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) January 28, 2010

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 January 28, 2010, its results of operations for the fourth 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 January 28, 2010 reporting financial results for the fourth quarter ended December 31, 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: January 28, 2010	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

AT&T Reports Fourth-Quarter Earnings Growth with a 2.7 Million

Net Gain in Wireless Subscribers, Continued Strong Growth in

IP-Based Revenues, Record Full-Year Cash Flow

§   $0.51 diluted EPS for the fourth quarter versus $0.41 in the year-earlier period

§   $34.4 billion full-year cash from operating activities versus $33.7 billion in 2008, and $17.1 billion free cash flow, up 28.4 percent versus 2008 (free cash flow is cash from operations minus capital expenditures)

§   2.7 million fourth-quarter net addition in total wireless subscribers, the second highest quarterly net gain in the company's history; full-year wireless net adds totaled 7.3 million, equaling the company’s best-ever annual total, to reach 85.1 million subscribers in service

§   Best-ever fourth-quarter wireless subscriber churn levels – 1.19 percent postpaid and 1.44 percent total

§   2.6 percent growth in postpaid wireless subscriber ARPU (average monthly revenues per subscriber), eighth consecutive quarter with a year-over-year increase

§   Continued robust growth in revenues from wireless data services such as messaging, access to applications and related services; up $805 million, or 26.3 percent, versus the year-earlier quarter to $3.9 billion

§   248,000 net gain in AT&T U-verseSM TV subscribers to reach 2.1 million in service, up more than 1 million in 2009, with continued high broadband and voice attach rates

§   18.8 percent growth in wireline IP data revenues driven by AT&T U-verse expansion and growth in advanced business solutions

§   17.0 percent growth in revenues from strategic business services such as Ethernet, Virtual Private Networks (VPNs), hosting and application services

Note: AT&T's fourth-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Thursday, Jan. 28, 2010, at www.att.com/investor.relations.

DALLAS, Jan. 28, 2010 – AT&T Inc. (NYSE:T) today reported fourth-quarter results highlighted by solid momentum across key growth areas. Wireless service revenues grew 9.2 percent, driven by industry-leading subscriber growth and continued rapid adoption of data services. AT&T U-verse subscriber gains topped 1 million for the year. Wireline IP-based services and strategic business products both posted strong double-digit revenue growth.

Progress in these areas and continued solid execution of cost initiatives offset expected declines in legacy voice and print advertising products. Fourth-quarter revenues totaled $30.9 billion, net income attributable to AT&T was $3.0 billion, diluted earnings per share totaled $0.51 and cash from operating activities totaled $9.0 billion.

“We had a solid 2009 and led the industry in the biggest growth driver – mobile broadband,” said Randall Stephenson, AT&T chairman and chief executive officer. “Looking ahead, customer demand for connectivity, particularly mobile broadband and IP data, continues to be strong, and AT&T is well positioned at the center of this growth. Our fundamental outlook for the business is quite positive.

“Our significant investments in IP infrastructure – both mobile and fixed – provide the next-generation growth platforms for us,” Stephenson said. “Our leadership in mobile broadband will continue to set us apart as we roll out even faster 3G speeds this year and begin deploying 4G capabilities in 2011 Our IP-based U-verse service continues to scale nicely, improving our consumer revenue profile. And we continue to see solid growth from mobile broadband and IP data services in the business segment.”

Fourth-Quarter Financial Results

For the quarter ended Dec. 31, 2009, AT&T's consolidated revenues totaled $30.9 billion, compared with $31.1 billion in the year-earlier quarter and up slightly from the third quarter of 2009. This marked AT&T’s third consecutive quarter with a sequential increase in consolidated revenues.

AT&T's operating expenses for the fourth quarter of 2009 were $26.0 billion versus $26.2 billion in the year-earlier period. Operating income was $4.9 billion, compared with $4.9 billion in the fourth quarter of 2008, and AT&T's operating income margin was 15.8 percent, the same as in the year-earlier quarter. Net income attributable to AT&T totaled $3.0 billion, compared with $2.4 billion in the year-earlier quarter, and earnings per diluted share totaled $0.51, compared with $0.41 in the fourth quarter of 2008.

In addition to solid operational performance, fourth-quarter 2009 results reflect severance charges related to workforce reductions totaling $330 million, or $0.04 per share, offset by $0.04 of benefits to earnings per share from tax audits and judicial developments. Year-over-year comparisons reflect incremental noncash pension and retiree benefit expenses in the fourth quarter of 2009 of approximately $250 million, or $0.03 per diluted share.

Fourth-quarter 2008 results included a severance charge of $617 million, or $0.07 per diluted share, related to workforce reductions and a charge of $445 million, or $0.05 per diluted share, for merger-related trust investment losses. Both quarters’ severance charges are primarily reflected in the Other segment of AT&T financial statements.

Full-Year Results, Outlook

For the full year 2009, compared with 2008 results, AT&T’s consolidated revenues totaled $123.0 billion versus $124.0 billion; operating expenses were $101.5 billion, compared with $101.0 billion; net income attributable to AT&T was $12.5 billion versus $12.9 billion; and earnings per diluted share totaled $2.12, compared with $2.16.

Compared with 2008 results, AT&T's full-year cash from operating activities totaled $34.4 billion, up from $33.7 billion; capital expenditures totaled $17.3 billion versus $20.3 billion; and free cash flow (cash from operations minus capital expenditures) totaled $17.1 billion, up from $13.3 billion. AT&T's 2009 cash from operations and free cash flow were the company' best-ever annual totals.

As it continues to execute its growth and cost-improvement initiatives, in 2010, AT&T expects to deliver stable consolidated revenues and stable-to-improved consolidated operating income margins, leading to stable-to-improved earnings per share. AT&T also expects to generate strong free cash flow in 2010, generally in line with 2008 results, even with a substantial increase in wireless capital investment to further enhance wireless broadband coverage, capacity and performance. Total 2010 capital expenditures are expected to be in the $18 billion to $19 billion range, a level framed by the expectation that regulatory and legislative decisions relating to the telecom sector will continue to be sensitive to investment. AT&T expects to achieve a wireless OIBDA service margin in the low 40-percent range in 2010, and its longer-term wireless OIBDA service margin outlook continues to be in the mid-40 percent range. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

2

Wireless Operational Highlights

AT&T’s fourth-quarter wireless growth was driven by the company’s premier nationwide network capabilities, rich access to applications and attractive device lineup. Highlights include:

§   Strong Subscriber Gains. In the fourth quarter, AT&T posted a net gain in total wireless subscribers of 2.7 million, the second highest quarterly net add total in the company’s history, reflecting rapid adoption of smartphones and emerging devices such as eReaders, netbooks and navigation devices. Full-year wireless net adds totaled 7.3 million, equaling the company’s best-ever annual total, to reach 85.1 million subscribers in service. Retail postpaid net adds totaled 910,000 for the quarter and 4.3 million for the full year.

§   Best-Ever Fourth-Quarter Subscriber Churn. Average monthly subscriber churn improved to best-ever fourth-quarter levels. Postpaid churn was 1.19 percent, down from 1.20 percent in the year-earlier quarter; total churn was 1.44 percent versus 1.64 percent in the fourth quarter of 2008. This marked AT&T’s sixth consecutive quarter of year-over-year improvement in both total and postpaid wireless churn.

§   Sustained Robust Growth in Wireless Data Revenues. Wireless data revenues – from messaging, access to applications and related services – increased $805 million, or 26.3 percent, from the year-earlier quarter to $3.9 billion. Versus the year-earlier quarter, total text messages carried on the AT&T network increased 70 percent to 135 billion and multimedia messages more than doubled to more than 2 billion.

§   Eighth Consecutive Quarter of Postpaid ARPU Growth. Driven by strong data growth, postpaid subscriber ARPU increased 2.6 percent versus the year-earlier quarter to $61.13. This marks the eighth consecutive quarter AT&T has posted a year-over-year increase in postpaid ARPU. Postpaid data ARPU reached $19.16, up 17.5 percent versus the year-earlier quarter.

§   Strong Growth in 3G and Integrated Devices. Key drivers of AT&T’s wireless data growth are increased penetration of integrated devices (handsets with QWERTY or virtual keyboards in addition to voice functionality) and greater usage of the company’s extensive 3G network. The number of postpaid 3G integrated devices on AT&T’s network increased by more than 4 million in the fourth quarter and nearly tripled over the past year. At the end of the year, 46.4 percent of AT&T's 65.1 million postpaid subscribers had integrated devices, up from 27.0 percent a year earlier. AT&T's fourth-quarter integrated-device growth included 3.1 million iPhone activations, the second highest quarterly total to date, with more than a third of the activations for customers who were new to AT&T. 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.

§   Leadership in Emerging Devices. AT&T’s fourth-quarter subscriber gains also reflect strong growth in wireless connectivity for emerging devices including eReaders such as the Amazon Kindle, the Sony Reader Daily Edition™ and the Barnes & Noble nook. Total emerging devices on AT&T’s wireless network increased by more than 1 million in the fourth quarter, its strongest quarter in this category to date, predominantly reflected in reseller subscriber totals.

3

§   Wireless Margin Improvement. AT&T delivered year-over-year margin expansion and sequential margin stability in the fourth quarter – reflecting continued low churn, improved operating efficiencies and further growth in the company's base of high-quality subscribers. Fourth-quarter wireless service revenues totaled $12.6 billion, up 9.2 percent from the fourth quarter of 2008, and operating expenses totaled $10.4 billion, up 2.4 percent versus the year-earlier quarter. Versus the fourth quarter of 2008, wireless operating income was $3.4 billion, up 27.4 percent; wireless operating income margin was 24.7 percent versus 20.9 percent; and wireless OIBDA service margin was 38.8 percent, compared with 35.8 percent.

Wireline Operational Highlights

AT&T's fourth-quarter wireline results were highlighted by further expansion in AT&T U-verse services and sustained mid-teens growth in revenues from strategic business services. Highlights include:

§   Solid, Consistent AT&T U-verse Gains. AT&T U-verse TV subscribers increased by 248,000 in the quarter to reach 2.1 million, up more than 1 million over the past year. This was the company’s fifth consecutive quarter with AT&T U-verse TV net adds above 240,000. More than three-fourths of AT&T U-verse TV subscribers have a triple- or quad-play option from AT&T. AT&T’s U-verse deployment now reaches approximately 23 million living units. Companywide penetration of eligible living units now approaches 13 percent, and across areas marketed to for 24 months or more, overall penetration exceeds 20 percent. AT&T's total video subscribers, which combine the company's U-verse and bundled satellite customers, reached 4.2 million at the end of the year, representing 16.0 percent of households served.

§   Improved Broadband Growth. AT&T U-verse broadband continued its strong growth with a net gain of 267,000 wireline consumer subscribers in the fourth quarter. This growth, combined with continued solid gains in standalone broadband, more than offset declines in traditional DSL connections for a 167,000 net gain in consumer wireline broadband connections. Total broadband connections, which include business and consumer wireline subscribers and wireless customers with 3G LaptopConnect cards, increased by 171,000 in the quarter to reach 17.3 million.

§   31.8 Percent Growth in Revenues from Consumer IP-Based Services. Increased AT&T U-verse penetration drove 31.8 percent year-over-year growth in consumer IP revenues (broadband, U-verse TV and U-verse Voice) and a 3.7 percent increase in revenues per household served. Consumer IP revenues now represent 34.7 percent of AT&T’s consumer wireline revenues, up from 25.3 percent in the year-earlier quarter. AT&T's combined wireline consumer TV and broadband connections increased by 394,000 in the quarter and 1.8 million over the full year 2009. AT&T U-verse Voice connections increased by 219,000 in the quarter and 730,000 for the full year 2009. AT&T’s total consumer revenue connections at the end of the year were 45.3 million, compared with 45.7 million at the end of the third quarter of 2009 and 47.0 million at the end of 2008, reflecting declines in traditional voice access lines partially offset by increases in broadband, TV and VoIP (Voice over Internet Protocol) connections.

§   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 17.0 percent versus the year-earlier quarter, continuing trends of recent quarters. Total business revenues declined 5.5 percent versus the year-earlier quarter, reflecting economic weakness in voice and legacy data products, and were down just 0.4 percent versus the third quarter of 2009 – their best sequential comparison in five quarters.

4

§   Improved Growth in Business IP Revenues. Business IP data revenues grew 7.3 percent versus the year-earlier fourth quarter, led by better than 20 percent growth in VPN revenues. Approximately two-thirds 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.

§   Improved Wireline Revenue and Margin Trends. Fourth-quarter total wireline revenues were $16.2 billion, down 5.3 percent versus the year-earlier quarter and down 0.9 percent sequentially – the company’s smallest declines in four quarters. Fourth-quarter wireline operating expenses totaled $14.3 billion, down 2.7 percent from $14.7 billion in the year-earlier quarter, as productivity improvements offset expenses associated with AT&T U-verse expansion and incremental noncash pension and retiree benefit costs, which totaled $236 million in the quarter. Compared with the year-earlier quarter, AT&T’s fourth-quarter wireline operating income totaled $1.9 billion versus $2.4 billion, and the company’s wireline operating income margin was 11.6 percent versus 14.0 percent.

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. With a powerful array of network resources that includes the nation’s fastest 3G network, AT&T is a leading provider of wireless, Wi-Fi, high speed Internet and voice services. AT&T offers the best wireless coverage worldwide, offering the most wireless phones that work in the most countries.  It also offers advanced TV services under the AT&T U-verseSM and AT&T │DIRECTVSM brands. The company’s suite of IP-based business communications services is one of the most advanced in the world. In domestic markets, AT&T’s Yellow Pages and YELLOWPAGES.COM organizations are known for their leadership in directory publishing and advertising sales. 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.  This AT&T news release and other announcements are available at http://www.att.com/newsroom and as part of an RSS feed at www.att.com/rss. Or follow our news on Twitter at @ATTNews. Find us on Facebook at www.Facebook.com/ATT to discover more about our consumer and wireless services or at www.facebook.com/ATTSmallBiz to discover more about our small business services.

© 2010 AT&T Intellectual Property. All rights reserved. AT&T and the AT&T logo are trademarks of AT&T Intellectual Property.All other marks contained herein are the property of their respective owners.

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.

5

EX-99.2

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Twelve Months Ended
	12/31/2009			12/31/2008			% Chg			12/31/2009			12/31/2008			% Chg
Operating Revenues
Wireless service	$	12,585		$	11,523			9.2	%	$	48,563		$	44,249			9.7	%
Voice		7,612			8,796			-13.5	%		32,314			37,321			-13.4	%
Data		6,473			6,203			4.4	%		25,454			24,373			4.4	%
Directory		1,102			1,302			-15.4	%		4,724			5,416			-12.8	%
Other		3,086			3,252			-5.1	%		11,963			12,669			-5.6	%
Total Operating Revenues		30,858			31,076			-0.7	%		123,018			124,028			-0.8	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		12,800			12,642			1.2	%		50,405			49,556			1.7	%
Selling, general and administrative		8,182			8,492			-3.7	%		31,407			31,526			-0.4	%
Depreciation and amortization		5,015			5,044			-0.6	%		19,714			19,883			-0.8	%
Total Operating Expenses		25,997			26,178			-0.7	%		101,526			100,965			0.6	%
Operating Income		4,861			4,898			-0.8	%		21,492			23,063			-6.8	%
Interest Expense		798			813			-1.8	%		3,379			3,390			-0.3	%
Equity in Net Income of Affiliates		185			107			72.9	%		734			819			-10.4	%
Other Income (Expense) - Net		109			(425	)		-			152			(328	)		-
Income Before Income Taxes		4,357			3,767			15.7	%		18,999			20,164			-5.8	%
Income Taxes		1,266			1,290			-1.9	%		6,156			7,036			-12.5	%
Net Income		3,091			2,477			24.8	%		12,843			13,128			-2.2	%
Less: Net Income Attributable to Noncontrolling Interest		(72	)		(73	)		1.4	%		(308	)		(261	)		-18.0	%
Net Income Attributable to AT&T	$	3,019		$	2,404			25.6	%	$	12,535		$	12,867			-2.6	%
Basic Earnings Per Share Attributable to AT&T	$	0.51		$	0.41			24.4	%	$	2.12		$	2.17			-2.3	%
Weighted Average Common
Shares Outstanding (000,000)		5,901			5,893			0.1	%		5,900			5,927			-0.5	%
Diluted Earnings Per Share Attributable to AT&T	$	0.51		$	0.41			24.4	%	$	2.12		$	2.16			-1.9	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		5,927			5,920			0.1	%		5,924			5,958			-0.6	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Twelve Months Ended
Wireless	12/31/2009			12/31/2008			% Chg			12/31/2009			12/31/2008			% Chg
Segment Operating Revenues
Service	$	12,607		$	11,541			9.2	%	$	48,657		$	44,410			9.6	%
Equipment		1,231			1,318			-6.6	%		4,940			4,925			0.3	%
Total Segment Operating Revenues		13,838			12,859			7.6	%		53,597			49,335			8.6	%
Segment Operating Expenses
Operations and support		8,941			8,731			2.4	%		34,561			32,481			6.4	%
Depreciation and amortization		1,477			1,443			2.4	%		5,765			5,770			-0.1	%
Total Segment Operating Expenses		10,418			10,174			2.4	%		40,326			38,251			5.4	%
Segment Operating Income		3,420			2,685			27.4	%		13,271			11,084			19.7	%
Equity in Net Income of Affiliates		9			1			-			9			6			50.0	%
Segment Income	$	3,429		$	2,686			27.7	%	$	13,280		$	11,090			19.7	%
Segment Operating Income Margin		24.7	%		20.9	%					24.8	%		22.5	%
Wireline
Segment Operating Revenues
Voice	$	7,793		$	9,007			-13.5	%	$	33,082		$	38,198			-13.4	%
Data		6,823			6,460			5.6	%		26,723			25,353			5.4	%
Other		1,546			1,606			-3.7	%		5,865			6,304			-7.0	%
Total Segment Operating Revenues		16,162			17,073			-5.3	%		65,670			69,855			-6.0	%
Segment Operating Expenses
Operations and support		10,987			11,299			-2.8	%		44,646			45,440			-1.7	%
Depreciation and amortization		3,306			3,392			-2.5	%		13,093			13,206			-0.9	%
Total Segment Operating Expenses		14,293			14,691			-2.7	%		57,739			58,646			-1.5	%
Segment Operating Income		1,869			2,382			-21.5	%		7,931			11,209			-29.2	%
Equity in Net Income of Affiliates		1			1			0.0	%		18			19			-5.3	%
Segment Income	$	1,870		$	2,383			-21.5	%	$	7,949		$	11,228			-29.2	%
Segment Operating Income Margin		11.6	%		14.0	%					12.1	%		16.0	%
Advertising Solutions
Segment Operating Revenues	$	1,129		$	1,328			-15.0	%	$	4,809		$	5,502			-12.6	%
Segment Operating Expenses
Operations and support		701			705			-0.6	%		2,922			2,998			-2.5	%
Depreciation and amortization		149			180			-17.2	%		649			789			-17.7	%
Total Segment Operating Expenses		850			885			-4.0	%		3,571			3,787			-5.7	%
Segment Income	$	279		$	443			-37.0	%	$	1,238		$	1,715			-27.8	%
Segment Income Margin		24.7	%		33.4	%					25.7	%		31.2	%
Other
Segment Operating Revenues	$	443		$	485			-8.7	%	$	1,731		$	2,042			-15.2	%
Segment Operating Expenses		1,150			1,096			4.9	%		2,678			2,986			-10.3	%
Segment Operating Income (Loss)		(707	)		(611	)		-15.7	%		(947	)		(944	)		-0.3	%
Equity in Net Income of Affiliates		175			105			66.7	%		706			794			-11.1	%
Segment Income(Loss)	$	(532	)	$	(506	)		-5.1	%	$	(241	)	$	(150	)		-60.7	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	12/31/09			12/31/08
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	3,802		$	1,792
Accounts receivable - net of allowances for
doubtful accounts of $1,205 and $1,270		14,978			16,047
Prepaid expenses		1,572			1,538
Deferred income taxes		1,274			1,014
Other current assets		2,708			2,165
Total current assets		24,334			22,556
Property, Plant and Equipment - Net		100,093			99,088
Goodwill		73,259			71,829
Licenses		48,759			47,306
Customer Lists and Relationships - Net		7,420			10,582
Other Intangible Assets - Net		5,644			5,824
Investments in Equity Affiliates		2,921			2,332
Other Assets		6,322			5,728
Total Assets	$	268,752		$	265,245
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	7,361		$	14,119
Accounts payable and accrued liabilities		20,999			20,032
Advanced billing and customer deposits		4,170			3,849
Accrued taxes		1,696			1,874
Dividends payable		2,479			2,416
Total current liabilities		36,705			42,290
Long-Term Debt		64,720			60,872
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		23,803			19,196
Postemployment benefit obligation		27,849			31,930
Other noncurrent liabilities		13,350			14,207
Total deferred credits and other noncurrent liabilities		65,002			65,333
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Additional paid-in-capital		91,707			91,728
Retained earnings		39,366			36,591
Treasury shares (at cost)		(21,260	)		(21,410	)
Accumulated other comprehensive loss		(14,408	)		(17,057	)
Noncontrolling interest		425			403
Total stockholders' equity		102,325			96,750
Total Liabilities and Stockholders' Equity	$	268,752		$	265,245

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
unaudited
	2009			2008			2007
Operating Activities
Net income	$	12,843		$	13,128		$	12,147
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		19,714			19,883			21,577
Undistributed earnings from investments in equity affiliates		(419	)		(654	)		(297	)
Provision for uncollectible accounts		1,763			1,796			1,617
Deferred income tax expense (benefit)		2,104			5,889			(240	)
Net (gain) loss from impairment and sale of investments		-			517			(11	)
Gain on license exchange		-			-			(409	)
Changes in operating assets and liabilities:
Accounts receivable		(454	)		(1,421	)		(1,491	)
Other current assets		(355	)		827			(1,020	)
Accounts payable and accrued liabilities		2,372			(5,563	)		672
Share-based payment excess tax benefit		-			(15	)		(173	)
Net income attributable to noncontrolling interest		(308	)		(261	)		(196	)
Other - net		(2,815	)		(470	)		2,066
Total adjustments		21,602			20,528			22,095
Net Cash Provided by Operating Activities		34,445			33,656			34,242
Investing Activities
Construction and capital expenditures
Capital expenditures		(16,595	)		(19,676	)		(17,717	)
Interest during construction		(740	)		(659	)		(171	)
Acquisitions, net of cash acquired		(983	)		(10,972	)		(2,873	)
Dispositions		287			1,615			1,594
Sales of securities, net of investments		55			68			455
Sale of other investments		-			436			-
Other		51			45			36
Net Cash Used in Investing Activities		(17,925	)		(29,143	)		(18,676	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(3,910	)		2,017			(3,411	)
Issuance of long-term debt		8,161			12,416			11,367
Repayment of long-term debt		(8,654	)		(4,010	)		(6,772	)
Purchase of treasury shares		-			(6,077	)		(10,390	)
Issuance of treasury shares		28			319			1,986
Dividends paid		(9,670	)		(9,507	)		(8,743	)
Share-based payment excess tax benefit		-			15			173
Other		(465	)		136			(224	)
Net Cash Used in Financing Activities		(14,510	)		(4,691	)		(16,014	)
Net increase (decrease) in cash and cash equivalents		2,010			(178	)		(448	)
Cash and cash equivalents beginning of year		1,792			1,970			2,418
Cash and Cash Equivalents End of Period	$	3,802		$	1,792		$	1,970

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Twelve Months Ended
	12/31/2009			12/31/2008			% Chg			12/31/2009			12/31/2008			% Chg
Wireless
Wireless Customers (000)											85,120			77,009			10.5	%
Net Customer Additions (000)		2,661			2,095			27.0	%		7,278			6,699			8.6	%
M&A Activity, Partitioned Customers and Other Adjs. (000)1		863			43						833			258
Postpaid Customers (000)											65,146			60,098			8.4	%
Net Postpaid Customer Additions (000)		910			1,342			-32.2	%		4,323			4,634			-6.7	%
Postpaid Churn		1.19	%		1.20	%	-1 BP				1.16	%		1.19	%	-3 BP
Licensed POPs (000,000)											306			304			0.7	%
In-Region Wireline 2
Total Consumer Revenue Connections (000)
Retail Consumer Voice Connections 3											24,562			27,479			-10.6	%
Retail Consumer Additional Voice Connections 3											2,770			3,359			-17.5	%
Consumer Wired Broadband Connections 4											13,717			12,970			5.8	%
Video Connections: 5
Satellite Connections											2,174			2,190			-0.7	%
U-verse Video Connections											2,064			1,045			97.5	%
Total Consumer Revenue Connections (000)											45,287			47,043			-3.7	%
Net Consumer Revenue Connection Changes (000)		(372	)		(504	)		26.2	%		(1,756	)		(2,395	)		26.7	%
Broadband and Video
Total Broadband Connections (000) 6											17,254			16,265			6.1	%
Net Broadband Connection Changes (000) 6		171			300			-43.0	%		989			1,463			-32.4	%
Total Video Connections (000) 5											4,239			3,235			31.0	%
Net Video Connection Changes (000) 5		227			272			-16.5	%		1,004			888			13.1	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	5,529		$	5,288			4.6	%	$	16,595		$	19,676			-15.7	%
Interest during construction	$	187		$	204			-8.3	%	$	740		$	659			12.3	%
Dividends Declared per Share	$	0.4200		$	0.4100			2.4	%	$	1.6500		$	1.6100			2.5	%
End of Period Common Shares Outstanding (000,000)											5,902			5,893			0.2	%
Debt Ratio 7,8											41.3	%		43.7	%	-240 BP
Total Employees											282,720			302,660			-6.6	%

1	4Q09 M&A Activity reflects the acquisition of Centennial Communications, which was completed in November 2009.
2	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
3	Includes consumer U-verse Voice over IP connections.
4	Consumer Wired Broadband Connections include DSL lines, U-verse High Speed Internet access and satellite broadband.
5	Video connections include sales under agency agreements with EchoStar and DirecTV customers and U-verse connections.
6	Total broadband connections include DSL lines, U-verse High Speed Internet access, satellite broadband and 3G LaptopConnect cards.
7	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
8	Prior year amounts restated to conform to current period reporting methodology.
Note: For the end of year 2009, total switched access lines were 49,392, retail business switched access lines totaled 20,106 and wholesale and coin switched access lines totaled 2,908.

Financial Data
AT&T Inc.
Non-GAAP Financial Reconciliations
Free Cash Flow
AT&T Inc.
Dollars in Millions
Unaudited
December 31, 2009		Three Months Ended	Twelve Months Ended
Net cash provided by operating activities	$	8,964	$                    34,445
Less: Construction and capital expenditures		(5,715)	(17,335)
Free Cash Flow	$	3,249	$                  17,110

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
	12/31/2008			3/31/2009			6/30/2009			9/30/2009			12/31/2009
Service Revenues	$	11,541		$	11,668		$	11,983		$	12,399		$	12,607
Equipment Revenues		1,318			1,192			1,262			1,255			1,231
Total Operating Revenues		12,859			12,860			13,245			13,654			13,838
Operating Expenses
Operations and support		8,731			8,085			8,658			8,877			8,941
Depreciation and amortization		1,443			1,434			1,436			1,418			1,477
Total Operating Expenses		10,174			9,519			10,094			10,295			10,418
Operating Income		2,685			3,341			3,151			3,359			3,420
Plus: Depreciation and amortization		1,443			1,434			1,436			1,418			1,477
OIBDA		4,128			4,775			4,587			4,777			4,897
OIBDA as a % of Service Revenue		35.8	%		40.9	%		38.3	%		38.5	%		38.8	%

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.