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 25, 2017

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):

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

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

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

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

Item 8.01  Other Events.

Throughout this document, AT&T Inc. is referred to as "we" or "AT&T." We are a holding company whose subsidiaries and affiliates operate in the communications and digital entertainment services industry. Our subsidiaries and affiliates provide services and equipment that deliver wireless, video and broadband services both domestically and internationally, as well as traditional telephony services.

Overview

We announced on January 25, 2017 that fourth-quarter 2016 net income attributable to AT&T totaled $2.4 billion, or $0.39 per diluted share. Fourth-quarter 2016 income per diluted share included adjustments netting to $1.7 billion, or $0.27 per share, resulting from the following significant items: $0.13 per diluted share for the amortization of intangible assets, $0.10 per diluted share for noncash losses for the annual adjustment related to pension and postemployment benefit accounting and a combined $0.04 per diluted share for merger and integration items, impairments and other items. The results compare with a reported net income attributable to AT&T of $4.0 billion, or $0.65 per diluted share, in the fourth quarter of 2015. For the full year 2016, net income attributable to AT&T was $13.0 billion versus $13.3 billion in 2015; earnings per diluted share were $2.10 compared with $2.37 for 2015.

On a reported basis, our fourth-quarter 2016 revenues were $41.8 billion, down 0.7 percent from the fourth-quarter 2015, and full-year 2016 revenues were $163.8 billion, up 11.6 percent from the previous full year. Fourth-quarter revenues reflect continued declines in our legacy voice and data services and pressure in wireless service revenues from the adoption of Mobile Share plans partially offset by growth in fixed strategic service and video revenues. Full-year 2016 revenues reflect increased revenues primarily from our 2015 acquisition of DIRECTV. Compared with results for the fourth quarter of 2015, operating expenses were $37.6 billion, up 8.7 percent and full-year 2016 operating expenses were $139.4 billion, up 14.3 percent from the previous full year; fourth-quarter operating income was $4.2 billion, down 43.6 percent and full-year 2015 operating income was $24.3 billion, down 1.8 percent from the full-year 2016; and AT&T's fourth-quarter operating income margin was 10.2 percent, compared to 17.9 percent and full-year 2016 operating income margin was 14.9 percent compared to 16.9 percent. The year-over-year quarter variances are primarily due to the noncash adjustments related to our pension and postemployment benefit accounting. For the full year, cash from operating activities was $39.3 billion, up from $35.9 billion in 2015, due primarily to the acquisition of DIRECTV and the timing of working capital payments.

Many of our products, including AT&T Mobility and AT&T U-verse^® (U-verse), are offered to subscribers in multiple segments. Accordingly, to aid in understanding subscriber trends, we are presenting an overall discussion of these customer metrics. We reported a net gain of 2.8 million North American wireless subscribers in the fourth quarter of 2016, of which 1.5 million were domestic. At December 31, 2016, our North American wireless customer base was approximately 146.8 million compared to 137.3 million in the prior year, and our domestic wireless subscribers totaled 134.9 million compared to 128.6 million. During the fourth quarter, net adds were as follows:

· North American branded net adds (combined postpaid and prepaid) were 2.2 million, of which 926,000 were domestic. North American prepaid subscriber net adds were 1.5 million, of which 406,000 were domestic. North American postpaid subscriber net adds were 753,000, of which 520,000 were domestic. Total domestic postpaid tablet and computing device net adds were 509,000.

· Connected devices were 1.3 million; all of which were attributable to connected cars.

· North American reseller had a net loss of 692,000, with 672,000 in the U.S., primarily attributable to the shutdown of our 2G U.S. network.

We no longer offer subsidized device purchases for the majority of our U.S. customers, instead allowing subscribers to purchase devices on installment (AT&T Next) or to bring their own device (BYOD). During the first quarter of 2016, we also introduced an integrated offer that allows for unlimited wireless data when combined with our video services, ending the fourth quarter with more than 7.9 million subscribers to this offer. At December 31, 2016, Mobile Share plans represented nearly 57.0 million domestic wireless connections and nearly 83 percent of our domestic wireless postpaid smartphone base was on a no-device-subsidy Mobile Share plan.

Sales under our equipment installment programs, including AT&T Next, represented 84 percent of all postpaid smartphone gross adds and upgrades, compared to 72 percent in the fourth quarter of 2015. During the fourth quarter of 2016, we sold 5.5 million smartphones under our AT&T Next program and had BYOD gross adds of 669,000. Nearly 95 percent of smartphone transactions in the quarter were on no-subsidy contracts compared to 81 percent in the year-ago quarter. At December 31, 2016, about 52 percent of the postpaid smartphone base is on AT&T Next compared to approximately 46 percent at December 31, 2015.

At December 31, 2016, we had 37.7 million video subscribers (excluding DIRECTV NOW) compared with 37.9 million at December 31, 2015. During the quarter, we introduced DIRECTV NOW and added more than 200,000 subscribers. Total linear video subscribers decreased by 49,000 in the fourth quarter of 2016, of which 27,000 were in the U.S.

Our total broadband connections were 15.6 million at December 31, 2016, and 15.8 million at December 31, 2015. During the fourth quarter, we added 149,000 IP broadband subscribers, for a total of 13.9 million at December 31, 2016. Total broadband subscribers declined by 13,000 in the quarter.

At December 31, 2016, our total switched access lines were 14.0 million compared with 16.7 million at December 31, 2015. The number of U-verse voice connections (which use VoIP technology and therefore are not included in the access line total) increased by 80,000 in the quarter to reach 5.8 million at December 31, 2016, compared to 5.5 million at December 31, 2015.

Segment Summary

Business Solutions

Revenues from our Business Solutions (Business) segment for the fourth quarter of 2016 were $18.0 billion, down 1.0 percent versus the year-ago quarter driven by continued declines in our legacy voice and data services and lower equipment revenues, partially offset by growth in mobility and strategic business services. Our fourth-quarter 2016 revenues were also negatively impacted by the lack of business investment, the second-quarter 2016 sale of certain hosting operations and foreign exchange pressures. Fourth-quarter 2016 Business operating expenses totaled $14.0 billion, down 3.3 percent versus the fourth quarter of 2015, largely due to lower sales volumes and employee-related expenses. The Business operating margin was 22.3 percent, compared to 20.4 percent in the year-earlier quarter with growth in wireless and IP revenues and cost efficiencies slightly offsetting declines in higher-margin legacy services.

We had approximately 81.4 million business wireless subscribers at December 31, 2016 compared to 73.7 million at December 31, 2015. During the fourth quarter of 2016, business wireless net adds for connected devices were 1.3 million and postpaid net adds were 250,000. Postpaid business wireless subscriber churn was 1.11 percent, compared to 1.10 percent in the year-ago quarter.

During the fourth quarter of 2016, we added 14,000 high-speed internet business subscribers, bringing total business IP broadband to 977,000 subscribers. Total business broadband had a loss of 15,000 subscribers in the quarter.

Entertainment Group

Our Entertainment Group (Entertainment) segment includes the results of the U.S. satellite-based DIRECTV operations as well as broadband and wired voice services to domestic residential customers. Entertainment revenues for the fourth quarter of 2016 were $13.2 billion, up 1.6 percent versus the year-ago quarter due to DIRECTV video revenues and strong growth in consumer IP broadband. Revenues from legacy voice and data products continue to decline.  Fourth-quarter 2016 Entertainment operating expenses totaled $11.8 billion compared to $11.5 billion in the fourth quarter of 2015, largely due to annual content cost increases, including NFL Sunday Ticket, and start-up costs for DIRECTV NOW, partially offset by cost synergies. The Entertainment operating margin was 10.3 percent, compared to 11.1 percent in the year-earlier quarter with video and IP revenue growth and cost efficiencies offsetting programming content cost pressure, DIRECTV NOW launch expenses and declines in legacy services.

At December 31, 2016, Entertainment had approximately 50.7 million revenue connections, compared to 52.2 million at December 31, 2015, which included:

· Approximately 25.3 million video connections at December 31, 2016 compared to 25.4 million at December 31, 2015. During the fourth quarter of 2016, we added 235,000 satellite subscribers; however, U-verse subscribers declined 262,000 as we focused on profitability and increasingly emphasized satellite sales. We expect that our fourth-quarter subscriber net adds reflected customer migrations to DIRECTV NOW. We have excluded DIRECTV NOW subscribers from our video connections and net adds. At December 31, 2016, more than 80 percent of our domestic video subscribers are on the DIRECTV platform. Video connections and net adds exclude DIRECTV NOW subscribers.

· Approximately 14.2 million broadband connections at December 31, 2016 compared to 14.3 million at December 31, 2015. During the fourth quarter, we added 136,000 IP broadband subscribers, for a total of 12.9 million at December 31, 2016. Total broadband subscribers increased 3,000 in the quarter.

· Approximately 11.3 million wired voice connections at December 31, 2016 compared to 12.5 million at December 31, 2015. Voice connections include switched access lines and VoIP connections.

Consumer Mobility

Revenues from our Consumer Mobility segment, which consist of consumer, wholesale and resale subscribers located in the U.S., for the fourth quarter of 2016 were $8.4 billion, down 3.8 percent versus the year-ago quarter, reflecting a $511 million decline in postpaid service revenues due to the popularity of Mobile Share plans and migrations of customers to our Business segment. This decline was partially offset by an increase of $248 million in prepaid service revenues. Fourth-quarter 2016 Consumer Mobility operating expenses totaled $6.2 billion, down 5.7 percent versus the fourth quarter of 2015 reflecting lower equipment and commission costs as well as increased operational efficiencies. The Consumer Mobility operating margin was 26.0 percent, compared to 24.5 percent in the year-earlier quarter with lower volumes, fewer subsidized sales and cost efficiencies more than offsetting service revenue pressure.

We had approximately 53.5 million Consumer Mobility subscribers at December 31, 2016 compared to 55.0 million at December 31, 2015. During the fourth quarter of 2016, we had branded net adds of 676,000 (prepaid net adds were 406,000 and consumer postpaid net adds were 270,000). Consumer reseller had a net loss of 673,000. Our business wireless offerings allow for individual subscribers to purchase wireless services through employer-sponsored plans for a reduced price. The migration of these subscribers to the ABS segment negatively impacted Consumer postpaid subscriber and service revenues growth.

Total customer churn of Consumer Mobility subscribers was 2.43 percent versus 1.97 percent in the fourth quarter of 2015, including postpaid churn of 1.25 percent, compared to 1.31 percent in the year-ago quarter.

International

Our International segment consists of the Latin American operations acquired in our July 2015 acquisition of DIRECTV as well as the Mexican wireless operations acquired earlier in 2015. Fourth quarter 2016 operating revenues were $1.9 billion, up 3.2 percent versus the prior year. Video service revenues in Latin America were $1.3 billion, up 4.6% versus the prior year, and wireless service revenues in Mexico were $648 million, down 0.8% when compared to the fourth quarter of 2015. Our international segment revenues reflect foreign exchange pressures in our DIRECTV Latin America and Mexican wireless results. Operating expenses were $2.2 billion compared to $2.1 billion in the fourth quarter of 2015. The International operating margin was (14.0) percent, in the fourth quarter of both 2016 and 2015.

At December 31, 2016, we had approximately 12.0 million wireless subscribers in Mexico and 12.5 million video connections in Latin America, including 5.2 million in Brazil. During the fourth quarter of 2016, our Mexico wireless business had net adds of 1.3 million subscribers and our Latin America video connections declined by 21,000.

Supplemental Discussion

As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined AT&T Mobility operations (domestic only). AT&T Mobility revenues for the fourth quarter of 2016 were $18.8 billion, down 0.7 percent versus the fourth quarter of 2015, and AT&T Mobility's operating income margin was 24.7 percent compared to 23.2 percent in the year-ago quarter reflecting continuing adoption of AT&T Next, an increase in BYOD customers, fewer smartphone upgrades and continued efforts to drive operating costs out of the business.

For the quarter ended December 31, 2016, postpaid phone-only ARPU decreased 1.5 percent versus the year-earlier quarter and 1.3 percent sequentially. Postpaid phone-only ARPU plus AT&T Next increased 0.9 percent versus the year earlier quarter and decreased 0.6 percent sequentially.

Postpaid phone only churn was 0.98 percent, compared to 1.07 percent in the fourth quarter of 2015. Postpaid churn was 1.16 percent, compared to 1.18 percent in the year-ago quarter. Total customer churn was 1.71 percent versus 1.50 percent in the fourth quarter of 2015, driven by churn from the shutdown of the 2G network. Loss of 2G subscribers contributed 22 basis points of pressure to total churn and 2 basis points to postpaid churn and postpaid phone only churn during the quarter.

We expect that our total capital expenditures in 2017 will be in the $22 billion range. We expect consolidated revenue growth in the low-single digit range, adjusted operating margin expansion and adjusted earnings per share growth in the mid-single digit range. Expectations do not assume any economic improvement. Our guidance excludes pension and postemployment actuarial gains and losses, pending acquisitions and dispositions as well as any other significant items in year-over-year comparisons. Adjustments include noncash mark-to-market benefit plan gains and losses, merger integration and amortization costs and other adjustments. Traditionally, the mark-to-market adjustment is the largest item, which is driven by interest rates and investment returns that are not reasonably estimable at this time. We expect amortization to be lower in 2017 compared to 2016.

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

Information set forth in this filing contains financial estimates and other forward-looking statements that are subject to risks and uncertainties. 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 filing based on new information or otherwise.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are filed as part of this report:

(d)   Exhibits

99.1  AT&T Inc. selected financial statements and operating data.

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 25, 2017	By: /s/ Debra L. Dial          Debra L. Dial Senior Vice President and Controller

EX-99.1

AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts	Three Months Ended									Twelve Months Ended
Unaudited	December 31,						Percent			December 31,						Percent
	2016			2015			Change			2016			2015			Change
Operating Revenues
Service	$	37,369		$	37,635			-0.7	%	$	148,884		$	131,677			13.1	%
Equipment		4,472			4,484			-0.3	%		14,902			15,124			-1.5	%
Total Operating Revenues		41,841			42,119			-0.7	%		163,786			146,801			11.6	%
Operating Expenses
Cost of services and sales
Equipment		5,667			5,868			-3.4	%		18,757			19,268			-2.7	%
Broadcast, programming and operations		5,612			5,645			-0.6	%		19,851			11,996			65.5	%
Other cost of services (exclusive of depreciation           and amortization shown separately below)		9,840			8,178			20.3	%		38,276			35,782			7.0	%
Selling, general and administrative		9,984			8,419			18.6	%		36,347			32,919			10.4	%
Asset abandonments and impairments		361			-			-	%		361			35			-	%
Depreciation and amortization		6,129			6,477			-5.4	%		25,847			22,016			17.4	%
Total Operating Expenses		37,593			34,587			8.7	%		139,439			122,016			14.3	%
Operating Income		4,248			7,532			-43.6	%		24,347			24,785			-1.8	%
Interest Expense		1,221			1,143			6.8	%		4,910			4,120			19.2	%
Equity in Net Income of Affiliates		41			31			32.3	%		98			79			24.1	%
Other Income (Expense) - Net		123			(113	)		-	%		277			(52	)		-	%
Income Before Income Taxes		3,191			6,307			-49.4	%		19,812			20,692			-4.3	%
Income Tax Expense		676			2,221			-69.6	%		6,479			7,005			-7.5	%
Net Income		2,515			4,086			-38.4	%		13,333			13,687			-2.6	%
Less: Net Income Attributable to     Noncontrolling Interest		(78	)		(80	)		2.5	%		(357	)		(342	)		-4.4	%
Net Income Attributable to AT&T	$	2,437		$	4,006			-39.2	%	$	12,976		$	13,345			-2.8	%
Basic Earnings Per Share Attributable to AT&T	$	0.39		$	0.65			-40.0	%	$	2.10		$	2.37			-11.4	%
Weighted Average Common        Shares Outstanding (000,000)		6,161			6,165			-0.1	%		6,168			5,628			9.6	%
Diluted Earnings Per Share Attributable to AT&T	$	0.39		$	0.65			-40.0	%	$	2.10		$	2.37			-11.4	%
Weighted Average Common        Shares Outstanding with Dilution (000,000)		6,181			6,187			-0.1	%		6,189			5,646			9.6	%

AT&T Inc.
Financial Data
Consolidated Balance Sheets
Dollars in millions
Unaudited	Dec. 31,			Dec. 31,
	2016			2015
Assets
Current Assets
Cash and cash equivalents	$	5,788		$	5,121
Accounts receivable - net of allowances for doubtful accounts of $661 and $704		16,794			16,532
Prepaid expenses		1,555			1,072
Other current assets		14,232			13,267
Total current assets		38,369			35,992
Property, Plant and Equipment - Net		124,899			124,450
Goodwill		105,207			104,568
Licenses		94,176			93,093
Customer Lists and Relationships - Net		14,243			18,208
Other Intangible Assets - Net		8,441			9,409
Investments in Equity Affiliates		1,674			1,606
Other Assets		16,812			15,346
Total Assets	$	403,821		$	402,672
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	9,832		$	7,636
Accounts payable and accrued liabilities		31,138			30,372
Advanced billing and customer deposits		4,519			4,682
Accrued taxes		2,079			2,176
Dividends payable		3,008			2,950
Total current liabilities		50,576			47,816
Long-Term Debt		113,681			118,515
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		60,128			56,181
Postemployment benefit obligation		33,578			34,262
Other noncurrent liabilities		21,748			22,258
Total deferred credits and other noncurrent liabilities		115,454			112,701
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		89,604			89,763
Retained earnings		34,734			33,671
Treasury stock		(12,659	)		(12,592	)
Accumulated other comprehensive income		4,961			5,334
Noncontrolling interest		975			969
Total stockholders' equity		124,110			123,640
Total Liabilities and Stockholders' Equity	$	403,821		$	402,672

AT&T Inc.
Financial Data
Consolidated Statements of Cash Flows
Dollars in millions	Twelve Months Ended
Unaudited	December 31,
	2016			2015
Operating Activities
Net income	$	13,333		$	13,687
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		25,847			22,016
Undistributed earnings from investments in equity affiliates		(37	)		(49	)
Provision for uncollectible accounts		1,474			1,416
Deferred income tax expense		2,947			4,117
Net (gain) loss from sale of investments, net of impairments		(169	)		91
Actuarial loss (gain) on pension and postretirement benefits		1,024			(2,152	)
Asset abandonments and impairments		361			35
Changes in operating assets and liabilities:
Accounts receivable		(1,003	)		30
Other current assets		1,708			(1,182	)
Accounts payable and accrued liabilities		118			1,354
Equipment installment receivables and related sales		(576	)		(3,023	)
Deferred fulfillment costs		(2,359	)		(1,437	)
Retirement benefit funding		(910	)		(735	)
Other - net		(2,414	)		1,712
Total adjustments		26,011			22,193
Net Cash Provided by Operating Activities		39,344			35,880
Investing Activities
Capital expenditures:
Purchase of property and equipment		(21,516	)		(19,218	)
Interest during construction		(892	)		(797	)
Acquisitions, net of cash acquired		(2,959	)		(30,759	)
Dispositions		646			83
Sales of securities, net		506			1,545
Other		-			2
Net Cash Used in Investing Activities		(24,215	)		(49,144	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		-			(1	)
Issuance of long-term debt		10,140			33,969
Repayment of long-term debt		(10,823	)		(10,042	)
Purchase of treasury stock		(512	)		(269	)
Issuance of treasury stock		146			143
Dividends paid		(11,797	)		(10,200	)
Other		(1,616	)		(3,818	)
Net Cash (Used in) Provided by Financing Activities		(14,462	)		9,782
Net increase (decrease) in cash and cash equivalents		667			(3,482	)
Cash and cash equivalents beginning of year		5,121			8,603
Cash and Cash Equivalents End of Year	$	5,788		$	5,121

AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts	Three Months Ended									Twelve Months Ended
Unaudited	December 31,						Percent			December 31,						Percent
	2016			2015			Change			2016			2015			Change
Capital expenditures
Purchase of property and equipment	$	6,233		$	5,862			6.3	%	$	21,516		$	19,218			12.0	%
Interest during construction		223			231			-3.5	%		892			797			11.9	%
Total Capital Expenditures	$	6,456		$	6,093			6.0	%	$	22,408		$	20,015			12.0	%
Dividends Declared per Share	$	0.49		$	0.48			2.1	%	$	1.93		$	1.89			2.1	%
End of Period Common Shares Outstanding (000,000)											6,139			6,145			-0.1	%
Debt Ratio											49.9	%		50.5	%		-60	BP
Total Employees											268,540			281,450			-4.6	%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited											December 31,					Percent
											2016			2015		Change
Wireless Subscribers
Domestic											134,859			128,640			4.8	%
Mexico											11,973			8,684			37.9	%
Total Wireless Subscribers											146,832			137,324			6.9	%
Total Branded Wireless Subscribers											103,011			96,937			6.3	%
Video Connections
Domestic											25,293			25,424			-0.5	%
PanAmericana											7,206			7,066			2.0	%
Brazil											5,249			5,444			-3.6	%
Total Video Connections											37,748			37,934			-0.5	%
Broadband Connections
IP											13,864			13,268			4.5	%
DSL											1,741			2,510			-30.6	%
Total Broadband Connections											15,605			15,778			-1.1	%
Voice Connections
Network Access Lines											13,986			16,670			-16.1	%
U-verse  VoIP Connections											5,787			5,453			6.1	%
Total Retail Consumer Voice Connections											19,773			22,123			-10.6	%
		Three Months Ended									Twelve Months Ended
		December 31,						Percent			December 31,						Percent
		2016			2015			Change			2016			2015			Change
Wireless Net Additions
Domestic		1,522			2,234			-31.9	%		6,196			8,059			-23.1	%
Mexico		1,275			593			-	%		3,289			(96	)		-	%
Total Wireless Net Additions		2,797			2,827			-1.1	%		9,485			7,963			19.1	%
Total Branded Wireless Net Additions		2,221			1,633			36.0	%		6,102			3,038			-	%
Video Net Additions
Domestic		(28	)		(26	)		-7.7	%		(131	)		(63	)		-	%
PanAmericana		67			60			11.7	%		140			76			84.2	%
Brazil		(88	)		(94	)		6.4	%		(195	)		(223	)		12.6	%
Total Video Net Additions		(49	)		(60	)		18.3	%		(186	)		(210	)		11.4	%
Broadband Net Additions
IP		149			192			-22.4	%		596			1,063			-43.9	%
DSL		(162	)		(246	)		34.1	%		(769	)		(1,313	)		41.4	%
Total Broadband Net Additions		(13	)		(54	)		75.9	%		(173	)		(250	)		30.8	%

BUSINESS SOLUTIONS
The Business Solutions segment provides services to business customers, including multinational companies; governmental and wholesale customers; and individual subscribers who purchase wireless services through employer-sponsored plans. We provide advanced IP-based services including Virtual Private Networks (VPN); Ethernet-related products and broadband, collectively referred to as strategic business services; as well as traditional data and voice products. We utilize our wireless and wired networks (referred to as "wired" or "wireline") to provide a complete communications solution to our business customers.
Segment Results
Dollars in millions	Three Months Ended								Twelve Months Ended
Unaudited	December 31,						Percent		December 31,						Percent
	2016			2015			Change		2016			2015			Change
Segment Operating Revenues
Wireless service	$	7,983		$	7,684		3.9	%	$	31,850		$	30,687		3.8	%
Fixed strategic services		2,942			2,716		8.3	%		11,389			10,461		8.9	%
Legacy voice and data services		3,797			4,387		-13.4	%		16,364			18,468		-11.4	%
Other service and equipment		963			973		-1.0	%		3,615			3,558		1.6	%
Wireless equipment		2,348			2,454		-4.3	%		7,770			7,953		-2.3	%
Total Segment Operating Revenues		18,033			18,214		-1.0	%		70,988			71,127		-0.2	%
Segment Operating Expenses
Operations and support expenses		11,746			11,980		-2.0	%		44,330			44,946		-1.4	%
Depreciation and amortization		2,264			2,513		-9.9	%		9,832			9,789		0.4	%
Total Segment Operating Expenses		14,010			14,493		-3.3	%		54,162			54,735		-1.0	%
Segment Operating Income		4,023			3,721		8.1	%		16,826			16,392		2.6	%
Equity in Net Income of Affiliates		-			-		-	%		-			-		-	%
Segment Contribution	$	4,023		$	3,721		8.1	%	$	16,826		$	16,392		2.6	%
Segment Operating Income Margin		22.3	%		20.4	%	190	BP		23.7	%		23.0	%	70	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited									December 31,						Percent
										2016			2015		Change
Business Solutions Wireless Subscribers
Postpaid/Branded										50,688			48,290		5.0	%
Reseller										65			85		-23.5	%
Connected Devices										30,649			25,284		21.2	%
Total Business Solutions Wireless Subscribers										81,402			73,659		10.5	%
Business Solutions IP Broadband Connections										977			911		7.2	%
	Three Months Ended								Twelve Months Ended
	December 31,						Percent		December 31,						Percent
		2016			2015		Change			2016			2015		Change
Business Solutions Wireless Net Additions
Postpaid/Branded		250			353		-29.2	%		759			1,203		-36.9	%
Reseller		1			(1	)	-	%		(33	)		13		-	%
Connected Devices		1,263			1,211		4.3	%		5,330			5,315		0.3	%
Total Business Solutions Wireless Net Additions		1,514			1,563		-3.1	%		6,056			6,531		-7.3	%
Business Solutions Wireless Postpaid Churn		1.11	%		1.10	%	1	BP		1.00	%		0.99	%	1	BP
Business Solutions IP Broadband   Net Additions		14			19		-26.3	%		66			89		-25.8	%

ENTERTAINMENT GROUP
The Entertainment Group segment provides video, internet, voice communication, and interactive and targeted advertising services to customers located in the U.S. or in U.S. territories. We utilize our copper and IP-based wired network and/or our satellite technology.
Segment Results
Dollars in millions		Three Months Ended									Twelve Months Ended
Unaudited		December 31,						Percent			December 31,						Percent
		2016			2015			Change			2016			2015			Change
Segment Operating Revenues
Video entertainment		$	9,567		$	9,247			3.5	%	$	36,460		$	20,271			79.9	%
High-speed internet			1,910			1,740			9.8	%		7,472			6,601			13.2	%
Legacy voice and data services			1,104			1,367			-19.2	%		4,829			5,914			-18.3	%
Other service and equipment			625			640			-2.3	%		2,534			2,508			1.0	%
Total Segment Operating Revenues			13,206			12,994			1.6	%		51,295			35,294			45.3	%
Segment Operating Expenses
Operations and support expenses			10,463			10,123			3.4	%		39,338			28,345			38.8	%
Depreciation and amortization			1,381			1,426			-3.2	%		5,862			4,945			18.5	%
Total Segment Operating Expenses			11,844			11,549			2.6	%		45,200			33,290			35.8	%
Segment Operating Income			1,362			1,445			-5.7	%		6,095			2,004			-	%
Equity in Net Income (Loss) of Affiliates			8			12			-33.3	%		9			(4	)		-	%
Segment Contribution		$	1,370		$	1,457			-6.0	%	$	6,104		$	2,000			-	%
Segment Operating Income Margin			10.3	%		11.1	%		-80	BP		11.9	%		5.7	%		620	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited											December 31,						Percent
												2016			2015		Change
Video Connections
Satellite												21,012			19,784			6.2	%
U-verse												4,253			5,614			-24.2	%
Total Video Connections												25,265			25,398			-0.5	%
Broadband Connections
IP												12,888			12,356			4.3	%
DSL												1,291			1,930			-33.1	%
Total Broadband Connections												14,179			14,286			-0.7	%
Voice Connections
Retail Consumer Switched Access Lines												5,853			7,286			-19.7	%
U-verse Consumer VoIP Connections												5,425			5,212			4.1	%
Total Retail Consumer Voice Connections												11,278			12,498			-9.8	%
		Three Months Ended									Twelve Months Ended
		December 31,						Percent			December 31,						Percent
			2016			2015		Change				2016			2015		Change
Video Net Additions1
Satellite			235			214			9.8	%		1,228			240			-	%
U-verse			(262	)		(240	)		-9.2	%		(1,361	)		(306	)		-	%
Total Video Net Additions			(27	)		(26	)		-3.8	%		(133	)		(66	)		-	%
1	Includes customers that migrated to DIRECTV NOW
Broadband Net Additions
IP			136			171			-20.5	%		532			973			-45.3	%
DSL			(133	)		(208	)		36.1	%		(639	)		(1,130	)		43.5	%
Total Broadband Net Additions			3			(37	)		-	%		(107	)		(157	)		31.8	%

CONSUMER MOBILITY
The Consumer Mobility segment provides nationwide wireless service to consumers and wholesale and resale wireless subscribers located in the U.S. or in U.S. territories. We utilize our U.S. wireless network to provide voice and data services, including high-speed internet, video, and home monitoring services.
Segment Results
Dollars in millions	Three Months Ended									Twelve Months Ended
Unaudited	December 31,						Percent				December 31,						Percent
	2016			2015			Change				2016			2015			Change
Segment Operating Revenues
Service	$	6,731		$	7,131			-5.6	%		$	27,536		$	29,150			-5.5	%
Equipment		1,688			1,618			4.3	%			5,664			5,916			-4.3	%
Total Segment Operating Revenues		8,419			8,749			-3.8	%			33,200			35,066			-5.3	%
Segment Operating Expenses
Operations and support expenses		5,316			5,669			-6.2	%			19,659			21,477			-8.5	%
Depreciation and amortization		918			939			-2.2	%			3,716			3,851			-3.5	%
Total Segment Operating Expenses		6,234			6,608			-5.7	%			23,375			25,328			-7.7	%
Segment Operating Income		2,185			2,141			2.1	%			9,825			9,738			0.9	%
Equity in Net Income of Affiliates		-			-			-	%			-			-			-	%
Segment Contribution	$	2,185		$	2,141			2.1	%		$	9,825		$	9,738			0.9	%
Segment Operating Income Margin		26.0	%		24.5	%		150	BP			29.6	%		27.8	%		180	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited											December 31,						Percent
												2016			2015		Change
Consumer Mobility Subscribers
Postpaid												27,095			28,814			-6.0	%
Prepaid												13,536			11,548			17.2	%
Branded												40,631			40,362			0.7	%
Reseller												11,884			13,690			-13.2	%
Connected Devices												942			929			1.4	%
Total Consumer Mobility Subscribers												53,457			54,981			-2.8	%
	Three Months Ended										Twelve Months Ended
	December 31,						Percent				December 31,						Percent
		2016			2015		Change					2016			2015		Change
Consumer Mobility Net Additions
Postpaid		270			174			55.2	%			359			463			-22.5	%
Prepaid		406			469			-13.4	%			1,575			1,364			15.5	%
Branded		676			643			5.1	%			1,934			1,827			5.9	%
Reseller		(673	)		50			-	%			(1,813	)		(168	)		-	%
Connected Devices		5			(22	)		-	%			19			(131	)		-	%
Total Consumer Mobility Net Additions		8			671			-98.8	%			140			1,528			-90.8	%
Total Churn		2.43	%		1.97	%		46	BP			2.15	%		1.94	%		21	BP
Postpaid Churn		1.25	%		1.31	%		-6	BP			1.19	%		1.25	%		-6	BP

INTERNATIONAL
The International segment provides entertainment services in Latin America and wireless services in Mexico. Video entertainment services are provided to primarily residential customers using satellite technology. We utilize our regional and national wireless networks in Mexico to provide consumer and business customers with wireless data and voice communication services. Our international subsidiaries conduct business in their local currency and operating results are converted to U.S. dollars using official exchange rates.
Segment Results
Dollars in millions	Three Months Ended									Twelve Months Ended
Unaudited	December 31,						Percent			December 31,						Percent
	2016			2015			Change			2016			2015			Change
Segment Operating Revenues
Video entertainment	$	1,261		$	1,206			4.6	%	$	4,910		$	2,151			-	%
Wireless service		477			494			-3.4	%		1,905			1,647			15.7	%
Wireless equipment		171			149			14.8	%		468			304			53.9	%
Total Segment Operating Revenues		1,909			1,849			3.2	%		7,283			4,102			77.5	%
Segment Operating Expenses
Operations and support expenses		1,879			1,799			4.4	%		6,830			3,930			73.8	%
Depreciation and amortization		298			309			-3.6	%		1,166			655			78.0	%
Total Segment Operating Expenses		2,177			2,108			3.3	%		7,996			4,585			74.4	%
Segment Operating Income (Loss)		(268	)		(259	)		-3.5	%		(713	)		(483	)		-47.6	%
Equity in Net Income (Loss) of Affiliates		28			(1	)		-	%		52			(5	)		-	%
Segment Contribution	$	(240	)	$	(260	)		7.7	%	$	(661	)	$	(488	)		-35.5	%
Segment Operating Income Margin		(14.0	)%		(14.0	)%		-	BP		(9.8	)%		(11.8	)%		200	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited										December 31,						Percent
											2016			2015		Change
Mexican Wireless Subscribers
Postpaid											4,965			4,289			15.8	%
Prepaid											6,727			3,995			68.4	%
Branded											11,692			8,284			41.1	%
Reseller											281			400			-29.8	%
Total Mexican Wireless Subscribers											11,973			8,684			37.9	%
Latin America Satellite Subscribers
PanAmericana											7,206			7,066			2.0	%
SKY Brazil											5,249			5,444			-3.6	%
Total Latin America Satellite Subscribers											12,455			12,510			-0.4	%
	Three Months Ended									Twelve Months Ended
	December 31,						Percent			December 31,						Percent
		2016			2015		Change				2016			2015		Change
Mexican Wireless Net Additions
Postpaid		233			130			79.2	%		677			177			-	%
Prepaid		1,062			508			-	%		2,732			(169	)		-	%
Branded		1,295			638			-	%		3,409			8			-	%
Reseller		(20	)		(45	)		55.6	%		(120	)		(104	)		-15.4	%
Total Mexican Wireless Net Additions		1,275			593			-	%		3,289			(96	)		-	%
Latin America Satellite Net Additions
PanAmericana		67			60			11.7	%		140			76			84.2	%
SKY Brazil		(88	)		(94	)		6.4	%		(195	)		(223	)		12.6	%
Total Latin America Satellite Net Additions		(21	)		(34	)		38.2	%		(55	)		(147	)		62.6	%

SUPPLEMENTAL OPERATING INFORMATION - AT&T MOBILITY
As a supplemental discussion of our operating results, for comparison purposes, we are providing a view of our combined domestic wireless operations (AT&T Mobility).
Operating Results
Dollars in millions	Three Months Ended										Twelve Months Ended
Unaudited	December 31,							Percent			December 31,							Percent
	2016				2015			Change			2016				2015			Change
Operating Revenues
Service		$	14,713		$	14,815			-0.7	%		$	59,386		$	59,837			-0.8	%
Equipment			4,037			4,071			-0.8	%			13,435			13,868			-3.1	%
Total Operating Revenues			18,750			18,886			-0.7	%			72,821			73,705			-1.2	%
Operating Expenses
Operations and support expenses			12,064			12,479			-3.3	%			43,886			45,789			-4.2	%
Depreciation and amortization			2,048			2,031			0.8	%			8,292			8,113			2.2	%
Total Operating Expenses			14,112			14,510			-2.7	%			52,178			53,902			-3.2	%
Operating Income			4,638			4,376			6.0	%			20,643			19,803			4.2	%
Equity in Net Income of Affiliates			-			-			-	%			-			-			-	%
Operating Contribution		$	4,638		$	4,376			6.0	%		$	20,643		$	19,803			4.2	%
Operating Income Margin			24.7	%		23.2	%		150	BP			28.3	%		26.9	%		140	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited											December 31,							Percent
													2016			2015		Change
AT&T Mobility Subscribers
Postpaid													77,783			77,105			0.9	%
Prepaid													13,536			11,548			17.2	%
Branded													91,319			88,653			3.0	%
Reseller													11,949			13,774			-13.2	%
Connected Devices													31,591			26,213			20.5	%
Total AT&T Mobility Subscribers													134,859			128,640			4.8	%
Domestic Licensed POPs (000,000)													322			321			0.3	%
	Three Months Ended										Twelve Months Ended
	December 31,							Percent			December 31,							Percent
			2016			2015		Change					2016			2015		Change
AT&T Mobility Net Additions
Postpaid			520			526			-1.1	%			1,118			1,666			-32.9	%
Prepaid			406			469			-13.4	%			1,575			1,364			15.5	%
Branded			926			995			-6.9	%			2,693			3,030			-11.1	%
Reseller			(672	)		50			-	%			(1,846	)		(155	)		-	%
Connected Devices			1,268			1,189			6.6	%			5,349			5,184			3.2	%
Total AT&T Mobility Net Additions			1,522			2,234			-31.9	%			6,196			8,059			-23.1	%
M&A Activity, Partitioned Customers and   Other Adjustments			(1	)		-			-	%			23			27			-14.8	%
Total Churn			1.71	%		1.50	%		21	BP			1.48	%		1.39	%		9	BP
Branded Churn			1.74	%		1.72	%		2	BP			1.62	%		1.63	%		-1	BP
Postpaid Churn			1.16	%		1.18	%		-2	BP			1.07	%		1.09	%		-2	BP
Postpaid Phone Only Churn			0.98	%		1.07	%		-9	BP			0.92	%		0.99	%		-7	BP

SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
Dollars in millions
Unaudited
December 31, 2016
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	18,033		$	11,746		$	6,287		$	2,264	$	4,023		$	-		$	4,023
Entertainment Group		13,206			10,463			2,743			1,381		1,362			8			1,370
Consumer Mobility		8,419			5,316			3,103			918		2,185			-			2,185
International		1,909			1,879			30			298		(268	)		28			(240	)
Segment Total		41,567			29,404			12,163			4,861		7,302		$	36		$	7,338
Corporate and Other		284			233			51			11		40
Acquisition-related items		-			385			(385	)		1,228		(1,613	)
Certain Significant items		(10	)		1,442			(1,452	)		29		(1,481	)
AT&T Inc.	$	41,841		$	31,464		$	10,377		$	6,129	$	4,248
December 31, 2015
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	18,214		$	11,980		$	6,234		$	2,513	$	3,721		$	-		$	3,721
Entertainment Group		12,994			10,123			2,871			1,426		1,445			12			1,457
Consumer Mobility		8,749			5,669			3,080			939		2,141			-			2,141
International		1,849			1,799			50			309		(259	)		(1	)		(260	)
Segment Total		41,806			29,571			12,235			5,187		7,048		$	11		$	7,059
Corporate and Other		313			272			41			17		24
Acquisition-related items		-			383			(383	)		1,273		(1,656	)
Certain Significant items		-			(2,116	)		2,116			-		2,116
AT&T Inc.	$	42,119		$	28,110		$	14,009		$	6,477	$	7,532
Twelve Months Ended
Dollars in millions
Unaudited
December 31, 2016
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	70,988		$	44,330		$	26,658		$	9,832	$	16,826		$	-		$	16,826
Entertainment Group		51,295			39,338			11,957			5,862		6,095			9			6,104
Consumer Mobility		33,200			19,659			13,541			3,716		9,825			-			9,825
International		7,283			6,830			453			1,166		(713	)		52			(661	)
Segment Total		162,766			110,157			52,609			20,576		32,033		$	61		$	32,094
Corporate and Other		1,043			1,173			(130	)		65		(195	)
Acquisition-related items		-			1,203			(1,203	)		5,177		(6,380	)
Certain Significant items		(23	)		1,059			(1,082	)		29		(1,111	)
AT&T Inc.	$	163,786		$	113,592		$	50,194		$	25,847	$	24,347
December 31, 2015
	Revenues			Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	71,127		$	44,946		$	26,181		$	9,789	$	16,392		$	-		$	16,392
Entertainment Group		35,294			28,345			6,949			4,945		2,004			(4	)		2,000
Consumer Mobility		35,066			21,477			13,589			3,851		9,738			-			9,738
International		4,102			3,930			172			655		(483	)		(5	)		(488	)
Segment Total		145,589			98,698			46,891			19,240		27,651		$	(9	)	$	27,642
Corporate and Other		1,297			1,057			240			64		176
Acquisition-related items		(85	)		1,987			(2,072	)		2,712		(4,784	)
Certain Significant items		-			(1,742	)		1,742			-		1,742
AT&T Inc.	$	146,801		$	100,000		$	46,801		$	22,016	$	24,785