviewingthereviseddisclosures.OnJuly17,2015,wefiled
ourresponsetotheNAL.WebelievethattheNALisunlawfulandshouldbewithdrawn,becausewehavefullycompliedwiththeOpenInternetTransparencyRuleandtheFCC
hasnoauthoritytoimposetheproposedremedies.ThematteriscurrentlypendingbeforetheFCC.

LIQUIDITYANDCAPITALRESOURCES

Wehad$5,121incashandcashequivalentsavailableatDecember31,2015.Approximately$807ofourcashandcashequivalentsresidedinforeignjurisdictions,someof
whicharesubjecttorestrictionsonrepatriation.Cashandcashequivalentsdecreased$3,482sinceDecember31,2014.Wealsohad$401inshort-terminvestments,whichwe
includedin"Othercurrentassets"onourconsolidatedbalancesheets.In2015,cashinflowswereprimarilyprovidedbycashreceiptsfromoperations,includingcashfromour
saleandtransferofcertainequipmentinstallmentreceivablestothirdpartiesandlong-termdebtissuances.Theseinflowswereoffsetbycashusedtomeettheneedsofthe
business,including,butnotlimitedto,paymentofoperatingexpenses;acquisitionsofwirelessspectrum,DIRECTV,GSFTelecomHoldings,S.A.P.I.deC.V.(GSFTelecom)
andNextelMexico;fundingcapitalexpenditures;debtrepayments;dividendstostockholders;andcollateralposting(seeNote9).Wediscussmanyofthesefactorsindetail
below.

CashProvidedbyorUsedinOperatingActivities
During2015,cashprovidedbyoperatingactivitieswas$35,880,comparedto$31,338in2014.Higheroperatingcashflowsin2015wereprimarilyduetoimprovedoperating
results,ouracquisitionofDIRECTVandworkingcapitalimprovements.

During2014,cashprovidedbyoperatingactivitieswas$31,338comparedto$34,796in2013.Loweroperatingcashflowsin2014wereprimarilyduetowirelessdevice
financingrelatedtoAT&TNext,whichresultsincashcollectionovertheinstallmentperiodinsteadofatthetimeofsale,increasedinventorylevelsandretirementbenefit
funding.Proceedsfromthesaleofequipmentinstallmentreceivablesandthetimingofworkingcapitalpaymentspartiallyoffsetthedeclineinoperatingcashflows.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

CashUsedinorProvidedbyInvestingActivities
During2015,cashusedininvestingactivitiesconsistedprimarilyof:
$17,740foracquisitionsofspectrumlicenses,largelyduetotheremainingpaymentforAWSspectrumlicensesintheAWS-3Auction.
$19,218incapitalexpenditures,excludinginterestduringconstruction.
$13,019netofcashacquiredfortheacquisitionsofDIRECTV,GSFTelecom,NextelMexicoandotheroperations.

During2015,wealsoreceived$1,945uponthematurityofcertainshort-terminvestmentsandpaid$400foradditionalshort-terminvestments.

Virtuallyallofourcapitalexpendituresarespentonourcommunicationsnetworksandourvideoservicesandsupportsystemsforourdigitalentertainmentservices.Capital
expenditures,excludinginterestduringconstruction,decreased$1,981from2014,reflectingthecompletionofourLTEbuildandotherProjectVelocityIPinitiativesin2014.In
connectionwithcapitalimprovementstoourwirelessnetworkinMexico,wealsonegotiatedin2015favorablepaymentterms(referredtoasvendorfinancing).In2015,we
deferred$684ofvendorfinancingrelatedtocapitaladditionstofutureperiods.CapitalexpendituresalsoincludespendingforDIRECTV,GSFTelecomandNextelMexicoafter
theacquisitiondates.Aspartofourorganizationalrealignment,wenolongerallocatecapitalexpenditurestooursegments.

Weexpectour2016capitalinvestment,whichincludesourcapitalexpendituresplusvendorfinancingpaymentsrelatedtoourMexiconetwork,forourexistingbusinessestobe
inthe$22,000range,andweexpectourcapitalinvestmenttobeinthe15percentrangeofservicerevenuesorlowerfrom2016through2018.Theamountofcapitalinvestment
isinfluencedbydemandforservicesandproducts,capacityneedsandnetworkenhancements.Wearealsofocusedonensuringmergercommitmentsaremet.

CashUsedinorProvidedbyFinancingActivities
Wepaiddividendsof$10,200in2015,$9,552in2014,and$9,696in2013.Theincreasein2015isprimarilyduetotheincreaseinsharesoutstandingresultingfromour
acquisitionofDIRECTVandtheincreaseinthequarterlydividendapprovedbyourBoardofDirectorsinDecember2014.Thedecreasein2014reflectsthedeclineinshares
outstandingresultingfromrepurchaseactivity,partiallyoffsetbydividendrateincreases.InDecember2015,ourBoardofDirectorsapproveda2.1%increaseinthequarterly
dividendfrom$0.47to$0.48pershare.Thisfollowsa2.2%dividendincreaseapprovedbyourBoardinDecember2014.DividendsdeclaredbyourBoardofDirectorstotaled
$1.89persharein2015,$1.85persharein2014,and$1.81persharein2013.Ourdividendpolicyconsiderstheexpectationsandrequirementsofstockholders,capitalfunding
requirementsofAT&Tandlong-termgrowthopportunities.ItisourintenttoprovidethefinancialflexibilitytoallowourBoardofDirectorstoconsiderdividendgrowthandto
recommendanincreaseindividendstobepaidinfutureperiods.AlldividendsremainsubjecttodeclarationbyourBoardofDirectors.

During2015,wereceivednetproceedsof$33,969fromtheissuanceof$34,129inlong-termdebtinvariousmarkets,withanaverageweightedmaturityofapproximately12
yearsandaweightedaveragecouponof2.7%.Debtissuedincluded:
February2015issuanceof$2,619of4.600%globalnotesdue2045.
March2015borrowingsunderavariableratetermloanfacilitydue2018,variableratetermloanfacilitydue2020andvariablerate18-monthcreditagreementdue
2016,togethertotaling$11,155.
March2015issuanceof1,250of1.300%globalnotesdue2023and1,250of2.450%globalnotesdue2035(together,equivalentto$2,844,whenissued).
May2015issuanceof$3,000of2.450%globalnotesdue2020;$2,750of3.000%globalnotesdue2022;$5,000of3.400%globalnotesdue2025;$2,500of4.500%
globalnotesdue2035;$3,500of4.750%globalnotesdue2046;and$750floatingrateglobalnotesdue2020.Thefloatingrateforthenoteisbaseduponthethree-
monthLondonInterbankOfferedRate(LIBOR),resetquarterly,plus93basispoints.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

During2015,weredeemed$10,042indebt,primarilyconsistingofthefollowingrepayments:
Redemptionof$902ofvariousseniornotesinconnectionwiththeJanuary2015GSFTelecomacquisitionandApril2015NextelMexicoacquisition.
April2015redemptionof1,250(approximately$1,975atmaturity)ofAT&T6.125%notesdue2015.
August2015redemptionof$1,500ofAT&T2.500%notesdueAugust2015.
September2015redemptionof$1,000of0.800%notesdueDecember2015;$1,000of0.900%AT&TnotesdueFebruary2016;$750of3.125%DIRECTVHoldings
LLCandDIRECTVFinancingCo.,Inc.notesdueFebruary2016;and$1,500of3.500%ofDIRECTVseniornotesdueMarch2016.
September2015prepaymentof$1,000oftheoutstandingadvancesunderthe$2,00018-monthcreditagreement(the"18-MonthCreditAgreement")byandbetween
AT&TandMizuho.(Seethe"CreditFacilities"discussionbelow.)

In2015,wecontinuedtotakeadvantageoflowermarketinterestratesandundertookseveralactivitiesrelatedtoourlong-termdebtwhichcausedourweightedaverageinterest
rateofourentirelong-termdebtportfolio,includingtheimpactofderivatives,todecreasefrom4.2%atDecember31,2014to4.0%atDecember31,2015.Wehad$124,847of
totalnotesanddebenturesoutstanding(seeNote9)atDecember31,2015,whichincludedEuro,Britishpoundsterling,Swissfranc,BrazilianrealandCanadiandollar
denominateddebtofapproximately$26,221.

OnFebruary9,2016,weissued$6,000oflong-termdebtwhichincluded:
$1,250of2.800%globalnotesdue2021.
$1,500of3.600%globalnotesdue2023.
$1,750of4.125%globalnotesdue2026.
$1,500of5.650%globalnotesdue2047.

AtDecember31,2015,wehad$7,636ofdebtmaturingwithinoneyear,substantiallyallofwhichwasrelatedtolong-termdebtissuances.Debtmaturingwithinoneyear
includesthefollowingnotesthatmaybeputbacktousbytheholders:
$1,000ofannualputresetsecuritiesissuedbyBellSouthCorporationthatmaybeputbacktouseachApriluntilmaturityin2021.
Anaccretingzero-couponnotethatmayberedeemedeachMayuntilmaturityin2022.Ifthezero-couponnote(issuedforprincipalof$500in2007)isheldtomaturity,
theredemptionamountwillbe$1,030.

OurBoardofDirectorshasapprovedrepurchaseauthorizationsof300millionshareseachin2013and2014(seeNote14).FortheyearendedDecember31,2014,wehad
repurchasedapproximately48millionsharestotaling$1,617undertheseauthorizationsandfortheyearendedDecember31,2015,wehadrepurchasedapproximately8million
sharestotaling$269undertheseauthorizations.AtDecember31,2015wehadapproximately407millionsharesremainingfromthe2013and2014authorizations.

Theemphasisofour2016financingactivitieswillbetheissuanceofdebt,thepaymentofdividends,whichissubjecttoapprovalbyourBoardofDirectors,andtherepayment
ofdebt.Weplantofundourfinancingusesofcashthroughacombinationofcashfromoperations,debtissuancesandassetsales.Thetimingandmixofdebtissuancewillbe
guidedbycreditmarketconditionsandinterestratetrends.

CreditFacilities
OnDecember11,2015,weenteredintoafive-year,$12,000creditagreement(the"RevolvingCreditAgreement")withCitibank,N.A.(Citibank),asadministrativeagent,
replacingour$5,000creditagreementthatwouldhaveexpiredinDecember2018.Atthesametime,AT&Tandthelendersterminatedtheirobligationsundertheexisting
revolving$3,000creditagreementwithCitibankthatwouldhaveexpiredinDecember2017.

InJanuary2015,weenteredintoa$9,155creditagreement(the"SyndicatedCreditAgreement")containing(i)a$6,286termloanfacility(the"TrancheAFacility")and(ii)a
$2,869termloanfacility(the"TrancheBFacility"),withcertaininvestmentandcommercialbanksandMizuhoBank,Ltd.("Mizuho"),asadministrativeagent.Wealsoentered
intoa$2,00018-monthcreditagreement(the"18-MonthCreditAgreement")withMizuhoasinitiallenderandagent.OnDecember11,2015,AT&TamendedtheSyndicated
CreditAgreementandthe18-MonthCreditAgreementto,amongotherthings,revisethefinancialcovenanttomatchthefinancialcovenantintheRevolvingCreditAgreement.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Revolving
Credit
Agreement
IntheeventadvancesaremadeundertheRevolvingCreditAgreement,thoseadvanceswouldbeusedforgeneralcorporatepurposes.Advancesarenotconditionedonthe
absenceofamaterialadversechange.Alladvancesmustberepaidnolaterthanthedateonwhichlendersarenolongerobligatedtomakeanyadvancesundertheagreement.
Wecanterminate,inwholeorinpart,amountscommittedbythelendersinexcessofanyoutstandingadvances;however,wecannotreinstateanysuchterminatedcommitments.
Wealsomayrequestthatthetotalamountofthelender'scommitmentsbeincreasedbyanintegralmultipleof$25effectiveonadatethatisatleast90dayspriortothe
scheduledterminationdatethenineffect,providedthatnoeventofdefaulthasoccurredandinnoeventshallthetotalamountofthelender'scommitmentsatanytimeexceed
$14,000.AtDecember31,2015,wehadnoadvancesoutstandingundertheRevolvingCreditAgreementandwehavecompliedwillallcovenants.

TheobligationsofthelenderstoprovideadvanceswillterminateonDecember11,2020,unlesspriortothatdateeither:(i)AT&Treducesto$0thecommitmentsofthelenders,
or(ii)certaineventsofdefaultoccur.Weandlendersrepresentingmorethan50%ofthefacilityamountmayagreetoextendtheircommitmentsfortwoone-yearperiods
beyondtheDecember11,2020,terminationdate,undercertaincircumstances.

AdvancesundertheRevolvingCreditAgreementwouldbearinterest,atAT&T'soption,either:
atavariableannualrateequalto(1)thehighestof:(a)thebaserateofthebankaffiliateofCitibank,N.A.whichisservingasadministrativeagentunderthe
Agreement,(b)0.50%perannumabovetheFederalfundsrate,and(c)theLIBORapplicabletoU.S.dollarsforaperiodofonemonthplus1.00%perannum,plus(2)
anapplicablemargin,assetforthintheRevolvingCreditAgreement("ApplicableMarginforBaseAdvances");or
atarateequalto:(i)LIBORforaperiodofone,two,threeorsixmonths,asapplicable,plus(ii)theApplicableMargin("ApplicableMarginforEurocurrencyRate
Advances").

TheApplicableMarginforEurocurrencyRateAdvanceswillequal0.680%,0.910%,1.025%,or1.125%perannum,dependingonAT&T'screditrating.TheApplicableMargin
forBaseRateAdvanceswillbeequaltothegreaterof0.00%andtherelevantApplicableMarginforEurocurrencyRateAdvancesminus1.00%perannumdependingon
AT&T'screditrating.

Wewillpayafacilityfeeof0.070%,0.090%,0.100%or0.125%perannum,dependingonAT&T'screditrating,oftheamountoflendercommitments.

TheRevolvingCreditAgreementcontainscovenantsthatarecustomaryforanissuerwithaninvestmentgradeseniordebtcreditrating,aswellasanetdebt-to-EBITDA
(earningsbeforeinterest,taxes,depreciationandamortization,andothermodificationsdescribedintheRevolvingCreditAgreement)financialratiocovenantthatAT&Twill
maintain,asofthelastdayofeachfiscalquarter,aratioofnotmorethan3.5-to-1.

The
Syndicated
Credit
Agreement
InMarch2015,AT&TborrowedallamountsavailableundertheTrancheAFacilityandtheTrancheBFacility.AmountsborrowedundertheTrancheAFacilitywillbedueon
March2,2018.AmountsborrowedundertheTrancheBFacilitywillbesubjecttoamortizationfromMarch2,2018,with25percentoftheaggregateprincipalamountthereof
beingpayablepriortoMarch2,2020,andallremainingprincipalamountdueonMarch2,2020.

Advancesbearinterestatarateequalto:(i)theLIBORfordepositsindollars(adjustedupwardstoreflectanybankreservecosts)foraperiodofthreeorsixmonths,as
applicable,plus(ii)theApplicableMargin(eachsuchAdvance,aEurodollarRateAdvance).TheApplicableMarginundertheTrancheAFacilitywillequal1.000%,1.125%or
1.250%perannumdependingonAT&T'screditrating.TheApplicableMarginundertheTrancheBFacilitywillequal1.125%,1.250%or1.375%perannum,dependingon
AT&T'screditrating.

TheSyndicatedCreditAgreementcontainscovenantsthatarecustomaryforanissuerwithaninvestmentgradeseniordebtcreditrating.Amongotherthings,theSyndicated
CreditAgreementrequiresustomaintainanetdebt-to-EBITDA(earningsbeforeinterest,incometaxes,depreciationandamortization,andothermodificationsdescribedinthe
SyndicatedCreditAgreement)ratioofnotmorethan3.5-to-1,asofthelastdayofeachfiscalquarter.

Eventsofdefaultarecustomaryforanagreementofthisnatureandresultintheaccelerationorpermitthelenderstoaccelerate,asapplicable,requiredpaymentandwhichwould
increasetheApplicableMarginby2.00%perannum.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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The
18-Month
Credit
Agreement
InMarch2015,AT&Tborrowedallamountsavailableunderthe18-MonthCreditAgreement.Amountsborrowedunderthe18-MonthCreditAgreementwillbedueand
payableonSeptember2,2016.InSeptember2015,wepartiallyrepaidtheamountborrowed.

Advancesbearinterestatarateequalto:(i)theLIBORfordepositsindollars(adjustedupwardstoreflectanybankreservecosts)foraperiodofone,two,threeorsixmonths,
asapplicable,plus(ii)theApplicableMargin(eachsuchAdvance,aEurodollarRateAdvance).TheApplicableMarginwillequal0.800%,0.900%or1.000%perannum,
dependingonAT&T'screditrating.IntheeventthatAT&T'sunsecuredseniorlong-termdebtratingsaresplitbyS&P,Moody'sandFitch,thentheApplicableMarginwillbe
determinedbythehighestrating,unlessthelowestofsuchratingsismorethanonelevelbelowthehighestofsuchratings,inwhichcasethepricingwillbetheratingthatisone
levelabovethelowestofsuchratings.

The18-MonthCreditAgreementcontainsaffirmativeandnegativecovenantsandeventsofdefaultequivalenttothosecontainedintheSyndicatedCreditAgreement.

CollateralArrangements
During2015,weposted$2,288ofadditionalcashcollateral,onanetbasis,tobanksandotherparticipantsinourderivativearrangements.Cashpostingsunderthese
arrangementsvarywithchangesincreditratingsandnettingagreements.(SeeNote10)

Other
Ourtotalcapitalconsistsofdebt(long-termdebtanddebtmaturingwithinoneyear)andstockholders'equity.Ourcapitalstructuredoesnotincludedebtissuedbyourequity
methodinvestments.AtDecember31,2015,ourdebtratiowas50.5%,comparedto47.5%atDecember31,2014,and44.1%atDecember31,2013.Thedebtratioisaffectedby
thesamefactorsthataffecttotalcapital,andreflectsthedebtissuedandacquiredin2015andourissuanceoftreasurysharesofAT&Tcommonstock,anddebtredemptions
during2015.Totalcapitalincreased$77,687in2015comparedtoanincreaseof$2,905in2014.The2015capitalincreasewasprimarilyduetouseoftreasurystocktoacquire
DIRECTVandanincreaseindebtbalances,partiallyoffsetbyadecreaseinaccumulatedothercomprehensiveincomeduetoforeigncurrencytranslationadjustments.

Asignificantamountofourcashoutflowsarerelatedtotaxitemsandbenefitspaidforcurrentandformeremployees.Totaltaxesincurred,collectedandremittedbyAT&T
during2015,2014,and2013were$21,501,$20,870and$21,004.Thesetaxesincludeincome,franchise,property,sales,excise,payroll,grossreceiptsandvariousothertaxes
andfees.Totalhealthandwelfarebenefitsprovidedtocertainactiveandretiredemployeesandtheirdependentstotaled$4,625in2015,with$1,239paidfromplanassets.Of
thosebenefits,$3,749relatedtomedicalandprescriptiondrugbenefits.During2015,wepaid$4,681ofpensionbenefitsoutofplanassets.

During2015,wealsoreceivedapproximately$4,534frommonetizationofvariousassets,primarilyfromoursalesofcertainequipmentinstallmentreceivablesandrealestate
holdings.Weplantocontinuetoexploremonetizationopportunitiesin2016.

InSeptember2013,wemadeavoluntarycontributionofapreferredequityinterestinAT&TMobilityIILLC(Mobility),theholdingcompanyforourwirelessbusiness,tothe
trustusedtopaypensionbenefitsunderourqualifiedpensionplans.InSeptember2013,theU.S.DepartmentofLabor(DOL)publishedaproposedexemptionthatauthorized
retroactiveapprovalofthisvoluntarycontribution.InJuly2014,theDOLpublishedintheFederalRegistertheirfinalretroactiveapprovalofourvoluntarycontribution.

Thepreferredequityinteresthadafairvalueof$8,714atDecember31,2015and$9,104onthecontributiondateandhasaliquidationvalueof$8,000.Thetrustisentitledto
receivecumulativecashdistributionsof$560perannum,whicharedistributedquarterlyinequalamountsandaccountedforascontributions.Wedistributed$560tothetrust
during2015.Solongaswemakethedistributions,wewillhavenolimitationsonourabilitytodeclareadividendorrepurchaseshares.Thispreferredequityinterestisaplan
assetunderERISAandisrecognizedassuchintheplan'sseparatefinancialstatements.However,becausethepreferredequityinterestisnotunconditionallytransferabletoan
unrelatedparty,itisnotreflectedinplanassetsinourconsolidatedfinancialstatementsandinsteadhasbeeneliminatedinconsolidation.Wealsoagreedtomakeacash
contributiontothetrustof$175nolaterthantheduedateofourfederalincometaxreturnfor2014,2015and2016.The2014contributionof$175wasmadetothetrustduring
thesecondquarterof2015.Wearerequiredtocontributeanother$175in2016and$175in2017.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
Dollarsinmillionsexceptpershareamounts

Thepreferredequityinterestisnottransferablebythetrustexceptthroughitsputandcallfeatures.Afteraperiodoffiveyearsfromthecontributionor,ifearlier,thedateupon
whichthepensionplantrustisfullyfundedasdeterminedunderGAAP,AT&Thasarighttopurchasefromthepensionplantrustsomeorallthepreferredequityinterestatthe
greateroftheirfairmarketvalueorminimumliquidationvalueplusanyunpaidcumulativedividends.Inaddition,AT&Twillhavetherighttopurchasethepreferredequity
interestintheeventAT&T'sownershipofMobilityislessthan50%orthereisatransactionthatresultsinthetransferof50%ormoreofthepensionplantrust'sassetstoan
entitynotundercommoncontrolwithAT&T(collectively,achangeofcontrol).ThepensionplantrusthastherighttorequireAT&Ttopurchasethepreferredequityinterestat
thegreateroftheirfairmarketvalueorminimumliquidationvalueplusanyunpaidcumulativedividends,andininstallments,asspecifiedinthecontributionagreementuponthe
occurrenceofanyofthefollowing:(1)atanytimeiftheratioofdebttototalcapitalizationofMobilityexceedsthatofAT&T,(2)thedateonwhichAT&Tisratedbelow
investmentgradefortwoconsecutivecalendarquarters,(3)uponachangeofcontrolifAT&Tdoesnotexerciseitspurchaseoption,or(4)atanytimeafteraseven-yearperiod
fromthecontributiondate.IntheeventAT&Telectsorisrequiredtopurchasethepreferredequityinterest,AT&Tmayelecttosettlethepurchasepriceincashorsharesof
AT&Tcommonstockoracombinationthereof.

CONTRACTUALOBLIGATIONS,COMMITMENTSANDCONTINGENCIES

Currentaccountingstandardsrequireustodiscloseourmaterialobligationsandcommitmentstomakingfuturepaymentsundercontracts,suchasdebtandleaseagreements,and
undercontingentcommitments,suchasdebtguarantees.Weoccasionallyenterintothird-partydebtguarantees,buttheyarenot,noraretheyreasonablylikelytobecome,
material.Wediscloseourcontractuallong-termdebtrepaymentobligationsinNote9andouroperatingleasepaymentsinNote6.Ourcontractualobligationsdonotinclude
contributionsassociatedwithourvoluntarycontributionoftheMobilitypreferredequityinterest,orexpectedpensionandpostretirementpayments(wemaintainpensionfunds
andVoluntaryEmployeeBeneficiaryAssociationtruststofullyorpartiallyfundthesebenefits)(seeNote12).Intheordinarycourseofbusiness,weroutinelyenterinto
commercialcommitmentsforvariousaspectsofouroperations,suchasfixedassets,inventoryandofficesupplies.However,wedonotbelievethatthecommitmentswillhavea
materialeffectonourfinancialcondition,resultsofoperationsorcashflows.

OurcontractualobligationsasofDecember31,2015,areinthefollowingtable.Thepurchaseobligationsthatfollowarethoseforwhichwehaveguaranteedfundsandwillbe
fundedwithcashprovidedbyoperationsorthroughincrementalborrowings.Theminimumcommitmentforcertainobligationsisbasedonterminationpenaltiesthatcouldbe
paidtoexitthecontract.Otherlong-termliabilitiesareincludedinthetablebasedontheyearofrequiredpaymentoranestimateoftheyearofpayment.Suchestimateof
paymentisbasedonareviewofpasttrendsfortheseitems,aswellasaforecastoffutureactivities.Certainitemswereexcludedfromthefollowingtable,astheyearofpayment
isunknownandcouldnotbereliablyestimatedsincepasttrendswerenotdeemedtobeanindicatoroffuturepayment.

SubstantiallyallofourpurchaseobligationsareinourBusinessSolutions,EntertainmentGroup,andtheConsumerMobilitysegments.Thetabledoesnotincludethefairvalue
ofourinterestrateswaps.OurcapitalleaseobligationsandvendorfinancinghavebeenexcludedfromthetableduetotheinsignificantamountsofsuchobligationsatDecember
31,2015.Manyofourothernoncurrentliabilitieshavebeenexcludedfromthefollowingtableduetotheuncertaintyofthetimingofpayments,combinedwiththeabsenceof
historicaltrendingtobeusedasapredictorofsuchpayments.Additionally,certainotherlong-termliabilitieshavebeenexcludedsincesettlementofsuchliabilitieswillnot
requiretheuseofcash.Ourotherlong-termliabilitiesare:deferredincometaxes(seeNote11)of$56,181;postemploymentbenefitobligationsof$34,262;andothernoncurrent
liabilitiesof$22,258.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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PaymentsDueByPeriod
Lessthan 1-3 3-5 Morethan
ContractualObligations Total 1Year Years Years 5Years
Long-termdebtobligations1 $ 129,443 $ 7,383 $ 20,847 $ 17,322 $ 83,891
Interestpaymentsonlong-termdebt 80,171 5,235 10,046 8,761 56,129
Financeobligations2 3,575 234 482 502 2,357
Operatingleaseobligations 28,845 3,775 6,808 5,774 12,488
Unrecognizedtaxbenefits3 4,918 867 - - 4,051
Purchaseobligations4 48,699 22,929 9,437 6,159 10,174
TotalContractualObligations $ 295,651 $ 40,423 $ 47,620 $ 38,518 $ 169,090
1Representsprincipalorpayoffamountsofnotesanddebenturesatmaturityor,forputabledebt,thenextputopportunity.
2RepresentsfutureminimumpaymentsundertheCrownCastleandotherarrangements(seeNote16).
3ThenoncurrentportionoftheUTBsisincludedinthe"Morethan5Years"column,aswecannotreasonablyestimatethetimingoramountsofadditionalcashpayments,ifany,atthistime.
SeeNote11foradditionalinformation.
4Wecalculatedtheminimumobligationforcertainagreementstopurchasegoodsorservicesbasedonterminationfeesthatcanbepaidtoexitthecontract.Ifweelecttoexitthesecontracts,
terminationfeesforallsuchcontractsintheyearofterminationcouldbeapproximately$690in2016,$925intheaggregatefor2017
and2018,$431intheaggregatefor2019and2020,and$241intheaggregatethereafter.Certainterminationfeesareexcludedfromtheabovetable,asthefeeswouldnotbepaideveryyear
andthetimingofsuchpayments,ifany,isuncertain.

MARKETRISK

Weareexposedtomarketrisksprimarilyfromchangesininterestratesandforeigncurrencyexchangerates.Theserisks,alongwithotherbusinessrisks,impactourcostof
capital.Itisourpolicytomanageourdebtstructureandforeignexchangeexposureinordertomanagecapitalcosts,controlfinancialrisksandmaintainfinancialflexibilityover
thelongterm.Inmanagingmarketrisks,weemployderivativesaccordingtodocumentedpoliciesandprocedures,includinginterestrateswaps,interestratelocks,foreign
currencyexchangecontractsandcombinedinterestrateforeigncurrencycontracts(cross-currencyswaps).Wedonotusederivativesfortradingorspeculativepurposes.Wedo
notforeseesignificantchangesinthestrategiesweusetomanagemarketriskinthenearfuture.

InterestRateRisk

Themajorityofourfinancialinstrumentsaremedium-andlong-termfixed-ratenotesanddebentures.Changesininterestratescanleadtosignificantfluctuationsinthefair
valueoftheseinstruments.Theprincipalamountsbyexpectedmaturity,averageinterestrateandfairvalueofourliabilitiesthatareexposedtointerestrateriskaredescribedin
Notes9and10.Inmanaginginterestexpense,wecontrolourmixoffixedandfloatingratedebt,principallythroughtheuseofinterestrateswaps.Wehaveestablishedinterest
raterisklimitsthatwecloselymonitorbymeasuringinterestratesensitivitiesinourdebtandinterestratederivativesportfolios.

Mostofourforeign-denominatedlong-termdebthasbeenswappedfromfixed-rateorfloating-rateforeigncurrenciestofixed-rateU.S.dollarsatissuancethroughcross-
currencyswaps,removinginterestrateriskandforeigncurrencyexchangeriskassociatedwiththeunderlyinginterestandprincipalpayments.Likewise,periodicallyweenter
intointerestratelockstopartiallyhedgetheriskofincreasesinthebenchmarkinterestrateduringtheperiodleadinguptotheprobableissuanceoffixed-ratedebt.Weexpect
gainsorlossesinourcross-currencyswapsandinterestratelockstooffsetthelossesandgainsinthefinancialinstrumentstheyhedge.

FollowingareourinterestratederivativessubjecttomaterialinterestrateriskasofDecember31,2015.Theinterestratesillustratedbelowrefertotheaverageratesweexpectto
paybasedoncurrentandimpliedforwardratesandtheaverageratesweexpecttoreceivebasedonderivativecontracts.Thenotionalamountistheprincipalamountofthedebt
subjecttotheinterestrateswapcontracts.Thefairvalueasset(liability)representstheamountwewouldreceive(pay)ifwehadexitedthecontractsasofDecember31,2015.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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Maturity
FairValue
2016 2017 2018 2019 2020 Thereafter Total 12/31/15
InterestRateDerivatives
InterestRateSwaps:
ReceiveFixed/Pay
VariableNotional
AmountMaturing $ - $ 700 $ 3,000 $ 3,350 $ - $ - $ 7,050 $ 136
Weighted-Average
VariableRatePayable1 3.4% 4.0% 4.5% 3.8% - -
Weighted-Average
FixedRateReceivable 4.5% 4.5% 4.5% 3.5% - -
1InterestpayablebasedoncurrentandimpliedforwardratesforOne,Three,orSixMonthLIBORplusaspreadrangingbetweenapproximately14and425basispoints.

ForeignExchangeRisk

Weareexposedtoforeigncurrencyexchangeriskthroughourforeignaffiliatesandequityinvestmentsinforeigncompanies.Wedonothedgeforeigncurrencytranslationrisk
inthenetassetsandincomewereportfromthesesources.However,wedohedgeaportionoftheexchangeriskinvolvedinanticipationofhighlyprobableforeigncurrency-
denominatedtransactionsandcashflowstreams,suchasthoserelatedtoissuingforeign-denominateddebt,receivingdividendsfromforeigninvestments,andotherreceiptsand
disbursements.

Throughcross-currencyswaps,mostofourforeign-denominateddebthasbeenswappedfromfixed-rateorfloating-rateforeigncurrenciestofixed-rateU.S.dollarsatissuance,
removinginterestrateriskandforeigncurrencyexchangeriskassociatedwiththeunderlyinginterestandprincipalpayments.Weexpectgainsorlossesinourcross-currency
swapstooffsetthelossesandgainsinthefinancialinstrumentstheyhedge.

Inanticipationofotherforeigncurrency-denominatedtransactions,weoftenenterintoforeignexchangeforwardcontractstoprovidecurrencyatafixedrate.Ourpolicyisto
measuretheriskofadversecurrencyfluctuationsbycalculatingthepotentialdollarlossesresultingfromchangesinexchangeratesthathaveareasonableprobabilityof
occurring.Wecovertheexposurethatresultsfromchangesthatexceedacceptableamounts.

Forthepurposeofassessingspecificrisks,weuseasensitivityanalysistodeterminetheeffectsthatmarketriskexposuresmayhaveonthefairvalueofourfinancial
instrumentsandresultsofoperations.Toperformthesensitivityanalysis,weassesstheriskoflossinfairvaluesfromtheeffectofahypothetical10%fluctuationoftheU.S.
dollaragainstforeigncurrenciesfromtheprevailingforeigncurrencyexchangerates,assumingnochangeininterestrates.Wehaveforeignexchangeforwardcontracts,
maturingonFebruary25,2016,heldbyourGSFTelecomandNextelMexicosubsidiaries(AT&TTelecomHoldingsS.deR.L.deC.V.&AT&TComunicacionesDigitalesS.
deR.L.deC.V.).

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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STOCKPERFORMANCEGRAPH

Thecomparisonaboveassumes$100investedonDecember31,2010,inAT&Tcommonstock,Standard&Poor's500Index(S&P500),andStandard&Poor's500Integrated
TelecomIndex(S&P500IntegratedTelecom).Totalreturnequalsstockpriceappreciationplusreinvestmentofdividends.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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RISKFACTORS

Inadditiontotheotherinformationsetforthinthisdocument,includingthematterscontainedunderthecaption"CautionaryLanguageConcerningForward-Looking
Statements,"youshouldcarefullyreadthemattersdescribedbelow.Webelievethateachofthesematterscouldmateriallyaffectourbusiness.Werecognizethatmostofthese
factorsarebeyondourabilitytocontrolandthereforewecannotpredictanoutcome.Accordingly,wehaveorganizedthembyfirstaddressinggeneralfactors,thenindustry
factorsand,finally,itemsspecificallyapplicabletous.

ThecurrentU.S.economyhaschangedourcustomers'buyinghabitsandafailuretoadequatelyrespondcouldmateriallyadverselyaffectourbusiness.

WeprovideservicesandproductspredominantlytoconsumersandlargeandsmallbusinessesintheUnitedStates.Wealsoprovideservicestolargerbusinessesthroughoutthe
world.ThecurrentuneveneconomicrecoveryintheUnitedStatescontinuestopressuresomeofourcustomers'demandforandabilitytopayforexistingservices,especially
wiredservices,includingvideo,andtheirinterestinpurchasingnewservices.Customersarechangingtheirbuyinghabitsinresponsetobothongoingeconomicconditionsand
technologicaladvances.Shouldwefailtorespondpromptlytoaddressthesechangesincustomerdemands,wearelikelytoexperiencegreaterpressureonpricingandmargins
aswecontinuetocompeteforcustomerswhowouldhaveevenlessdiscretionaryincome.

AdversechangesinmedicalcostsandtheU.S.securitiesmarketsandadeclineininterestratescouldmateriallyincreaseourbenefitplancosts.

Ourcoststoprovidecurrentbenefitsandfundingforfuturebenefitsaresubjecttoincreases,primarilyduetocontinuingincreasesinmedicalandprescriptiondrugcosts,andcan
beaffectedbylowerreturnsonfundsheldbyourpensionandotherbenefitplans,whicharereflectedinourfinancialstatementsforthatyear.Investmentreturnsonthesefunds
dependlargelyontrendsintheU.S.securitiesmarketsandtheU.S.economy.Wehaveexperiencedhistoricallylowinterestratesduringthelastseveralyears.Whileannual
marketreturnsandincreasedvolatilityhavepressuredassetreturnsintheshort-term,weexpectlong-termmarketreturnstostabilize.During2015,theoverallbondrates
increased,whichresultsinlowerbenefitobligations.Incalculatingthecostsincludedonourfinancialstatementsofprovidingbenefitsunderourplans,wehavemadecertain
assumptionsregardingfutureinvestmentreturns,medicalcostsandinterestrates.Whilewehavemadesomechangestothebenefitplanstolimitourriskfromincreasing
medicalcosts,ifactualinvestmentreturns,medicalcostsandinterestratesareworsethanthosepreviouslyassumed,ourcostswillincrease.

TheFinancialAccountingStandardsBoardrequirescompaniestorecognizethefundedstatusofdefinedbenefitpensionandpostretirementplansasanassetorliabilityinour
statementoffinancialpositionandtorecognizechangesinthatfundedstatusintheyearinwhichthechangesoccur.Wehaveelectedtoreflecttheannualadjustmentstothe
fundedstatusinourconsolidatedstatementofincome.Therefore,anincreaseinourcostsoradversemarketconditionswillhaveanegativeeffectonouroperatingresults.

Adversechangesinglobalfinancialmarketscouldlimitourabilityandourlargercustomers'abilitytoaccesscapitalorincreasethecostofcapitalneededtofund
businessoperations.

Whiletheglobalfinancialmarketsweregenerallystableduring2015,acontinuinguncertaintysurroundingglobalgrowthrateshasresultedinincreasingvolatilityinthecredit,
currency,equityandfixedincomemarkets.Volatilityinsomeareas,suchasinemergingmarkets,mayaffectcompanies'accesstothecreditmarkets,leadingtohigher
borrowingcostsforcompaniesor,insomecases,theinabilityofthesecompaniestofundtheirongoingoperations.Inaddition,wecontractwithlargefinancialinstitutionsto
supportourowntreasuryoperations,includingcontractstohedgeourexposureoninterestratesandforeignexchangeandthefundingofcreditlinesandothershort-termdebt
obligations,includingcommercialpaper.Thesefinancialinstitutionsalsofacestrictercapital-relatedandotherregulationsintheUnitedStatesandEurope,aswellasongoing
legalandfinancialissuesconcerningtheirloanportfolios,whichmayhampertheirabilitytoprovidecreditorraisethecostofprovidingsuchcredit.Acompany'scostof
borrowingisalsoaffectedbyevaluationsgivenbyvariouscreditratingagenciesandtheseagencieshavebeenapplyingtightercreditstandardswhenevaluatingacompany's
debtlevelsandfuturegrowthprospects.Whilewehavebeensuccessfulincontinuingtoaccessthecreditandfixedincomemarketswhenneeded,adversechangesinthe
financialmarketscouldrenderuseitherunabletoaccessthesemarketsorabletoaccessthesemarketsonlyathigherinterestcostsandwithrestrictivefinancialorother
conditions,severelyaffectingourbusinessoperations.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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Changesinavailabletechnologycouldincreasecompetitionandourcapitalcosts.

Thecommunicationsanddigitalentertainmentindustryhasexperiencedrapidchangesinthepastseveralyears.Thedevelopmentofwireless,cableandIPtechnologieshas
significantlyincreasedthecommercialviabilityofalternativestotraditionalwiredserviceandenhancedthecapabilitiesofwirelessnetworks.Inaddition,ourcustomerscontinue
toincreasedemandforservicesthatcanbeaccessedonmobiledevices,especiallyvideoservices.Whileourcustomerscanusetheirtraditionalvideosubscriptiontoaccess
mobileprogramming,anincreasingnumberofcustomersarealsousingmobiledevicesasthesolemeansofviewingvideoandanincreasingnumberofnon-traditionalvideo
providersaredevelopingcontentandtechnologiestosatisfythatdemand.Inordertoremaincompetitive,wecontinuetodeploythesophisticatedwiredandwirelessnetworks,
includingsatellites,aswellasresearchothernewtechnologies.Ifthenewtechnologieswehaveadoptedoronwhichwehavefocusedourresearcheffortsfailtobecost-
effectiveandacceptedbycustomers,ourabilitytoremaincompetitivecouldbemateriallyadverselyaffected.

Changestofederal,stateandforeigngovernmentregulationsanddecisionsinregulatoryproceedingscouldfurtherincreaseouroperatingcostsand/oraltercustomer
perceptionsofouroperations,whichcouldmateriallyadverselyaffectus.

Oursubsidiariesprovidingwiredservicesaresubjecttosignificantfederalandstateregulationwhilemanyofourcompetitorsarenot.Inaddition,oursubsidiariesandaffiliates
operatingoutsidetheUnitedStatesarealsosubjecttothejurisdictionofnationalandsupranationalregulatoryauthoritiesinthemarketwhereserviceisprovided.Ourwireless
andsatellitevideosubsidiariesareregulatedtovaryingdegreesbytheFCCandsomestateandlocalagencies.AdverseregulationsandrulingsbytheFCCrelatingtobroadband
andsatellitevideoissuescouldimpedeourabilitytomanageournetworksandrecovercostsandlessenincentivestoinvestinournetworks.Thedevelopmentofnew
technologies,suchasIP-basedservices,alsohascreatedorpotentiallycouldcreateconflictingregulationbetweentheFCCandvariousstateandlocalauthorities,whichmay
involvelengthylitigationtoresolveandmayresultinoutcomesunfavorabletous.Inaddition,increasedpublicfocusonavarietyofissuesrelatedtoouroperations,suchas
privacyissues,governmentrequestsorordersforcustomerdata,andpotentialglobalclimatechanges,haveledtoproposalsatstate,federalandforeigngovernmentlevelsto
changeorincreaseregulationonouroperations.Shouldcustomersdecidethatourcompetitorsoperateinamorecustomer-friendlyenvironment,wecouldbematerially
adverselyaffected.

Continuinggrowthinourwirelessserviceswilldependoncontinuingaccesstoadequatespectrum,deploymentofnewtechnologyandofferingattractiveservicesto
customers.

Thewirelessindustryisundergoingrapidandsignificanttechnologicalchangesandadramaticincreaseinusage,inparticulardemandforandusageofdata,videoandother
non-voiceservices.Wemustcontinuallyinvestinourwirelessnetworkinordertocontinuallyimproveourwirelessservicetomeetthisincreasingdemandandremain
competitive.Improvementsinourservicedependonmanyfactors,includingcontinuedaccesstoanddeploymentofadequatespectrum.Wemustmaintainandexpandour
networkcapacityandcoverageaswellastheassociatedwirelinenetworkneededtotransportvoiceanddatabetweencellsites.Tothisend,wehaveparticipatedinspectrum
auctions,atincreasingfinancialcost,andcontinuetodeploytechnologyadvancementsinordertofurtherimprovenetworkqualityandtheefficientuseofourspectrum.

Networkserviceenhancementsandproductlaunchesmaynotoccurasscheduledoratthecostexpectedduetomanyfactors,includingdelaysindeterminingequipmentand
handsetoperatingstandards,supplierdelays,increasesinnetworkequipmentandhandsetcomponentcosts,regulatorypermittingdelaysfortowersitesorenhancementsor
labor-relateddelays.Deploymentofnewtechnologyalsomayadverselyaffecttheperformanceofthenetworkforexistingservices.IftheFCCdoesnotfairlyallocatesufficient
spectrumtoallowthewirelessindustryingeneral,andtheCompanyinparticular,toincreaseitscapacityorifwecannotacquireneededspectrumordeploytheservices
customersdesireonatimelybasiswithoutburdensomeconditionsoratadequatecostwhilemaintainingnetworkqualitylevels,thenourabilitytoattractandretaincustomers,
andthereforemaintainandimproveouroperatingmargins,couldbemateriallyadverselyaffected.

Increasingcompetitionforwirelesscustomerscouldmateriallyadverselyaffectouroperatingresults.

Wehavemultiplewirelesscompetitorsineachofourserviceareasandcompeteforcustomersbasedprincipallyonservice/deviceofferings,price,callquality,coverageareaand
customerservice.Inaddition,wearefacinggrowingcompetitionfromprovidersofferingservicesusingalternativewirelesstechnologiesandIP-basednetworksaswellas
traditionalwirelinenetworks.Weexpectmarketsaturationtocontinuetocausethewirelessindustry'scustomergrowthratetomoderateincomparisonwithhistoricalgrowth
rates,leadingtoincreasedcompetitionforcustomers.Wealsoexpectthatourcustomers'growingdemandfordataserviceswillplaceconstraintsonournetworkcapacity.This
competitionandourcapacityissueswillcontinuetoputpressureonpricingandmarginsascompaniescompeteforpotentialcustomers.Ourabilitytorespondwilldepend,
amongotherthings,oncontinuedimprovementinnetworkqualityandcustomerserviceandeffectivemarketingofattractiveproductsandservices,andcostmanagement.These
effortswillinvolvesignificantexpensesandrequirestrategicmanagementdecisionson,andtimelyimplementationof,equipmentchoices,networkdeploymentand
management,andserviceofferings.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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Increasingcoststoprovideservicescouldadverselyaffectoperatingmargins.

Ouroperatingcosts,includingcustomeracquisitionandretentioncostscouldcontinuetoputpressureonmarginsandcustomerretentionlevels.Inaddition,virtuallyallour
videoprogrammingisprovidedbyothercompaniesandhistoricallytheratestheychargeusforprogramminghaveoftenincreasedmorethantherateofinflation.Weare
attemptingtouseourincreasedscaleandaccesstowirelesscustomerstochangethistrendbutsuchnegotiationsaredifficultandalsomayresultinprogrammingdisruption.If
weareunabletorestrainthesecostsorprovideprogrammingdesiredbyourcustomersitcouldimpactmarginsandourabilitytoattractandretaincustomers.

Anumberofourcompetitorsthatrelyonalternativetechnologies(e.g.,wireless,cableandVoIP)andbusinessmodels(e.g.,advertising-supported)aretypicallysubjecttoless
(orno)regulationthanoursubsidiariesandthereforeareabletooperatewithlowercosts.Inaddition,thesecompetitorsgenerallycanfocusondiscretecustomersegmentssince
theydonothaveregulatoryobligationstoprovideuniversalservice.Thesecompetitorsalsohavecostadvantagescomparedtous,dueinparttooperatingonnewer,more
technicallyadvancedandlower-costnetworksandanonunionizedworkforce,loweremployeebenefitsandfewerretirees(asmostofthecompetitorsarerelativelynew
companies).Tothisend,wehavebeguninitiativesatboththestateandfederallevelstoobtainregulatoryapprovals,whereneeded,totransitionservicesfromouroldercopper-
basednetworktoanadvancedIP-basednetwork.Ifwedonotobtainregulatoryapprovalsforournetworktransitionorobtainapprovalswithonerousconditionsattachedwe
couldexperiencesignificantcostandcompetitivedisadvantages.

Unfavorablelitigationorgovernmentalinvestigationresultscouldrequireustopaysignificantamountsorleadtoonerousoperatingprocedures.

WearesubjecttoanumberoflawsuitsbothintheUnitedStatesandinforeigncountries,including,atanyparticulartime,claimsrelatingtoantitrust;patentinfringement;wage
andhour;personalinjury;customerprivacyviolations;regulatoryproceedings,andouradvertising,salesandbillingandcollectionpractices.Wealsospendsubstantial
resourcescomplyingwithvariousgovernmentstandards,whichmayentailrelatedinvestigationsandlitigation.Inthewirelessarea,wealsofacecurrentandpotentiallitigation
relatingtoallegedadversehealtheffectsoncustomersoremployeeswhousesuchtechnologiesincluding,forexample,wirelessdevices.Wemayincursignificantexpenses
defendingsuchsuitsorgovernmentchargesandmayberequiredtopayamountsorotherwisechangeouroperationsinwaysthatcouldmateriallyadverselyaffectouroperations
orfinancialresults.

Cyberattacks,equipmentfailures,naturaldisastersandterroristactsmaymateriallyadverselyaffectouroperations.

Cyberattacks,majorequipmentfailuresornaturaldisasters,includingsevereweather,terroristactsorotherbreachesofnetworkorITsecuritythataffectourwirelineand
wirelessnetworks,includingtelephoneswitchingoffices,microwavelinks,third-party-ownedlocalandlong-distancenetworksonwhichwerely,ourcellsitesorother
equipment,ourvideosatellites,ourcustomeraccountsupportandinformationsystems,oremployeeandbusinessrecordscouldhaveamaterialadverseeffectonouroperations.
Whilewehavebeensubjecttosecuritybreachesorcyberattacks,thesedidnotresultinamaterialadverseeffectonouroperations.However,assuchattackscontinueto
increaseinscopeandfrequency,wemaybeunabletopreventasignificantattackinthefuture.Ourabilitytomaintainandupgradeourvideoprogrammingalsodependsonour
abilitytosuccessfullydeployandoperatevideosatellites.Ourinabilitytodeployoroperateourwireline,wireless,satelliteorcustomeroremployee-relatedsupportsystemsasa
resultofsuchevents,evenforalimitedtimeperiod,couldresultinsignificantexpenses,potentiallegalliabilityoralossofcustomersorimpairourabilitytoattractnew
customers,anddamageourreputation,anyofwhichcouldhaveamaterialadverseeffectonourbusiness,resultsofoperationsandfinancialcondition.

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Management'sDiscussionandAnalysisofFinancialConditionandResultsofOperations(continued)
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OurfailuretosuccessfullyintegrateourJuly2015acquisitionofDIRECTV,includingourfailuretoachievethecostsavingsandanyothersynergiesfromthe
acquisitioneitheronscheduleorintheamountsexpected;thepotentialadverseeffectsonourdividendamountduetotheissuanceofadditionalsharesandthe
additionofacquisition-relateddebttoourbalancesheet;disruptionfromtheacquisitionmakingitmoredifficulttomaintainrelationshipswithcustomers,employees
orsuppliers;andcompetitionanditseffectonpricing,spending,third-partyrelationshipsandrevenues,allmaymateriallyadverselyaffectouroperatingresults.

WecompletedouracquisitionofDIRECTVinJuly2015.Webelievethattheacquisitionwillgiveusthescale,resourcesandabilitytodeployvideoservicestomorecustomers
thanotherwisepossibleandtoprovideanintegratedbundleofbroadband,videoandwirelessservicesenablingustocompetemoreeffectivelyagainstcableoperatorsaswellas
othertechnology,mediaandcommunicationscompanies.Inaddition,webelievetheacquisitionwillresultincostsavings,especiallyintheareaofvideocontentcosts,andother
potentialsynergies,enablingustoexpandandenhanceourbroadbanddeploymentandprovidemorevideooptionsacrossmultiplefixedandmobiledevices.Wemustcomply
withvariousregulatoryconditionsandintegratealargenumberofvideonetworkandotheroperationalsystemsandadministrativesystems.Theintegrationprocessmayalso
resultinsignificantexpensesandchargesagainstearnings,bothcashandnoncash.Whilewehavesuccessfullymergedlargecompaniesintoouroperationsinthepast,delaysin
theprocesscouldhaveamaterialadverseeffectonourrevenues,expenses,operatingresultsandfinancialcondition.Thisacquisitionhasincreasedtheamountofdebtonour
balancesheet(bothfromDIRECTV'sdebtandtheindebtednessneededtopayaportionofthepurchaseprice)leadingtoadditionalinterestexpenseand,duetoadditionalshares
beingissued,willresultinadditionalcashbeingrequiredforanydividendsdeclared.Bothofthesefactorscouldputpressureonourfinancialflexibilitytocontinuecapital
investments,developnewservicesanddeclarefuturedividends.Inaddition,eventsoutsideofourcontrol,includingchangesinregulationandlawsaswellaseconomictrends,
couldadverselyaffectourabilitytorealizetheexpectedbenefitsfromthisacquisition.

TheacquisitionsofDIRECTV,GSFTelecomandNextelMexicowillincreaseourexposuretobothchangesintheinternationaleconomyandtothelevelofregulation
onourbusinessandtheseriskscouldoffsetourexpectedgrowthopportunitiesfromtheseacquisitions.

Thesethreeacquisitionswillincreasethemagnitudeofourinternationaloperations,particularlyinMexicoandtherestofLatinAmerica.Wewillneedtocomplywithawide
varietyofnewandcomplexlocallaws,regulationsandtreatiesandgovernmentinvolvementinprivatebusinessactivity.Wewillalsobeexposedtorestrictionsoncash
repatriation,foreignexchangecontrols,fluctuationsincurrencyvalues,traderestrictionsandotherregulationsthatmayaffectmateriallyourearnings.Whilethecountries
involvedrepresentsignificantopportunitiestosellouradvancedservices,anumberofthesesamecountrieshaveexperiencedunstablegrowthpatternsandattimeshave
experiencedhighinflation,currencydevaluation,foreignexchangecontrols,instabilityinthebankingsectorandhighunemployment.Shouldtheseconditionspersist,customers
inthesecountriesmaybeunabletopurchasetheservicesweofferorpayforservicesalreadyprovided.

Inaddition,operatinginforeigncountriesalsotypicallyinvolvesparticipatingwithlocalbusinesses,eithertocomplywithlocallawsor,forexample,toenhanceproduct
marketing.InvolvementwithforeignfirmsexposesustotheriskofbeingunabletocontroltheactionsofthosefirmsandthereforeexposesustoviolatingtheForeignCorrupt
PracticesAct(FCPA).ViolationsoftheFCPAcouldhaveamaterialadverseeffectonouroperatingresults.

Increasesinourdebtlevelstofundacquisitions,additionalspectrumpurchases,orotherstrategicdecisionscouldadverselyaffectourabilitytofinancefuturedebtat
attractiveratesandreduceourabilitytorespondtocompetitionandadverseeconomictrends.

Wehaveincreasedtheamountofourdebtduring2014and2015tofundacquisitions,includingspectrumpurchasesneededtocompeteinourbusiness.Whilewebelievesuch
decisionswereprudentandnecessarytotakeadvantageofbothgrowthopportunitiesandrespondtoindustrydevelopments,weexperiencedacredit-ratingdowngrade.Banks
andpotentialpurchasersofourpublicly-tradeddebtmaydecidethatthesestrategicdecisionsandsimilaractionswemaytakeinthefuture,aswellasexpectedtrendsinthe
industry,willcontinuetoincreasetheriskofinvestinginourdebtandmaydemandahigherrateofinterest,imposerestrictivecovenantsorotherwiselimittheamountof
potentialborrowing.

37
CAUTIONARYLANGUAGECONCERNINGFORWARD-LOOKINGSTATEMENTS

Informationsetforthinthisreportcontainsforward-lookingstatementsthataresubjecttorisksanduncertainties,andactualresultscoulddiffermaterially.Manyofthesefactorsarediscussed
inmoredetailinthe"RiskFactors"section.Weclaimtheprotectionofthesafeharborforforward-lookingstatementsprovidedbythePrivateSecuritiesLitigationReformActof1995.

Thefollowingfactorscouldcauseourfutureresultstodiffermateriallyfromthoseexpressedintheforward-lookingstatements:
Adverseeconomicand/orcapitalaccesschangesinthemarketsservedbyusorincountriesinwhichwehavesignificantinvestments,includingtheimpactoncustomerdemandandour
abilityandoursuppliers'abilitytoaccessfinancialmarketsatfavorableratesandterms.
Changesinavailabletechnologyandtheeffectsofsuchchanges,includingproductsubstitutionsanddeploymentcosts.
Increasesinourbenefitplans'costs,includingincreasesduetoadversechangesintheUnitedStatesandforeignsecuritiesmarkets,resultinginworse-than-assumedinvestmentreturnsand
discountrates;adversechangesinmortalityassumptions;adversemedicalcosttrends,andunfavorableordelayedimplementationofhealthcarelegislation,regulationsorrelatedcourt
decisions.
ThefinaloutcomeofFCCandotherfederalorstateagencyproceedings(includingjudicialreview,ifany,ofsuchproceedings)involvingissuesthatareimportanttoourbusiness,
including,withoutlimitation,intercarriercompensation,interconnectionobligations,pendingNoticesofApparentLiability,thetransitionfromlegacytechnologiestoIP-based
infrastructureincludingthewithdrawaloflegacyTDM-basedservices,universalservice,broadbanddeployment,E911services,competitionpolicy,netneutrality,includingtheFCC's
orderreclassifyingbroadbandasTitleIIservicessubjecttomuchmorefulsomeregulation,unbundlednetworkelementsandotherwholesaleobligations,multi-channelvideo
programmingdistributorservicesandequipment,availabilityofnewspectrumfromtheFCConfairandbalancedterms,andwirelessandsatellitelicenseawardsandrenewals.
Thefinaloutcomeofstateandfederallegislativeeffortsinvolvingissuesthatareimportanttoourbusiness,includingderegulationofIP-basedservices,relieffromCarrierofLastResort
obligations,andeliminationofstatecommissionreviewofthewithdrawalofservices.
Enactmentofadditionalstate,federaland/orforeignregulatoryandtaxlawsandregulationspertainingtooursubsidiariesandforeigninvestments,includinglawsandregulationsthat
reduceourincentivetoinvestinournetworks,resultinginlowerrevenuegrowthand/orhigheroperatingcosts.
Ourabilitytoabsorbrevenuelossescausedbyincreasingcompetition,includingofferingsthatusealternativetechnologiesordeliverymethods(e.g.,cable,wireless,VoIPandOverThe
TopVideoservice)andourabilitytomaintaincapitalexpenditures.
Theextentofcompetitionincludingfromgovernmentalnetworksandotherprovidersandtheresultingpressureoncustomerandaccesslinetotalsandsegmentoperatingmargins.
Ourabilitytodevelopattractiveandprofitableproduct/serviceofferingstooffsetincreasingcompetition.
Theabilityofourcompetitorstoofferproduct/serviceofferingsatlowerpricesduetolowercoststructuresandregulatoryandlegislativeactionsadversetous,includingstateregulatory
proceedingsrelatingtounbundlednetworkelementsandnonregulationofcomparablealternativetechnologies(e.g.,VoIP).
ThecontinueddevelopmentanddeliveryofattractiveandprofitablevideoofferingsthroughsatelliteandU-verse;theextenttowhichregulatoryandbuild-outrequirementsapplytoour
offerings;andtheavailability,costand/orreliabilityofthevarioustechnologiesand/orcontentrequiredtoprovidesuchofferings.
Ourcontinuedabilitytoattractandofferadiverseportfolioofwirelessserviceanddevices,devicefinancingplans,andmaintainmargins.
Theavailabilityandcostofadditionalwirelessspectrumandregulationsandconditionsrelatingtospectrumuse,licensing,obtainingadditionalspectrum,technicalstandardsand
deploymentandusage,includingnetworkmanagementrules.
Ourabilitytomanagegrowthinwirelessdataservices,includingnetworkqualityandacquisitionofadequatespectrumatreasonablecostsandterms.
Theoutcomeofpending,threatenedorpotentiallitigation,including,withoutlimitation,patentandproductsafetyclaimsbyoragainstthirdparties.
Theimpactonournetworks,includingsatellitesoperatedbyDIRECTV,andbusinessfrommajorequipmentfailures;securitybreachesrelatedtothenetworkorcustomerinformation;our
inabilitytoobtainhandsets,equipment/softwareorhavehandsets,equipment/softwareserviced,andinthecaseofsatelliteslaunched,inatimelyandcost-effectivemannerfromsuppliers;
orsevereweatherconditions,naturaldisasters,pandemics,energyshortages,warsorterroristattacks.
TheissuancebytheFinancialAccountingStandardsBoardorotheraccountingoversightbodiesofnewaccountingstandardsorchangestoexistingstandards.
TheissuancebytheInternalRevenueServiceand/orstateorforeigntaxauthoritiesofnewtaxregulationsorchangestoexistingstandardsandactionsbyfederal,state,localorforeigntax
agenciesandjudicialauthoritieswithrespecttoapplyingapplicabletaxlawsandregulationsandtheresolutionofdisputeswithanytaxingjurisdictions.
OurabilitytointegrateouracquisitionofDIRECTV.
Ourabilitytoadequatelyfundourwirelessoperations,includingpaymentforadditionalspectrum,networkupgradesandtechnologicaladvancements.
OurincreasedexposuretovideocompetitionandforeigneconomiesduetoourrecentacquisitionsofDIRECTVandMexicanwirelessproperties,includingforeignexchangefluctuations,
aswellasregulatoryandpoliticaluncertaintyinLatinAmerica.
Changesinourcorporatestrategies,suchaschangingnetworkrequirementsoracquisitionsanddispositions,whichmayrequiresignificantamountsofcashorstock,torespondto
competitionandregulatory,legislativeandtechnologicaldevelopments.
Theuncertaintysurroundingfurthercongressionalactiontoaddressspendingreductions,whichmayresultinasignificantreductioningovernmentspendingandreluctanceofbusinesses
andconsumerstospendingeneralandonourproductsandservicesspecifically,duetothisfiscaluncertainty.

Readersarecautionedthatotherfactorsdiscussedinthisreport,althoughnotenumeratedhere,alsocouldmateriallyaffectourfutureearnings.

38
AT&TInc.
ConsolidatedStatementsofIncome
Dollarsinmillionsexceptpershareamounts
2015 2014 2013
AsAdjusted
Operating
Revenues
Service $ 131,677 $ 118,437 $ 119,252
Equipment 15,124 14,010 9,500
Totaloperatingrevenues 146,801 132,447 128,752

Operating
Expenses
Costofservicesandsales
Equipment 19,268 18,946 16,644
Broadcast,programmingandoperations 11,996 4,075 3,308
Othercostofservices(exclusiveofdepreciation
andamortizationshownseparatelybelow) 35,782 37,124 31,239
Selling,generalandadministrative 32,954 39,697 28,414
Abandonmentofnetworkassets - 2,120 -
Depreciationandamortization 22,016 18,273 18,395
Totaloperatingexpenses 122,016 120,235 98,000
OperatingIncome 24,785 12,212 30,752

Other
Income
(Expense)
Interestexpense (4,120) (3,613) (3,940)
Equityinnetincomeofaffiliates 79 175 642
Otherincome(expense)net (52) 1,581 596
Totalotherincome(expense) (4,093) (1,857) (2,702)
IncomeBeforeIncomeTaxes 20,692 10,355 28,050
Incometaxexpense 7,005 3,619 9,328
NetIncome 13,687 6,736 18,722
Less:NetIncomeAttributabletoNoncontrollingInterest (342) (294) (304)
NetIncomeAttributabletoAT&T $ 13,345 $ 6,442 $ 18,418

BasicEarningsPerShareAttributabletoAT&T $ 2.37 $ 1.24 $ 3.42
DilutedEarningsPerShareAttributabletoAT&T $ 2.37 $ 1.24 $ 3.42
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

39
AT&TInc.
ConsolidatedStatementsofComprehensiveIncome
Dollarsinmillions
2015 2014 2013
AsAdjusted

Netincome $ 13,687 $ 6,736 $ 18,722
Othercomprehensiveincome,netoftax:
ForeignCurrency:
Translationadjustments(includes$(16),$0and$(2)
attributabletononcontrollinginterest),netoftaxesof$(595),$(45)and$(78) (1,188) (75) (140)
Reclassificationadjustmentincludedinnetincome,netoftaxesof$0,$224
and$30 - 416 55
Available-for-salesecurities:
Netunrealizedgains,netoftaxesof$0,$40,and$137 - 65 258
Reclassificationadjustmentincludedinnetincome,netoftaxesof$(9),$(10)
and$(42) (15) (16) (79)
Cashflowhedges:
Netunrealized(losses)gains,netoftaxesof$(411),$140and$286 (763) 260 525
Reclassificationadjustmentincludedinnetincome,netoftaxesof$20,$18
and$16 38 36 30
Definedbenefitpostretirementplans:
Amortizationofnetpriorservicecreditincludedinnetincome,netoftaxesof
$(523),$(588)and$(480) (860) (959) (782)
Netpriorservicecreditarisingduringperiod,netoftaxesof$27,$262
and$1,695 45 428 2,765
Reclassificationadjustmentincludedinnetincome,netoftaxesof$0,$11
and$7 - 26 11
Othercomprehensiveincome(loss) (2,743) 181 2,643
Totalcomprehensiveincome 10,944 6,917 21,365
Less:Totalcomprehensiveincomeattributabletononcontrollinginterest (326) (294) (302)
TotalComprehensiveIncomeAttributabletoAT&T $ 10,618 $ 6,623 $ 21,063
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

40
AT&TInc.
ConsolidatedBalanceSheets
Dollarsinmillionsexceptpershareamounts
December31,
2015 2014
Assets AsAdjusted
CurrentAssets
Cashandcashequivalents $ 5,121 $ 8,603
Accountsreceivable-netofallowancesfordoubtfulaccountsof$704and$454 16,532 14,527
Prepaidexpenses 1,072 831
Othercurrentassets 13,267 9,645
Totalcurrentassets 35,992 33,606
Property,PlantandEquipmentNet 124,450 112,898
Goodwill 104,568 69,692
Licenses 93,093 60,824
CustomerListsandRelationships-Net 18,208 812
OtherIntangibleAssetsNet 9,409 5,327
InvestmentsinEquityAffiliates 1,606 250
OtherAssets 15,346 13,425
TotalAssets $ 402,672 $ 296,834

Liabilities
and
Stockholders'
Equity
CurrentLiabilities
Debtmaturingwithinoneyear $ 7,636 $ 6,056
Accountspayableandaccruedliabilities 30,372 23,592
Advancedbillingsandcustomerdeposits 4,682 4,105
Accruedtaxes 2,176 1,091
Dividendspayable 2,950 2,438
Totalcurrentliabilities 47,816 37,282
Long-TermDebt 118,515 75,778
DeferredCreditsandOtherNoncurrentLiabilities
Deferredincometaxes 56,181 38,436
Postemploymentbenefitobligation 34,262 37,079
Othernoncurrentliabilities 22,258 17,989
Totaldeferredcreditsandothernoncurrentliabilities 112,701 93,504
Stockholders'
Equity
Commonstock($1parvalue,14,000,000,000authorizedatDecember31,2015
and2014:issued6,495,231,088atDecember31,2015and2014) 6,495 6,495
Additionalpaid-incapital 89,763 91,108
Retainedearnings 33,671 31,081
Treasurystock(350,291,239atDecember31,2015and1,308,318,131
atDecember31,2014,atcost) (12,592) (47,029)
Accumulatedothercomprehensiveincome 5,334 8,061
Noncontrollinginterest 969 554
Totalstockholders'equity 123,640 90,270
TotalLiabilitiesandStockholders'Equity $ 402,672 $ 296,834
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

41
AT&TInc.
ConsolidatedStatementsofCashFlows
Dollarsinmillions
2015 2014 2013
Operating
Activities AsAdjusted
Netincome $ 13,687 $ 6,736 $ 18,722
Adjustmentstoreconcilenetincometonetcashprovidedbyoperatingactivities:
Depreciationandamortization 22,016 18,273 18,395
Undistributedearningsfrominvestmentsinequityaffiliates (49) (27) (324)
Provisionforuncollectibleaccounts 1,416 1,032 954
Deferredincometaxexpense 4,117 1,948 6,345
Netloss(gain)fromsaleofinvestments,netofimpairments 91 (1,461) (492)
Actuarial(gain)lossonpensionandpostretirementbenefits (2,152) 7,869 (7,584)
Abandonmentofnetworkassets - 2,120 -
Changesinoperatingassetsandliabilities:
Accountsreceivable (535) (2,651) (1,329)
Othercurrentassets (1,789) (974) 445
Accountspayableandaccruedliabilities 1,291 2,412 (152)
Retirementbenefitfunding (735) (560) (209)
Other-
net (1,478) (3,379) 25
Totaladjustments 22,193 24,602 16,074
NetCashProvidedbyOperatingActivities 35,880 31,338 34,796

Investing
Activities
Constructionandcapitalexpenditures:
Capitalexpenditures (19,218) (21,199) (20,944)
Interestduringconstruction (797) (234) (284)
Acquisitions,netofcashacquired (30,759) (3,141) (4,113)
Dispositions 83 8,123 1,923
Sales(purchases)ofsecurities,net 1,545 (1,890) -
Returnofadvancestoandinvestmentsinequityaffiliates 1 4 301
Other 1 - (7)
NetCashUsedinInvestingActivities (49,144) (18,337) (23,124)

Financing
Activities
Netchangeinshort-termborrowingswithoriginalmaturitiesof
threemonthsorless (1) (16) 20
Issuanceofothershort-termborrowings - - 1,476
Repaymentofothershort-termborrowings - - (1,476)
Issuanceoflong-termdebt 33,969 15,926 12,040
Repaymentoflong-termdebt (10,042) (10,400) (7,698)
Issuanceofotherlong-termfinancingobligations - 107 4,796
Purchaseoftreasurystock (269) (1,617) (13,028)
Issuanceoftreasurystock 143 39 114
Dividendspaid (10,200) (9,552) (9,696)
Other (3,818) (2,224) 251
NetCashProvidedby(Usedin)FinancingActivities 9,782 (7,737) (13,201)
Net(decrease)increaseincashandcashequivalents (3,482) 5,264 (1,529)
Cashandcashequivalentsbeginningofyear 8,603 3,339 4,868
CashandCashEquivalentsEndofYear $ 5,121 $ 8,603 $ 3,339
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

42
AT&TInc.
ConsolidatedStatementsofChangesinStockholders'Equity
Dollarsandsharesinmillionsexceptpershareamounts
2015 2014 2013
Shares Amount Shares Amount Shares Amount
AsAdjusted
Common
Stock
Balanceatbeginningofyear 6,495 $ 6,495 6,495 $ 6,495 6,495 $ 6,495
Issuanceofstock - - - - - -
Balanceatendofyear 6,495 $ 6,495 6,495 $ 6,495 6,495 $ 6,495

Additional
Paid-In
Capital
Balanceatbeginningofyear $ 91,108 $ 91,091 $ 91,038
Issuanceoftreasurystock (1,597) 4 (8)
Share-basedpayments 252 47 62
Changerelatedtoacquisitionofinterests
heldbynoncontrollingowners - (34) (1)
Balanceatendofyear $ 89,763 $ 91,108 $ 91,091

Retained
Earnings
Balanceatbeginningofyear $ 31,081 $ 34,269 $ 25,440
NetincomeattributabletoAT&T($2.37,
$1.24and$3.42perdilutedshare) 13,345 6,442 18,418
Dividendstostockholders($1.89,$1.85and
$1.81pershare) (10,755) (9,630) (9,589)
Balanceatendofyear $ 33,671 $ 31,081 $ 34,269

Treasury
Stock
Balanceatbeginningofyear (1,308) $ (47,029) (1,269) $ (45,619) (914) $ (32,888)
Repurchaseofcommonstock (8) (278) (48) (1,617) (366) (13,028)
Issuanceoftreasurystock 966 34,715 9 207 11 297
Balanceatendofyear (350) $ (12,592) (1,308) $ (47,029) (1,269) $ (45,619)
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

43
AT&TInc.
ConsolidatedStatementsofChangesinStockholders'Equity(continued)
Dollarsandsharesinmillionsexceptpershareamounts
2015 2014 2013
Amount Amount Amount
AsAdjusted
Accumulated
Other
Comprehensive
Income

Attributable
to
AT&T,
net
of
tax:
Balanceatbeginningofyear $ 8,061 $ 7,880 $ 5,235
Othercomprehensiveincome(loss)
attributabletoAT&T (2,727) 181 2,645
Balanceatendofyear $ 5,334 $ 8,061 $ 7,880

Noncontrolling
Interest:
Balanceatbeginningofyear $ 554 $ 494 $ 333
Netincomeattributabletononcontrolling
interest 342 294 304
Distributions (294) (233) (231)
Contributions - - 51
Acquisitionsofnoncontrollinginterests 383 69 44
Acquisitionofinterestsheldby
noncontrollingowners - (70) (5)
Translationadjustmentsattributableto
noncontrollinginterest,netoftaxes (16) - (2)
Balanceatendofyear $ 969 $ 554 $ 494

TotalStockholders'Equityatbeginningofyear $ 90,270 $ 94,610 $ 95,653
TotalStockholders'Equityatendofyear $ 123,640 $ 90,270 $ 94,610
Theaccompanyingnotesareanintegralpartoftheconsolidatedfinancialstatements.

44
NotestoConsolidatedFinancialStatements
Dollarsinmillionsexceptpershareamounts

NOTE1.SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES

BasisofPresentationThroughoutthisdocument,AT&TInc.isreferredtoas"AT&T,""we"orthe"Company."Theconsolidatedfinancialstatementsincludetheaccountsof
theCompanyandourmajority-ownedsubsidiariesandaffiliates,includingtheresultsofDIRECTVandwirelesspropertiesinMexicofortheperiodfromacquisitionthrough
December31,2015.Oursubsidiariesandaffiliatesoperateinthecommunicationsanddigitalentertainmentservicesindustry,providingservicesandequipmentthatdeliver
voice,videoandbroadbandservicesdomesticallyandinternationally.

Allsignificantintercompanytransactionsareeliminatedintheconsolidationprocess.Investmentsinlessthanmajority-ownedsubsidiariesandpartnershipswherewehave
significantinfluenceareaccountedforundertheequitymethod.Earningsfromcertaininvestmentsaccountedforusingtheequitymethodareincludedforperiodsendedwithin
uptoonequarterofourperiodend.Wealsorecordedourproportionateshareofourequitymethodinvestees'othercomprehensiveincome(OCI)items,includingactuarialgains
andlossesonpensionandotherpostretirementbenefitobligationsandcumulativetranslationadjustments.

ThepreparationoffinancialstatementsinconformitywithU.S.generallyacceptedaccountingprinciples(GAAP)requiresmanagementtomakeestimatesandassumptionsthat
affecttheamountsreportedinthefinancialstatementsandaccompanyingnotes,includingestimatesofprobablelossesandexpenses.Actualresultscoulddifferfromthose
estimates.Certainamountshavebeenreclassifiedtoconformtothecurrentperiod'spresentation,includingourpresentationof"Equipment"and"Broadcast,programmingand
operations"costsseparatelyfromothercostofservicesintheconsolidatedstatementsofincome.

CustomerFulfillmentCostsInAugust2015,withouracquisitionofDIRECTV,weannouncedachangeinaccountingforcustomerset-upandinstallationcosts.Historically
wehavefollowedanaccountingpolicyofdeferringcustomerset-upandinstallationcostsonlytotheextentofdeferredrevenuesrecordedforupfrontfees(e.g.,activation
charges),andtoexpenseanycoststhatexceeddeferredrevenues.AfterdiscussingthischangewiththeSecuritiesandExchangeCommission,wechangedouraccountingtoa
preferablemethodofcapitalizingthesecostsandamortizingthemovertheexpectedeconomiclifeofthecustomerrelationshipofapproximatelyfouryears,subjecttoan
assessmentoftherecoverabilityofsuchcosts.Thischangeinaccountingprincipleimpactsvideo,broadbandInternetandwirelinevoiceservicesandisconsideredpreferablein
thatitprovidesanaccuratereflectionofassets(i.e.,thecontractualcustomerrelationshipobtainedthroughtheset-upandinstallation)generatedbythosespecificbusiness
activities.Ournewaccountingmethodismorecomparablewiththeaccountingmethodusedinthecableentertainmentindustry.WithouracquisitionofDIRECTV,changingto
thisaccountingmethodenhancescomparabilitytoothercompaniesintheindustry.Thischangeinaccountingdidnothaveanimpactonourwirelessactivities,duetothe
absenceofthesetypesofexpensesinthosebusinessactivities.

ThecumulativeeffectofthechangeonRetainedEarningsasofJanuary1,2013,wasanincreaseofapproximately$2,959onourconsolidatedbalancesheet.Thischangedidnot
haveanimpactoncashprovidedbyorusedinoperationsforanyperiodpresented.

NewAccountingStandards

Long-Term
Debt
and
Debt
Issuance
Costs
InApril2015,theFinancialAccountingStandardsBoard(FASB)issuedAccountingStandardsUpdate(ASU)No.2015-03,
"InterestImputationofInterest:SimplifyingthePresentationofDebtIssuanceCosts"(ASU2015-03),whichresultedinthereclassificationofdebtissuancecostsfrom"Other
Assets"toinclusionasareductionofourreportable"Long-TermDebt"balanceonourconsolidatedbalancesheets.SinceASU2015-03doesnotaddressdeferredissuancecosts
forline-of-creditarrangements,theFASBissuedASUNo.2015-15,"InterestImputationofInterest:PresentationandSubsequentMeasurementofDebtIssuanceCosts
AssociatedwithLine-of-CreditArrangements"(ASU2015-15),inAugust2015.ASU2015-15allowsacompanytodeferdebtissuancecostsassociatedwithline-of-credit
arrangements,includingarrangementswithnooutstandingborrowings,classifythemasanasset,andamortizethemoverthetermofthearrangements.WeelectedtoadoptASU
2015-03early,withfullretrospectiveapplicationasrequiredbytheguidance,andASU2015-15,whichwaseffectiveimmediately.Thesestandardsdidnothaveamaterial
impactonourconsolidatedbalancesheetsandhadnoimpactonourcashflowsprovidedbyorusedinoperationsforanyperiodpresented.

45
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Business
Combinations
InSeptember2015,theFASBissuedASUNo.2015-16,"BusinessCombinationsSimplifyingtheAccountingforMeasurement-PeriodAdjustments"
(ASU2015-16),whichresultsintheabilitytorecognize,incurrentperiodearnings,anychangesinprovisionalamountsduringthemeasurementperiodaftertheclosingofan
acquisition,insteadofrestatingpriorperiodsforthesechanges.WeelectedtoadoptASU2015-16early,whichhadnoimpactonourconsolidatedbalancesheetasofDecember
31,2015,orourconsolidatedoperatingresultsandcashflowsfortheyearended.

Deferred
Income
Taxes
and
Liabilities
InNovember2015,theFASBissuedASUNo.2015-17,"IncomeTaxes(Topic740)BalanceSheetClassificationofDeferredTaxes"
(ASU2015-17),whichrequirescompaniesreporttheirdeferredtaxliabilitiesanddeferredtaxassets,togetherasasinglenoncurrentitemontheirclassifiedbalancesheets.We
electedtoadoptASU2015-17early,andapplieditretrospectivelyasallowedbythestandard.OuradoptionofASU2015-17didnothaveamaterialimpactonourconsolidated
balancesheetsandhadnoimpactonourcashprovidedbyorusedinoperationsforanyperiodpresented.

Thefollowingtablespresentourresultsunderourhistoricalmethodandasadjustedtoreflecttheseaccountingchanges:

Historical Effectof Effectof


Accounting Voluntary Adoptionof As
Method Change NewASUs Adjusted
At
December
31,
2015
or
for
the
year

ended
Othercostofservices $ 36,038 $ (256) $ - $ 35,782
Incometaxexpense 6,908 97 - 7,005
NetIncome 13,528 159 - 13,687
NetIncomeAttributabletoAT&T 13,186 159 - 13,345

BasicEarningsperShareAttributableto
AT&T $ 2.34 $ 0.03 $ - $ 2.37
DilutedEarningsperShareAttributableto
AT&T 2.34 0.03 - 2.37

Othercurrentassets $ 12,225 $ 1,588 $ (546)2 $ 13,267
OtherAssets 12,605 3,064 (323)1 15,346
Long-termdebt 118,838 - (323)1 118,515
Deferredincometaxes 55,580 1,147 (546)2 56,181
TotalAssets 398,889 4,652 (869)1,2 402,672
TotalLiabilities 278,754 1,147 (869)1,2 279,032
Retainedearnings $ 30,166 $ 3,505 $ - $ 33,671
1ImpactofASU2015-03.
2ImpactofASU2015-17.

46
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Historical Effectof Effectof


Accounting Voluntary Adoptionof As
Method Change NewASUs Adjusted
At
December
31,
2014
or
for
the
year

ended
Othercostofservices $ 37,590 $ (466) $ - $ 37,124
Otherincome(expense)-net 1,652 (71) - 1,581
Incometaxexpense 3,442 177 - 3,619
NetIncome 6,518 218 - 6,736
NetIncomeAttributabletoAT&T 6,224 218 - 6,442

BasicEarningsperShareAttributableto
AT&T $ 1.19 $ 0.05 $ - $ 1.24
DilutedEarningsperShareAttributableto
AT&T 1.19 0.05 - 1.24

Othercurrentassets $ 8,067 $ 1,735 $ (157)2 $ 9,645
OtherAssets 10,998 2,661 (234)1 13,425
Long-termdebt 76,011 - (233)1 75,778
Deferredincometaxes 37,544 1,005 (113)2 38,436
TotalAssets 292,829 4,396 (391)1,2 296,834
TotalLiabilities 205,905 1,050 (391)1,2 206,564
Retainedearnings $ 27,736 $ 3,345 $ - $ 31,081
1ImpactofASU2015-03.
2ImpactofASU2015-17.

Historical Effectof Effectof


Accounting Voluntary Adoptionof As
Method Change NewASUs Adjusted
At
December
31,
2013
or
for
the
year

ended
Othercostofservices $ 31,512 $ (273) $ - $ 31,239
Incometaxexpense 9,224 104 - 9,328
NetIncome 18,553 169 - 18,722
NetIncomeAttributabletoAT&T 18,249 169 - 18,418

BasicEarningsperShareAttributableto
AT&T $ 3.39 $ 0.03 $ - $ 3.42
DilutedEarningsperShareAttributableto
AT&T 3.39 0.03 - 3.42

Othercurrentassets $ 5,979 $ 1,725 $ (159)2 $ 7,545
OtherAssets 8,278 2,269 (199)1 10,348
Long-termdebt 69,290 - (199)1 69,091
Deferredincometaxes 36,308 859 (152)2 37,015
TotalAssets 277,787 3,994 (358)1,2 281,423
TotalLiabilities 186,305 866 (358)1,2 186,813
Retainedearnings $ 31,141 $ 3,128 $ - $ 34,269
1ImpactofASU2015-03.
2ImpactofASU2015-17.

Revenue
Recognition
InMay2014,theFASBissuedASUNo.2014-09,"RevenuefromContractswithCustomers(Topic606)"(ASU2014-09)andhassincemodifiedthe
standardwithASU2015-14,"DeferraloftheEffectiveDate."Thesestandardsreplaceexistingrevenuerecognitionruleswithacomprehensiverevenuemeasurementand
recognitionstandardandexpandeddisclosurerequirements.ASU2014-09becomeseffectiveforannualreportingperiodsbeginningafterDecember15,2017,atwhichpointwe
plantoadoptthestandard.Uponinitialevaluation,webelievethekeychangesinthestandardthatimpactourrevenuerecognitionrelatetotheallocationofcontractrevenues
betweenvariousservicesandequipment,andthetiminginwhichthoserevenuesarerecognized.Wearestillintheprocessofdeterminingtheimpactonthetimingofrevenue
recognitionandtheallocationofrevenuetoproductsandsegments.

47
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

ASU2014-09alsospecifiesthatallincrementalcostsofobtaininganddirectcostsoffulfillingourcontractswithcustomersshouldbedeferredandrecognizedoverthecontract
periodorexpectedcustomerlife.Inthethirdquarterof2015,wechangedouraccountingpolicyforthecostsoffulfillingcontractswithcustomerstodeferallrecoverablecosts
whilenotchangingourapproachtoacquisitioncosts.Webelieve,asaresultofouraccountingpolicychangeforfulfillmentcosts,thattherequirementtodefersuchcostsinthe
newstandardwillnotresultinasignificantchangetoourresults.Therequirementtodefercontractacquisitioncostshowever,willresultintherecognitionofadeferredcharge
onourbalancesheets,butastheindustrycontinuestoundergochangesinhowdevicesandservicesaresoldtocustomerswithimpactsontheresultingcommissionspaidtoour
internalandexternalsalesforces,wecannotcurrentlyestimateimpactofthischange.

TheFASBallowstwoadoptionmethodsunderASU2014-09.Underonemethod,acompanywillapplytherulestocontractsinallreportingperiodspresented,subjecttocertain
allowableexceptions.Undertheothermethod,acompanywillapplytherulestoallcontractsexistingasofJanuary1,2018,recognizinginbeginningretainedearningsan
adjustmentforthecumulativeeffectofthechangeandprovideadditionaldisclosurescomparingresultstopreviousrules.Whilewecontinuetoevaluatetheimpactofthenew
standardandavailableadoptionmethods,webelievethestandardwillrequireustoimplementnewrevenueaccountingsystemsandprocesses,whichwillsignificantlychange
ourinternalcontrolsoverrevenuerecognition.Inaddition,theimplementationofthenewsystemsandprocesseswillimpactourconsiderationsofwhichadoptionmethodswe
intendtouse.

Financial
Instruments
InJanuary2016,theFASBissuedASUNo.2016-01,"FinancialInstrumentsOverall(Subtopic825-10):RecognitionandMeasurementofFinancial
AssetsandFinancialLiabilities"(ASU2016-01),whichwillrequireustorecordchangesinthefairvalueofourequityinvestments,exceptforthoseaccountedforunderthe
equitymethod,innetincomeinsteadofinaccumulatedothercomprehensiveincome.ASU2016-01willbecomeeffectiveforfiscalyearsandinterimperiodsbeginningafter
December15,2017,andwiththeexceptionofcertaindisclosurerequirements,isnotsubjecttoearlyadoption.

IncomeTaxesWeprovidedeferredincometaxesfortemporarydifferencesbetweenthecarryingamountsofassetsandliabilitiesforfinancialreportingpurposesandthe
computedtaxbasisofthoseassetsandliabilities.Weprovidevaluationallowancesagainstthedeferredtaxassets(included,togetherwithourdeferredincometaxassets,aspart
ofourreportablenetdeferredincometaxliabilitiesonourconsolidatedbalancesheets),forwhichtherealizationisuncertain.Wereviewtheseitemsregularlyinlightofchanges
infederalandstatetaxlawsandchangesinourbusiness.

CashandCashEquivalentsCashandcashequivalentsincludeallhighlyliquidinvestmentswithoriginalmaturitiesofthreemonthsorless.Thecarryingamounts
approximatefairvalue.AtDecember31,2015,weheld$2,117incashand$3,004inmoneymarketfundsandothercashequivalents.

RevenueRecognitionRevenuesderivedfromwireless,fixedtelephone,dataandvideoservicesarerecognizedwhenservicesareprovided.Thisisbaseduponeitherusage
(e.g.,minutesoftraffic/bytesofdataprocessed),periodoftime(e.g.,monthlyservicefees)orotherestablishedfeeschedules.Ourservicerevenuesarebilledeitherinadvance,
arrearsorareprepaid.

Werecordrevenuereductionsforestimatedfutureadjustmentstocustomeraccounts,otherthanbaddebtexpense,atthetimerevenueisrecognizedbasedonhistorical
experience.Servicerevenuesincludebillingstoourcustomersforvariousregulatoryfeesimposedonusbygovernmentalauthorities.Wereportrevenuesfromtransactions
betweenusandourcustomersnetoftaxesthegovernmentauthoritiesrequireustocollectfromourcustomersinourconsolidatedstatementsofincome.Cashincentivesgivento
customersarerecordedasareductionofrevenue.Revenuesrelatedtononrefundable,upfrontserviceactivationandsetupfeesaredeferredandrecognizedovertheassociated
servicecontractperiodorcustomerlife.Revenuerecognizedfromcontractsthatbundleservicesandequipmentislimitedtothelesseroftheamountallocatedbasedonthe
relativesellingpriceoftheequipmentandservicealreadydeliveredortheamountpaidandowedbythecustomerfortheequipmentandservicealreadydelivered.Werecordthe
saleofequipmenttocustomerswhenwenolongerhaveanyrequirementstoperform,whentitleispassedandwhentheproductsareacceptedbycustomers.Werecordthesale
ofequipmentandservicestocustomersasgrossrevenuewhenwearetheprincipalinthearrangementandnetoftheassociatedcostsincurredwhenwearenotconsideredthe
principalinthearrangement.

48
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Weoffertoourcustomerstheoptiontopurchasecertainwirelessdevicesininstallmentsoveraperiodofupto30months,withtherighttotradeintheoriginalequipmentfora
newdevice,afterhavingpaidaspecifiednumberofinstallments,andhavetheremainingunpaidbalancesatisfied.Forcustomersthatelecttheseinstallmentpaymentprograms,
werecognizerevenuefortheentireamountofthecustomerreceivable,netofthefairvalueofthetrade-inrightguaranteeandimputedinterest.SeeNote15foradditional
information,includingthesalesofourequipmentinstallmentreceivables.

AllowanceforDoubtfulAccountsWerecordexpensetomaintainanallowancefordoubtfulaccountsforestimatedlossesthatresultfromthefailureorinabilityofour
customerstomakerequiredpaymentsdeemedcollectablefromthecustomerwhentheservicewasprovidedorproductwasdelivered.Whendeterminingtheallowance,we
considertheprobabilityofrecoverabilityofaccountsreceivablebasedonpastexperience,takingintoaccountcurrentcollectiontrendsaswellasgeneraleconomicfactors,
includingbankruptcyrates.Creditrisksareassessedbasedonhistoricalwrite-offs,netofrecoveries,aswellasananalysisoftheagedaccountsreceivablebalanceswith
allowancesgenerallyincreasingasthereceivableages.Accountsreceivablemaybefullyreservedforwhenspecificcollectionissuesareknowntoexist,suchaspending
bankruptcyorcatastrophes.

InventoryInventories,whichareincludedin"Othercurrentassets"onourconsolidatedbalancesheets,were$4,033atDecember31,2015,and$1,933atDecember31,2014.
Wirelessdevicesandaccessories,whicharevaluedatthelowerofcostormarket(determinedusingcurrentreplacementcost),were$3,733atDecember31,2015,and$1,858at
December31,2014.

Property,PlantandEquipmentProperty,plantandequipmentisstatedatcost,exceptforassetsacquiredusingacquisitionaccounting,whichareinitiallyrecordedatfair
value(seeNote6).Thecostofadditionsandsubstantialimprovementstoproperty,plantandequipmentiscapitalized,andincludesinternalcompensationcostsforthese
projects;however,noncashactuarialgainsorlossesincludedincompensationcostsareexcludedfromamountsreportedas"capitalexpenditures."Thecostofmaintenanceand
repairsofproperty,plantandequipmentischargedtooperatingexpenses.Property,plantandequipmentcostsaredepreciatedusingstraight-linemethodsovertheirestimated
economiclives.Certainsubsidiariesfollowcompositegroupdepreciationmethodology.Accordingly,whenaportionoftheirdepreciableproperty,plantandequipmentisretired
intheordinarycourseofbusiness,thegrossbookvalueisreclassifiedtoaccumulateddepreciation,andnogainorlossisrecognizedonthedispositionoftheseassets.

Property,plantandequipmentisreviewedforrecoverabilitywhenevereventsorchangesincircumstancesindicatethatthecarryingamountmaynotberecoverable.We
recognizeanimpairmentlosswhenthecarryingamountofalong-livedassetisnotrecoverable.Thecarryingamountofalong-livedassetisnotrecoverableifitexceedsthesum
oftheundiscountedcashflowsexpectedtoresultfromtheuseandeventualdispositionoftheasset.

Theliabilityforthefairvalueofanassetretirementobligationisrecordedintheperiodinwhichitisincurredifareasonableestimateoffairvaluecanbemade.Inperiods
subsequenttoinitialmeasurement,werecognizeperiod-to-periodchangesintheliabilityresultingfromthepassageoftimeandrevisionstoeitherthetimingortheamountof
theoriginalestimate.Theincreaseinthecarryingvalueoftheassociatedlong-livedassetisdepreciatedoverthecorrespondingestimatedeconomiclife.

SoftwareCostsWecapitalizecertaincostsincurredinconnectionwithdevelopingorobtaininginternal-usesoftware.Capitalizedsoftwarecostsareincludedin"Property,
PlantandEquipment"onourconsolidatedbalancesheets.Inaddition,thereiscertainnetworksoftwarethatallowstheequipmenttoprovidethefeaturesandfunctionsuniqueto
theAT&Tnetwork,whichweincludeinthecostoftheequipmentcategoriesforfinancialreportingpurposes.

Weamortizeourcapitalizedsoftwarecostsoverathree-yeartofive-yearperiod,reflectingtheestimatedperiodduringwhichtheseassetswillremaininservice,whichalso
alignswiththeestimatedusefullivesusedintheindustry.

GoodwillandOtherIntangibleAssetsAT&Thasfivemajorclassesofintangibleassets:goodwill,licenses,whichincludeFederalCommunicationsCommission(FCC),
otherwirelesslicensesandorbitalslots,otherindefinite-livedintangibleassets,primarilymadeupoftheAT&TandDIRECTVInternationaltradenamesincludingSKY,
customerlistsandvariousotherfinite-livedintangibleassets(seeNote7).

49
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Goodwillrepresentstheexcessofconsiderationpaidoverthefairvalueofnetassetsacquiredinbusinesscombinations.FCCandwirelesslicenses(wirelesslicenses)provideus
withtheexclusiverighttoutilizecertainradiofrequencyspectrumtoprovidewirelesscommunicationsservices.Whilewirelesslicensesareissuedforafixedperiodoftime
(generally10years),renewalsofwirelesslicenseshaveoccurredroutinelyandatnominalcost.Moreover,wehavedeterminedthattherearecurrentlynolegal,regulatory,
contractual,competitive,economicorotherfactorsthatlimittheusefullivesofourwirelesslicenses.Orbitalslotsrepresentthespaceinwhichweoperatethebroadcastsatellites
thatsupportourdigitalvideoentertainmentserviceofferings.Similartoourwirelesslicenses,therearenofactorsthatlimittheusefullivesofourorbitalslots.Weacquiredthe
rightstotheAT&Tandotherbrandnamesinpreviousacquisitions.Wehavetheeffectiveabilitytoretaintheseexclusiverightspermanentlyatanominalcost.

Goodwill,licensesandotherindefinite-livedintangibleassetsarenotamortizedbutaretestedatleastannuallyforimpairment.Thetestingisperformedonthevalueasof
October1eachyear,andcomparesthebookvalueoftheassetstotheirfairvalue.Goodwillistestedbycomparingthebookvalueofeachreportingunit,deemedtobeour
principaloperatingsegmentsoronelevelbelowthem(BusinessSolutions,EntertainmentGroup,ConsumerMobility,andMexicoWireless,BrazilandPanAmericanainthe
Internationalsegment),tothefairvalueofthosereportingunitscalculatedusingadiscountedcashflowapproachaswellasamarketmultipleapproach.Licensesaretestedfor
impairmentonanaggregatebasis,consistentwithouruseofthelicensesonanationalscopeusingadiscountedcashflowapproach.Wealsocorroboratedthevalueofwireless
licenseswithamarketapproachastheAWS-3auctionprovidedmarketpriceinformationfornationalwirelesslicenses.Brandnamesaretestedbycomparingthebookvaluetoa
fairvaluecalculatedusingadiscountedcashflowapproachonapresumedroyaltyratederivedfromtherevenuesrelatedtothebrandname.

Intangibleassetsthathavefiniteusefullivesareamortizedovertheirusefullives(seeNote7).Customerlistsandrelationshipsareamortizedusingprimarilythesum-of-the-
months-digitsmethodofamortizationovertheperiodinwhichthoserelationshipsareexpectedtocontributetoourfuturecashflows.Theremainingfinite-livedintangibleassets
aregenerallyamortizedusingthestraight-linemethod.

BroadcastProgrammingandOtherCostsWerecognizethecostsoftelevisionprogrammingdistributionrightswhenwedistributetherelatedprogramming.Werecognize
thecostsoftelevisionprogrammingrightstodistributelivesportingeventstoexpenseusingthestraight-linemethodoverthecourseoftheseasonortournament,which
approximatesthepatternofusage.

AdvertisingCostsWeexpenseadvertisingcostsforproductsandservicesorforpromotingourcorporateimageasweincurthem(seeNote18).

TrafficCompensationExpenseWeusevariousestimatesandassumptionstodeterminetheamountoftrafficcompensationexpenserecognizedduringanyreportingperiod.
Switchedtrafficcompensationcostsareaccruedutilizingestimatedratesandvolumesbyproduct,formulatedfromhistoricaldataandadjustedforknownratechanges.Such
estimatesareadjustedmonthlytoreflectnewlyavailableinformation,suchasratechangesandnewcontractualagreements.Billsreflectingactualincurredinformationare
generallynotreceivedwithinthreemonthssubsequenttotheendofthereportingperiod,atwhichpointafinaladjustmentismadetotheaccruedswitchedtrafficcompensation
expense.Dedicatedtrafficcompensationcostsareestimatedbasedonthenumberofcircuitsandtheaverageprojectedcircuitcosts.

ForeignCurrencyTranslationWeareexposedtoforeigncurrencyexchangeriskthroughourforeignaffiliatesandequityinvestmentsinforeigncompanies.Ourforeign
subsidiariesandforeigninvestmentsgenerallyreporttheirearningsintheirlocalcurrencies.Wetranslatetheirforeignassetsandliabilitiesatexchangeratesineffectatthe
balancesheetdates.Wetranslatetheirrevenuesandexpensesusingaverageratesduringtheyear.Theresultingforeigncurrencytranslationadjustmentsarerecordedasa
separatecomponentofaccumulatedothercomprehensiveincome(accumulatedOCI)intheaccompanyingconsolidatedbalancesheets(seeNote3).Operationsincountrieswith
highlyinflationaryeconomiesconsidertheU.S.dollarasthefunctionalcurrency.

Wedonothedgeforeigncurrencytranslationriskinthenetassetsandincomewereportfromthesesources.However,wedohedgeaportionoftheforeigncurrencyexchange
riskinvolvedinanticipationofhighlyprobableforeigncurrency-denominatedtransactions,whichweexplainfurtherinourdiscussionofourmethodsofmanagingourforeign
currencyrisk(seeNote10).

50
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

PensionandOtherPostretirementBenefitsSeeNote12foracomprehensivediscussionofourpensionandpostretirementbenefitexpense,includingadiscussionofthe
actuarialassumptions,ourpolicyforrecognizingtheassociatedgainsandlossesandourmethodusedtoestimateserviceandinterestcostcomponents.

NOTE2.EARNINGSPERSHARE

Areconciliationofthenumeratorsanddenominatorsofbasicearningspershareanddilutedearningspershareisshowninthetablebelow:

YearEndedDecember31, 2015 2014 2013


Numerators
Numeratorforbasicearningspershare:
Netincome $ 13,687 $ 6,736 $ 18,722
Less:Netincomeattributabletononcontrollinginterest (342) (294) (304)
NetincomeattributabletoAT&T 13,345 6,442 18,418
Dilutivepotentialcommonshares:
Share-basedpayment 13 13 13
Numeratorfordilutedearningspershare $ 13,358 $ 6,455 $ 18,431
Denominators(000,000)
Denominatorforbasicearningspershare:
Weighted-averagenumberofcommonsharesoutstanding 5,628 5,205 5,368
Dilutivepotentialcommonshares:
Share-basedpayment(inshares) 18 16 17
Denominatorfordilutedearningspershare 5,646 5,221 5,385
BasicearningspershareattributabletoAT&T $ 2.37 $ 1.24 $ 3.42
DilutedearningspershareattributabletoAT&T $ 2.37 $ 1.24 $ 3.42

51
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

NOTE3.OTHERCOMPREHENSIVEINCOME

ChangesinthebalancesofeachcomponentincludedinaccumulatedOCIarepresentedbelow.Allamountsarenetoftaxandexcludenoncontrollinginterest.

Followingour2015acquisitionsofDIRECTVandwirelessbusinessesinMexico,wehaveadditionalforeignoperationsthatareexposedtofluctuationsintheexchangerates
usedtoconvertoperations,assetsandliabilitiesintoU.S.dollars.Sincethedatesofacquisition,whencomparedtotheU.S.dollar,theBrazilianrealexchangeratehas
depreciated15.2%,theArgentinianpesoexchangeratehasdepreciated29.1%andMexicanpesoexchangeratehasdepreciated13.1%.FortheyearendedDecember31,2014,
theamountsreclassifiedfromaccumulatedOCIincludeamountsrealizeduponthesaleofourinvestmentinAmricaMvil,S.A.deC.V.(AmricaMvil)(seeNote5).

AtDecember31,2015,2014and2013andfortheyearsended
NetUnrealized
Foreign Gains(Losses) NetUnrealized Accumulated
Currency onAvailable- Gains(Losses) DefinedBenefit Other
Translation for-Sale onCashFlow Postretirement Comprehensive
Adjustment Securities Hedges Plans Income
BalanceasofDecember31,2012 $ (284) $ 271 $ (110) $ 5,358 $ 5,235
Othercomprehensiveincome
(loss)beforereclassifications (138) 258 525 2,765 3,410
Amountsreclassified
fromaccumulatedOCI 551 (79)2 303 (771)4 (765)
Netothercomprehensive
income(loss) (83) 179 555 1,994 2,645
BalanceasofDecember31,2013 (367) 450 445 7,352 7,880
Othercomprehensiveincome
(loss)beforereclassifications (75) 65 260 428 678
Amountsreclassified
fromaccumulatedOCI 4161 (16)2 363 (933)4 (497)
Netothercomprehensive
income(loss) 341 49 296 (505) 181
BalanceasofDecember31,2014 (26) 499 741 6,847 8,061
Othercomprehensiveincome
(loss)beforereclassifications (1,172) - (763) 45 (1,890)
Amountsreclassified
fromaccumulatedOCI -1 (15)2 383 (860)4 (837)
Netothercomprehensive
income(loss) (1,172) (15) (725) (815) (2,727)
BalanceasofDecember31,2015 $ (1,198) $ 484 $ 16 $ 6,032 $ 5,334
1Translation(gain)lossreclassificationsareincludedinOtherincome(expense)-netintheconsolidatedstatementsofincome.
2(Gains)lossesareincludedinOtherincome(expense)-netintheconsolidatedstatementsofincome.
3(Gains)lossesareincludedininterestexpenseintheconsolidatedstatementsofincome.SeeNote10foradditionalinformation.
4Theamortizationofpriorservicecreditsassociatedwithpostretirementbenefits,netofamountscapitalizedaspartofconstructionlabor,areincludedinCostofservicesand
salesandSelling,generalandadministrativeintheconsolidatedstatementsofincome(seeNote12).
ActuariallossreclassificationsrelatedtoourequitymethodinvesteesareincludedinOtherincome(expense)-netintheconsolidatedstatementsofincome.

52
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

NOTE4.SEGMENTINFORMATION

Oursegmentsarestrategicbusinessunitsthatofferproductsandservicestodifferentcustomersegmentsovervarioustechnologyplatformsand/orindifferentgeographiesthat
aremanagedaccordingly.DuetorecentorganizationalchangesandourJuly24,2015acquisitionofDIRECTV,effectiveforthequarterendedSeptember30,2015,werevised
ouroperatingsegmentstoalignwithournewmanagementstructureandorganizationalresponsibilities.Weanalyzeouroperatingsegmentsbasedonsegmentcontribution,
whichconsistsofoperatingincome,excludingacquisition-relatedcostsandothersignificantitems(asdiscussedbelow),andequityinnetincomeofaffiliatesforinvestments
managedwithineachoperatingsegment.Wehavefourreportablesegments:(1)BusinessSolutions,(2)EntertainmentGroup,(3)ConsumerMobilityand(4)International.

Wealsoevaluatesegmentperformancebasedonsegmentoperatingincomebeforedepreciationandamortization,whichwerefertoasEBITDAand/orEBITDAmargin.We
believeEBITDAtobearelevantandusefulmeasurementtoourinvestorsasitispartofourinternalmanagementreportingandplanningprocessesanditisanimportantmetric
thatmanagementusestoevaluatesegmentoperatingperformance.EBITDAdoesnotgiveeffecttocashusedfordebtservicerequirementsandthusdoesnotreflectavailable
fundsfordistributions,reinvestmentorotherdiscretionaryuses.

TheBusiness
Solutions
segment
providesservicestobusiness,governmentalandwholesalecustomersandindividualsubscriberswhopurchasewirelessservicesthrough
employer-sponsoredplans.WeprovideadvancedIP-basedservicesincludingVirtualPrivateNetworks(VPN),Ethernet-relatedproductsandbroadband,collectivelyreferredto
asstrategicbusinessservices,aswellastraditionaldataandvoiceproducts.Weutilizeourwirelessandwirednetworkandaremarketedtoprovideacompletecommunications
solutiontoourbusinesscustomers.

TheEntertainment
Group
segment
providesvideo,InternetandvoicecommunicationservicestoresidentialcustomerslocatedintheU.S.orinU.S.territories.Weutilizeour
copperandIP-based(referredtoas"wired"or"wireline")wirednetworkand/oroursatellitetechnology.

TheConsumer
Mobility
segment
providesnationwidewirelessservicetoconsumers,andwirelesswholesaleandresalesubscriberslocatedintheU.S.orinU.S.territories.We
utilizeourU.S.wirelessnetworktoprovidevoiceanddataservices,includinghigh-speedInternet,videoentertainmentandhomemonitoringservices.

TheInternational
segment
providesentertainmentservicesinLatinAmericaandwirelessservicesinMexico.Videoentertainmentservicesareprovidedtoprimarilyresidential
customersusingsatellitetechnology.WeutilizeourregionalandnationalnetworksinMexicotoprovideconsumerandbusinesscustomerswithwirelessdataandvoice
communicationservices.OurinternationalsubsidiariesconductbusinessintheirlocalcurrencyandoperatingresultsareconvertedtoU.S.dollarsusingofficialexchangerates.

Inreconcilingitemstoconsolidatedoperatingincomeandincomebeforeincometaxes,Corporate
and
Other
includes:(1)operationsthatarenotconsideredreportablesegments
andthatarenolongerintegraltoouroperationsorwhichwenolongeractivelymarket,and(2)impactsofcorporate-widedecisionsforwhichtheindividualoperatingsegments
arenotbeingevaluated,includinginterestcostsandexpectedreturnonplanassetsforourpensionandpostretirementbenefitplans.

Certainoperatingitemsarenotallocatedtoourbusinesssegments:
Acquisition-related
items
include(1)operationsandsupportitemsassociatedwiththemergerandintegrationofnewlyacquiredbusinesses,and(2)thenoncash
amortizationofintangibleassetsacquiredinacquisitions.
Certain
significant
items
include(1)noncashactuarialgainsandlossesfrompensionandotherpostretirementbenefits,(2)employeeseparationchargesassociatedwith
voluntaryand/orstrategicoffers,(3)lossesresultingfromabandonmentorimpairmentofassetsand(4)otheritemsforwhichthesegmentsarenotbeingevaluated.

Interestexpenseandotherincome(expense)net,aremanagedonlyonatotalcompanybasisandare,accordingly,reflectedonlyinconsolidatedresults.Therefore,theseitems
arealsonotincludedineachsegment'sreportableresults.

Ouroperatingassetsareutilizedbymultiplesegmentsandconsistofourwirelessandwirednetworksaswellasaninternationalsatellitefleet.Wemanageourassetstoprovide
forthemostefficient,effectiveandintegratedservicetoourcustomers,notbyoperatingsegment,andthereforeassetinformationandcapitalexpendituresbysegmentarenot
presented.Depreciationisallocatedbasedonnetworkusageorassetutilizationbysegment.

53
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

FortheyearendedDecember31,2015
Equityin
Operations Net
and Depreciation Operating Income
Support and Income (Loss)of Segment
Revenue Expenses EBITDA Amortization (Loss) Affiliates Contribution
BusinessSolutions $ 71,127 $ 44,946 $ 26,181 $ 9,789 $ 16,392 $ - $ 16,392
EntertainmentGroup 35,294 28,345 6,949 4,945 2,004 (4) 2,000
ConsumerMobility 35,066 21,477 13,589 3,851 9,738 - 9,738
International 4,102 3,930 172 655 (483) (5) (488)
SegmentTotal 145,589 98,698 46,891 19,240 27,651 $ (9) $ 27,642
CorporateandOther 1,297 1,057 240 64 176
Acquisition-relateditems (85) 1,987 (2,072) 2,712 (4,784)
Certainsignificantitems - (1,742) 1,742 - 1,742
AT&TInc. $ 146,801 $ 100,000 $ 46,801 $ 22,016 $ 24,785

FortheyearendedDecember312014
Equityin
Operations Net
and Depreciation Income
Support and Operating (Loss)of Segment
Revenue Expenses EBITDA Amortization Income(Loss) Affiliates Contribution
BusinessSolutions $ 70,606 $ 45,826 $ 24,780 $ 9,355
$ 15,425 $ - $ 15,425
EntertainmentGroup 22,233 18,992 3,241 4,473
(1,232) (2) (1,234)
ConsumerMobility 36,769 23,891 12,878 3,827
9,051 (1) 9,050
International - - - -
- 153 153
SegmentTotal 129,608 88,709 40,899 17,655
23,244 $ 150 $ 23,394
CorporateandOther 2,839 2,471 368 105
263
Acquisition-relateditems - 785 (785) 487
(1,272)
Certainsignificantitems - 9,997 (9,997) 26
(10,023)
AT&TInc. $ 132,447 $ 101,962 $ 30,485 $ 18,273
$ 12,212

54
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

FortheyearendedDecember31,2013
Equityin
Operations Net
and Depreciation Operating Income
Support and Income (Loss)of Segment
Revenue Expenses EBITDA Amortization (Loss) Affiliates Contribution
BusinessSolutions $ 67,647 $ 43,442 $ 24,205 $ 8,965 $ 15,240 $ - $ 15,240
EntertainmentGroup 21,542 17,943 3,599 4,815 (1,216) - (1,216)
ConsumerMobility 36,243 22,545 13,698 3,683 10,015 - 10,015
International - - - - - 532 532
SegmentTotal 125,432 83,930 41,502 17,463 24,039 $ 532 $ 24,571
CorporateandOther 3,320 2,987 333 274 59
Acquisition-relateditems - - - 658 (658)
Certainsignificantitems - (7,312) 7,312 - 7,312
AT&TInc. $ 128,752 $ 79,605 $ 49,147 $ 18,395 $ 30,752

55
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Thefollowingtableisareconciliationofoperatingincome(loss)to"IncomeBeforeIncomeTaxes"reportedonourconsolidatedstatementsofincome:

2015 2014 2013
BusinessSolutions $ 16,392 $ 15,425 $ 15,240
EntertainmentGroup 2,000 (1,234) (1,216)
ConsumerMobility 9,738 9,050 10,015
International (488) 153 532
SegmentOperatingIncome 27,642 23,394 24,571
ReconcilingItems:
CorporateandOther 176 263 59
Mergerandintegrationcharges (2,072) (785) -
Amortizationofintangiblesacquired (2,712) (487) (658)
Actuarialgain(loss) 2,152 (7,869) 7,584
Employeeseparationcharges (375) - (501)
Other(expenses)credits (35) - 229
Assetabandonmentsandimpairments - (2,154) -
Segmentequityinnetincome(loss)ofaffiliates 9 (150) (532)
AT&TOperatingIncome 24,785 12,212 30,752
Interestexpense 4,120 3,613 3,940
Equityinnetincomeofaffiliates 79 175 642
Otherincome(expense)-net (52) 1,581 596
IncomeBeforeIncomeTaxes $ 20,692 $ 10,355 $ 28,050

Thefollowingtablesetsforthrevenuesearnedfromsubscriberslocatedindifferentgeographicareas.Propertyisgroupedbyitsphysicallocation.

2015 2014 2013
NetProperty, NetProperty, NetProperty,
Plant& Plant& Plant&
Revenues Equipment Revenues Equipment Revenues Equipment
UnitedStates $ 140,234 $ 118,515 $ 129,772 $ 112,092 $ 126,212 $ 110,090
LatinAmerica
Brazil 1,224 1,384 142 33 136 41
Other 1,157 1,530 99 67 92 72
Mexico 2,046 2,369 94 20 90 24
Other 2,140 652 2,340 686 2,222 741
Total $ 146,801 $ 124,450 $ 132,447 $ 112,898 $ 128,752 $ 110,968

56
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

NOTE5.ACQUISITIONS,DISPOSITIONSANDOTHERADJUSTMENTS

Acquisitions

DIRECTVOnJuly24,2015,wecompletedouracquisitionofDIRECTV,aleadingproviderofdigitaltelevisionentertainmentservicesinboththeUnitedStatesandLatin
America.Theacquisitionrepresentsanopportunityforustointegrateauniqueandcomplementarysetofassetsandachievesubstantialcostsynergiesovertime,aswellas
generaterevenuefrompaytelevisioninLatinAmerica.Ourdistributionscalewillenableustoofferconsumersbundlesincludingvideo,high-speedbroadbandandmobile
services,usingallthesaleschannelsofbothcompanies.Webelievethecombinedcompanywillbeacontentdistributionleaderacrossmobile,videoandbroadbandplatforms.

Underthemergeragreement,eachshareofDIRECTVstockwasexchangedfor$28.50cashplus1.892sharesofourcommonstock.Afteradjustmentforsharesissuedtotrusts
consolidatedbyAT&T,share-basedpaymentarrangementsandfractionalshares,whichweresettledincash,AT&Tissued954,407,524sharestoDIRECTVshareholders,
givingthemanapproximate16%stakeinthecombinedcompany,basedoncommonsharesoutstanding.Basedonour$34.29pershareclosingstockpriceonJuly24,2015,the
aggregatevalueofconsiderationpaidtoDIRECTVshareholderswas$47,409,including$32,727ofAT&Tstockand$14,378incash,$299forshare-basedpayment
arrangementsand$5forDIRECTVsharespreviouslypurchasedontheopenmarketbytrustsconsolidatedbyAT&T.

Our2015operatingresultsincludetheresultsfromDIRECTVfollowingtheacquisitiondate.Thefairvaluesoftheassetsacquiredandliabilitiesassumedwerepreliminarily
determinedusingtheincome,costandmarketapproaches.Thefairvaluemeasurementswereprimarilybasedonsignificantinputsthatarenotobservableinthemarketandare
consideredLevel3undertheFairValueMeasurementandDisclosureframework,otherthanlong-termdebtassumedintheacquisition(seeNote10).Theincomeapproachwas
primarilyusedtovaluetheintangibleassets,consistingprimarilyofacquiredcustomerrelationships,orbitalslotsandtradenames.Theincomeapproachestimatesfairvaluefor
anassetbasedonthepresentvalueofcashflowsprojectedtobegeneratedbytheasset.Projectedcashflowsarediscountedatarequiredrateofreturnthatreflectstherelative
riskofachievingthecashflowsandthetimevalueofmoney.Thecostapproach,whichestimatesvaluebydeterminingthecurrentcostofreplacinganassetwithanotherof
equivalenteconomicutility,wasusedprimarilyforplant,propertyandequipment.Thecosttoreplaceagivenassetreflectstheestimatedreproductionorreplacementcostfor
theproperty,lessanallowanceforlossinvalueduetodepreciation.OurDecember31,2015consolidatedbalancesheetincludestheassetsandliabilitiesofDIRECTV,which
havebeenmeasuredatfairvalue.

ThefollowingtablesummarizesthepreliminaryestimatedfairvaluesoftheDIRECTVassetsacquiredandliabilitiesassumedandrelateddeferredincometaxesasofthe
acquisitiondate.

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NotestoConsolidatedFinancialStatements(continued)
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Assetsacquired
Cash $ 4,797
Accountsreceivable 2,011
Allothercurrentassets 1,535
Property,plantandequipment(includingsatellites) 9,301
Intangibleassetsnotsubjecttoamortization
Orbitalslots 11,946
Tradename 1,382
Intangibleassetssubjecttoamortization
Customerlistsandrelationships 19,505
Tradename 2,905
Other 457
Investmentsandotherassets 2,360
Goodwill 34,427
Totalassetsacquired 90,626

Liabilitiesassumed
Currentliabilities,excludingcurrentportionoflong-termdebt 5,693
Long-termdebt 20,585
Othernoncurrentliabilities 16,585
Totalliabilitiesassumed 42,863
Netassetsacquired 47,763
Noncontrollinginterest (354)
Aggregatevalueofconsiderationpaid $ 47,409

Theseestimatesarepreliminaryinnatureandsubjecttoadjustments,whichcouldbematerial.Anynecessaryadjustmentswillbefinalizedwithinoneyearfromthedateof
acquisition.Substantiallyallthereceivablesacquiredareexpectedtobecollectable.Wehavenotidentifiedanymaterialunrecordedpre-acquisitioncontingencieswherethe
relatedasset,liabilityorimpairmentisprobableandtheamountcanbereasonablyestimated.Goodwilliscalculatedasthedifferencebetweentheacquisitiondatefairvalueof
theconsiderationtransferredandthefairvalueofthenetassetsacquired,andrepresentsthefutureeconomicbenefitsthatweexpecttoachieveasaresultofacquisition.Priorto
thefinalizationofthepurchasepriceallocation,ifinformationbecomesavailablethatwouldindicateitisprobablethatsucheventshadoccurredandtheamountscanbe
reasonablyestimated,suchitemswillbeincludedinthefinalpurchasepriceallocationandmaychangegoodwill.Purchasedgoodwillisnotexpectedtobedeductiblefortax
purposes.ThegoodwillwasallocatedtoourEntertainmentGroupandInternationalsegments.

Forthe160-dayperiodendedDecember31,2015,ourconsolidatedstatementofincomeincluded$14,561ofrevenuesand$(46)ofoperatingincome,whichincluded$2,254of
intangibleamortizationfromDIRECTV,anditsaffiliates.ThefollowingunauditedproformaconsolidatedresultsofoperationsassumethattheacquisitionofDIRECTVwas
completedasofJanuary1,2014.

(Unaudited)
YearEnded
December31,
2015 2014
Totaloperatingrevenues1 $ 165,694 $ 165,595
NetIncomeAttributabletoAT&T 12,683 6,412

BasicEarningsPerShareAttributabletoAT&T $ 2.06 $ 1.04
DilutedEarningsPerShareAttributabletoAT&T $ 2.06 $ 1.04
1Reflectsrevenuedeclinesresultingfromourfourth-quarter2014saleofourConnecticutwirelineoperations.

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Nonrecurringadjustmentsincludedintheproformaresultsaboveconsistofthefollowing:AtJune30,2015,duetothecontinuedeconomicuncertaintyandlackofliquidityin
allthreeoftheofficialcurrencyexchangemechanismsinVenezuela,DIRECTVchangedtheexchangerateusedtomeasureitsVenezuelansubsidiary'smonetaryassetsand
liabilitiesintoU.S.dollarsfromSistemaComplementariodeAdministracindeDivisas(SICAD)toSistemaMarginaldeDivisas(SIMADI).Thesignificantchangeinexchange
ratesalsorequiredthereevaluationoftherecoverabilityoffixedandintangibleassetsandinventory,whichresultedinanimpairmentchargeof$1,060recordedinDIRECTV's
consolidatedstatementofoperationsforthesix-monthperiodendedJune30,2015.PriortoDIRECTV'sJune30,2015changetotheSIMADIexchangerate,operatingresults
forthesixmonthsendedJune30,2015weremeasuredusingtheSICADexchangeratewhichresultedinrevenuesinVenezuelaofapproximately$500andoperatingprofit
beforedepreciationandamortizationofapproximately$180.Proformadatamaynotbeindicativeoftheresultsthatwouldhavebeenobtainedhadtheseeventsoccurredatthe
beginningoftheperiodspresented,norisitintendedtobeaprojectionoffutureresults.

NextelMexicoOnApril30,2015,wecompletedouracquisitionofthesubsidiariesofNIIHoldingsInc.,operatingitswirelessbusinessinMexico,for$1,875,including
approximately$427ofnetdebtandotheradjustments.ThesubsidiariesofferedserviceunderthenameNextelMexico.

Thepreliminaryvaluesofassetsacquiredwere:$383inlicenses,$1,293inproperty,plantandequipment,$111incustomerlistsand$112ofgoodwill.Thegoodwillwas
allocatedtoourInternationalsegment.

GSFTelecomOnJanuary16,2015,weacquiredMexicanwirelesscompanyGSFTelecomHoldings,S.A.P.I.deC.V.(GSFTelecom)for$2,500,includingnetdebtof
approximately$700.GSFTelecomofferedserviceunderboththeIusacellandUnefonbrandnamesinMexico.

Thepreliminaryvaluesofassetsacquiredwere:$673inlicenses,$715inproperty,plantandequipment,$374incustomerlists,$26intradenamesand$972ofgoodwill.The
goodwillwasallocatedtoourInternationalsegment.

AWS-3AuctionInJanuary2015,wesubmittedwinningbidsfor251AdvancedWirelessService(AWS)spectrumlicensesintheAWS-3Auction(FCCAuction97)for
$18,189.WeprovidedtheFederalCommunicationsCommission(FCC)aninitialdownpaymentof$921inOctober2014andpaidtheremaining$17,268inthefirstquarterof
2015.

SpectrumAcquisitions

During2015,weacquired$489ofwirelessspectrum,notincludingtheAWSauction.During2014,weacquired$1,263ofwirelessspectrum,not
includingLeapWirelessInternational,Inc.(Leap)discussedbelow.

LeapInMarch2014,weacquiredLeap,aproviderofprepaidwirelessservice,for$15.00peroutstandingshareofLeap'scommonstock,or$1,248(excludingLeap'scashon
hand),plusonenontransferablecontingentvalueright(CVR)pershare.TheCVRwillentitleeachLeapstockholdertoaproratashareofthenetproceedsofthefuturesaleof
theChicago700MHzA-bandFCClicenseheldbyLeap.

Thevaluesofassetsacquiredunderthetermsoftheagreementwere:$3,000inlicenses,$510inproperty,plantandequipment,$520ofcustomerlists,$340fortradenamesand
$248ofgoodwill.ThegoodwillwasallocatedtoourConsumerMobilitysegment.TheestimatedfairvalueofdebtassociatedwiththeacquisitionofLeapwas$3,889,allof
whichwasredeemedormaturedbyJuly31,2014.

Dispositions

ConnecticutWirelineOnOctober24,2014,wesoldourincumbentlocalexchangeoperationsinConnecticutfor$2,018andrecordedapre-taxgainof$76,whichisincluded
in"Otherincome(expense)net,"onourconsolidatedstatementsofincome.Inconjunctionwiththesale,weallocated$743ofgoodwillfromourformerWirelinereporting
unit.Becausethebookvalueofthegoodwilldidnothaveacorrespondingtaxbasis,theresultingnetincomeimpactofthesalewasalossof$360.

AmricaMvilIn2014,wesoldourremainingstakeinAmricaMvilforapproximately$5,885andrecordedapre-taxgainof$1,330,whichisincludedin"Otherincome
(expense)net,"onourconsolidatedstatementsofincome.In2013,wesoldaportionofoursharesinAmricaMvilforapproximately$1,179.AmricaMvilwasaccounted
forasanequitymethodinvestment.

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NotestoConsolidatedFinancialStatements(continued)
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NOTE6.PROPERTY,PLANTANDEQUIPMENT

Property,plantandequipmentissummarizedasfollowsatDecember31:

Lives(years) 2015 2014


Land - $ 1,638 $ 1,567
Buildingsandimprovements 2-44 33,784 32,204
Centralofficeequipment1 3-10 93,643 89,857
Cable,wiringandconduit 15-50 75,784 72,766
Satellites 12-15 2,088 -
Otherequipment 2-23 81,972 74,244
Software 3-5 11,347 8,604
Underconstruction - 5,971 3,053
306,227 282,295
Accumulateddepreciationandamortization 181,777 169,397
Property,plantandequipment-net $ 124,450 $ 112,898
1Includescertainnetworksoftware.

Ourdepreciationexpensewas$19,289in2015,$17,773in2014and$17,722in2013.Depreciationexpenseincludedamortizationofsoftwaretotaling$1,660in2015,$1,504in
2014and$2,142in2013.

Weperiodicallyassessournetworkassetsforimpairment,andouranalyseshaveindicatednoimpairment.During2014,duetodecliningcustomerdemandforourlegacyvoice
anddataproductsandthemigrationofournetworkstonextgenerationtechnologies,wedecidedtoabandoninplacespecificcoppernetworkassetsclassifiedascable,wiring
andconduit.Theseabandonedassetshadagrossbookvalueofapproximately$7,141,withaccumulateddepreciationof$5,021.In2014,werecordeda$2,120noncashcharge
forthisabandonment,whichisincludedin"Abandonmentofnetworkassets"onourconsolidatedstatementsofincome.

Certainfacilitiesandequipmentusedinoperationsareleasedunderoperatingorcapitalleases.Rentalexpensesunderoperatingleaseswere$5,025for2015,$4,345for2014
and$3,683for2013.AtDecember31,2015,thefutureminimumrentalpaymentsundernoncancelableoperatingleasesfortheyears2016through2020were$3,775,$3,551,
$3,257,$3,003and$2,771,with$12,488duethereafter.Certainrealestateoperatingleasescontainrenewaloptionsthatmaybeexercised.Capitalleasesarenotsignificant.

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NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

NOTE7.GOODWILLANDOTHERINTANGIBLEASSETS

AspartofourorganizationalrealignmentdiscussedinNote4,thegoodwillfromthepreviousWirelesssegmentwasallocatedtotheBusinessSolutionsandConsumerMobility
segmentsandthegoodwillfromthepreviousWirelinesegmentwasallocatedtotheBusinessSolutionsandEntertainmentGroupsegments.Theallocationswerebasedonthe
relativefairvalueoftheportionsofthepreviousWirelessandWirelinesegmentswhichweremovedintothenewBusinessSolutions,EntertainmentGroupandConsumer
Mobilitysegments.

Thefollowingtablesetsforththechangesinthecarryingamountsofgoodwillbysegment,whichisthesameasreportingunitforBusinessSolutions,EntertainmentGroupand
ConsumerMobility.TheInternationalsegmenthasthreereportingunits:MexicoWireless,BrazilandPanAmericana.

Business Entertainment Consumer


Wireless Wireline Solutions Group Mobility International Total
BalanceasofDecember31,
2013 $ 36,106 $ 33,167 $ - $ - $ - $ - $ 69,273
Goodwillacquired 367 - - - - - 367
Other (4) 56 - - - - 52
BalanceasofDecember31,
2014 36,469 33,223 - - - - 69,692
Goodwillacquired 6 - - 30,839 - 4,672 35,517
Foreigncurrency
translation
adjustments - - - - - (638) (638)
Allocationofgoodwill (36,471) (33,226) 45,351 7,834 16,512 - -
Other (4) 3 - - - (2) (3)
BalanceasofDecember
31,2015 $ - $ - $ 45,351 $ 38,673 $ 16,512 $ 4,032 $ 104,568

Themajorityofourgoodwillacquiredduring2015relatedtoouracquisitionsofDIRECTV,NextelMexicoandGSFTelecom.Theallocationofgoodwillrepresentsgoodwill
previouslyassignedtoourWirelessandWirelinesegments.Otherchangestoourgoodwillin2015includeforeigncurrencytranslationadjustmentsandthefinalvaluationof
Leap.Themajorityofourgoodwillacquiredduring2014relatedtoouracquisitionofLeap.Otherchangestoourgoodwillduring2014includeadjustmentstotheamountof
goodwillmovedtoheldforsalein2013relatedtothesaleofourConnecticutwirelineoperations.(SeeNote5)
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NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Ourotherintangibleassetsaresummarizedasfollows:

December31,2015 December31,2014
Gross Currency Gross Currency
Carrying Translation Accumulated Carrying Translation Accumulated
OtherIntangibleAssets Amount Adjustment Amortization Amount Adjustment Amortization
Amortizedintangibleassets:
Customerlistsandrelationships:
Wirelessacquisitions $ 1,055 $ - $ 679 $ 1,082 $ - $ 550
BellSouthCorporation 4,450 - 4,347 5,825 - 5,559
DIRECTV 19,505 (294) 1,807 - - -
AT&TCorp. 33 - 23 56 - 42
Mexicanwireless 485 (60) 110 - - -
Subtotal 25,528 (354) 6,966 6,963 - 6,151
Tradename 2,905 - 424 - - -
Other 686 - 195 275 - 189
Total $ 29,119 $ (354) $ 7,585 $ 7,238 $ - $ 6,340

Indefinite-livedintangibleassetsnotsubjecttoamortization:
Licenses
Wirelesslicenses $ 81,147 $ 60,824
Orbitalslots 11,946 -
Tradenames 6,437 5,241
Total $ 99,530 $ 66,065

Wirelesslicenseadditionsin2015wereprimarilyrelatedtoFCCAuction97,withtheremainderoriginatingfromourMexicobusinessacquisitionsandvariousspectrumlicense
purchases.TheincreaseinorbitalslotsandtradenameswasprimarilyduetotheDIRECTVacquisition.(SeeNote5)

Wereviewindefinite-livedintangibleassetsforimpairmentannually(seeNote1).Licensesincludewirelesslicensesthatprovideuswiththeexclusiverighttoutilizecertain
radiofrequencyspectrumtoprovidewirelesscommunicationsservices,similarlicensesinMexicoandorbitalslotsrepresentingthespaceinwhichweoperatethebroadcast
satellitesthatsupportourdigitalvideoentertainmentserviceofferings.

Amortizedintangibleassetsaredefinite-lifeassets,andassuch,werecordamortizationexpensebasedonamethodthatmostappropriatelyreflectsourexpectedcashflowsfrom
theseassets,overaweighted-averageof8.6years(9.2yearsforcustomerlistsandrelationshipsand4.2yearsforamortizingtradenamesandother).Amortizationexpensefor
definite-lifeintangibleassetswas$2,728fortheyearendedDecember31,2015,$500fortheyearendedDecember31,2014and$672fortheyearendedDecember31,2013.
Amortizationexpenseisestimatedtobe$5,207in2016,$4,623in2017,$3,580in2018,$2,521in2019,and$2,041in2020.

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NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

In2015,wewroteoffapproximately$1,483offullyamortizedintangibleassets(primarilycustomerlists).In2014,wewroteoffapproximately$2,850offullyamortized
intangibleassets(primarilycustomerlists).Wereviewotheramortizingintangibleassetsforimpairmentwhenevereventsorcircumstancesindicatethatthecarryingamount
maynotberecoverableovertheremaininglifeoftheassetorassetgroup.

NOTE8.EQUITYMETHODINVESTMENTS

Investmentsinpartnerships,jointventuresandlessthanmajority-ownedsubsidiariesinwhichwehavesignificantinfluenceareaccountedforundertheequitymethod.

Inthethirdquarterof2015,weacquiredDIRECTV(seeNote5),whichincludedvariousequitymethodinvestments.Theearningsfromtheseinvestments,subsequenttothe
acquisitiondate,areincludedinthe2015activityinthetablebelow,aswellasourconsolidatedstatementofincomefor2015.

OurinvestmentsinequityaffiliatesatDecember31,2015primarilyincludeourinterestsinSKYMexico,GameShowNetwork,OtterMediaHoldings,YPHoldingsLLC(YP
Holdings),MLBNetworkandNWSportsNet.

SKYMexicoWeholda41.0%interestinSKYMexico,whichwasacquiredaspartofDIRECTV.SKYMexicoisaleadingpay-TVproviderinMexico.

GameShowNetwork(GSN)Weholda42.0%interestinGSN,whichwasalsoapartoftheacquisitionofDIRECTV.GSNisatelevisionnetworkdedicatedtogame-related
programmingandInternetinteractivegameplaying.

OtterMediaHoldingsWeholda43.4%interestinOtterMediaHoldings,aventurebetweenTheCherninGroupandAT&Tthatisfocusedonacquiring,investinginand
launchingover-the-topsubscriptionvideoservices.

YPHoldingsWeholda47.0%interestinYPHoldings,anonlineadvertisingcompanyanddirectorypublisher.

MLBNetworkWeholda16.7%interestinMLBNetwork,whichoffersbroadcastsdedicatedtoMajorLeagueBaseballandwasacquiredwithDIRECTV.

NWSportsNetWeholda29.0%interestinNWSportsNet,aregionalsportsnetworkacquiredaspartofDIRECTV.

Thefollowingtableisareconciliationofourinvestmentsinequityaffiliatesaspresentedonourconsolidatedbalancesheets:

2015 2014
Beginningofyear $ 250 $ 3,860
Additionalinvestments 77 226
DIRECTVinvestmentsacquired 1,232 -
Equityinnetincomeofaffiliates 79 175
Dividendsanddistributionsreceived (30) (148)
SaleofAmricaMvilshares - (3,817)
Otheradjustments (2) (46)
Endofyear $ 1,606 $ 250

Undistributedearningsfromequityaffiliateswere$162and$88atDecember31,2015and2014.

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Dollarsinmillionsexceptpershareamounts

NOTE9.DEBT

Long-termdebtofAT&Tanditssubsidiaries,includinginterestratesandmaturities,issummarizedasfollowsatDecember31:

2015 2014
Notesanddebentures1
InterestRates Maturities2
0.49%2.99% 20152022 $ 34,265 $ 22,127
3.00%4.99% 20152046 54,678 31,516
5.00%6.99% 20152095 31,140 23,260
7.00%9.50% 20152097 5,805 6,153
Other 15 -
Fairvalueofinterestrateswapsrecorded
indebt 109 125
126,012 83,181
Unamortized(discount)premium-net (842) (1,549)
Unamortizedissuancecosts (323) (233)
Totalnotesanddebentures 124,847 81,399
Capitalizedleases 884 430
Other 416 -
Totallong-termdebt,includingcurrent
maturities 126,147 81,829
Currentmaturitiesoflong-termdebt (7,632) (6,051)
Totallong-termdebt $ 118,515 $ 75,778
1Includescreditagreementborrowings.
2Maturitiesassumeputabledebtisredeemedbytheholdersatthenextopportunity.

OnJuly24,2015,weadded$20,585inlong-termdebt,includingcapitalleases,relatedtoouracquisitionofDIRECTV.DIRECTV'sdebtincludedbothfixedandfloating-rate
couponswithaweightedaveragerateofapproximately4.6%(rangingfrom1.75%to9.50%)andhadmaturitiesrangingfrom2015to2042.Includedinour"Totalnotesand
debentures"balanceinthetableabovewasthefacevalueofacquireddebtfromDIRECTVof$17,050,whichhadacarryingamountof$17,787atDecember31,2015.

IncludedinthetableaboveatDecember31,2015,wasapproximately$738,representingtheremainingexcessofthefairvalueovertherecordedvalueofdebtinconnection
withtheacquisitionofDIRECTV,allofwhichwasincludedinour"Unamortized(discount)premium-net."Theexcessisamortizedovertheremaininglivesoftheunderlying
debtobligations.

WehadoutstandingEuro,Britishpoundsterling,Canadiandollar,SwissfrancandBrazilianrealdenominateddebtofapproximately$26,221and$24,568atDecember31,2015
and2014.Theweighted-averageinterestrateofourentirelong-termdebtportfolio,includingtheimpactofderivatives,decreasedfrom4.2%atDecember31,2014to4.0%at
December31,2015.

OtherdebtincludesfinancingarrangementswehaveinMexicofortheconstructionofwirelessnetworkfacilitiesthattotaled$416,atDecember31,2015.

Currentmaturitiesoflong-termdebtincludedebtthatmaybeputbacktousbytheholdersin2016.Wehave$1,000ofannualputresetsecuritiesthatmaybeputeachApril
untilmaturityin2021.Iftheholdersdonotrequireustorepurchasethesecurities,theinterestratewillberesetbasedoncurrentmarketconditions.Likewise,wehavean
accretingzero-couponnotethatmayberedeemedeachMay,untilmaturityin2022.Ifthezero-couponnote(issuedforprincipalof$500in2007)isheldtomaturity,the
redemptionamountwillbe$1,030.

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NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

DebtmaturingwithinoneyearconsistedofthefollowingatDecember31:

2015 2014
Currentmaturitiesoflong-termdebt $ 7,632 $ 6,051
Bankborrowings1 4 5
Total $ 7,636 $ 6,056
1Outstandingbalanceofshort-termcreditfacilityofaforeignsubsidiary.

FinancingActivities
During2015,weissued$33,969inlong-termdebtinvariousmarkets,withanaverageweightedmaturityofapproximately12yearsandaweightedaveragecouponof2.7%.We
redeemed$10,042inborrowingsofvariousnoteswithstatedratesof0.80%to9.10%.

During2015wecompletedthefollowinglong-termdebtissuances:
February2015issuanceof$2,619of4.600%globalnotesdue2045.
March2015borrowingsunderavariableratetermloanfacilitydue2018,variableratetermloanfacilitydue2020andvariablerate18-monthcreditagreementdue
2016,togethertotaling$11,155.
March2015issuanceof1,250of1.300%globalnotesdue2023and1,250of2.450%globalnotesdue2035(together,equivalentto$2,844,whenissued).
May2015issuanceof$3,000of2.450%globalnotesdue2020;$2,750of3.000%globalnotesdue2022;$5,000of3.400%globalnotesdue2025;$2,500of4.500%
globalnotesdue2035;$3,500of4.750%globalnotesdue2046;and$750floatingrateglobalnotesdue2020.Thefloatingrateforthenoteisbaseduponthethree-
monthLondonInterbankOfferedRate(LIBOR),resetquarterly,plus93basispoints.

OnFebruary9,2016,wecompletedthefollowinglong-termdebtissuances:
$1,250of2.800%globalnotesdue2021.
$1,500of3.600%globalnotesdue2023.
$1,750of4.125%globalnotesdue2026.
$1,500of5.650%globalnotesdue2047.

AsofDecember31,2015and2014,wewereincompliancewithallcovenantsandconditionsofinstrumentsgoverningourdebt.Substantiallyallofouroutstandinglong-term
debtisunsecured.Maturitiesofoutstandinglong-termnotesanddebentures,asofDecember31,2015,andthecorrespondingweighted-averageinterestratescheduledfor
repaymentareasfollows:

2016 2017 2018 2019 2020 Thereafter


Debtrepayments1 $ 7,383 $ 7,789 $ 13,058 $ 7,863 $ 9,459 $ 83,891
Weighted-averageinterestrate 2.8% 2.3% 3.5% 3.9% 3.2% 4.8%
1 Debtrepaymentsassumeputabledebtisredeemedbytheholdersatthenextopportunity.

CreditFacilities
OnDecember11,2015,weenteredintoafive-year,$12,000creditagreement(the"RevolvingCreditAgreement")withCitibank,N.A.(Citibank),asadministrativeagent,
replacingour$5,000creditagreementthatwouldhaveexpiredinDecember2018.Atthesametime,AT&Tandthelendersterminatedtheirobligationsundertheexisting
revolving$3,000creditagreementwithCitibankthatwouldhaveexpiredinDecember2017.

InJanuary2015,weenteredintoa$9,155creditagreement(the"SyndicatedCreditAgreement")containing(i)a$6,286termloanfacility(the"TrancheAFacility")and(ii)a
$2,869termloanfacility(the"TrancheBFacility"),withcertaininvestmentandcommercialbanksandMizuhoBank,Ltd.("Mizuho"),asadministrativeagent.Wealsoentered
intoa$2,00018-monthcreditagreement(the"18-MonthCreditAgreement")withMizuhoasinitiallenderandagent.OnDecember11,2015,AT&TamendedtheSyndicated
CreditAgreementandthe18-MonthCreditAgreementto,amongotherthings,revisethefinancialcovenanttomatchthefinancialcovenantintheRevolvingCreditAgreement.

65
NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

Revolving
Credit
Agreement
IntheeventadvancesaremadeundertheRevolvingCreditAgreement,thoseadvanceswouldbeusedforgeneralcorporatepurposes.Advancesarenotconditionedonthe
absenceofamaterialadversechange.Alladvancesmustberepaidnolaterthanthedateonwhichlendersarenolongerobligatedtomakeanyadvancesundertheagreement.
Wecanterminate,inwholeorinpart,amountscommittedbythelendersinexcessofanyoutstandingadvances;however,wecannotreinstateanysuchterminatedcommitments.
Wealsomayrequestthatthetotalamountofthelender'scommitmentsbeincreasedbyanintegralmultipleof$25effectiveonadatethatisatleast90dayspriortothe
scheduledterminationdatethenineffect,providedthatnoeventofdefaulthasoccurredandinnoeventshallthetotalamountofthelender'scommitmentsatanytimeexceed
$14,000.AtDecember31,2015,wehadnoadvancesoutstandingundertheRevolvingCreditAgreementandwehavecompliedwillallcovenants.

TheobligationsofthelenderstoprovideadvanceswillterminateonDecember11,2020,unlesspriortothatdateeither:(i)AT&Treducesto$0thecommitmentsofthelenders,
or(ii)certaineventsofdefaultoccur.Weandlendersrepresentingmorethan50%ofthefacilityamountmayagreetoextendtheircommitmentsfortwoone-yearperiods
beyondtheDecember11,2020,terminationdate,undercertaincircumstances.

AdvancesundertheRevolvingCreditAgreementwouldbearinterest,atAT&T'soption,either:
atavariableannualrateequalto(1)thehighestof:(a)thebaserateofthebankaffiliateofCitibank,N.A.whichisservingasadministrativeagentunderthe
Agreement,(b)0.50%perannumabovetheFederalfundsrate,and(c)theLIBORapplicabletoU.S.dollarsforaperiodofonemonthplus1.00%perannum,plus(2)
anapplicablemargin,assetforthintheRevolvingCreditAgreement("ApplicableMarginforBaseAdvances");or
atarateequalto:(i)LIBORforaperiodofone,two,threeorsixmonths,asapplicable,plus(ii)theApplicableMargin("ApplicableMarginforEurocurrencyRate
Advances").

TheApplicableMarginforEurocurrencyRateAdvanceswillequal0.680%,0.910%,1.025%,or1.125%perannum,dependingonAT&T'screditrating.TheApplicableMargin
forBaseRateAdvanceswillbeequaltothegreaterof0.00%andtherelevantApplicableMarginforEurocurrencyRateAdvancesminus1.00%perannumdependingon
AT&T'screditrating.

Wewillpayafacilityfeeof0.070%,0.090%,0.100%or0.125%perannum,dependingonAT&T'screditrating,oftheamountoflendercommitments.

TheRevolvingCreditAgreementcontainscovenantsthatarecustomaryforanissuerwithaninvestmentgradeseniordebtcreditrating,aswellasanetdebt-to-EBITDA
(earningsbeforeinterest,taxes,depreciationandamortization,andothermodificationsdescribedintheRevolvingCreditAgreement)financialratiocovenantthatAT&Twill
maintain,asofthelastdayofeachfiscalquarter,aratioofnotmorethan3.5-to-1.

The
Syndicated
Credit
Agreement
InMarch2015,AT&TborrowedallamountsavailableundertheTrancheAFacilityandtheTrancheBFacility.AmountsborrowedundertheTrancheAFacilitywillbedueon
March2,2018.AmountsborrowedundertheTrancheBFacilitywillbesubjecttoamortizationfromMarch2,2018,with25percentoftheaggregateprincipalamountthereof
beingpayablepriortoMarch2,2020,andallremainingprincipalamountdueonMarch2,2020.

Advancesbearinterestatarateequalto:(i)theLIBORfordepositsindollars(adjustedupwardstoreflectanybankreservecosts)foraperiodofthreeorsixmonths,as
applicable,plus(ii)theApplicableMargin(eachsuchAdvance,aEurodollarRateAdvance).TheApplicableMarginundertheTrancheAFacilitywillequal1.000%,1.125%or
1.250%perannumdependingonAT&T'screditrating.TheApplicableMarginundertheTrancheBFacilitywillequal1.125%,1.250%or1.375%perannum,dependingon
AT&T'screditrating.

TheSyndicatedCreditAgreementcontainscovenantsthatarecustomaryforanissuerwithaninvestmentgradeseniordebtcreditrating.Amongotherthings,theSyndicated
CreditAgreementrequiresustomaintainanetdebt-to-EBITDA(earningsbeforeinterest,incometaxes,depreciationandamortization,andothermodificationsdescribedinthe
SyndicatedCreditAgreement)ratioofnotmorethan3.5-to-1,asofthelastdayofeachfiscalquarter.

Eventsofdefaultarecustomaryforanagreementofthisnatureandresultintheaccelerationorpermitthelenderstoaccelerate,asapplicable,requiredpaymentandwhichwould
increasetheApplicableMarginby2.00%perannum.

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The
18-Month
Credit
Agreement
InMarch2015,AT&Tborrowedallamountsavailableunderthe18-MonthCreditAgreement.Amountsborrowedunderthe18-MonthCreditAgreementwillbedueand
payableonSeptember2,2016.InSeptember2015,wepartiallyrepaidtheamountborrowed.

Advancesbearinterestatarateequalto:(i)theLIBORfordepositsindollars(adjustedupwardstoreflectanybankreservecosts)foraperiodofone,two,threeorsixmonths,
asapplicable,plus(ii)theApplicableMargin(eachsuchAdvance,aEurodollarRateAdvance).TheApplicableMarginwillequal0.800%,0.900%or1.000%perannum,
dependingonAT&T'screditrating.IntheeventthatAT&T'sunsecuredseniorlong-termdebtratingsaresplitbyS&P,Moody'sandFitch,thentheApplicableMarginwillbe
determinedbythehighestrating,unlessthelowestofsuchratingsismorethanonelevelbelowthehighestofsuchratings,inwhichcasethepricingwillbetheratingthatisone
levelabovethelowestofsuchratings.

The18-MonthCreditAgreementcontainsaffirmativeandnegativecovenantsandeventsofdefaultequivalenttothosecontainedintheSyndicatedCreditAgreement.

NOTE10.FAIRVALUEMEASUREMENTSANDDISCLOSURE

TheFairValueMeasurementandDisclosureframeworkprovidesathree-tieredfairvaluehierarchythatgiveshighestprioritytounadjustedquotedpricesinactivemarketsfor
identicalassetsorliabilities(Level1measurements)andthelowestprioritytounobservableinputs(Level3measurements).Thethreelevelsofthefairvaluehierarchyare
describedbelow:

Level1 Inputstothevaluationmethodologyareunadjustedquotedpricesforidenticalassetsorliabilitiesinactivemarketsthatwehavetheabilitytoaccess.

Level2 Inputstothevaluationmethodologyinclude:
Quotedpricesforsimilarassetsandliabilitiesinactivemarkets.
Quotedpricesforidenticalorsimilarassetsorliabilitiesininactivemarkets.
Inputsotherthanquotedmarketpricesthatareobservablefortheassetorliability.
Inputsthatarederivedprincipallyfromorcorroboratedbyobservablemarketdatabycorrelationorothermeans.

Level3 Inputstothevaluationmethodologyareunobservableandsignificanttothefairvaluemeasurement.
Fairvalueisoftenbasedondevelopedmodelsinwhichtherearefew,ifany,externalobservations.

Thefairvaluemeasurementslevelofanassetorliabilitywithinthefairvaluehierarchyisbasedonthelowestlevelofanyinputthatissignificanttothefairvaluemeasurement.
Valuationtechniquesusedshouldmaximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.

Thevaluationmethodologiesdescribedabovemayproduceafairvaluecalculationthatmaynotbeindicativeoffuturenetrealizablevalueorreflectiveoffuturefairvalues.We
believeourvaluationmethodsareappropriateandconsistentwithothermarketparticipants.Theuseofdifferentmethodologiesorassumptionstodeterminethefairvalueof
certainfinancialinstrumentscouldresultinadifferentfairvaluemeasurementatthereportingdate.TherehavebeennochangesinthemethodologiesusedsinceDecember31,
2014.

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Long-TermDebtandOtherFinancialInstruments
Thecarryingamountsandestimatedfairvaluesofourlong-termdebt,includingcurrentmaturitiesandotherfinancialinstruments,aresummarizedasfollows:

December31,2015 December31,2014
Carrying Fair Carrying Fair
Amount Value Amount Value
Notesanddebentures1 $ 124,847 $ 128,993 $ 81,399 $ 90,367
Bankborrowings 4 4 5 5
Investmentsecurities 2,704 2,704 2,735 2,735
1Includescreditagreementborrowings.

Thecarryingvalueofdebtwithanoriginalmaturityoflessthanoneyearapproximatesfairvalue.Thefairvaluemeasurementsusedfornotesanddebenturesareconsidered
Level2andaredeterminedusingvariousmethods,includingquotedpricesforidenticalorsimilarsecuritiesinbothactiveandinactivemarkets.

Followingisthefairvaluelevelingforavailable-for-salesecuritiesandderivativesasofDecember31,2015,andDecember31,2014:

December31,2015
Level1 Level2 Level3 Total
Available-for-SaleSecurities
Domesticequities $ 1,132 $ - $ - $ 1,132
Internationalequities 569 - - 569
Fixedincomebonds - 680 - 680
AssetDerivatives1
Interestrateswaps - 136 - 136
Cross-currencyswaps - 556 - 556
Foreignexchangecontracts - 3 - 3
LiabilityDerivatives1
Cross-currencyswaps - (3,466) - (3,466)

December31,2014
Level1 Level2 Level3 Total
Available-for-SaleSecurities
Domesticequities $ 1,160 $ - $ - $ 1,160
Internationalequities 553 - - 553
Fixedincomebonds - 836 - 836
AssetDerivatives1
Interestrateswaps - 157 - 157
Cross-currencyswaps - 1,243 - 1,243
Interestratelocks - 5 - 5
LiabilityDerivatives1
Cross-currencyswaps - (1,506) - (1,506)
Interestratelocks - (133) - (133)
1Derivativesdesignatedashedginginstrumentsarereflectedas"Otherassets,""Othernoncurrentliabilities"and,foraportionofinterestrateswaps,"Othercurrentassets"inour
consolidatedbalancesheets.

InvestmentSecurities
Ourinvestmentsecuritiesincludeequities,fixedincomebondsandothersecurities.Asubstantialportionofthefairvaluesofouravailable-for-salesecuritieswasestimated
basedonquotedmarketprices.Investmentsinsecuritiesnottradedonanationalsecuritiesexchangearevaluedusingpricingmodels,quotedpricesofsecuritieswithsimilar
characteristicsordiscountedcashflows.Realizedgainsandlossesonsecuritiesareincludedin"Otherincome(expense)net"intheconsolidatedstatementsofincomeusing
thespecificidentificationmethod.Unrealizedgainsandlosses,netoftax,onavailable-for-salesecuritiesarerecordedinaccumulatedOCI.Unrealizedlossesthatareconsidered
otherthantemporaryarerecordedin"Otherincome(expense)net"withthecorrespondingreductiontothecarryingbasisoftheinvestment.Fixedincomeinvestmentsof$95
havematuritiesoflessthanoneyear,$320withinonetothreeyears,$52withinthreetofiveyears,and$213forfiveormoreyears.

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Ourcashequivalents(moneymarketsecurities),short-terminvestments(certificateandtimedeposits)andcustomerdepositsarerecordedatamortizedcost,andtherespective
carryingamountsapproximatefairvalues.Short-terminvestmentsandcustomerdepositsarerecordedin"Othercurrentassets"andourinvestmentsecuritiesarerecordedin
"Otherassets"ontheconsolidatedbalancesheets.

DerivativeFinancialInstruments
Weemployderivativestomanagecertainmarketrisks,primarilyinterestrateriskandforeigncurrencyexchangerisk.Thisincludestheuseofinterestrateswaps,interestrate
locks,foreignexchangeforwardcontractsandcombinedinterestrateforeignexchangecontracts(cross-currencyswaps).Wedonotusederivativesfortradingorspeculative
purposes.Werecordderivativesonourconsolidatedbalancesheetsatfairvaluethatisderivedfromobservablemarketdata,includingyieldcurvesandforeignexchangerates
(allofourderivativesareLevel2).Cashflowsassociatedwithderivativeinstrumentsarepresentedinthesamecategoryontheconsolidatedstatementsofcashflowsastheitem
beinghedged.

Themajorityofourderivativesaredesignatedeitherasahedgeofthefairvalueofarecognizedassetorliabilityorofanunrecognizedfirmcommitment(fairvaluehedge),oras
ahedgeofaforecastedtransactionorofthevariabilityofcashflowstobereceivedorpaidrelatedtoarecognizedassetorliability(cashflowhedge).

Fair
Value
Hedging
Wedesignateourfixed-to-floatinginterestrateswapsasfairvaluehedges.Thepurposeoftheseswapsistomanageinterestrateriskbymanagingourmix
offixed-rateandfloating-ratedebt.Theseswapsinvolvethereceiptoffixed-rateamountsforfloatinginterestratepaymentsoverthelifeoftheswapswithoutexchangeofthe
underlyingprincipalamount.Accruedandrealizedgainsorlossesfrominterestrateswapsimpactinterestexpenseintheconsolidatedstatementsofincome.Unrealizedgainson
interestrateswapsarerecordedatfairmarketvalueasassets,andunrealizedlossesoninterestrateswapsarerecordedatfairmarketvalueasliabilities.Changesinthefair
valuesoftheinterestrateswapsareexactlyoffsetbychangesinthefairvalueoftheunderlyingdebt.Gainsorlossesrealizeduponearlyterminationofourfairvaluehedgesare
recognizedininterestexpense.IntheyearsendedDecember31,2015,andDecember31,2014,noineffectivenesswasmeasuredoninterestrateswapsdesignatedasfairvalue
hedges.

Cash
Flow
Hedging
Wedesignateourcross-currencyswapsascashflowhedges.Wehaveenteredintomultiplecross-currencyswapstohedgeourexposuretovariabilityin
expectedfuturecashflowsthatareattributabletoforeigncurrencyriskgeneratedfromtheissuanceofourEuro,Britishpoundsterling,CanadiandollarandSwissFranc
denominateddebt.TheseagreementsincludeinitialandfinalexchangesofprincipalfromfixedforeigndenominationstofixedU.S.denominatedamounts,tobeexchangedata
specifiedrate,usuallydeterminedbythemarketspotrateuponissuance.Theyalsoincludeaninterestrateswapofafixedorfloatingforeign-denominatedratetoafixedU.S.
denominatedinterestrate.

Unrealizedgainsonderivativesdesignatedascashflowhedgesarerecordedatfairvalueasassets,andunrealizedlossesonderivativesdesignatedascashflowhedgesare
recordedatfairvalueasliabilities,bothfortheperiodtheyareoutstanding.Forderivativeinstrumentsdesignatedascashflowhedges,theeffectiveportionisreportedasa
componentofaccumulatedOCIuntilreclassifiedintointerestexpenseinthesameperiodthehedgedtransactionaffectsearnings.Thegainorlossontheineffectiveportionis
recognizedas"Otherincome(expense)net"intheconsolidatedstatementsofincomeineachperiod.Weevaluatetheeffectivenessofourcross-currencyswapseachquarter.
IntheyearsendedDecember31,2015,andDecember31,2014,noineffectivenesswasmeasuredoncross-currencyswapsdesignatedascashflowhedges.

Periodically,weenterintoanddesignateinterestratelockstopartiallyhedgetheriskofchangesininterestpaymentsattributabletoincreasesinthebenchmarkinterestrate
duringtheperiodleadinguptotheprobableissuanceoffixed-ratedebt.Wedesignateourinterestratelocksascashflowhedges.Gainsandlosseswhenwesettleourinterest
ratelocksareamortizedintoincomeoverthelifeoftherelateddebt,exceptwhereamaterialamountisdeemedtobeineffective,whichwouldbeimmediatelyreclassifiedto
"Otherincome(expense)net"intheconsolidatedstatementsofincome.IntheyearsendedDecember31,2015,andDecember31,2014,noineffectivenesswasmeasuredon
interestratelocks.Overthenext12months,weexpecttoreclassify$59fromaccumulatedOCItointerestexpenseduetotheamortizationofnetlossesonhistoricalinterestrate
locks.

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Wehedgeaportionoftheexchangeriskinvolvedinanticipationofhighlyprobableforeigncurrency-denominatedtransactions.Inanticipationofthesetransactions,weoften
enterintoforeignexchangecontractstoprovidecurrencyatafixedrate.Gainsandlossesatthetimewesettleortakedeliveryonourdesignatedforeignexchangecontractsare
amortizedintoincomeinthesameperiodthehedgedtransactionaffectsearnings,exceptwhereanamountisdeemedtobeineffective,whichwouldbeimmediatelyreclassified
to"Otherincome(expense)net"intheconsolidatedstatementsofincome.IntheyearsendedDecember31,2015,andDecember31,2014,noineffectivenesswasmeasuredon
foreignexchangecontractsdesignatedascashflowhedges.

Collateral
and
Credit-Risk
Contingency
Wehaveenteredintoagreementswithourderivativecounterpartiesestablishingcollateralthresholdsbasedonrespectivecreditratings
andnettingagreements.AtDecember31,2015,wehadpostedcollateralof$2,343(adepositasset)andheldcollateralof$124(areceiptliability).Undertheagreements,ifour
creditratinghadbeendowngradedoneratinglevelbyFitchRatings,beforethefinalcollateralexchangeinDecember,wewouldhavebeenrequiredtopostadditionalcollateral
of$105.IfDIRECTVHoldingsLLC'screditratinghadbeendowngradedbelowBBB-(S&P)andbelowBaa3(Moody's)wewouldoweanadditional$163.AtDecember31,
2014,wehadpostedcollateralof$530(adepositasset)andheldcollateralof$599(areceiptliability).Wedonotoffsetthefairvalueofcollateral,whethertherighttoreclaim
cashcollateral(areceivable)ortheobligationtoreturncashcollateral(apayable)exists,againstthefairvalueofthederivativeinstruments.

Followingisthenotionalamountofouroutstandingderivativepositions:

2015 2014
Interestrateswaps $ 7,050 $ 6,550
Cross-currencyswaps 29,642 26,505
Interestratelocks - 6,750
Foreignexchangecontracts 100 -
Total $ 36,792 $ 39,805

Followingistherelatedhedgeditemsaffectingourfinancialpositionandperformance:

EffectofDerivativesontheConsolidatedStatementsofIncome
FairValueHedgingRelationships
FortheyearsendedDecember31, 2015 2014 2013
Interestrateswaps(Interestexpense):
Gain(Loss)oninterestrateswaps $ (16) $ (29) $ (113)
Gain(Loss)onlong-termdebt 16 29 113

Inaddition,thenetswapsettlementsthataccruedandsettledintheperiodsabovewereincludedininterestexpense.

CashFlowHedgingRelationships
FortheyearendedDecember31, 2015 2014 2013
Cross-currencyswaps:
Gain(Loss)recognizedinaccumulatedOCI $ (813) $ 528 $ 813
Interestratelocks:
Gain(Loss)recognizedinaccumulatedOCI (361) (128) -
Interestincome(expense)reclassifiedfrom
accumulatedOCIintoincome (58) (44) (46)
Foreignexchangecontracts:
Gain(Loss)recognizedinaccumulatedOCI - - (2)

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NOTE11.INCOMETAXES

Significantcomponentsofourdeferredtaxliabilities(assets)areasfollowsatDecember31:

2015 2014
Depreciationandamortization $ 59,879 $ 47,082
Intangibles(nonamortizable) 6,920 1,874
Employeebenefits (10,517) (11,679)
Deferredfulfillmentcosts 2,172 2,035
Netoperatinglossandothercarryforwards (4,029) (2,126)
Othernet (1,478) 68
Subtotal 52,947 37,254
Deferredtaxassetsvaluationallowance 2,141 1,182
Netdeferredtaxliabilities $ 55,088 $ 38,436

Noncurrentdeferredtaxliabilities $ 56,181 $ 38,436
Less:Noncurrentdeferredtaxassets (1,093) -
Netdeferredtaxliabilities $ 55,088 $ 38,436

AtDecember31,2015,wehadcombinednetoperatinglosscarryforwards(taxeffected)forfederalincometaxpurposesof$106,stateof$851andforeignof$1,676,expiring
through2031.Additionally,wehadfederalcreditcarryforwardsof$134andstatecreditcarryforwardsof$1,262,expiringprimarilythrough2035.Theincreaseinournet
operatinglosscarryforwardswasprimarilyduetoouracquisitionsofGSFTelecom,NextelMexicoandDIRECTV.

Werecognizeavaluationallowanceif,basedontheweightofavailableevidence,itismorelikelythannotthatsomeportion,orall,ofadeferredtaxassetwillnotberealized.
OurvaluationallowancesatDecember31,2015and2014relatedprimarilytostateandforeignnetoperatinglossesandstatecreditcarryforwards.Theincreaseinourvaluation
allowancewasprimarilyduetoour2015acquisitions.

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Werecognizethefinancialstatementeffectsofataxreturnpositionwhenitismorelikelythannot,basedonthetechnicalmerits,thatthepositionwillultimatelybesustained.
Fortaxpositionsthatmeetthisrecognitionthreshold,weapplyourjudgment,takingintoaccountapplicabletaxlaws,ourexperienceinmanagingtaxauditsandrelevantGAAP,
todeterminetheamountoftaxbenefitstorecognizeinourfinancialstatements.Foreachposition,thedifferencebetweenthebenefitrealizedonourtaxreturnandthebenefit
reflectedinourfinancialstatementsisrecordedonourconsolidatedbalancesheetsasanunrecognizedtaxbenefit(UTB).WeupdateourUTBsateachfinancialstatementdate
toreflecttheimpactsofauditsettlementsandotherresolutionsofauditissues,theexpirationofstatutesoflimitation,developmentsintaxlawandongoingdiscussionswith
taxingauthorities.AreconciliationofthechangeinourUTBbalancefromJanuary1toDecember31for2015and2014isasfollows:

Federal,StateandForeignTax 2015 2014


Balanceatbeginningofyear $ 4,465 $ 4,227
Increasesfortaxpositionsrelatedtothecurrentyear 1,333 470
Increasesfortaxpositionsrelatedtoprioryears 660 484
Decreasesfortaxpositionsrelatedtoprioryears (396) (657)
Lapseofstatuteoflimitations (16) (38)
Settlements 10 (21)
Currentyearacquisitions 864 -
Foreigncurrencyeffects (22) -
Balanceatendofyear 6,898 4,465
Accruedinterestandpenalties 1,138 973
Grossunrecognizedincometaxbenefits 8,036 5,438
Less:Deferredfederalandstateincometaxbenefits (582) (434)
Less:Taxattributabletotimingitemsincludedabove (3,460) (2,400)
Less:UTBsincludedabovethatrelatetoacquisitionsthatwouldimpactgoodwill
ifrecognizedduringthemeasurementperiod (842) -
TotalUTBthat,ifrecognized,wouldimpactthe
effectiveincometaxrateasoftheendoftheyear $ 3,152 $ 2,604

PeriodicallywemakedepositstotaxingjurisdictionswhichreduceourUTBbalancebutarenotincludedinthereconciliationabove.Theamountofdepositsthatreducedour
UTBbalancewas$3,027atDecember31,2015,and$2,258atDecember31,2014.

AccruedinterestandpenaltiesincludedinUTBswere$1,138asofDecember31,2015,and$973asofDecember31,2014.Werecordinterestandpenaltiesrelatedtofederal,
stateandforeignUTBsinincometaxexpense.Thenetinterestandpenaltyexpense(benefit)includedinincometaxexpensewas$83for2015,$(64)for2014,and$35for
2013.

WefileincometaxreturnsintheU.S.federaljurisdictionandvariousstate,localandforeignjurisdictions.Asalargetaxpayer,ourincometaxreturnsareregularlyauditedby
theInternalRevenueService(IRS)andothertaxingauthorities.TheIRShascompletedfieldexaminationsofourtaxreturnsthrough2010.Allauditperiodspriorto2003are
closedforfederalexaminationpurposes.Contestedissuesfromour2003through2010returnsareatvariousstagesofresolutionwiththeIRSAppealsDivision;weareunableto
estimatetheimpacttheresolutionoftheseissuesmayhaveonourUTBs.

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Thecomponentsofincometax(benefit)expenseareasfollows:

2015 2014 2013


Federal:
Current $ 2,496 $ 1,610 $ 3,044
Deferred 3,828 2,060 5,783
6,324 3,670 8,827
Stateandlocal:
Current 72 (102) (132)
Deferred 671 (73) 596
743 (175) 464
Foreign:
Current 320 163 71
Deferred (382) (39) (34)
(62) 124 37
Total $ 7,005 $ 3,619 $ 9,328

"IncomeBeforeIncomeTaxes"intheConsolidatedStatementsofIncomeincludedthefollowingcomponentsfortheyearsendedDecember31:

2015 2014 2013


U.S.incomebeforeincometaxes $ 21,519 $ 10,244 $ 27,903
Foreignincome(loss)beforeincometaxes (827) 111 147
Total $ 20,692 $ 10,355 $ 28,050

Areconciliationofincometaxexpense(benefit)andtheamountcomputedbyapplyingthestatutoryfederalincometaxrate(35%)toincomefromcontinuingoperationsbefore
incometaxesisasfollows:

2015 2014 2013


Taxescomputedatfederalstatutoryrate $ 7,242 $ 3,624 $ 9,818
Increases(decreases)inincometaxesresultingfrom:
Stateandlocalincometaxesnetoffederalincometaxbenefit 483 (113) 302
Connecticutwirelinesale - 350 -
LossofforeigntaxcreditsinconnectionwithAmricaMvilsale - 386 -
Othernet (720) (628) (792)
Total $ 7,005 $ 3,619 $ 9,328
EffectiveTaxRate 33.9% 34.9% 33.3%

NOTE12.PENSIONANDPOSTRETIREMENTBENEFITS

PensionBenefitsandPostretirementBenefits
SubstantiallyallofourU.S.employeesarecoveredbyoneofournoncontributorypensionplans.Themajorityofournewlyhiredemployees,longer-servicemanagementand
somenonmanagementemployeesparticipateincashbalancepensionprogramsthatincludeannualormonthlycreditsbasedonsalaryaswellasaninterestcredit.Otherlonger-
servicemanagementemployeesparticipateinpensionprogramsthathaveatraditionalpensionformula(i.e.,astatedpercentageofemployees'adjustedcareerincome).Other
longer-servicenonmanagementemployees'pensionbenefitsaregenerallycalculatedusingoneoftwoformulas:aflatdollaramountappliedtoyearsofserviceaccordingtojob
classificationoracashbalanceplanwithnegotiatedannualpensionbandcreditsaswellasinterestcredits.Mostnonmanagementemployeescanelecttoreceivetheirpension
benefitsineitheralumpsumpaymentoranannuity.EffectiveJanuary1,2015,thepensionplanwasamendedsothatnewmanagementhiresarenolongereligiblefortheplan.

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Wealsoprovideavarietyofmedical,dentalandlifeinsurancebenefitstocertainretiredemployeesundervariousplansandaccrueactuariallydeterminedpostretirementbenefit
costsasactiveemployeesearnthesebenefits.

WeacquiredDIRECTVonJuly24,2015.DIRECTVsponsorsanoncontributorydefinedbenefitpensionplan,whichprovidesbenefitstomostemployeesbasedoneitheryears
ofserviceandfinalaveragesalary,oreligiblecompensationwhileemployedbyDIRECTV.DIRECTValsomaintains(1)apostretirementbenefitplanforthoseretireeseligible
toparticipateinhealthcareandlifeinsurancebenefitsgenerallyuntiltheyreachage65and(2)anunfundednonqualifiedpensionplanforcertaineligibleemployees.Wehave
recordedthefairvalueoftheDIRECTVplansusingassumptionsandaccountingpoliciesconsistentwiththosedisclosedbyAT&T.Uponacquisition,theexcessofprojected
benefitobligationovertheplanassetswasrecognizedasaliabilityandpreviouslyexistingdeferredactuarialgainsandlossesandunrecognizedservicecostsorbenefitswere
eliminated.

InDecember2014,weannouncedanopportunityforcertainmanagementemployeeswhoareretirementeligibleasofMarch31,2015toelectanenhanced,fulllumpsum
paymentoptionoftheiraccruedpensioniftheyretireonorbeforeMarch31,2015.Thelumpsumvaluetotaledapproximately$1,200whichwasdistributedin2015.We
recordedspecialterminationbenefitsof$149asaresultoftheoffer.

InOctober2013,weofferedanopportunityforcertainretirement-eligibleemployeestoelectafulllumpsumpaymentoftheiraccruedpensioniftheyretiredasofDecember30,
2013.ThelumpsumvaluewascalculatedusingtheAugust2012discountratesforsomepensionprogramsandwasequaltothecashbalanceamountforthemanagementnew
hirepensionprogram.Thelumpsumvaluetotaledapproximately$2,700,whichwasdistributedin2014.Werecordedspecialterminationbenefitsof$15in2014and$250in
2013asaresultofthisoffer.

InOctober2013,aspartofour2014annualbenefitsenrollmentprocess,wealsocommunicatedanamendmenttoourMedicare-eligibleretireesthat,beginningin2015,AT&T
wouldprovideaccesstoretireehealthinsurancecoveragethatsupplementsgovernment-sponsoredMedicarethroughaprivateinsurancemarketplace.Theplanwasfurther
amendedin2014toincludeaccesstodentalbenefitsthroughtheprivateinsurancemarketplace.Thisnewapproachallowedretireestochooseinsurancewiththeterms,costand
coveragethatbestfittheirneeds,whilestillreceivingfinancialsupportasdeterminedbyAT&T.Futurechangesinsupport,ifany,willbebasedonanumberoffactorssuchas
businessconditions,governmentactions,marketplacechangesandthegeneralconsumerinflationrate.

Inthefourthquarterof2014,wechangedthemethodweusetoestimatetheserviceandinterestcomponentsofnetperiodicbenefitcostforpension(asofOctober1,2014)and
otherpostretirementbenefits(asofDecember31,2014).Thischangedidnotaffectthemeasurementofourtotalbenefitobligationsorourannualnetperiodicbenefitcostasthe
changeinserviceandinterestcostswascompletelyoffsetintheactuarial(gain)lossreported.Thischangecomparedtothepreviousmethodresultedinadecreaseof$150inthe
serviceandinterestcomponentsforpensioncostinthefourthquarterof2014.FortheyearendedDecember31,2015,thechangeresultedinanincrementaldecreaseof$740in
serviceandinterestcomponentsforpensionandpostretirementcosts.Priortothefourthquarterof2014,weestimatedtheseserviceandinterestcostcomponentsutilizinga
singleweighted-averagediscountratederivedfromtheyieldcurveusedtomeasurethebenefitobligationatthebeginningoftheperiod.Wehaveelectedtoutilizeafullyield
curveapproachintheestimationofthesecomponentsbyapplyingthespecificspotratesalongtheyieldcurveusedinthedeterminationofthebenefitobligationtotherelevant
projectedcashflows.Wehavemadethischangetoprovideamoreprecisemeasurementofserviceandinterestcostsbyimprovingthecorrelationbetweenprojectedbenefitcash
flowstothecorrespondingspotyieldcurverates.Wehaveaccountedforthischangeasachangeinaccountingestimatethatisinseparablefromachangeinaccountingprinciple
andaccordinglyhaveaccountedforitprospectively.

ObligationsandFundedStatus
Fordefinedbenefitpensionplans,thebenefitobligationisthe"projectedbenefitobligation,"theactuarialpresentvalue,asofourDecember31measurementdate,ofallbenefits
attributedbythepensionbenefitformulatoemployeeservicerenderedtothatdate.Theamountofbenefittobepaiddependsonanumberoffutureeventsincorporatedintothe
pensionbenefitformula,includingestimatesoftheaveragelifeofemployees/survivorsandaverageyearsofservicerendered.Itismeasuredbasedonassumptionsconcerning
futureinterestratesandfutureemployeecompensationlevels.

Forpostretirementbenefitplans,thebenefitobligationisthe"accumulatedpostretirementbenefitobligation,"theactuarialpresentvalueasofadateofallfuturebenefits
attributedunderthetermsofthepostretirementbenefitplantoemployeeservicerenderedtothevaluationdate.

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ThefollowingtablepresentsthisreconciliationandshowsthechangeintheprojectedbenefitobligationfortheyearsendedDecember31:

PensionBenefits PostretirementBenefits
2015 2014 2015 2014
Benefitobligationatbeginningofyear $ 59,543 $ 56,560 $ 30,709 $ 30,285
Servicecost-benefitsearnedduringtheperiod 1,212 1,134 222 233
Interestcostonprojectedbenefitobligation 1,902 2,470 967 1,458
Amendments (8) (73) (74) (617)
Actuarial(gain)loss (3,079) 6,269 (1,988) 1,822
Specialterminationbenefits 149 17 - -
Benefitspaid (4,681) (6,543) (1,958) (2,298)
DIRECTVacquisition 470 - 20 -
TransferforsaleofConnecticutwirelineoperations (42) (293) - (174)
Plantransfers (2) 2 - -
Benefitobligationatendofyear $ 55,464 $ 59,543 $ 27,898 $ 30,709

ThefollowingtablepresentsthechangeinthevalueofplanassetsfortheyearsendedDecember31andtheplans'fundedstatusatDecember31:

PensionBenefits PostretirementBenefits
2015 2014 2015 2014
Fairvalueofplanassetsatbeginningofyear $ 45,163 $ 47,238 $ 7,846 $ 8,960
Actualreturnonplanassets 604 4,213 64 384
Benefitspaid1 (4,681) (6,543) (1,239) (1,498)
Contributions 735 562 - -
DIRECTVacquisition 418 - - -
TransferforsaleofConnecticutwirelineoperations (42) (308) - -
Plantransfersandother (2) 1 - -
Fairvalueofplanassetsatendofyear3 42,195 45,163 6,671 7,846
Unfundedstatusatendofyear2 $ (13,269) $ (14,380) $ (21,227) $ (22,863)
1Atourdiscretion,certainpostretirementbenefitsmaybepaidfromAT&Tcashaccounts,whichdoesnotreduceVoluntaryEmployeeBenefitAssociation(VEBA)assets.Futurebenefit
paymentsmaybemadefromVEBAtrustsandthusreducethoseassetbalances.
2Fundedstatusisnotindicativeofourabilitytopayongoingpensionbenefitsorofourobligationtofundretirementtrusts.Requiredpensionfundingisdeterminedinaccordancewiththe
EmployeeRetirementIncomeSecurityActof1974,asamended(ERISA)regulations.
3Netassetsavailableforbenefitswere$50,909atDecember31,2015and$54,184atDecember31,2014andincludethepreferredequityinterestinAT&TMobilityIILLCdiscussedbelow,
whichwasvaluedat$8,714and$9,021,respectively.

InJuly2014,theU.S.DepartmentofLaborpublishedintheFederalRegistertheirfinalretroactiveapprovalofourSeptember9,2013voluntarycontributionofapreferred
equityinterestinAT&TMobilityIILLC,theprimaryholdingcompanyforourwirelessbusiness,tothetrustusedtopaypensionbenefitsunderourqualifiedpensionplans.The
preferredequityinteresthadavalueof$9,104onthecontributiondateandwasvaluedat$8,714atDecember31,2015.Thetrustisentitledtoreceivecumulativecash
distributionsof$560perannum,whichwillbedistributedquarterlyinequalamountsandwillbeaccountedforascontributions.Wedistributed$560tothetrustduring2015.So
longaswemakethedistributions,wewillhavenolimitationsonourabilitytodeclareadividend,orrepurchaseshares.Thispreferredequityinterestisaplanassetunder
ERISAandisrecognizedassuchintheplan'sseparatefinancialstatements.However,becausethepreferredequityinterestisnotunconditionallytransferabletoanunrelated
party(seeNote14),itisnotreflectedinplanassetsinourconsolidatedfinancialstatementsandinsteadhasbeeneliminatedinconsolidation.Atthetimeofthecontributionof
thepreferredequityinterest,wemadeanadditionalcashcontributionof$175andhaveagreedtoannualcashcontributionsof$175nolaterthantheduedateforourfederal
incometaxreturnforeachof2014,2015and2016.Wemadesuchacontributionof$175in2015.Thesecontributionscombinedwithourexistingpensionassetsareinexcessof
90%ofthepensionobligationatDecember31,2015.

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Asnotedabove,thispreferredequityinterestrepresentsaplanassetofourpensiontrust,whichisrecognizedintheseparatefinancialstatementsofourpensionplanasa
qualifiedplanassetforfundingpurposes.Thefollowingtablepresentsareconciliationofourpensionplanassetsrecognizedintheconsolidatedfinancialstatementsofthe
CompanywiththenetassetsavailableforbenefitsincludedintheseparatefinancialstatementsofthepensionplanatDecember31:

2015 2014
Planassetsrecognizedintheconsolidatedfinancialstatements $ 42,195 $ 45,163
PreferredequityinterestinMobility 8,714 9,021
Netassetsavailableforbenefits $ 50,909 $ 54,184

AmountsrecognizedonourconsolidatedbalancesheetsatDecember31arelistedbelow:

PensionBenefits PostretirementBenefits
2015 2014 2015 2014
Currentportionofemployeebenefitobligation1 $ - $ - $ (1,766) $ (1,842)
Employeebenefitobligation2 (13,269) (14,380) (19,461) (21,021)
Netamountrecognized $ (13,269) $ (14,380) $ (21,227) $ (22,863)
1Includedin"Accountspayableandaccruedliabilities."
2Includedin"Postemploymentbenefitobligation."

Theaccumulatedbenefitobligationforourpensionplansrepresentstheactuarialpresentvalueofbenefitsbasedonemployeeserviceandcompensationasofacertaindateand
doesnotincludeanassumptionaboutfuturecompensationlevels.Theaccumulatedbenefitobligationforourpensionplanswas$54,007atDecember31,2015,and$57,949at
December31,2014.

NetPeriodicBenefitCostandOtherAmountsRecognizedinOtherComprehensiveIncome

Periodic
Benefit
Costs
Ourcombinednetpensionandpostretirement(credit)costrecognizedinourconsolidatedstatementsofincomewas$(2,821),$7,232and$(7,390)fortheyearsendedDecember
31,2015,2014and2013.Aportionofpensionandpostretirementbenefitcostsiscapitalizedaspartofthebenefitloadoninternalconstructionandcapitalexpenditures,
providingasmallreductioninthenetexpenserecorded.Thefollowingtablepresentsthecomponentsofnetperiodicbenefitcost:

PensionBenefits PostretirementBenefits
2015 2014 2013 2015 2014 2013
Servicecostbenefitsearned
duringtheperiod $ 1,212 $ 1,134 $ 1,321 $ 222 $ 233 $ 352
Interestcostonprojectedbenefit
obligation 1,902 2,470 2,429 967 1,458 1,532
Expectedreturnonassets (3,317) (3,380) (3,312) (421) (653) (706)
Amortizationofpriorservicecredit (103) (94) (94) (1,278) (1,448) (1,161)
Actuarial(gain)loss (373) 5,419 (5,013) (1,632) 2,093 (2,738)
Netpensionandpostretirement
(credit)cost $ (679) $ 5,549 $ (4,669) $ (2,142) $ 1,683 $ (2,721)

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Other
Changes
in
Benefit
Obligations
Recognized
in
Other
Comprehensive
Income
Thefollowingtablepresentstheafter-taxchangesinbenefitobligationsrecognizedinOCIandtheafter-taxpriorservicecreditsthatwereamortizedfromOCIintonetperiodic
benefitcosts:

PensionBenefits PostretirementBenefits
2015 2014 2013 2015 2014 2013
Balanceatbeginningofyear $ 575 $ 583 $ 641 $ 6,257 $ 6,812 $ 4,766
Priorservice(cost)credit 1 45 - 45 383 2,765
Amortizationofpriorservicecredit (64) (58) (58) (792) (898) (719)
Reclassificationtoincomeofpriorservicecredit - 5 - - (40) -
Totalrecognizedinother
comprehensive(income)loss (63) (8) (58) (747) (555) 2,046
Balanceatendofyear $ 512 $ 575 $ 583 $ 5,510 $ 6,257 $ 6,812

TheestimatedpriorservicecreditsthatwillbeamortizedfromaccumulatedOCIintonetperiodicbenefitcostoverthenextfiscalyearare$103($64netoftax)forpensionand
$1,277($792netoftax)forpostretirementbenefits.

Assumptions
Indeterminingtheprojectedbenefitobligationandthenetpensionandpostretirementbenefitcost,weusedthefollowingsignificantweighted-averageassumptions:

PensionBenefits PostretirementBenefits
2015 2014 2013 2015 2014 2013
Weighted-averagediscountrate
fordeterminingprojected
benefitobligationat
December31 4.60% 4.30% 5.00% 4.50% 4.20% 5.00%
Discountrateineffectfor
determiningservicecost 4.60% 5.00% 4.30% 4.60% 5.00% 4.30%
Discountrateineffectfor
determininginterestcost1 3.30% 4.60% 4.30% 3.30% 5.00% 4.30%
Long-termrateofreturnon
planassets 7.75% 7.75% 7.75% 5.75% 7.75% 7.75%
Compositerateofcompensation
increasefordetermining
projectedbenefitobligation 3.10% 3.00% 3.00% 3.10% 3.00% 3.00%
Compositerateofcompensation
increasefordeterminingnet
pensioncost(benefit) 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%
1Weighted-averagediscountrateof5.00%ineffectforpensioncostsfromJanuary1,2014throughSeptember30,2014.Discountratesineffectof4.90%forservicecostand
3.50%forinterestcostfromOctober1,2014throughDecember31,2014.Adiscountrateof5.00%wasusedfor
postretirementcostsfortheyearendedDecember31,2014.

Werecognizegainsandlossesonpensionandpostretirementplanassetsandobligationsimmediatelyinouroperatingresults.Thesegainsandlossesaremeasuredannuallyas
ofDecember31andaccordinglywillberecordedduringthefourthquarter,unlessearlierremeasurementsarerequired.

Discount
Rate

Ourassumedweighted-averagediscountrateforpensionandpostretirementbenefitsof4.60%and4.50%respectively,atDecember31,2015,reflectsthe
hypotheticalrateatwhichtheprojectedbenefitobligationcouldbeeffectivelysettledorpaidouttoparticipants.Wedeterminedourdiscountratebasedonarangeoffactors,
includingayieldcurvecomposedoftheratesofreturnonseveralhundredhigh-quality,fixedincomecorporatebondsavailableatthemeasurementdateandcorrespondingto
therelatedexpecteddurationsoffuturecashoutflows.ThesebondswereallratedatleastAa3orAA-byoneofthenationallyrecognizedstatisticalratingorganizations,
denominatedinU.S.dollars,andneithercallable,convertiblenorindexlinked.FortheyearendedDecember31,2015,whencomparedtotheyearendedDecember31,2014,we
increasedourpensiondiscountrateby0.30%,resultinginadecreaseinourpensionplanbenefitobligationof$1,977andincreasedourpostretirementdiscountrate0.30%,
resultinginadecreaseinourpostretirementbenefitobligationof$854.FortheyearendedDecember31,2014,wedecreasedourpensiondiscountrateby0.70%,resultinginan
increaseinourpensionplanbenefitobligationof$4,854anddecreasedourpostretirementdiscountratesby0.80%,resultinginanincreaseinourpostretirementbenefit
obligationof$2,786.

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Weutilizeafullyieldcurveapproachintheestimationoftheserviceandinterestcomponentsofnetperiodicbenefitcostsforpensionandotherpostretirementbenefits.Under
thisapproach,weapplydiscountingusingindividualspotratesfromayieldcurvecomposedoftheratesofreturnonseveralhundredhigh-quality,fixedincomecorporatebonds
availableatthemeasurementdate.Thesespotratesaligntoeachoftheprojectedbenefitobligationsandservicecostcashflows.Theservicecostcomponentrelatestotheactive
participantsintheplan,sotherelevantcashflowsonwhichtoapplytheyieldcurveareconsiderablylongerindurationonaveragethanthetotalprojectedbenefitobligation
cashflows,whichalsoincludebenefitpaymentstoretirees.Interestcostiscomputedbymultiplyingeachspotratebythecorrespondingdiscountedprojectedbenefitobligation
cashflows.Thefullyieldcurveapproachreducesanyactuarialgainsandlossesbaseduponinterestrateexpectations(e.g.,built-ingainsininterestcostinanupwardsloping
yieldcurvescenario),orgainsandlossesmerelyresultingfromthetimingandmagnitudeofcashoutflowsassociatedwithourbenefitobligations.Neithertheannual
measurementofourtotalbenefitobligationsnorannualnetbenefitcostisaffectedbythefullyieldcurveapproach.Forourpensionbenefits,thesingleeffectiveinterestrate
usedforperiodicserviceandinterestcostsduring2015are4.60%and3.30%,respectively.Forourpostretirementbenefits,thesingleeffectiveinterestrateusedforperiodic
serviceandinterestcostsduring2015are4.60%and3.30%.

Expected
Long-Term
Rate
of
Return
Ourexpectedlong-termrateofreturnonpensionplanassetsis7.75%for2016and2015.Ourexpectedlong-termrateofreturnon
postretirementplanassetsis5.75%for2016and2015.Ourlong-termratesofreturnreflecttheaveragerateofearningsexpectedonthefundsinvested,ortobeinvested,to
provideforthebenefitsincludedintheprojectedbenefitobligations.Insettingthelong-termassumedrateofreturn,managementconsiderscapitalmarketsfutureexpectations
andtheassetmixoftheplans'investments.Actuallong-termreturncan,inrelativelystablemarkets,alsoserveasafactorindeterminingfutureexpectations.Weconsidermany
factorsthatinclude,butarenotlimitedto,historicalreturnsonplanassets,currentmarketinformationonlong-termreturns(e.g.,long-termbondrates)andcurrentandtarget
assetallocationsbetweenassetcategories.Thetargetassetallocationisdeterminedbasedonconsultationswithexternalinvestmentadvisers.Ifallotherfactorsweretoremain
unchanged,weexpectthata0.50%decreaseintheexpectedlong-termrateofreturnwouldcause2016combinedpensionandpostretirementcosttoincrease$232.However,
anydifferencesintherateandactualreturnswillbeincludedwiththeactuarialgainorlossrecordedinthefourthquarterwhenourplansareremeasured.

Composite
Rate
of
Compensation
Increase
Ourexpectedcompositerateofcompensationincreasecostof3.10%in2015and3.00%in2014reflectsthelong-termaveragerate
ofsalaryincreases.

Mortality
Tables
AtDecember31,2015weupdatedourassumedmortalityratestoreflectourbestestimateoffuturemortality,whichdecreasedourpensionobligationby$859
anddecreasedourpostretirementobligationsby$274.AtDecember31,2014weupdatedourassumedmortalityrates,whichincreasedourpensionobligationby$1,442and
increasedourpostretirementobligationsby$53.

Healthcare
Cost
Trend
Ourhealthcarecosttrendassumptionsaredevelopedbasedonhistoricalcostdata,thenear-termoutlookandanassessmentoflikelylong-termtrends.
Duetohistoricalexperience,updatedexpectationsofhealthcareindustryinflationandrecentprescriptiondrugcostexperience,our2016assumedannualhealthcareprescription
drugcosttrendfornon-Medicareeligibleparticipantswillincreaseto6.25%,trendingtoourultimatetrendrateof4.50%in2023andforMedicare-eligibleparticipantswill
remainatanassumedannualandultimatetrendrateof4.50%.Thischangeinassumptionincreasedourobligationby$23.In2015ourassumedannualhealthcareprescription
drugcosttrendratefornon-Medicareeligibleparticipantswas6.00%,trendingtoourultimatetrendrateof4.50%in2021.

Medicare-eligibleretireeswhoreceiveaccessto
retireehealthinsurancecoveragethroughaprivateinsurancemarketplacearenotsubjecttoassumedhealthcaretrend.Inadditiontothehealthcarecosttrendin2015,we
assumedanannual2.50%growthinadministrativeexpensesandanannual3.00%growthindentalclaims.

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Aonepercentage-pointchangeintheassumedcombinedmedicalanddentalcosttrendratewouldhavethefollowingeffects:

OnePercentage- OnePercentage-
PointIncrease PointDecrease
Increase(decrease)intotalofserviceandinterestcostcomponents $ 58 $ (51)
Increase(decrease)inaccumulatedpostretirementbenefitobligation 660 (590)

PlanAssets
Planassetsconsistprimarilyofprivateandpublicequity,governmentandcorporatebonds,andrealassets(realestateandnaturalresources).Theassetallocationsofthepension
plansaremaintainedtomeetERISArequirements.Anyplancontributions,asdeterminedbyERISAregulations,aremadetoapensiontrustforthebenefitofplanparticipants.
AspartofourvoluntarycontributionoftheMobilitypreferredequityinterest,wewillcontribute$735ofcashdistributionsduring2016.Wedonothaveadditionalsignificant
requiredcontributionstoourpensionplansfor2016.

WemaintainVEBAtruststopartiallyfundpostretirementbenefits;however,therearenoERISAorregulatoryrequirementsthatthesepostretirementbenefitplansbefunded
annually.

Theprincipalinvestmentobjectivesaretoensuretheavailabilityoffundstopaypensionandpostretirementbenefitsastheybecomedueunderabroadrangeoffutureeconomic
scenarios,tomaximizelong-terminvestmentreturnwithanacceptablelevelofriskbasedonourpensionandpostretirementobligations,andtobebroadlydiversifiedacrossand
withinthecapitalmarketstoinsulateassetvaluesagainstadverseexperienceinanyonemarket.Eachassetclasshasbroadlydiversifiedcharacteristics.Substantialbiasestoward
anyparticularinvestingstyleortypeofsecurityaresoughttobeavoidedbymanagingtheaggregationofallaccountswithportfoliobenchmarks.Assetandbenefitobligation
forecastingstudiesareconductedperiodically,generallyeverytwotothreeyears,orwhensignificantchangeshaveoccurredinmarketconditions,benefits,participant
demographicsorfundedstatus.Decisionsregardinginvestmentpolicyaremadewithanunderstandingoftheeffectofassetallocationonfundedstatus,futurecontributionsand
projectedexpenses.ThecurrentassetallocationpolicyandrisklevelforthepensionplanandVEBAassetsisbasedonstudiescompletedandapprovedduring2013and2015,
respectively,andisreflectedinthetablebelow.

Theplans'weighted-averageassettargetsandactualallocationsasapercentageofplanassets,includingthenotionalexposureoffuturecontractsbyassetcategoriesat
December31,areasfollows:

PensionAssets Postretirement(VEBA)Assets
Target 2015 2014 Target 2015 2014
Equitysecurities:
Domestic 20% - 30% 22 % 23 % 21% - 31% 26 % 29 %
International 10% - 20% 15 14 9% - 19% 14 20
Fixedincomesecurities 35% - 45% 40 38 29% - 39% 34 29
Realassets 6% - 16% 10 11 0% - 6% 1 1
Privateequity 4% - 14% 12 12 0% - 7% 2 3
Other 0% - 5% 1 2 17% - 27% 23 18
Total 100 % 100 % 100 % 100 %

AtDecember31,2015,AT&Tsecuritiesrepresentedlessthan0.5%ofassetsheldbyourpensionplansand6%ofassets(primarilycommonstock)heldbyourVEBAtrusts
includedinthesefinancialstatements.

Investment
Valuation
Investmentsarestatedatfairvalue.Fairvalueisthepricethatwouldbereceivedtosellanassetorpaidtotransferaliabilityinanorderlytransactionbetweenmarket
participantsatthemeasurementdate.See"FairValueMeasurements"forfurtherdiscussion.

Investmentsinsecuritiestradedonanationalsecuritiesexchangearevaluedatthelastreportedsalespriceonthelastbusinessdayoftheyear.Ifnosalewasreportedonthat
date,theyarevaluedatthelastreportedbidprice.Investmentsinsecuritiesnottradedonanationalsecuritiesexchangearevaluedusingpricingmodels,quotedpricesof
securitieswithsimilarcharacteristicsordiscountedcashflows.Sharesofregisteredinvestmentcompaniesarevaluedbasedonquotedmarketprices,whichrepresentthenet
assetvalueofsharesheldatyear-end.Over-the-counter(OTC)securitiesarevaluedatthebidpriceortheaverageofthebidandaskedpriceonthelastbusinessdayoftheyear
frompublishedsourceswhereavailableand,ifnotavailable,fromothersourcesconsideredreliable.DependingonthetypesandcontractualtermsofOTCderivatives,fairvalue
ismeasuredusingvaluationtechniques,suchastheBlack-Scholesoptionpricingmodel,simulationmodelsoracombinationofvariousmodels.

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Common/collectivetrustfunds,pooledseparateaccountsandothercommingled(103-12)investmententitiesarevaluedatquotedredemptionvaluesthatrepresentthenetasset
valuesofunitsheldatyear-endwhichmanagementhasdeterminedapproximatesfairvalue.

Alternativeinvestments,includinginvestmentsinprivateequity,realestate,naturalresources(includedinrealassets),mezzanineanddistresseddebt(includedin
partnerships/jointventures),limitedpartnershipinterests,certainfixedincomesecuritiesandhedgefundsdonothavereadilyavailablemarketvalues.Theseestimatedfair
valuesmaydiffersignificantlyfromthevaluesthatwouldhavebeenusedhadareadymarketfortheseinvestmentsexisted,andsuchdifferencescouldbematerial.Alternative
investmentsnothavinganestablishedmarketarevaluedatfairvalueasdeterminedbytheinvestmentmanagers.Privateequity,mezzanineanddistressedinvestmentsareoften
valuedinitiallybytheinvestmentmanagersbaseduponcost.Thereafter,investmentmanagersmayuseavailablemarketdatatodetermineadjustmentstocarryingvaluebased
uponobservationsofthetradingmultiplesofpubliccompaniesconsideredcomparabletotheprivatecompaniesbeingvalued.Suchmarketdatausedtodetermineadjustmentsto
accountsforcashflowsandcompany-specifiedissuesincludecurrentoperatingperformanceandfutureexpectationsoftheinvestments,changesinmarketoutlook,andthe
third-partyfinancingenvironment.Privateequitypartnershipholdingsmayalsoincludepubliclyheldequityinvestmentsinliquidmarketsthataremarked-to-marketatquoted
publicvalues,subjecttoadjustmentsforlargepositionsheld.Realestateandnaturalresourcedirectinvestmentsarevaluedeitheratamountsbaseduponappraisalreports
preparedbyindependentthird-partyappraisersoratamountsasdeterminedbyinternalappraisalsperformedbytheinvestmentmanager,whicharereasonableasdeterminedby
thereviewofanexternalvaluationconsultant.Fixedincomesecuritiesvaluationisbaseduponpricingprovidedbyanexternalpricingservicewhensuchpricingisavailable.In
theeventasecurityistoothinlytradedornarrowlyheldtobepricedbysuchapricingservice,orthepricefurnishedbysuchexternalpricingservicesisdeemedinaccurate,the
managerswillthensolicitbroker/dealerquotes(spreadsorprices).Incaseswheresuchquotesareavailable,fairvaluewillbedeterminedbasedsolelyuponsuchquotes
provided.Managerswilltypicallyuseapricingmatrixfordeterminingfairvalueincaseswhereanapprovedpricingserviceorabroker/dealerisunabletoprovideafair
valuationforspecificfixed-ratesecuritiessuchasmanyprivateplacements.Newfixed-ratesecuritieswillbeinitiallyvaluedatcostatthetimeofpurchase.Thereafter,each
bondwillbeassignedaspreadfromapricingmatrixthatwillbeaddedtocurrentTreasuryrates.Thepricingmatrixderivesspreadsforeachbondbasedonexternalmarketdata,
includingthecurrentcreditratingforthebonds,creditspreadstoTreasuriesforeachcreditrating,sectoradd-onsorcredits,issue-specificadd-onsorcreditsaswellascallor
otheroptions.

Purchasesandsalesofsecuritiesarerecordedasofthetradedate.Realizedgainsandlossesonsalesofsecuritiesaredeterminedonthebasisofaveragecost.Interestincomeis
recognizedontheaccrualbasis.Dividendincomeisrecognizedontheex-dividenddate.

Non-interestbearingcashandoverdraftsarevaluedatcost,whichapproximatesfairvalue.

Fair
Value
Measurements
SeeNote10foradiscussionoffairvaluehierarchythatprioritizestheinputstovaluationtechniquesusedtomeasurefairvalue.

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Thefollowingtablessetforthbylevel,withinthefairvaluehierarchy,thepensionandpostretirementassetsandliabilitiesatfairvalueasofDecember31,2015:

PensionAssetsandLiabilitiesatFairValueasofDecember31,2015
Level1 Level2 Level3 Total
Non-interestbearingcash $ 160 $ - $ - $ 160
Interestbearingcash - 25 - 25
Foreigncurrencycontracts - 25 - 25
Equitysecurities:
Domesticequities 8,315 4 - 8,319
Internationalequities 4,287 - - 4,287
Fixedincomesecurities:
Asset-backedsecurities - 403 1 404
Mortgage-backedsecurities - 792 - 792
Collateralizedmortgage-backedsecurities - 278 - 278
Collateralizedmortgageobligations/REMICS - 345 - 345
Corporateandotherfixedincomeinstrumentsandfunds 65 8,274 373 8,712
Governmentandmunicipalbonds 75 4,495 - 4,570
Privateequityfunds - - 4,926 4,926
Realestateandrealassets - - 4,357 4,357
Commingledfunds - 5,522 2 5,524
Securitieslendingcollateral 512 3,538 - 4,050
Receivableforvariationmargin 13 - - 13
Assetsatfairvalue 13,427 23,701 9,659 46,787
Investmentssoldshortandotherliabilitiesatfairvalue (824) (12) - (836)
Totalplannetassetsatfairvalue $ 12,603 $ 23,689 $ 9,659 $ 45,951
Otherassets(liabilities)1 (3,756)
TotalPlanNetAssets $ 42,195
1Otherassets(liabilities)includeamountsreceivable,accountspayableandnetadjustmentforsecuritieslendingpayable.

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PostretirementAssetsandLiabilitiesatFairValueasofDecember31,2015
Level1 Level2 Level3 Total
Non-interestbearingcash $ 2 $ - $ - $ 2
Interestbearingcash 220 1,292 - 1,512
Foreigncurrencies 4 - - 4
Equitysecurities:
Domesticequities 1,187 - - 1,187
Internationalequities 869 - - 869
Fixedincomesecurities:
Asset-backedsecurities - 35 2 37
Collateralizedmortgage-backedsecurities - 120 13 133
Collateralizedmortgageobligations - 45 - 45
Corporateandotherfixedincomeinstrumentsandfunds - 389 - 389
Governmentandmunicipalbonds - 617 - 617
Commingledfunds - 1,681 1 1,682
Privateequityassets - - 155 155
Realassets - - 81 81
Securitieslendingcollateral 6 189 - 195
FuturesContracts 1 - - 1
Totalplannetassetsatfairvalue $ 2,289 $ 4,368 $ 252 $ 6,909
Otherassets(liabilities)1 (238)
TotalPlanNetAssets $ 6,671
1Otherassets(liabilities)includeamountsreceivable,accountspayableandnetadjustmentforsecuritieslendingpayable.

ThetablesbelowsetforthasummaryofchangesinthefairvalueoftheLevel3pensionandpostretirementassetsfortheyearendedDecember31,2015:

RealEstate
FixedIncome Private andReal
PensionAssets Equities Funds EquityFunds Assets Total
Balanceatbeginningofyear $ - $ 444 $ 5,399 $ 4,845 $ 10,688
Realizedgains(losses) (1) 29 426 416 870
Unrealizedgains(losses) 1 (16) 132 (114) 3
Transfersin - - - 19 19
Transfersout - - (19) - (19)
Purchases - 29 436 474 939
Sales - (110) (1,448) (1,283) (2,841)
Balanceatendofyear $ - $ 376 $ 4,926 $ 4,357 $ 9,659

FixedIncome Private
PostretirementAssets Funds EquityFunds RealAssets Total
Balanceatbeginningofyear $ 3 $ 218 $ 96 $ 317
Realizedgains(losses) - (16) (2) (18)
Unrealizedgains(losses) - 24 (1) 23
Transfersin 15 - 25 40
Transfersout (1) - (25) (26)
Purchases - 30 1 31
Sales (1) (101) (13) (115)
Balanceatendofyear $ 16 $ 155 $ 81 $ 252

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Thefollowingtablessetforthbylevel,withinthefairvaluehierarchy,thepensionandpostretirementassetsandliabilitiesatfairvalueasofDecember31,2014:

PensionAssetsandLiabilitiesatFairValueasofDecember31,2014
Level1 Level2 Level3 Total
Non-interestbearingcash $ 45 $ - $ - $ 45
Interestbearingcash - 127 - 127
Foreigncurrencycontracts - 25 - 25
Equitysecurities:
Domesticequities 8,613 74 - 8,687
Internationalequities 4,805 171 - 4,976
Fixedincomesecurities:
Asset-backedsecurities - 610 1 611
Mortgage-backedsecurities - 1,741 - 1,741
Collateralizedmortgage-backedsecurities - 418 - 418
Collateralizedmortgageobligations/REMICS - 531 - 531
Corporateandotherfixedincomeinstrumentsandfunds 97 7,210 441 7,748
Governmentandmunicipalbonds 145 4,876 - 5,021
Privateequityfunds - - 5,399 5,399
Realestateandrealassets - - 4,845 4,845
Commingledfunds - 5,823 2 5,825
Securitieslendingcollateral 310 3,140 - 3,450
Receivableforvariationmargin 6 - - 6
Purchasedoptions 1 - - 1
Assetsatfairvalue 14,022 24,746 10,688 49,456
Investmentssoldshortandotherliabilitiesatfairvalue (650) (260) - (910)
Totalplannetassetsatfairvalue $ 13,372 $ 24,486 $ 10,688 $ 48,546
Otherassets(liabilities)1 (3,383)
TotalPlanNetAssets $ 45,163
1Otherassets(liabilities)includeamountsreceivable,accountspayableandnetadjustmentforsecuritieslendingpayable.

PostretirementAssetsandLiabilitiesatFairValueasofDecember31,2014
Level1 Level2 Level3 Total
Interestbearingcash $ 278 $ 1,198 $ - $ 1,476
Equitysecurities:
Domesticequities 1,606 - - 1,606
Internationalequities 1,405 - - 1,405
Fixedincomesecurities:
Asset-backedsecurities - 46 - 46
Collateralizedmortgage-backedsecurities - 113 - 113
Collateralizedmortgageobligations - 50 1 51
Corporateandotherfixedincomeinstrumentsandfunds - 397 - 397
Governmentandmunicipalbonds - 614 1 615
Commingledfunds - 1,960 1 1,961
Privateequityassets - - 218 218
Realassets - - 96 96
Securitieslendingcollateral - 173 - 173
Totalplannetassetsatfairvalue $ 3,289 $ 4,551 $ 317 $ 8,157
Otherassets(liabilities)1 (311)
TotalPlanNetAssets $ 7,846
1Otherassets(liabilities)includeamountsreceivable,accountspayableandnetadjustmentforsecuritieslendingpayable.

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NotestoConsolidatedFinancialStatements(continued)
Dollarsinmillionsexceptpershareamounts

ThetablesbelowsetforthasummaryofchangesinthefairvalueoftheLevel3pensionandpostretirementassetsfortheyearendedDecember31,2014:

FixedIncome PrivateEquity RealEstateand


PensionAssets Equities Funds Funds RealAssets Total
Balanceatbeginningofyear $ - $ 547 $ 5,724 $ 5,194 $ 11,465
Realizedgains(losses) - 41 696 806 1,543
Unrealizedgains(losses) - (1) (76) (246) (323)
Transfersin - - - 22 22
Transfersout - (3) (22) - (25)
Purchases 1 55 531 678 1,265
Sales (1) (195) (1,454) (1,609) (3,259)
Balanceatendofyear $ - $ 444 $ 5,399 $ 4,845 $ 10,688

FixedIncome PrivateEquity
PostretirementAssets Funds Funds RealAssets Total
Balanceatbeginningofyear $ 26 $ 309 $ 111 $ 446
Realizedgains(losses) - 45 (3) 42
Unrealizedgains(losses) 1 (29) 11 (17)
Transfersout (1) - - (1)
Purchases - 6 - 6
Sales (23) (113) (23) (159)
Balanceatendofyear $ 3 $ 218 $ 96 $ 317

EstimatedFutureBenefitPayments
ExpectedbenefitpaymentsareestimatedusingthesameassumptionsusedindeterminingourbenefitobligationatDecember31,2015.Becausebenefitpaymentswilldependon
futureemploymentandcompensationlevels,averageyearsemployed,averagelifespans,andpaymentelections,amongotherfactors,changesinanyofthesefactorscould
significantlyaffecttheseexpectedamounts.Thefollowingtableprovidesexpectedbenefitpaymentsunderourpensionandpostretirementplans:

Postretirement
PensionBenefits Benefits
2016 $ 4,705 $ 2,024
2017 4,424 1,995
2018 4,294 1,973
2019 4,198 1,939
2020 4,155 1,894
Years2021-2025 19,886 8,884

SupplementalRetirementPlans
Wealsoprovidecertainsenior-andmiddle-managementemployeeswithnonqualified,unfundedsupplementalretirementandsavingsplans.Whiletheseplansareunfunded,we
haveassetsinadesignatednonbankruptcyremotetrustthatareindependentlymanagedandusedtoprovideforthesebenefits.Theseplansincludesupplementalpensionbenefits
aswellascompensation-deferralplans,someofwhichincludeacorrespondingmatchbyusbasedonapercentageofthecompensationdeferral.

Weusethesamesignificantassumptionsforthecompositerateofcompensationincreaseindeterminingourprojectedbenefitobligationandthenetpensionand
postemploymentbenefitcost.Ourdiscountratesof4.4%atDecember31,2015and4.1%atDecember31,2014werecalculatedusingthesamemethodologiesusedin
calculatingthediscountrateforourqualifiedpensionandpostretirementbenefitplans.Thefollowingtablesprovidetheplans'benefitobligationsandfairvalueofassetsat
December31andthecomponentsofthesupplementalretirementpensionbenefitcost.Thenetamountsarerecordedas"Othernoncurrentliabilities"onourconsolidatedbalance
sheets.

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ThefollowingtableprovidesinformationforoursupplementalretirementplanswithaccumulatedbenefitobligationsinexcessofplanassetsatDecember31:

2015 2014
Projectedbenefitobligation $ (2,444) $ (2,458)
Accumulatedbenefitobligation (2,372) (2,410)
Fairvalueofplanassets - -

ThefollowingtablespresentthecomponentsofnetperiodicbenefitcostandotherchangesinplanassetsandbenefitobligationsrecognizedinOCI:

NetPeriodicBenefitCost 2015 2014 2013


Servicecostbenefitsearnedduringtheperiod $ 9 $ 7 $ 9
Interestcostonprojectedbenefitobligation 77 109 101
Amortizationofpriorservicecost(credit) 1 (1) -
Actuarial(gain)loss (36) 243 (106)
Netsupplementalretirementpensioncost $ 51 $ 358 $ 4

OtherChangesRecognizedin
OtherComprehensiveIncome 2015 2014 2013
Priorservice(cost)credit $ (1) $ (11) $ (1)
Amortizationofpriorservicecost(credit) 1 (1) -
Totalrecognizedinothercomprehensive(income)loss(netoftax) $ - $ (12) $ (1)

TheestimatedpriorservicecreditforoursupplementalretirementplanbenefitsthatwillbeamortizedfromaccumulatedOCIintonetperiodicbenefitcostoverthenextfiscal
yearis$1.

Deferredcompensationexpensewas$122in2015,$121in2014and$122in2013.Ourdeferredcompensationliability,includedin"Othernoncurrentliabilities,"was$1,221at
December31,2015,and$1,156atDecember31,2014.

ContributorySavingsPlans
Wemaintaincontributorysavingsplansthatcoversubstantiallyallemployees.Underthesavingsplans,wematchincashorcompanystockastatedpercentageofeligible
employeecontributions,subjecttoaspecifiedceiling.Therearenodebt-financedsharesheldbytheEmployeeStockOwnershipPlans,allocatedorunallocated.

Ourmatchofemployeecontributionstothesavingsplansisfulfilledwithpurchasesofourstockontheopenmarketorcompanycash.Benefitcostisbasedonthecostofshares
orunitsallocatedtoparticipatingemployees'accountsandwas$653,$654and$654fortheyearsendedDecember31,2015,2014and2013.

NOTE13.SHARE-BASEDPAYMENTS

Underourvariousplans,seniorandothermanagementemployeesandnonemployeedirectorshavereceivednonvestedstockandstockunits.Inconjunctionwiththeacquisition
ofDIRECTV,restrictedstockunitsissuedunderDIRECTVplanswereconvertedtoAT&Tshares.Theshareswillvestoveraperiodofonetofouryearsinaccordancewiththe
termsofthoseplans.WedonotintendtoissueanyadditionalgrantsundertheDIRECTVplans.AnyfuturegrantswillbemadeundertheAT&Tplans.

Wegrantperformancestockunits,whicharenonvestedstockunits,baseduponourstockpriceatthedateofgrantandawardthemintheformofAT&Tcommonstockandcash
attheendofathree-yearperiod,subjecttotheachievementofcertainperformancegoals.Wetreatthecashportionoftheseawardsasaliability.Wegrantforfeitablerestricted
stockandstockunits,whicharevaluedatthemarketpriceofourcommonstockatthedateofgrantandvesttypicallyoveratwo-toten-yearperiod.Wealsograntother
nonvestedstockunitsandawardthemincashattheendofathree-yearperiod,subjecttotheachievementofcertainmarketbasedconditions.AsofDecember31,2015,wewere
authorizedtoissueuptoapproximately109millionsharesofcommonstock(inadditiontosharesthatmaybeissueduponexerciseofoutstandingoptionsoruponvestingof
performancestockunitsorothernonvestedstockunits)toofficers,employeesanddirectorspursuanttothesevariousplans.

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Weaccountforourshare-basedpaymentarrangementsbasedonthefairvalueoftheawardsontheirrespectivegrantdate,whichmayaffectourabilitytofullyrealizethevalue
shownonourconsolidatedbalancesheetsofdeferredtaxassetsassociatedwithcompensationexpense.Werecordavaluationallowancewhenourfuturetaxableincomeisnot
expectedtobesufficienttorecovertheasset.Accordingly,therecanbenoassurancethatthecurrentstockpriceofourcommonshareswillrisetolevelssufficienttorealizethe
entiretaxbenefitcurrentlyreflectedonourconsolidatedbalancesheets.However,totheextentwegenerateexcesstaxbenefits(i.e.,thatadditionaltaxbenefitsinexcessofthe
deferredtaxesassociatedwithcompensationexpensepreviouslyrecognized)thepotentialfutureimpactonincomewouldbereduced.

Thecompensationcostrecognizedforthoseplanswasincludedinoperatingexpensesinourconsolidatedstatementsofincome,asreflectedinthetablebelow.Thetotalincome
taxbenefitrecognizedintheconsolidatedstatementsofincomeforshare-basedpaymentarrangementswas$172for2015,comparedto$122for2014and$175for2013.

2015 2014 2013


Performancestockunits $ 299 $ 226 $ 381
Restrictedstockandstockunits 147 93 80
Othernonvestedstockunits 5 (1) (3)
Total $ 451 $ 318 $ 458

AsummaryofthestatusofournonvestedstockunitsasofDecember31,2015,andchangesduringtheyearthenendedispresentedasfollows(sharesinmillions):

Weighted-
Average
Grant-DateFair
NonvestedStockUnits Shares Value
NonvestedatJanuary1,2015 26 $ 33.52
Granted 14 33.98
IssuedinDIRECTVacquisition 11 34.29
Vested (13) 33.86
Forfeited (2) 34.07
NonvestedatDecember31,2015 36 $ 33.78

AsofDecember31,2015,therewas$563oftotalunrecognizedcompensationcostrelatedtononvestedshare-basedpaymentarrangementsgranted.Thatcostisexpectedtobe
recognizedoveraweighted-averageperiodof2.15years.Thetotalfairvalueofsharesvestedduringtheyearwas$450for2015,comparedto$327for2014and$336for2013.

Itisourpolicytosatisfyshareoptionexercisesusingourtreasurystock.Cashreceivedfromstockoptionexerciseswas$46for2015,$43for2014and$135for2013.

NOTE14.STOCKHOLDERS'EQUITY

StockRepurchaseProgramFromtimetotime,werepurchasesharesofcommonstockfordistributionthroughouremployeebenefitplansorinconnectionwithcertain
acquisitions.InJuly2012,ourBoardofDirectorsauthorizedtherepurchaseof300millionsharesandwecompletedthatprograminMay2013.InMarch2013,ourBoardof
Directorsapprovedasecondauthorizationtorepurchase300millionshares,underwhichwerepurchasedsharesduring2014.InMarch2014,ourBoardofDirectorsapproveda
thirdauthorizationtorepurchaseupto300millionsharesofourcommonstock.FortheyearendedDecember31,2015,wehadrepurchasedapproximately8millionsharesfor
distributionthroughouremployeebenefitplanstotaling$269undertheseauthorizations.FortheyearendedDecember31,2014,wehadrepurchasedapproximately48million
sharestotaling$1,617undertheseauthorizations.

Toimplementtheseauthorizations,weusedopenmarketrepurchaseprograms,relyingonRule10b5-1oftheSecuritiesExchangeActof1934wherefeasible.

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AuthorizedSharesThereare14billionauthorizedcommonsharesofAT&Tstockand10millionauthorizedpreferredsharesofAT&Tstock.AsofDecember31,2015and
2014,nopreferredshareswereoutstanding.

DividendDeclarationsInDecember2015,theCompanydeclaredanincreaseinitsquarterlydividendto$0.48pershareofcommonstock.InDecember2014,theCompany
declaredanincreaseinitsquarterlydividendto$0.47pershareofcommonstock.

TreasuryStockAspartoftheacquisitionofDIRECTV,weissued954,407,524sharestoDIRECTVshareholders,whichreducedourtreasurystockbalanceby$34,328.

PreferredEquityInterestThepreferredequityinterestdiscussedinNote12isnottransferablebythetrustexceptthroughitsputandcallfeatures,andthereforehasbeen
eliminatedinconsolidation.Afteraperiodoffiveyearsfromthecontributionor,ifearlier,thedateuponwhichthepensionplantrustisfullyfundedasdeterminedunderGAAP,
AT&Thasarighttopurchasefromthepensionplantrustsomeorallofthepreferredequityinterestatthegreateroftheirfairmarketvalueorminimumliquidationvalueplus
anyunpaidcumulativedividends.Inaddition,AT&TwillhavetherighttopurchasethepreferredequityinterestintheeventAT&T'sownershipofMobilityislessthan50%or
thereisatransactionthatresultsinthetransferof50%ormoreofthepensionplantrust'sassetstoanentitynotundercommoncontrolwithAT&T(collectively,achangeof
control).ThepensionplantrusthastherighttorequireAT&Ttopurchasethepreferredequityinterestatthegreateroftheirfairmarketvalueorminimumliquidationvalueplus
anyunpaidcumulativedividends,andininstallments,asspecifiedinthecontributionagreementupontheoccurrenceofanyofthefollowing:(1)atanytimeiftheratioofdebt
tototalcapitalizationofMobilityexceedsthatofAT&T,(2)thedateonwhichAT&TInc.isratedbelowinvestmentgradefortwoconsecutivecalendarquarters,(3)upona
changeofcontrolifAT&Tdoesnotexerciseitspurchaseoption,or(4)atanytimeafteraseven-yearperiodfromthecontributiondate.IntheeventAT&Telectsorisrequired
topurchasethepreferredequityinterest,AT&TmayelecttosettlethepurchasepriceincashorsharesofAT&Tcommonstockoracombinationthereof.Becausethepreferred
equityinterestwasnotconsideredoutstandingforaccountingpurposesatyear-end,itdidnotaffectthecalculationofearningspershare.

NOTE15.SALESOFEQUIPMENTINSTALLMENTRECEIVABLES

Weofferourcustomerstheoptiontopurchasecertainwirelessdevicesininstallmentsoveraperiodofupto30months,withtherighttotradeintheoriginalequipmentfora
newdevicewithinasetperiodandhavetheremainingunpaidbalancesatisfied.AsofDecember31,2015andDecember31,2014,grossequipmentinstallmentreceivablesof
$5,719and$4,265wereincludedonourconsolidatedbalancesheets,ofwhich$3,239and$2,514arenotesreceivablethatareincludedin"Accountsreceivable-net."

In2014,weenteredintothefirstofaseriesofuncommittedagreementspertainingtothesaleofequipmentinstallmentreceivablesandrelatedsecuritywithCitibankandvarious
otherrelationshipbanksaspurchasers(collectively,thePurchasers).Undertheseagreements,wetransferredthereceivablestothePurchasersforcashandadditional
considerationuponsettlementofthereceivables,referredtoasthedeferredpurchaseprice.Underthetermsofthearrangements,wecontinuetobillandcollectonbehalfofour
customersforthereceivablessold.Todate,wehavecollectedandremittedapproximately$4,520(netoffees),ofwhich$580wasreturnedasdeferredpurchaseprice.

Thefollowingtablesetsforthasummaryofequipmentinstallmentreceivablessoldduring2015and2014:

2015 2014
Grossreceivablessold $ 7,436 $ 4,707
Netreceivablessold1 6,704 4,126
Cashproceedsreceived 4,439 2,528
Deferredpurchasepricerecorded 2,266 1,629
1Receivablesnetofallowance,imputedinterestandtrade-inrightguarantees.

Thedeferredpurchasepricewasinitiallyrecordedatestimatedfairvalue,whichwasbasedonremaininginstallmentpaymentsexpectedtobecollected,adjustedbytheexpected
timingandvalueofdevicetrade-ins,andissubsequentlycarriedatthelowerofcostornetrealizablevalue.Theestimatedvalueofthedevicetrade-insconsiderspricesoffered
tousbyindependentthirdpartiesthatcontemplatechangesinvalueafterthelaunchofadevicemodel.ThefairvaluemeasurementsusedareconsideredLevel3undertheFair
ValueMeasurementandDisclosureframework(seeNote10).

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During2015,werepurchasedinstallmentreceivablespreviouslysoldtothePurchasers,withafairvalueof$685.Thesetransactionsreducedourcurrentdeferredpurchaseprice
receivableby$534,resultinginagainof$151in2015.Thisgainisincludedin"Selling,generalandadministrative"intheconsolidatedstatementsofincome.

AtDecember31,2015,ourdeferredpurchasepricereceivablewas$2,961,ofwhich$1,772isincludedin"Othercurrentassets"onourconsolidatedbalancesheets,withthe
remainderin"OtherAssets."AtDecember31,2014,ourdeferredpurchasepricereceivablewas$1,606,whichisincludedin"OtherAssets."Ourmaximumexposuretolossasa
resultofsellingtheseequipmentinstallmentreceivablesislimitedtotheamountofourdeferredpurchasepriceatanypointintime.

Thesalesofequipmentinstallmentreceivablesdidnothaveamaterialimpactonourconsolidatedstatementsofincomeorto"TotalAssets"reportedonourconsolidatedbalance
sheets.WereflectthecashflowsrelatedtothearrangementasoperatingactivitiesinourconsolidatedstatementsofcashflowsbecausethecashreceivedfromthePurchasers
uponboththesaleofthereceivablesandthecollectionofthedeferredpurchasepriceisnotsubjecttosignificantinterestraterisk.

NOTE16.TOWERTRANSACTION

OnDecember16,2013,weclosedourtransactionwithCrownCastleInternationalCorp.(CrownCastle)inwhichCrownCastlegainedtheexclusiverightstoleaseandoperate
9,048wirelesstowersandpurchased627ofourwirelesstowersfor$4,827incash.Theleaseshavevarioustermswithanaveragelengthofapproximately28years.Asthe
leasesexpire,CrownCastlewillhavefixedpricepurchaseoptionsforthesetowerstotalingapproximately$4,200,basedontheirestimatedfairmarketvaluesattheendofthe
leaseterms.WesubleasespaceonthetowersfromCrownCastleforaninitialtermof10yearsatcurrentmarketrates,subjecttooptionalrenewalsinthefuture.

Wedeterminedourcontinuinginvolvementwiththetowerassetspreventedusfromachievingsale-leasebackaccountingforthetransaction,andweaccountedforthecash
proceedsfromCrownCastleasafinancingobligationonourconsolidatedbalancesheets.Werecordinterestonthefinancingobligationusingtheeffectiveinterestmethodata
rateofapproximately3.9%.ThefinancingobligationisincreasedbyinterestexpenseandestimatedfuturenetcashflowsgeneratedandretainedbyCrownCastlefromoperation
ofthetowersites,andreducedbyourcontractualpayments.WecontinuetoincludethetowerassetsinProperty,plantandequipmentinourconsolidatedbalancesheetsand
depreciatethemaccordingly.AtDecember31,2015and2014,thetowerassetshadabalanceof$960and$999,respectively.Ourdepreciationexpensefortheseassetswas$39
for2015,and$39for2014.TheimpactofthetransactiononouroperatingresultsfortheyearendedDecember31,2013wasnotmaterial.

PaymentsmadetoCrownCastleunderthisarrangementwere$225for2015.AtDecember31,2015,thefutureminimumpaymentsunderthesubleasearrangementare$230for
2016,$234for2017,$239for2018,$244for2019,$248for2020,and$2,304thereafter.

NOTE17.CONTINGENTLIABILITIES

Wearepartytonumerouslawsuits,regulatoryproceedingsandothermattersarisingintheordinarycourseofbusiness.Inevaluatingthesemattersonanongoingbasis,wetake
intoaccountamountsalreadyaccruedonthebalancesheet.Inouropinion,althoughtheoutcomesoftheseproceedingsareuncertain,theyshouldnothaveamaterialadverse
effectonourfinancialposition,resultsofoperationsorcashflows.

Wehavecontractualobligationstopurchasecertaingoodsorservicesfromvariousotherparties.Ourpurchaseobligationsareexpectedtobeapproximately$22,929in2016,
$9,437intotalfor2017and2018,$6,159intotalfor2019and2020and$10,174intotalforyearsthereafter.

SeeNote10foradiscussionofcollateralandcredit-riskcontingencies.

88
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Dollarsinmillionsexceptpershareamounts

NOTE18.ADDITIONALFINANCIALINFORMATION

December31,
ConsolidatedBalanceSheets 2015 2014
Customerfulfillmentcosts(includedinOthercurrentassets) $ 2,923 $ 2,720
Accountspayableandaccruedliabilities:
Accountspayable $ 21,047 $ 14,984
Accruedpayrollandcommissions 2,629 1,967
Currentportionofemployeebenefitobligation 1,766 1,842
Accruedinterest 1,974 1,597
Other 2,956 3,202
Totalaccountspayableandaccruedliabilities $ 30,372 $ 23,592

ConsolidatedStatementsofIncome 2015 2014 2013


Advertisingexpense $ 3,632 $ 3,272 $ 3,268
Interestexpenseincurred $ 4,917 $ 3,847 $ 4,224
Capitalizedinterest (797) (234) (284)
Totalinterestexpense $ 4,120 $ 3,613 $ 3,940

ConsolidatedStatementsofCashFlows 2015 2014 2013


Cashpaidduringtheyearfor:
Interest $ 4,822 $ 4,099 $ 4,302
Incometaxes,netofrefunds 1,851 1,532 1,985

Nocustomeraccountedformorethan10%ofconsolidatedrevenuesin2015,2014or2013.

LaborContractsAsofJanuary31,2016,weemployedapproximately281,000persons.Approximately45percentofouremployeesarerepresentedbytheCommunications
WorkersofAmerica,theInternationalBrotherhoodofElectricalWorkersorotherunions.Four-yearcontractscoveringapproximately24,000traditionalwirelineemployeesin
ourSoutheastregionwereratifiedonDecember4,2015.Contractscoveringapproximately9,000mobilityemployeesintheSouthwestregionandnearly16,000traditional
wirelineemployeesinourWestregionwillexpirein2016.Afterexpirationofthecurrentagreements,workstoppagesorlabordisruptionsmayoccurintheabsenceofnew
contractsorotheragreementsbeingreached.Aseparatecontractcoveringonlybenefitswithapproximately40,000employeesinourmobilitybusinessexpiresin2016,though
thereisanostrike/nolock-outclause.Contractscoveringwagesandothernon-benefitworkingtermsforthesemobilityemployeesarestructuredonaregionalbasis.

89
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Dollarsinmillionsexceptpershareamounts

NOTE19.QUARTERLYFINANCIALINFORMATION(UNAUDITED)

Thefollowingtablesrepresentourquarterlyfinancialresults:

2015CalendarQuarter
First1 Second1 Third Fourth2 Annual
TotalOperatingRevenues $ 32,576 $ 33,015 $ 39,091 $ 42,119 $ 146,801
OperatingIncome 5,557 5,773 5,923 7,532 24,785
NetIncome 3,339 3,184 3,078 4,086 13,687
NetIncomeAttributabletoAT&T 3,263 3,082 2,994 4,006 13,345
BasicEarningsPerShare
AttributabletoAT&T3 $ 0.63 $ 0.59 $ 0.50 $ 0.65 $ 2.37
DilutedEarningsPerShare
AttributabletoAT&T3 $ 0.63 $ 0.59 $ 0.50 $ 0.65 $ 2.37
StockPrice
High $ 35.07 $ 36.45 $ 35.93 $ 34.99
Low 32.41 32.37 30.97 32.17
Close 32.65 35.52 32.58 34.41
1Amountshavebeenadjustedforthevoluntarychangeinaccountingpolicy(Note1).
2Includesanactuarialgainonpensionandpostretirementbenefitplans(Note12).
3Quarterlyearningspershareimpactsmaynotaddtofull-yearearningspershareimpactsduetothedifferenceinweighted-averagecommonsharesforthequartersversusthe
weighted-averagecommonsharesfortheyear.

2014CalendarQuarter
First1 Second1 Third1 Fourth1,2 Annual
TotalOperatingRevenues $ 32,476 $ 32,575 $ 32,957 $ 34,439 $ 132,447
OperatingIncome(Loss) 6,335 5,739 5,607 (5,469) 12,212
NetIncome(Loss) 3,770 3,697 3,187 (3,918) 6,736
NetIncome(Loss)AttributabletoAT&T 3,688 3,623 3,130 (3,999) 6,442
BasicEarnings(Loss)PerShare
AttributabletoAT&T3 $ 0.71 $ 0.70 $ 0.60 $ (0.77) $ 1.24
DilutedEarnings(Loss)PerShare
AttributabletoAT&T3 $ 0.70 $ 0.69 $ 0.60 $ (0.77) $ 1.24
StockPrice
High $ 35.50 $ 36.86 $ 37.48 $ 36.16
Low 31.74 34.32 34.17 32.07
Close 35.07 35.36 35.24 33.59
1Amountshavebeenadjustedforthevoluntarychangeinaccountingpolicy(Note1).
2Includesanactuariallossonpensionandpostretirementbenefitplans(Note12)andassetabandonmentcharges(Note6).
3Quarterlyearningspershareimpactsmaynotaddtofull-yearearningspershareimpactsduetothedifferenceinweighted-averagecommonsharesforthequartersversusthe
weighted-averagecommonsharesfortheyear.

90
ReportofManagement

TheconsolidatedfinancialstatementshavebeenpreparedinconformitywithU.S.generallyacceptedaccountingprinciples.Theintegrityandobjectivityofthedatainthese
financialstatements,includingestimatesandjudgmentsrelatingtomattersnotconcludedbyyearend,aretheresponsibilityofmanagement,asisallotherinformationincluded
intheAnnualReport,unlessotherwiseindicated.

ThefinancialstatementsofAT&TInc.(AT&T)havebeenauditedbyErnst&YoungLLP,IndependentRegisteredPublicAccountingFirm.Managementhasmadeavailableto
Ernst&YoungLLPallofAT&T'sfinancialrecordsandrelateddata,aswellastheminutesofstockholders'anddirectors'meetings.Furthermore,managementbelievesthatall
representationsmadetoErnst&YoungLLPduringitsauditwerevalidandappropriate.

ManagementmaintainsdisclosurecontrolsandproceduresthataredesignedtoensurethatinformationrequiredtobedisclosedbyAT&Tisrecorded,processed,summarized,
accumulatedandcommunicatedtoitsmanagement,includingitsprincipalexecutiveandprincipalfinancialofficers,toallowtimelydecisionsregardingrequireddisclosure,and
reportedwithinthetimeperiodsspecifiedbytheSecuritiesandExchangeCommission'srulesandforms.

Management also seeks to ensure the objectivity and integrity of its financial data by the careful selection of its managers, by organizational arrangements that provide an
appropriatedivisionofresponsibilityandbycommunicationprogramsaimedatensuringthatitspolicies,standardsandmanagerialauthoritiesareunderstoodthroughoutthe
organization.

TheAuditCommitteeoftheBoardofDirectorsmeetsperiodicallywithmanagement,theinternalauditorsandtheindependentauditorstoreviewthemannerinwhichtheyare
performingtheirrespectiveresponsibilitiesandtodiscussauditing,internalaccountingcontrolsandfinancialreportingmatters.Boththeinternalauditorsandtheindependent
auditorsperiodicallymeetalonewiththeAuditCommitteeandhaveaccesstotheAuditCommitteeatanytime.

AssessmentofInternalControl
ThemanagementofAT&Tisresponsibleforestablishingandmaintainingadequateinternalcontroloverfinancialreporting,asdefinedinRule13a-15(f)or15d-15(f)underthe
SecuritiesExchangeActof1934.AT&T'sinternalcontrolsystemwasdesignedtoprovidereasonableassurancetothecompany'smanagementandBoardofDirectorsregarding
thepreparationandfairpresentationofpublishedfinancialstatements.

AT&Tmanagementassessedtheeffectivenessofthecompany'sinternalcontroloverfinancialreportingasofDecember31,2015.Inmakingthisassessment,itusedthecriteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal
Control

Integrated
Framework
(2013 framework). We have
excludedfromthescopeofourassessmentofinternalcontroloverfinancialreportingtheoperationsandrelatedassetsofDIRECTVandMexicowirelessoperations(Mexico),
whichweacquiredin2015.AtDecember31,2015andfortheperiodfromacquisitionthroughDecember31,2015,totalassetsandoperatingrevenuessubjecttoDIRECTV's
internalcontroloverfinancialreportingrepresented20.3%and9.9%ofAT&T'sconsolidatedtotalassetsandtotalrevenuesasofandfortheyearendedDecember31,2015.At
December 31, 2015 and for the period from acquisition through December 31, 2015, total assets and operating revenues subject to Mexico's internal control over financial
reportingrepresented1.6%and1.3%ofAT&T'sconsolidatedtotalassetsandtotalrevenuesasofandfortheyearendedDecember31,2015.Basedonitsassessment,AT&T
managementbelievesthat,asofDecember31,2015,thecompany'sinternalcontroloverfinancialreportingiseffectivebasedonthosecriteria.

Ernst&YoungLLP,theindependentregisteredpublicaccountingfirmthatauditedthefinancialstatementsincludedinthisAnnualReport,hasissuedanattestationreporton
thecompany'sinternalcontroloverfinancialreporting.

/s/RandallStephenson

/s/JohnJ.Stephens

RandallStephenson

JohnJ.Stephens

ChairmanoftheBoard,

SeniorExecutiveVicePresidentand

ChiefExecutiveOfficerandPresident

ChiefFinancialOfficer
ReportofIndependentRegisteredAccountingFirm

TheBoardofDirectorsandStockholdersofAT&TInc.

WehaveauditedtheaccompanyingconsolidatedbalancesheetsofAT&TInc.(theCompany)asofDecember31,2015and2014,andtherelatedconsolidatedstatementsof
income,comprehensiveincome,changesinstockholders'equityandcashflowsforeachofthethreeyearsintheperiodendedDecember31,2015.Thesefinancialstatementsare
theresponsibilityoftheCompany'smanagement.Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudits.

WeconductedourauditsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperform
theaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement.Anauditincludesexamining,onatestbasis,evidence
supportingtheamountsanddisclosuresinthefinancialstatements.Anauditalsoincludesassessingtheaccountingprinciplesusedandsignificantestimatesmadeby
management,aswellasevaluatingtheoverallfinancialstatementpresentation.Webelievethatourauditsprovideareasonablebasisforouropinion.

Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionoftheCompanyatDecember31,2015and
2014,andtheconsolidatedresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodendedDecember31,2015,inconformitywithU.S.generally
acceptedaccountingprinciples.

AsdescribedinNote1totheconsolidatedfinancialstatements,theCompanyhaselectedtochangeitsmethodofaccountingforcustomerset-upandinstallationcostsforits
video,broadbandInternetandwirelinevoiceservicesin2015.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theCompany'sinternalcontroloverfinancial
reportingasofDecember31,2015,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganizationsofthe
TreadwayCommission(2013framework)andourreportdatedFebruary18,2016expressedanunqualifiedopinionthereon.

/s/ErnstandYoungLLP
Dallas,Texas
February18,2016
ReportofIndependentRegisteredPublicAccountingFirm

TheBoardofDirectorsandStockholdersofAT&TInc.

WehaveauditedAT&TInc.'s(theCompany)internalcontroloverfinancialreportingasofDecember31,2015,basedoncriteriaestablishedinInternalControl-Integrated
FrameworkissuedbytheCommitteeofSponsoringOrganizationsoftheTreadwayCommission(2013framework)(theCOSOcriteria).TheCompany'smanagementis
responsibleformaintainingeffectiveinternalcontroloverfinancialreporting,andforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedin
theaccompanyingReportofManagement.OurresponsibilityistoexpressanopinionontheCompany'sinternalcontroloverfinancialreportingbasedonouraudit.

WeconductedourauditinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates).Thosestandardsrequirethatweplanandperform
theaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtainingan
understandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessof
internalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesa
reasonablebasisforouropinion.

Acompany'sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationof
financialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany'sinternalcontroloverfinancialreportingincludesthose
policiesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthe
company;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyaccepted
accountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorizationsofmanagementanddirectorsofthecompany;
and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorizedacquisition,use,ordispositionofthecompany'sassetsthatcouldhaveamaterial
effectonthefinancialstatements.

Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofuture
periodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmay
deteriorate.

AsindicatedintheaccompanyingReportofManagement,management'sassessmentofandconclusionontheeffectivenessofinternalcontroloverfinancialreportingdidnot
includetheinternalcontrolsofitsDIRECTVandMexicowirelessbusinesses,whichareincludedintheDecember31,2015consolidatedfinancialstatementsoftheCompany.
DIRECTVconstituted20.3%oftotalassetsand9.9%oftotalrevenuesfortheyearthenended.TheMexicowirelessbusinessesconstituted1.6%oftotalassetsand1.3%oftotal
revenuesfortheyearthenended.OurauditofinternalcontroloverfinancialreportingoftheCompanydidnotincludeanevaluationoftheinternalcontroloverfinancial
reportingofDIRECTVortheMexicowirelessbusinesses.

Inouropinion,theCompanymaintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasofDecember31,2015,basedontheCOSOcriteria.

Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates),theconsolidatedbalancesheetsoftheCompanyas
ofDecember31,2015and2014,andtherelatedconsolidatedstatementsofincome,comprehensiveincome,changesinstockholders'equityandcashflowsforeachofthethree
yearsintheperiodendedDecember31,2015andourreportdatedFebruary18,2016expressedanunqualifiedopinionthereon.

/s/ErnstandYoungLLP
Dallas,Texas
February18,2016
Exhibit21

PRINCIPALSUBSIDIARIESOF

AT&TINC.,ASOFDECEMBER31,2015

2015AT&TINC.REPORTTOSTOCKHOLDERS

SECURITIESANDEXCHANGECOMMISSION("SEC")

FORM10-KfiledFebruary18,2016

Stateof
LegalName Incorporation/Formation ConductsBusinessUnder
IllinoisBellTelephone Illinois AT&TIllinois;
Company AT&TWholesale

IndianaBellTelephone Indiana AT&TIndiana;


Company,Incorporated AT&TWholesale

MichiganBell Michigan AT&TMichigan;


TelephoneCompany AT&TWholesale

NevadaBell Nevada AT&TNevada;


TelephoneCompany AT&TWholesale

PacificBell California AT&TCalifornia;


TelephoneCompany AT&TWholesale;
AT&TDataComm

SBCInternetServices,LLC California AT&TInternetServices

SBCLongDistance,LLC Delaware AT&TLongDistance

AT&TTeleholdings,Inc. Delaware AT&TMidwest;


AT&TWest;
AT&TEast

SouthwesternBell Delaware AT&TArkansas;AT&TKansas;
TelephoneCompany AT&TMissouri;AT&TOklahoma;
AT&TTexas;AT&TSouthwest;
AT&TDataComm;AT&TWholesale

TheOhioBell Ohio AT&TOhio;
TelephoneCompany AT&TWholesale

WisconsinBell,Inc. Wisconsin AT&TWisconsin;
AT&TWholesale

AT&TCorp. NewYork AT&TCorp.;ACCBusiness;
AT&TWholesale;LuckyDogPhoneCo.;
AT&TBusinessSolutions;
AT&TAdvancedSolutions;
AT&TDiversifiedGroup;
AT&TMobileandBusinessSolutions
AT&TCommunicationsof
NewYork,Inc. NewYork same

TeleportCommunications
America,LLC Delaware same

BellSouth,LLC Georgia AT&TSouth

BellSouthTelecommunications, Georgia AT&TAlabama
LLC AT&TFlorida
AT&TGeorgia
AT&TKentucky
AT&TLouisiana
AT&TMississippi
AT&TNorthCarolina
AT&TSouthCarolina
AT&TTennessee
AT&TSoutheast

AT&TMobilityLLC Delaware AT&TMobility

AT&TMobilityIILLC Delaware AT&TMobility

NewCingularWireless
Services,Inc. Delaware AT&TMobility

CricketWirelessLLC Delaware same

AT&TMobilityGroupB.V. TheNetherlands same

DIRECTV,LLC California same

DIRECTVEnterprises,LLC Delaware same

DIRECTVLatinAmerica,LLC Delaware same

SKYBrasilServiosLtda. Brazil same

DIRECTVColombiaLtda. Colombia same

DIRECTVArgentinaS.A. Argentina same

ConsentofIndependentRegisteredPublicAccountingFirm

WeconsenttotheincorporationbyreferenceinthisAnnualReport(Form10-K)ofAT&TInc.(AT&T)ofourreportsdatedFebruary18,2016,withrespecttotheconsolidated
financialstatementsofAT&TandtheeffectivenessofinternalcontroloverfinancialreportingofAT&T,includedinthe2015AnnualReporttoStockholdersofAT&T.

OurauditsalsoincludedthefinancialstatementscheduleofAT&TlistedinItem15(a).ThisscheduleistheresponsibilityofAT&T'smanagement.Ourresponsibilityisto
expressanopinionbasedonouraudits.Inouropinion,astowhichthedateisFebruary18,2016,thefinancialstatementschedulereferredtoabove,whenconsideredinrelation
tothebasicfinancialstatementstakenasawhole,presentsfairlyinallmaterialrespectstheinformationsetforththerein.

WeconsenttotheincorporationbyreferenceofourreportsdatedFebruary18,2016,withrespecttotheconsolidatedfinancialstatementsofAT&Tandtheeffectivenessof
internalcontroloverfinancialreportingofAT&T,incorporatedbyreferenceinthisAnnualReport(Form10-K)ofAT&TfortheyearendedDecember31,2015andthe
financialstatementscheduleofAT&Tincludedherein,inthefollowingRegistrationStatements:

(1)RegistrationStatement(FormS-8No.333-34062)pertainingtotheStockSavingsPlan,
(2)RegistrationStatement(FormS-8No.333-120894)pertainingtotheAT&TStockPurchaseandDeferralPlanandCashDeferralPlan,
(3)RegistrationStatement(FormS-8No.333-129814)pertainingtotheAT&TSavingsPlanandcertainotherplans,
(4)RegistrationStatement(FormS-3No.333-187350)ofAT&TandtherelatedProspectuses,
(5)RegistrationStatement(FormS-8No.333-135517)pertainingtothe2006IncentivePlan,
(6)RegistrationStatement(FormS-8No.333-139749)pertainingtotheBellSouthRetirementSavingsPlanandcertainotherBellSouthplans,
(7)RegistrationStatement(FormS-8No.333-152822)pertainingtotheAT&TNon-EmployeeDirectorStockPurchasePlan,
(8)RegistrationStatement(FormS-8No.333-173079)pertainingtotheAT&T2011IncentivePlan,
(9)RegistrationStatement(FormS-8No.333-188384)pertainingtotheAT&TStockPurchaseandDeferralPlanandCashDeferralPlan,
(10)RegistrationStatement(FormS-8No.333-189789)pertainingtotheAT&TSavingsandSecurityPlan,theAT&TPuertoRicoRetirementSavingsPlan,theAT&T
RetirementSavingsPlan,andtheBellSouthSavingsandSecurityPlan,
(11)RegistrationStatement(FormS-4No.333-188382)pertainingtotheRegisteredExchangeOfferundertheRegistrationRightsAgreement,datedDecember17,2012,
(12)RegistrationStatement(FormS-4No333-197144)pertainingtotheDIRECTVmerger,and
(13)RegistrationStatement(FormS-8No333-205868)pertainingtotheDIRECTV2010StockPlan,theDIRECTV401(k)SavingsPlan,andtheLibertyEntertainment,
Inc.TransitionalStockAdjustmentPlan

/s/ErnstandYoung
Dallas,Texas
February18,2016
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Jonathan P. Klug, David R. McAtee II,
John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the attorneys for the
undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the Corporation, to
execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto, hereby giving and
granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever requisite and
necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might or could do if
personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully do, or cause to
be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 24, 2016 /s/ Randall L. Stephenson


Date Randall L. Stephenson
Chairman of the Board, Chief Executive Officer and
President
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Samuel A. Di Piazza, Jr.


Date Samuel A. Di Piazza, Jr.
Director


Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Richard W. Fisher


Date Richard W. Fisher
Director


Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Scott T. Ford


Date Scott T. Ford
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Glenn H. Hutchins


Date Glenn H. Hutchins
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ William E. Kennard


Date William E. Kennard
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Jon C. Madonna


Date Jon C. Madonna
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Michael B. McCallister


Date Michael B. McCallister
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ John B. McCoy


Date John B. McCoy
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Beth E. Mooney


Date Beth E. Mooney
Director

Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Joyce M. Roch


Date Joyce M. Roch
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Matthew K. Rose


Date Matthew K. Rose
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Cynthia B. Taylor


Date Cynthia B. Taylor
Director
Exhibit 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

THAT, AT&T INC., a Delaware corporation, hereinafter referred to as the "Corporation," proposes to file with the Securities
and Exchange Commission at Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, an
annual report on Form 10-K; and

NOW, THEREFORE, each of the undersigned hereby constitutes and appoints Randall L. Stephenson, Jonathan P. Klug,
David R. McAtee II, John J. Stephens, Paul W. Stephens, or any one of them, all of the City of Dallas and State of Texas, the
attorneys for the undersigned and in the undersigned's name, place and stead, and in the undersigned's office and capacity in the
Corporation, to execute and file such annual report, and thereafter to execute and file any amendment or amendments thereto,
hereby giving and granting to said attorneys full power and authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and concerning the premises, as fully to all intents and purposes as the undersigned might
or could do if personally present at the doing thereof, hereby ratifying and confirming all that said attorneys may or shall lawfully
do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has hereunto set his or her hand the date set forth opposite their name.

January 29, 2016 /s/ Laura D'Andrea Tyson


Date Laura D'Andrea Tyson
Director
Exhibit31.1
CERTIFICATION

I,RandallStephenson,certifythat:

1. IhavereviewedthisreportonForm10-KofAT&TInc.;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlight
ofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,results
ofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-
15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:
a) Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterial
informationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthis
reportisbeingprepared;
b) Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonable
assuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccounting
principles;
c) Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosure
controlsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
d) Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(theregistrant's
fourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternalcontroloverfinancial
reporting;and

5. Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant'sauditors
andtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
a) Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffectthe
registrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
b) Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancialreporting.

Date:February18,2016

/s/RandallStephenson...
RandallStephenson
ChairmanoftheBoard,
ChiefExecutiveOfficerandPresident
Exhibit31.2
CERTIFICATION

I,JohnJ.Stephens,certifythat:

1. IhavereviewedthisreportonForm10-KofAT&TInc.;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlight
ofthecircumstancesunderwhichsuchstatementsweremade,notmisleadingwithrespecttotheperiodcoveredbythisreport;

3. Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,results
ofoperationsandcashflowsoftheregistrantasof,andfor,theperiodspresentedinthisreport;

4. Theregistrant'sothercertifyingofficer(s)andIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-
15(e)and15d-15(e))andinternalcontroloverfinancialreporting(asdefinedinExchangeActRules13a-15(f)and15d-15(f))fortheregistrantandhave:
a) Designedsuchdisclosurecontrolsandprocedures,orcausedsuchdisclosurecontrolsandprocedurestobedesignedunderoursupervision,toensurethatmaterial
informationrelatingtotheregistrant,includingitsconsolidatedsubsidiaries,ismadeknowntousbyotherswithinthoseentities,particularlyduringtheperiodinwhichthis
reportisbeingprepared;
b) Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreportingtobedesignedunderoursupervision,toprovidereasonable
assuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccounting
principles;
c) Evaluatedtheeffectivenessoftheregistrant'sdisclosurecontrolsandproceduresandpresentedinthisreportourconclusionsabouttheeffectivenessofthedisclosure
controlsandprocedures,asoftheendoftheperiodcoveredbythisreportbasedonsuchevaluation;and
d) Disclosedinthisreportanychangeintheregistrant'sinternalcontroloverfinancialreportingthatoccurredduringtheregistrant'smostrecentfiscalquarter(theregistrant's
fourthfiscalquarterinthecaseofanannualreport)thathasmateriallyaffected,orisreasonablylikelytomateriallyaffect,theregistrant'sinternalcontroloverfinancial
reporting;and

5. Theregistrant'sothercertifyingofficer(s)andIhavedisclosed,basedonourmostrecentevaluationofinternalcontroloverfinancialreporting,totheregistrant'sauditors
andtheauditcommitteeoftheregistrant'sboardofdirectors(orpersonsperformingtheequivalentfunctions):
a) Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancialreportingwhicharereasonablylikelytoadverselyaffectthe
registrant'sabilitytorecord,process,summarizeandreportfinancialinformation;and
b) Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantroleintheregistrant'sinternalcontroloverfinancialreporting.

Date:February18,2016

/s/JohnJ.Stephens.
JohnJ.Stephens
SeniorExecutiveVicePresident
andChiefFinancialOfficer
CertificationofPeriodicFinancialReports

Pursuantto18U.S.C.Section1350,eachoftheundersignedofficersofAT&TInc.(the"Company")herebycertifiesthattheCompany'sAnnualReportonForm10-Kfor
theyearendedDecember31,2015(the"Report")fullycomplieswiththerequirementsofSection13(a)or15(d),asapplicable,oftheSecuritiesExchangeActof1934andthat
informationcontainedintheReportfairlypresents,inallmaterialrespects,thefinancialconditionandresultsofoperationsoftheCompany.


February18,2016 February18,2016

.
By:/s/JohnJ.Stephens
By:/s/RandallStephenson
JohnJ.Stephens
RandallStephenson
SeniorExecutiveVice
ChairmanoftheBoard,ChiefExecutiveOfficer
President
andPresident
andChiefFinancialOfficer

Theforegoingcertificationisbeingfurnishedsolelypursuantto18U.S.C.Section1350andisnotbeingfiledaspartoftheReportorasaseparatedisclosuredocument.This
certificationshallnotbedeemed"filed"forpurposesofSection18oftheSecuritiesExchangeActof1934("ExchangeAct")orotherwisesubjecttoliabilityunderthatsection.
ThiscertificationshallnotbedeemedtobeincorporatedbyreferenceintoanyfilingundertheSecuritiesActof1933ortheExchangeActexcepttotheextentthisExhibit32is
expresslyandspecificallyincorporatedbyreferenceinanysuchfiling.

AsignedoriginalofthiswrittenstatementrequiredbySection906,orotherdocumentauthenticating,acknowledging,orotherwiseadoptingthesignaturethatappearsintyped
formwithintheelectronicversionofthiswrittenstatementrequiredbySection906,hasbeenprovidedtoAT&TInc.andwillberetainedbyAT&TInc.andfurnishedtothe
SecuritiesandExchangeCommissionoritsstaffuponrequest.
Exhibit99

2015CalendarQuarter 2015CalendarQuarter
Historical Reported Adjusted Reported EffectofChange
First Second Third Fourth Annual First Second Third Fourth Annual First Second Third Fourth Annual
Total $32,576$33,015$39,091$ 42,119$146,801 $ 32,576$ 33,015$ 39,091$ 42,119$ 146,801 $ -$ -$ -$ -$ -
Operating
Revenues
Operating 5,456 5,712 5,923 7,532 24,623 5,557 5,773 5,923 7,532 24,785 101 61 - - 162
Income
NetIncome 3,276 3,146 3,078 4,086 13,586 3,339 3,184 3,078 4,086 13,687 63 38 - - 101
NetIncome 3,200 3,044 2,994 4,006 13,244 3,263 3,082 2,994 4,006 13,345 63 38 - - 101
Attributable
toAT&T
Basic $0.61$0.58$0.50$ 0.65$2.34 $0.63$0.59$0.50$ 0.65$2.37 $0.02$0.01$ -$ -$0.03
Earnings
PerShare
Attributable
toAT&T
Diluted $0.61$0.58$0.50$ 0.65$2.34 $0.63$0.59$0.50$ 0.65$2.37 $0.02$0.01$ -$ -$0.03
Earnings
PerShare
Attributable
toAT&T


2014CalendarQuarter(Historical) 2014CalendarQuarter(Adjusted) EffectofChange
First Second Third Fourth Annual First Second Third Fourth Annual First Second Third Fourth Annual
Total $32,476$32,575$32,957$ 34,439$132,447 $32,476$32,575$32,957$ 34,439$132,447 $ -$ -$ -$ -$ -
Operating
Revenues
Operating 6,278 5,616 5,402 (5,550) 11,746 6,335 5,739 5,607 (5,469) 12,212 57 123 205 81 466
Income
(Loss)
NetIncome 3,734 3,621 3,059 (3,896) 6,518 3,770 3,697 3,187 (3,918) 6,736 36 76 128 (22) 218
(Loss)
NetIncome 3,652 3,547 3,002 (3,977) 6,224 3,688 3,623 3,130 (3,999) 6,442 36 76 128 (22) 218
(Loss)
Attributable
toAT&T
Basic $0.70$0.68$0.58$(0.77)$1.19 $0.71$0.70$0.60$(0.77)$1.24 $0.01$0.02$0.02$ -$0.05
Earnings
(Loss)Per
Share
Attributable
toAT&T
Diluted $0.70$0.68$0.58$(0.77)$1.19 $0.70$0.69$0.60$(0.77)$1.24 $ -$0.01$0.02$ -$0.05
Earnings
PerShare
Attributable
toAT&T