8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) October 22, 2009

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-8610	43-1301883
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

208 S. Akard St., Dallas, Texas	75202
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

The registrant announced on October 22, 2009, its results of operations for the third quarter of 2009. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(c)          Exhibits

99.1 Press release dated October 22, 2009 reporting financial results for the third quarter ended September 30, 2009.

99.2	AT&T Inc. selected financial statements and operating data.
99.3	Discussion of OIBDA,  Free Cash Flow, Free Cash Flow Yield, and Free Cash Flow after Dividends

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AT&T INC.
Date: October 22, 2009	By: /s/ John J. Stephens         John J. Stephens Senior Vice President and Controller

EX-99.1

For more information, contact:

McCall Butler

Mobile: 917-209-5792

E-mail: mbutler@attnews.us

Record Wireless Gains, Double-Digit

Growth in IP-Based Revenues, Strong Cash Flow

Highlight AT&T's Third-Quarter Results

§   $0.54 diluted EPS compared with $0.55 for the year-earlier third quarter and $0.54 in the second quarter of 2009

§   2.0 million increase in total wireless subscribers – highest third-quarter net gain in the company’s history – to reach 81.6 million, up 6.7 million over the past year; 1.4 million retail postpaid wireless net adds in the quarter

§   Best-ever third-quarter postpaid wireless subscriber churn of 1.17 percent and record-low total subscriber churn of 1.43 percent

§   Postpaid wireless subscriber ARPU (average monthly revenues per subscriber) up 3.8 percent versus the year-earlier quarter and up 1.7 percent sequentially; seventh consecutive quarter with a year-over-year increase in postpaid ARPU

§   4.3 million postpaid 3G integrated wireless devices added to AT&T’s network, the largest quarterly increase in the company’s history; integrated device growth included 3.2 million iPhone activations, also the company’s largest quarterly total to date (integrated devices are handsets with QWERTY or virtual keyboards in addition to voice functionality)

§   33.6 percent increase in wireless data revenues to $3.6 billion, more than double the company’s total in the third quarter two years earlier, driven by growth in data plans and increased customer usage of Internet access, messaging and related services

§   240,000 net gain in AT&T U-verseSM TV subscribers – up from 232,000 added in the year-earlier third quarter – to reach 1.8 million in service, with continued high broadband and voice attach rates

§   18.7 percent growth in wireline IP data revenues driven by AT&T U-verse expansion and growth in advanced business products; 16.6 percent growth in revenues from strategic business services such as Ethernet, Virtual Private Networks (VPNs), hosting and application services

§   $9.7 billion cash from operating activities in the third quarter and $25.5 billion year to date; free cash flow of $5.5 billion in the quarter and $13.9 billion year to date, up from $7.9 billion in the first three quarters of 2008 (free cash flow is cash from operating activities minus capital expenditures)

Note: AT&T's third-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Thursday, October 22, 2009, at www.att.com/investor.relations.

DALLAS, Oct. 22, 2009 — AT&T Inc. (NYSE:T) today reported third-quarter results highlighted by strong wireless gains, further expansion of AT&T U-verse services and continued double-digit growth in revenues from strategic business products. Progress in these areas and solid cost execution largely offset economic pressures and declines in voice, legacy data and print advertising products to drive strong cash flow along with revenues and earnings that were in line with the first two quarters of 2009.

Third-quarter revenues totaled $30.9 billion, net income attributable to AT&T was $3.2 billion, diluted earnings per share totaled $0.54 and cash from operating activities totaled $9.7 billion.

“We delivered a terrific wireless quarter, IP data growth was strong and execution across the business continues to be solid,” said Randall Stephenson, AT&T chairman and chief executive officer.

“As the economy works to regain its footing, we are keenly focused on cost improvement as well as continued leadership and investment in key areas that will drive future growth. We have moved forward aggressively to further expand in mobile broadband. AT&T U-verse has good traction and is redefining our wired consumer experience. Our advanced business products have proven to be resilient, and we continue to expand our capabilities in areas like network security and global Wi-Fi coverage.

“These and other initiatives benefit customers, drive innovation across the industry and strengthen our long-term growth prospects.”

Third-Quarter Financial Results

For the quarter ended Sept. 30, 2009, AT&T's consolidated revenues totaled $30.9 billion, compared with $31.3 billion in the year-earlier quarter, as growth in wireless and advanced wireline data services in large part offset declines in voice, legacy data and print advertising products. Versus the second quarter of this year, consolidated revenues were up 0.4 percent, marking the company’s second consecutive quarter with a sequential revenue increase. Consistent with results in the third quarter and year to date, AT&T expects consolidated revenues for the full year 2009 will be slightly below 2008 results.

Compared with results for the year-earlier quarter, AT&T's operating expenses for the third quarter of 2009 were $25.5 billion versus $25.7 billion; operating income was $5.4 billion versus $5.6 billion; and AT&T's operating income margin was 17.5 percent, compared with 17.9 percent.

Net income attributable to AT&T totaled $3.2 billion compared with $3.2 billion in both the year-earlier third quarter and the second quarter of this year. Earnings per diluted share totaled $0.54, compared with $0.55 in the third quarter of 2008 and $0.54 in the second quarter of 2009.

In addition to solid operational performance, third-quarter 2009 earnings per share reflect a $0.03 benefit from the resolution of tax issues, offset by $0.02 of severance charges. Year-over-year expense, margin and earnings comparisons reflect incremental noncash pension and retiree benefit expenses in the third quarter of 2009 of more than $300 million, or $0.04 per diluted share. AT&T expects a similar year-over-year impact from noncash pension and retiree benefit expenses in the fourth quarter of 2009.

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For the third quarter, AT&T's cash from operating activities totaled $9.7 billion, capital expenditures totaled $4.2 billion, free cash flow (cash from operations minus capital expenditures) totaled $5.5 billion, and dividends paid totaled $2.4 billion.

Year to date through the third quarter, compared with results for the first three quarters of 2008, cash from operating activities totaled $25.5 billion, up from $22.8 billion; capital expenditures totaled $11.6 billion versus $14.8 billion; free cash flow totaled $13.9 billion, up from $7.9 billion; and dividends paid totaled $7.3 billion versus $7.2 billion. AT&T expects to generate continued positive free cash flow in the fourth quarter and expects free cash flow for the full year 2009 will be well above 2008 results.

Wireless Operational Highlights

AT&T delivered strong wireless growth in the third quarter as customers continue to respond positively to AT&T’s extensive network capabilities, attractive devices and broad access to applications. Highlights included:

§   Best-Ever Third-Quarter Subscriber Gain. Total wireless subscribers increased by 2.0 million in the third quarter – up slightly from results in the year-earlier quarter and up 48.1 percent versus net adds in the second quarter of this year. This was AT&T’s best-ever third-quarter net add total and the third quarter out of the past five in which AT&T achieved total wireless net adds approaching or exceeding  the 2 million mark. Over the past 12 months, AT&T’s wireless subscriber total increased by 6.7 million to 81.6 million. Retail postpaid net adds totaled 1.4 million – the second highest third-quarter total in the company’s history, behind only the third quarter of 2008, which included a strong iPhone 3G launch – and were up 20.1 percent versus results in the second quarter of this year.

§   Record-Low Subscriber Churn. Total wireless average monthly subscriber churn reached a record low of 1.43 percent, down from 1.69 percent in the year-earlier quarter. Postpaid churn improved from 1.22 percent in the year-earlier quarter to 1.17 percent, a third-quarter record for the company.

§   Strongest Integrated Device Quarter To Date. Postpaid 3G integrated wireless devices added to AT&T’s network in the third quarter totaled 4.3 million, the largest quarterly increase in the company’s history.Over the past year, the number of postpaid integrated devices on AT&T’s network more than doubled, and at the end of the third quarter, 41.7 percent of AT&T’s 63.4 million postpaid subscribers had integrated devices. The average ARPU for integrated devices on AT&T’s network continues to be 1.8 times that of the company’s nonintegrated-device base.

§   Record iPhone Activations. AT&T’s third-quarter integrated device growth included 3.2 million iPhone activations, also the company’s largest quarterly total to date, with nearly 40 percent of the activations for customers who were new to AT&T.

§   Continued Robust Growth in Wireless Data Revenues. Wireless data revenues – from messaging, Internet access, access to applications and related services – increased $916 million, or 33.6 percent, from the year-earlier third quarter to $3.6 billion, more than double the company’s total in the third quarter two years earlier. Data represented 29.4 percent of AT&T’s third-quarter wireless service revenues, up from 24.2 percent in the year-earlier quarter and 18.4 percent in the third quarter of 2007. Wireless text messages on the AT&T network exceeded 120 billion, nearly double the total for the year-earlier quarter. Internet access and media bundle revenues also continued their strong growth.

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§   Seventh Consecutive Quarter of Postpaid ARPU Growth. Driven by strong data growth, postpaid subscriber ARPU increased 3.8 percent versus the year-earlier quarter to $61.23. This compares with 2.3 percent year-over-year growth in the second quarter of this year and marks the seventh consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. On a sequential basis, postpaid ARPU was up 1.7 percent. Postpaid data ARPU reached $18.37, up 25.0 percent versus the year-earlier quarter and up 3.7 percent sequentially.

§   Wireless Margin Strength. Wireless service revenues grew 10.0 percent to $12.4 billion in the third quarter, and AT&T delivered substantial year-over-year margin expansion and sequential margin stability. Margins reflect churn improvements, operational execution to improve operating efficiencies in network and support systems, and further growth in the company’s base of high-quality integrated device subscribers. These factors offset increased acquisition costs associated with the company’s record quarter for iPhone activations. In the third quarter, wireless operating expenses totaled $10.3 billion, up 0.5 percent versus the year-earlier quarter and up 2.0 percent sequentially. Wireless operating income was $3.4 billion, up 41.2 percent versus the third quarter of 2008 and up 6.6 percent sequentially. AT&T’s wireless operating income margin was 24.6 percent, versus 18.9 percent in the year-earlier quarter and 23.8 percent in the second quarter of this year. AT&T’s wireless OIBDA service margin was 38.5 percent, compared with 33.5 percent in the year-earlier quarter and 38.3 percent in the second quarter of 2009. AT&T’s longer-term outlook for its wireless OIBDA service margin continues to be in the mid-40 percent range. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline Operational Highlights

AT&T’s third-quarter wireline results were highlighted by solid cost management, further expansion in AT&T U-verse services and sustained mid-teens growth in revenues from strategic business services such as VPNs, Ethernet, hosting and application services. Highlights included:

§   Continued Strong AT&T U-verse Gains. AT&T U-verse TV subscribers increased by 240,000 – versus a net gain of 232,000 in the year-earlier third quarter – to reach 1.8 million, up more than 1.0 million over the past year. AT&T U-verse TV’s broadband attach rate continues to run well above 90 percent, and its U-verse Voice attach rate continues to run above 60 percent. More than three-fourths of U-verse TV subscribers have a triple- or quad-play option from AT&T. At the end of the third quarter, AT&T’s U-verse deployment passed more than 20 million living units. Companywide penetration of eligible living units was above 12 percent, and across areas marketed to for 24 months or more, overall penetration now exceeds 20 percent. AT&T’s total video subscribers, which combine the company’s U-verse and bundled satellite customers, reached 4.0 million at the end of the third quarter, representing 14.9 percent of households served.

§   Broadband Growth. AT&T U-verse broadband continued its strong growth in the third quarter with a net subscriber gain of 252,000 subscribers, and growth in stand-alone broadband continues to be strong. These factors more than offset declines in traditional DSL connections for a 90,000 net gain in wireline broadband connections. Total broadband connections, which include wireline subscribers and wireless customers with 3G LaptopConnect cards, increased by 138,000 in the quarter to reach 17.1 million.

4

§   32.1 Percent Growth in Revenues from Consumer IP-Based Services.Increased AT&T U-verse TV penetration with a greater number of triple- and quad-play customers drove 32.1 percent year-over-year growth in consumer IP revenues in the third quarter, AT&T’s best growth in this category to date. Broadband, U-verse TV and U-verse Voice now represent 32.4 percent of AT&T’s consumer wireline revenues, up from 23.2 percent in the year-earlier third quarter and 18.7 percent in the third quarter of 2007.

§   Further Growth in Revenues Per Household.Driven by AT&T U-verse, wireline revenues per household served increased 2.5 percent versus the year-earlier third quarter and were up 1.3 percent sequentially. This marked AT&T’s seventh consecutive quarter with year-over-year growth in wireline consumer revenues per household.

§   Improved Consumer Revenue Connection Trends.Reflecting increased penetration of AT&T U-verse services, AT&T’sthird-quarter sequential decline in consumer revenue connections (retail voice, high speed Internet and video) was 27.5 percent smaller than the decline in the year-earlier quarter. Combined wireline consumer TV and broadband connections increased by 320,000 in the quarter and 1.9 million over the past year.AT&T U-verse Voice connections increased by 165,000 in the quarter and 631,000 over the past year. AT&T had 45.7 million total consumer revenue connections at the end of the third quarter, compared with 46.3 million at the end of the second quarter of 2009 and 47.5 million at the end of the third quarter of 2008, reflecting declines in traditional voice access lines partially offset by increases in broadband, TV and VoIP connections.

§   Continued Mid-Teens Percentage Growth in Revenues from Strategic Business Services. Revenues from new-generation capabilities that lead AT&T’s most advanced solutions – including Ethernet, VPNs, hosting, IP conferencing and application services – grew 16.6 percent versus the year-earlier third quarter and were up 5.2 percent sequentially. This compares with 15.2 percent year-over-year growth and a 3.8 percent sequential increase in the second quarter of this year.

§   Solid Business IP Data Growth. Growth in IP data revenues continues to partially offset economic pressures in legacy business products. Business IP data revenues grew 6.8 percent versus the year-earlier third quarter and were up 3.1 percent sequentially. This compares with 5.8 percent year-over-year growth and a slight sequential decline in the second quarter of this year. AT&T’s IP data gains continue to be led by high-teens percentage growth in VPN revenues. More than 60 percent of AT&T’s frame customers have made the transition to IP-based solutions, which allow them to easily add managed services such as network security, hosting and IP conferencing on top of their infrastructures. In the third quarter of 2009, IP revenues represented 31.7 percent of AT&T’s total business data revenues, up from 29.3 percent in the year-earlier quarter and 26.1 percent in the third quarter of 2007.

§   Sequential Stability in Wireline Margins. Solid execution on cost initiatives drove reductions in wireline operating expenses and helped achieve a wireline operating margin that was essentially stable sequentially. Wireline revenues declined 7.1 percent versus the year-earlier quarter and 1.3 percent sequentially to $16.3 billion. Wireline operating expenses declined 2.8 percent versus the year-earlier third quarter and 0.9 percent sequentially. Major cost-improvement initiatives include areas such as organizational and systems integration as well as order and billing center consolidation.

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About AT&T

AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services, the nation's fastest 3G network and the best wireless coverage worldwide, and the nation's leading high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of their three-screen integration strategy, AT&T operating companies are expanding their TV entertainment offerings. In 2009, AT&T again ranked No. 1 in the telecommunications industry on FORTUNE® magazine's list of the World's Most Admired Companies. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com.

© 2009 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Note: This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss. For more information, please review this announcement in the AT&T newsroom at http://www.att.com/newsroom.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.att.com/investor.relations. Accompanying financial statements follow.

NOTE: OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from Segment Operating Income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. We believe this metric provides useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

6

EX-99.2

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2009			9/30/2008			% Chg			9/30/2009			9/30/2008			% Chg
Operating Revenues
Wireless service	$	12,372		$	11,227			10.2	%	$	35,978		$	32,726			9.9	%
Voice		7,940			9,313			-14.7	%		24,702			28,525			-13.4	%
Data		6,424			6,144			4.6	%		18,981			18,170			4.5	%
Directory		1,162			1,333			-12.8	%		3,622			4,114			-12.0	%
Other		2,957			3,325			-11.1	%		8,877			9,417			-5.7	%
Total Operating Revenues		30,855			31,342			-1.6	%		92,160			92,952			-0.9	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		12,885			13,022			-1.1	%		37,605			36,914			1.9	%
Selling, general and administrative		7,672			7,724			-0.7	%		23,225			23,034			0.8	%
Depreciation and amortization		4,910			4,978			-1.4	%		14,699			14,839			-0.9	%
Total Operating Expenses		25,467			25,724			-1.0	%		75,529			74,787			1.0	%
Operating Income		5,388			5,618			-4.1	%		16,631			18,165			-8.4	%
Interest Expense		853			858			-0.6	%		2,581			2,577			0.2	%
Equity in Net Income of Affiliates		181			257			-29.6	%		549			712			-22.9	%
Other Income (Expense) - Net		27			(23	)		-			43			97			-55.7	%
Income Before Income Taxes		4,743			4,994			-5.0	%		14,642			16,397			-10.7	%
Income Taxes		1,468			1,705			-13.9	%		4,890			5,746			-14.9	%
Net Income		3,275			3,289			-0.4	%		9,752			10,651			-8.4	%
Less: Net Income Attributable to Noncontrolling Interest		(83	)		(59	)		-40.7	%		(236	)		(188	)		-25.5	%
Net Income Attributable to AT&T	$	3,192		$	3,230			-1.2	%	$	9,516		$	10,463			-9.1	%
Basic Earnings Per Share Attributable to AT&T	$	0.54		$	0.55			-1.8	%	$	1.61		$	1.76			-8.5	%
Weighted Average Common
Shares Outstanding (000,000)		5,901			5,893			0.1	%		5,899			5,938			-0.7	%
Diluted Earnings Per Share Attributable to AT&T	$	0.54		$	0.55			-1.8	%	$	1.61		$	1.75			-8.0	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		5,922			5,921			0.0	%		5,922			5,971			-0.8	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Nine Months Ended
Wireless	9/30/2009			9/30/2008			% Chg			9/30/2009			9/30/2008			% Chg
Segment Operating Revenues
Service	$	12,399		$	11,273			10.0	%	$	36,050		$	32,869			9.7	%
Equipment		1,255			1,345			-6.7	%		3,709			3,607			2.8	%
Total Segment Operating Revenues		13,654			12,618			8.2	%		39,759			36,476			9.0	%
Segment Operating Expenses
Operations and support		8,877			8,838			0.4	%		25,620			23,750			7.9	%
Depreciation and amortization		1,418			1,401			1.2	%		4,288			4,327			-0.9	%
Total Segment Operating Expenses		10,295			10,239			0.5	%		29,908			28,077			6.5	%
Segment Operating Income		3,359			2,379			41.2	%		9,851			8,399			17.3	%
Equity in Net Income of Affiliates		-			-			-			-			5			-
Segment Income	$	3,359		$	2,379			41.2	%	$	9,851		$	8,404			17.2	%
Segment Operating Income Margin		24.6	%		18.9	%					24.8	%		23.0	%
Wireline
Segment Operating Revenues
Voice	$	8,132		$	9,515			-14.5	%	$	25,289		$	29,191			-13.4	%
Data		6,747			6,401			5.4	%		19,900			18,893			5.3	%
Other		1,425			1,634			-12.8	%		4,319			4,698			-8.1	%
Total Segment Operating Revenues		16,304			17,550			-7.1	%		49,508			52,782			-6.2	%
Segment Operating Expenses
Operations and support		11,097			11,456			-3.1	%		33,659			34,141			-1.4	%
Depreciation and amortization		3,289			3,352			-1.9	%		9,787			9,814			-0.3	%
Total Segment Operating Expenses		14,386			14,808			-2.8	%		43,446			43,955			-1.2	%
Segment Operating Income		1,918			2,742			-30.1	%		6,062			8,827			-31.3	%
Equity in Net Income of Affiliates		9			9			0.0	%		17			18			-5.6	%
Segment Income	$	1,927		$	2,751			-30.0	%	$	6,079		$	8,845			-31.3	%
Segment Operating Income Margin		11.8	%		15.6	%					12.2	%		16.7	%
Advertising Solutions
Segment Operating Revenues	$	1,180		$	1,350			-12.6	%	$	3,680		$	4,174			-11.8	%
Segment Operating Expenses
Operations and support		721			735			-1.9	%		2,221			2,293			-3.1	%
Depreciation and amortization		158			194			-18.6	%		500			609			-17.9	%
Total Segment Operating Expenses		879			929			-5.4	%		2,721			2,902			-6.2	%
Segment Income	$	301		$	421			-28.5	%	$	959		$	1,272			-24.6	%
Segment Income Margin		25.5	%		31.2	%					26.1	%		30.5	%
Other
Segment Operating Revenues	$	427		$	501			-14.8	%	$	1,288		$	1,557			-17.3	%
Segment Operating Expenses		616			425			44.9	%		1,528			1,890			-19.2	%
Segment Operating Income (Loss)		(189	)		76			-			(240	)		(333	)		27.9	%
Equity in Net Income of Affiliates		172			248			-30.6	%		531			689			-22.9	%
Segment Income(Loss)	$	(17	)	$	324			-		$	291		$	356			-18.3	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	9/30/09			12/31/08
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	6,167		$	1,792
Accounts receivable - net of allowances for
uncollectibles of $1,345 and $1,270		14,796			16,047
Prepaid expenses		1,791			1,538
Deferred income taxes		991			1,014
Other current assets		2,176			2,165
Total current assets		25,921			22,556
Property, Plant and Equipment - Net		98,321			99,088
Goodwill		71,727			71,829
Licenses		47,946			47,306
Customer Lists and Relationships - Net		7,814			10,582
Other Intangible Assets - Net		5,656			5,824
Investments in Equity Affiliates		2,813			2,332
Other Assets		6,370			5,728
Total Assets	$	266,568		$	265,245
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	6,755		$	14,119
Accounts payable and accrued liabilities		18,093			20,032
Advanced billing and customer deposits		4,036			3,849
Accrued taxes		1,965			1,874
Dividends payable		2,419			2,416
Total current liabilities		33,268			42,290
Long-Term Debt		65,909			60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		22,279			19,196
Postemployment benefit obligation		31,750			31,930
Other noncurrent liabilities		13,361			14,207
Total deferred credits and other noncurrent liabilities		67,390			65,333
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Capital in excess of par value		91,678			91,728
Retained earnings		38,841			36,591
Treasury shares (at cost)		(21,280	)		(21,410	)
Accumulated other comprehensive income (loss)		(16,161	)		(17,057	)
Noncontrolling Interest		428			403
Total stockholders' equity		100,001			96,750
Total Liabilities and Stockholders' Equity	$	266,568		$	265,245

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited	Nine Months Ended
	9/30/09			9/30/08
Operating Activities
Net income	$	9,752		$	10,651
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		14,699			14,839
Provision for uncollectible accounts		1,384			1,297
Deferred income tax expense		2,574			4,063
Net (gain) loss from impairment on sale of investments		89			(2	)
Changes in operating assets and liabilities:
Accounts receivable		(133	)		(1,597	)
Other current assets		(288	)		616
Accounts payable and accrued liabilities		(361	)		(5,958	)
Stock-based compensation tax benefit		-			(15	)
Other - net		(2,235	)		(1,121	)
Total adjustments		15,729			12,122
Net Cash Provided by Operating Activities		25,481			22,773
Investing Activities
Construction and capital expenditures
Capital expenditures		(11,067	)		(14,388	)
Interest during construction		(553	)		(455	)
Acquisitions, net of cash acquired		(184	)		(10,086	)
Dispositions		205			1,444
Investments in securities, net of sales		(14	)		(103	)
Sale of other Investments		-			436
Other		44			33
Net Cash Used in Investing Activities		(11,569	)		(23,119	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(3,918	)		5,188
Issuance of long-term debt		8,161			10,924
Repayment of long-term debt		(6,170	)		(3,143	)
Purchase of treasury shares		-			(6,077	)
Issuance of treasury shares		8			317
Dividends paid		(7,252	)		(7,150	)
Stock-based compensation tax benefit		-			15
Other		(366	)		(104	)
Net Cash Used in Financing Activities		(9,537	)		(30	)
Net increase (decrease) in cash and cash equivalents		4,375			(376	)
Cash and cash equivalents beginning of year		1,792			1,970
Cash and Cash Equivalents End of Period	$	6,167		$	1,594

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2009			9/30/2008			% Chg			9/30/2009			9/30/2008			% Chg
Wireless
Wireless Customers (000)											81,596			74,871			9.0	%
Net Customer Additions (000)		2,026			1,976			2.5	%		4,617			4,604			0.3	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		(30	)		13						(30	)		215
Postpaid Customers (000)											63,434			58,735			8.0	%
Net Postpaid Customer Additions (000)		1,385			1,693			-18.2	%		3,413			3,292			3.7	%
Postpaid Churn		1.17	%		1.22	%	-5 BP				1.15	%		1.19	%	-4 BP
Licensed POPs (000,000)											306			304			0.7	%
In-Region Wireline 1
Total Consumer Revenue Connections (000)
Retail Consumer Voice Connections 2											25,205			28,329			-11.0	%
Retail Consumer Additional Voice Connections 2											2,893			3,526			-18.0	%
Consumer Wired Broadband Connections 3											13,550			12,729			6.4	%
Video Connections: 4
Satellite Connections											2,195			2,182			0.6	%
U-verse Video Connections											1,816			781
Total Consumer Revenue Connections (000)											45,659			47,547			-4.0	%
Net Consumer Revenue Connection Changes (000)		(630	)		(869	)		27.5	%		(1,384	)		(1,891	)		26.8	%
Broadband and Video
Total Broadband Connections (000) 5											17,083			15,965			7.0	%
Net Broadband Connection Changes (000) 5		138			334			-58.7	%		818			1,163			-29.7	%
Total Video Connections (000) 4											4,012			2,963			35.4	%
Net Video Connection Changes (000) 4		225			179			25.7	%		777			616			26.1	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	4,031		$	5,068			-20.5	%	$	11,067		$	14,388			-23.1	%
Interest during construction	$	185		$	198			-6.6	%	$	553		$	455			21.5	%
Dividends Declared per Share	$	0.4100		$	0.4000			2.5	%	$	1.2300		$	1.2000			2.5	%
End of Period Common Shares Outstanding (000,000)											5,901			5,893			0.1	%
Debt Ratio 6,7											42.1	%		40.5	%	160 BP
Total Employees											284,970			303,530			-6.1	%

1	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2	Includes consumer U-verse Voice over IP connections.
3	Consumer Wired Broadband Connections include DSL lines, U-verse High Speed Internet access and satellite broadband.
4	Video connections include sales under agency agreements with EchoStar and DirecTV customers and U-verse connections.
5	Total broadband connections include DSL lines, U-verse High Speed Internet access, satellite broadband and 3G LaptopConnect cards.
6	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
7	Prior year amounts restated to conform to current period reporting methodology.
Note: For the end of 3Q09, total switched access lines were 50,833, retail business switched access lines totaled 20,534, and wholesale and coin switched access lines totaled 2,936.

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliations
Free Cash Flow
AT&T Inc.
Dollars in Millions
Unaudited
September 30, 2009		Three Months Ended	Nine Months Ended
Net cash provided by operating activities	$	9,679	$                 25,481
Less: Construction and capital expenditures		(4,216)	(11,620)
Free Cash Flow	$	5,463	$                 13,861

Free cash flow is defined as cash from operations minus capital expenditures. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliation
Wireless Segment OIBDA
AT&T Inc.
Dollars in Millions
Unaudited
	Three Months Ended
	9/30/2008			12/31/2008			3/31/2009			6/30/2009			9/30/2009
Service Revenues	$	11,273		$	11,541		$	11,668		$	11,983		$	12,399
Equipment Revenues		1,345			1,318			1,192			1,262			1,255
Total Operating Revenues		12,618			12,859			12,860			13,245			13,654
Operating Expenses
Operations and support		8,838			8,731			8,085			8,658			8,877
Depreciation and amortization		1,401			1,443			1,434			1,436			1,418
Total Operating Expenses		10,239			10,174			9,519			10,094			10,295
Operating Income		2,379			2,685			3,341			3,151			3,359
Plus: Depreciation and amortization		1,401			1,443			1,434			1,436			1,418
OIBDA		3,780			4,128			4,775			4,587			4,777
OIBDA as a % of Service Revenue		33.5	%		35.8	%		40.9	%		38.3	%		38.5	%

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from segment operating income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

EX-99.3

EXHIBIT 99.3

OIBDA DISCUSSION

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA margin is calculated as OIBDA divided by service revenues. OIBDA differs from Segment Operating Income (Loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

We believe these measures are relevant and useful information to our investors as they are part of AT&T Mobility’s internal management reporting and planning processes and are important metrics that AT&T Mobility’s management uses to evaluate the operating performance of its regional operations. These measures are used by management as a gauge of AT&T Mobility’s success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T Mobility’s ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing AT&T Mobility’s performance with that of many of its competitors. The financial and operating metrics which affect OIBDA include the key revenue and expense drivers for which AT&T Mobility’s operating managers are responsible and upon which we evaluate their performance.

OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA excludes other, net, minority interest in earnings of consolidated entities and equity in net income (loss) of affiliates, as these do not reflect the operating results of AT&T Mobility’s subscriber base and its national footprint that AT&T Mobility utilizes to obtain and service its customers. Equity in net income (loss) of affiliates represents AT&T Mobility’s proportionate share of the net income (loss) of affiliates in which it exercises significant influence, but does not control. As AT&T Mobility does not control these entities, our management excludes these results when evaluating the performance of our primary operations. OIBDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, OIBDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.

We believe OIBDA as a percentage of service revenues to be a more relevant measure of AT&T Mobility’s operating margin than OIBDA as a percentage of total revenue. AT&T Mobility generally subsidizes a portion of its handset sales, all of which are recognized in the period in which AT&T Mobility sells the handset. This results in a disproportionate impact on its margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. AT&T Mobility also uses service revenues to calculate margin to facilitate comparison, both internally and externally with its competitors, as they calculate their margins using services revenue as well.

There are material limitations to using these non-GAAP financial measures. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect AT&T Mobility’s net income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to OIBDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

FREE CASH FLOW DISCUSSION

Free cash flow is defined as cash from operations minus capital expenditures.  Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends.  Free cash flow yield is defined as cash from continuing operations less capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter.  Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding.  We believe these metrics provide useful information to our investors because management monthly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it.  Management also views it as a measure of cash available to pay debt and return cash to shareowners.