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) April 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 2.02 Results of Operations and Financial Condition.

The registrant announced on April 25, 2017, its results of operations for the first quarter of 2017. 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:

(d)          Exhibits

99.1 Press release dated April 25, 2017 reporting financial results for the first quarter ended March 31, 2017.

99.2	AT&T Inc. selected financial statements and operating data.
99.3	Discussion and reconciliation of non-GAAP measures.

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

EX-99.1

Filed by AT&T Inc.

Pursuant to Rule 425 under the Securities Act of 1933

and deemed filed pursuant to Rule 14a–12

of the Securities Exchange Act of 1934

Subject Company: Straight Path Communications Inc.

Commission File No.: 1-36015

AT&T Reports First-Quarter Results

Updates Guidance Following FirstNet Award

·  Consolidated revenues of $39.4 billion

·  Operating income of $6.9 billion

·  Net income attributable to AT&T of $3.5 billion

·  Diluted EPS of $0.56 as reported and $0.74 as adjusted, compared to $0.61 and $0.72 in the year-ago quarter

·  Cash from operations of $9.2 billion

·  Free cash flow of $3.2 billion

·   2.7 million wireless net adds

o   2.1 million U.S., driven by prepaid and connected devices

o   633,000 Mexico

·   U.S. wireless first-quarter results:

o   Best-ever first-quarter postpaid phone churn of 0.90%

o   Wireless postpaid churn of 1.12%, including pressure from tablets

o   Strong operating margin of 30.1%; best-ever EBITDA margin of 41.8%; EBITDA wireless service margin of 49.3%

·   Entertainment Group first-quarter results:

o   Strong broadband gains with 242,000 IP broadband net adds; 115,000 total broadband net adds

o   4.6 million AT&T Fiber customer locations with plans to add 2 million in 2017

o   DIRECTV NOW gains help offset linear TV subscriber decline

Note: AT&T's first-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, April 25, 2017. The webcast and related materials will be available on AT&T's Investor Relations website at www.att.com/investor.relations.

DALLAS, April 25, 2017— AT&T Inc. (NYSE:T) today announced continued adjusted margin expansion and solid adjusted earnings growth for the first quarter. The quarter also was marked by several decisive strategic moves that helped broaden the company's spectrum portfolio.

"In a very competitive quarter, we continued to execute on our goals of driving efficiencies in our business while growing adjusted earnings per share. But just as important, the strategic moves we've made over the last few months to expand our wireless capacity and fortify our 5G leadership will be felt for years to come," said Randall Stephenson, AT&T Chairman and CEO. "FirstNet gives us access to 20 megahertz of valuable, low-band spectrum and allows us to deploy our spectrum assets more efficiently as we build a high-quality, mobile broadband network for our first responders. And our planned acquisitions of Fiber Tower and Straight Path will add valuable millimeter wave spectrum assets to our 5G tool kit as we lead the way to the next generation of wireless technology."

Consolidated Financial Results

AT&T's consolidated revenues for the first quarter totaled $39.4 billion versus $40.5 billion in the year-ago quarter, primarily due to record-low equipment sales in wireless. Compared with results for the first quarter of 2016, operating expenses were $32.5 billion versus $33.4 billion; operating income was $6.9 billion versus $7.1 billion; and operating income margin was 17.4% versus 17.6%. When adjusting for amortization, merger- and integration-related and other items, operating income was $8.2 billion versus $8.1 billion; and operating income margin was 20.7%, up 80 basis points versus the year-ago quarter.

First-quarter net income attributable to AT&T totaled $3.5 billion, or $0.56 per diluted share, compared to $3.8 billion, or $0.61 per diluted share, in the year-ago quarter. Adjusting for $0.18 of costs for amortization, merger- and integration-related and other items, earnings per diluted share was $0.74 compared to an adjusted $0.72 in the year-ago quarter.

Cash from operating activities was $9.2 billion in the first quarter, and capital expenditures were $6.0 billion. Free cash flow — cash from operating activities minus capital expenditures — was $3.2 billion for the quarter.

Updated 2017 Outlook

The company is updating its 2017 guidance. On a business as usual basis without the impact of Time Warner, AT&T expects:

· Adjusted EPS growth in the mid-single digit range

· Adjusted operating margin expansion

· Capital expenditures in the $22 billion range

· Free cash flow in the $18 billion range

The company is no longer providing consolidated revenue guidance primarily due to the unpredictability of wireless handset sales.

Adjustments include non-cash mark-to-market benefit plan gain/loss, 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.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc.

About AT&T

AT&T Inc. (NYSE:T) helps millions around the globe connect with leading entertainment, business, mobile and high speed internet services. We offer the nation's best data network* and the best global coverage of any U.S. wireless provider.** We're one of the world's largest providers of pay TV. We have TV customers in the U.S. and 11 Latin American countries. Nearly 3.5 million companies, from small to large businesses around the globe, turn to AT&T for our highly secure smart solutions.

Additional information about AT&T products and services is available at about.att.com. Follow our news on Twitter at @ATT, on Facebook at facebook.com/attand YouTube atyoutube.com/att.

© 2017 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

^*Claim based on the Nielsen Certified Data Network Score. Score includes data reported by wireless consumers in the Nielsen Mobile Insights survey, network measurements from Nielsen Mobile Performance and Nielsen Drive Test Benchmarks for Q3+Q4 2016 across 121 markets.

^**Global coverage claim based on offering discounted voice and data roaming; LTE roaming; and voice roaming in more countries than any other U.S. based carrier. International service required. Coverage not available in all areas. Coverage may vary per country and be limited/restricted in some countries.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this communication, including financial estimates and statements as to the expected timing, completion and effects of the proposed merger between AT&T Inc. and Straight Path Communications, Inc., constitute forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  These estimates and statements are subject to risks and uncertainties, and actual results might differ materially.  Such estimates and statements include, but are not limited to, statements about the benefits of the merger, including future financial and operating results, the combined company's plans, objectives, expectations and intentions, and other statements that are not historical facts.  Such statements are based upon the current beliefs and expectations of the management of AT&T Inc. and Straight Path Communications, Inc. and are subject to significant risks and uncertainties outside of our control.  This presentation may contain certain non-GAAP financial measures.  Reconciliations between the non- GAAP financial measures and the GAAP financial measures are available on the company's website at www.att.com/investor.relations. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements are the following: (1) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement, (2) the risk that Straight Path Communications, Inc. stockholders may not adopt the merger agreement, (3) the risk that the necessary regulatory approvals may not be obtained or may be obtained subject to conditions that are not anticipated, and (4) risks that any of the closing conditions to the proposed merger may not be satisfied in a timely manner.  Discussions of additional risks and uncertainties are contained in AT&T Inc.'s and Straight Path Communications, Inc.'s filings with the Securities and Exchange Commission.  Neither AT&T Inc. nor Straight Path Communications, Inc. is under any obligation, and each expressly disclaims any obligation, to update, alter, or otherwise revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events, or otherwise. Persons reading this announcement are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof.

The "quiet period" for FCC Spectrum Auction 1000 (also known as the 600 MHz incentive auction) is now in effect. During the quiet period, auction applicants are required to avoid discussions of bids, bidding strategy and post-auction market structure with other auction applicants.

Additional Information and Where to Find It

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval.  This communication may be deemed to be solicitation material in respect of the proposed merger between AT&T Inc. and Straight Path Communications, Inc.  In connection with the proposed merger, AT&T Inc. intends to file a registration statement on Form S-4, containing a proxy statement/prospectus with the Securities and Exchange Commission ("SEC").  STOCKHOLDERS OF STRAIGHT PATH COMMUNICATIONS, INC. ARE URGED TO READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE PROXY STATEMENT/PROSPECTUS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER.  Investors and security holders will be able to obtain copies of the proxy statement/prospectus as well as other filings containing information about AT&T Inc. and Straight Path Communications, Inc., without charge, at the SEC's website at http://www.sec.gov.  Copies of documents filed with the SEC by AT&T Inc. will be made available free of charge on AT&T Inc.'s investor relations website at http://www.att.com.  Copies of documents filed with the SEC by Straight Path Communications, Inc. will be made available free of charge on Straight Path Communications, Inc.'s investor relations website at http://spathinc.com/investors/.

Participants in Solicitation

AT&T Inc. and its directors and executive officers, and Straight Path Communications, Inc. and its directors and executive officers, may be deemed to be participants in the solicitation of proxies from the holders of Straight Path Communications, Inc. common stock in respect of the proposed merger.  Information about the directors and executive officers of AT&T Inc. is set forth in the proxy statement for AT&T Inc.'s 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 10, 2017.  Information about the directors and executive officers of Straight Path Communications, Inc. is set forth in the proxy statement for Straight Path Communications, Inc.'s 2017 Annual Meeting of Stockholders, which was filed with the SEC on November 22, 2016.  Investors may obtain additional information regarding the interest of such participants by reading the proxy statement/prospectus regarding the proposed merger when it becomes available.

For more information, contact:

Fletcher Cook – AT&T Global Media Relations

Email: fletcher.cook@att.com

Phone: (214) 757-7629

Eric Ryan – AT&T Global Media Relations

Email: eric.ryan.1@att.com

Phone: (929) 273-8434

EX-99.2

AT&T Inc.
Financial Data
Consolidated Statements of Income
Dollars in millions except per share amounts	Three Months Ended
Unaudited	March 31,						Percent
	2017			2016			Change
Operating Revenues
Service	$	36,456		$	37,101			-1.7	%
Equipment		2,909			3,434			-15.3	%
Total Operating Revenues		39,365			40,535			-2.9	%
Operating Expenses
Cost of services and sales
Equipment		3,848			4,375			-12.0	%
Broadcast, programming and operations		4,974			4,629			7.5	%
Other cost of services (exclusive of depreciation           and amortization shown separately below)		9,065			9,396			-3.5	%
Selling, general and administrative		8,487			8,441			0.5	%
Depreciation and amortization		6,127			6,563			-6.6	%
Total Operating Expenses		32,501			33,404			-2.7	%
Operating Income		6,864			7,131			-3.7	%
Interest Expense		(1,293	)		(1,207	)		-7.1	%
Equity in Net Income (Loss) of Affiliates		(173	)		13			-	%
Other Income (Expense) - Net		(20	)		70			-	%
Income Before Income Taxes		5,378			6,007			-10.5	%
Income Tax Expense		1,804			2,122			-15.0	%
Net Income		3,574			3,885			-8.0	%
Less: Net Income Attributable to     Noncontrolling Interest		(105	)		(82	)		-28.0	%
Net Income Attributable to AT&T	$	3,469		$	3,803			-8.8	%
Basic Earnings Per Share Attributable to AT&T	$	0.56		$	0.62			-9.7	%
Weighted Average Common        Shares Outstanding (000,000)		6,166			6,172			-0.1	%
Diluted Earnings Per Share Attributable to AT&T	$	0.56		$	0.61			-8.2	%
Weighted Average Common        Shares Outstanding with Dilution (000,000)		6,186			6,190			-0.1	%

AT&T Inc.
Financial Data
Consolidated Balance Sheets
Dollars in millions
Unaudited	Mar. 31,			Dec. 31,
	2017			2016
Assets
Current Assets
Cash and cash equivalents	$	14,884		$	5,788
Accounts receivable - net of allowances for doubtful accounts of $699 and $661		15,078			16,794
Prepaid expenses		1,418			1,555
Other current assets		14,347			14,232
Total current assets		45,727			38,369
Property, Plant and Equipment - Net		125,292			124,899
Goodwill		105,593			105,207
Licenses		94,617			94,176
Customer Lists and Relationships - Net		13,366			14,243
Other Intangible Assets - Net		8,295			8,441
Investments in Equity Affiliates		1,551			1,674
Other Assets		17,462			16,812
Total Assets	$	411,903		$	403,821
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	12,681		$	9,832
Accounts payable and accrued liabilities		27,120			31,138
Advanced billing and customer deposits		4,493			4,519
Accrued taxes		3,384			2,079
Dividends payable		3,012			3,008
Total current liabilities		50,690			50,576
Long-Term Debt		120,568			113,681
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		61,100			60,128
Postemployment benefit obligation		33,404			33,578
Other noncurrent liabilities		21,160			21,748
Total deferred credits and other noncurrent liabilities		115,664			115,454
Stockholders' Equity
Common stock		6,495			6,495
Additional paid-in capital		89,411			89,604
Retained earnings		35,175			34,734
Treasury stock		(12,400	)		(12,659	)
Accumulated other comprehensive income		5,160			4,961
Noncontrolling interest		1,140			975
Total stockholders' equity		124,981			124,110
Total Liabilities and Stockholders' Equity	$	411,903		$	403,821

AT&T Inc.
Financial Data
Consolidated Statements of Cash Flows
Dollars in millions	Three Months Ended
Unaudited	March 31,
	2017			2016
Operating Activities
Net income	$	3,574		$	3,885
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,127			6,563
Undistributed loss (earnings) from investments in equity affiliates		182			(13	)
Provision for uncollectible accounts		393			374
Deferred income tax expense		480			1,346
Net loss (gain) from sale of investments, net of impairments		61			(44	)
Changes in operating assets and liabilities:
Accounts receivable		445			43
Other current assets		228			1,319
Accounts payable and other accrued liabilities		(1,778	)		(3,990	)
Equipment installment receivables and related sales		579			454
Deferred fulfillment costs		(436	)		(542	)
Retirement benefit funding		(140	)		(140	)
Other - net		(497	)		(1,355	)
Total adjustments		5,644			4,015
Net Cash Provided by Operating Activities		9,218			7,900
Investing Activities
Capital expenditures:
Purchase of property and equipment		(5,784	)		(4,451	)
Interest during construction		(231	)		(218	)
Acquisitions, net of cash acquired		(162	)		(165	)
Dispositions		6			81
Sales of securities, net		-			445
Net Cash Used in Investing Activities		(6,171	)		(4,308	)
Financing Activities
Net change in short-term borrowings with original maturities of three months or less		(1	)		-
Issuance of long-term debt		12,440			5,978
Repayment of long-term debt		(3,053	)		(2,296	)
Purchase of treasury stock		(177	)		-
Issuance of treasury stock		21			89
Dividends paid		(3,009	)		(2,947	)
Other		(172	)		471
Net Cash Provided by Financing Activities		6,049			1,295
Net increase in cash and cash equivalents		9,096			4,887
Cash and cash equivalents beginning of year		5,788			5,121
Cash and Cash Equivalents End of Period	$	14,884		$	10,008

AT&T Inc.
Consolidated Supplementary Data
Supplementary Financial Data
Dollars in millions except per share amounts	Three Months Ended
Unaudited	March 31,						Percent
	2017			2016			Change
Capital expenditures
Purchase of property and equipment	$	5,784		$	4,451			29.9	%
Interest during construction		231			218			6.0	%
Total Capital Expenditures	$	6,015		$	4,669			28.8	%
Dividends Declared per Share	$	0.49		$	0.48			2.1	%
End of Period Common Shares Outstanding (000,000)		6,147			6,156			-0.1	%
Debt Ratio		51.6	%		51.2	%		40	BP
Total Employees		264,530			280,870			-5.8	%
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,						Percent
		2017			2016		Change
Wireless Subscribers
Domestic		134,218			130,445			2.9	%
Mexico		12,606			9,213			36.8	%
Total Wireless Subscribers		146,824			139,658			5.1	%
Total Branded Wireless Subscribers		103,532			98,158			5.5	%
Video Connections
Domestic		25,060			25,372			-1.2	%
PanAmericana		8,090			7,094			14.0	%
Brazil		5,588			5,342			4.6	%
Total Video Connections		38,738			37,808			2.5	%
Broadband Connections
IP		14,110			13,470			4.8	%
DSL		1,585			2,294			-30.9	%
Total Broadband Connections		15,695			15,764			-0.4	%
Voice Connections
Network Access Lines		13,363			15,975			-16.4	%
U-verse  VoIP Connections		5,858			5,484			6.8	%
Total Retail Consumer Voice Connections		19,221			21,459			-10.4	%
	Three Months Ended
	March 31,						Percent
		2017			2016		Change
Wireless Net Additions
Domestic		2,081			1,781			16.8	%
Mexico		633			529			19.7	%
Total Wireless Net Additions		2,714			2,310			17.5	%
Total Branded Wireless Net Additions		738			1,195			-38.2	%
Video Net Additions
Domestic		(233	)		(52	)		-	%
PanAmericana		52			28			85.7	%
Brazil		39			(101	)		-	%
Total Video Net Additions		(142	)		(125	)		-13.6	%
Broadband Net Additions
IP		246			202			21.8	%
DSL		(156	)		(216	)		27.8	%
Total Broadband Net Additions		90			(14	)		-	%

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
Unaudited	March 31,						Percent
	2017			2016			Change
Segment Operating Revenues
Wireless service	$	7,929		$	7,855			0.9	%
Fixed strategic services		2,974			2,751			8.1	%
Legacy voice and data services		3,630			4,373			-17.0	%
Other service and equipment		817			859			-4.9	%
Wireless equipment		1,498			1,771			-15.4	%
Total Segment Operating Revenues		16,848			17,609			-4.3	%
Segment Operating Expenses
Operations and support		10,176			10,802			-5.8	%
Depreciation and amortization		2,312			2,508			-7.8	%
Total Segment Operating Expenses		12,488			13,310			-6.2	%
Segment Operating Income		4,360			4,299			1.4	%
Equity in Net Income of Affiliates		-			-			-	%
Segment Contribution	$	4,360		$	4,299			1.4	%
Segment Operating Income Margin		25.9	%		24.4	%		150	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,						Percent
		2017			2016		Change
Business Solutions Wireless Subscribers
Postpaid/Branded		50,839			48,844			4.1	%
Reseller		76			64			18.8	%
Connected Devices		31,439			26,863			17.0	%
Total Business Solutions Wireless Subscribers		82,354			75,771			8.7	%
Business Solutions IP Broadband Connections		980			928			5.6	%
	Three Months Ended
	March 31,						Percent
		2017			2016		Change
Business Solutions Wireless Net Additions1
Postpaid/Branded		(125	)		133			-	%
Reseller		6			(22	)		-	%
Connected Devices		2,553			1,578			61.8	%
Total Business Solutions Wireless Net Additions		2,434			1,689			44.1	%
Business Solutions Wireless Postpaid Churn1		1.07	%		1.02	%		5	BP
Business Solutions IP Broadband   Net Additions		4			17			-76.5	%
1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.

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
Unaudited	March 31,						Percent
	2017			2016			Change
Segment Operating Revenues
Video entertainment	$	9,020		$	8,904			1.3	%
High-speed internet		1,941			1,803			7.7	%
Legacy voice and data services		1,056			1,313			-19.6	%
Other service and equipment		606			638			-5.0	%
Total Segment Operating Revenues		12,623			12,658			-0.3	%
Segment Operating Expenses
Operations and support		9,601			9,578			0.2	%
Depreciation and amortization		1,419			1,488			-4.6	%
Total Segment Operating Expenses		11,020			11,066			-0.4	%
Segment Operating Income		1,603			1,592			0.7	%
Equity in Net Income (Loss) of Affiliates		(6	)		3			-	%
Segment Contribution	$	1,597		$	1,595			0.1	%
Segment Operating Income Margin		12.7	%		12.6	%		10	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,						Percent
		2017			2016		Change
Linear Video Connections
Satellite		21,012			20,112			4.5	%
U-verse		4,020			5,232			-23.2	%
Total Linear Video Connections		25,032			25,344			-1.2	%
Broadband Connections
IP		13,130			12,542			4.7	%
DSL		1,164			1,749			-33.4	%
Total Broadband Connections		14,294			14,291			-	%
Voice Connections
Retail Consumer Switched Access Lines		5,533			6,888			-19.7	%
U-verse Consumer VoIP Connections		5,470			5,225			4.7	%
Total Retail Consumer Voice Connections		11,003			12,113			-9.2	%
	Three Months Ended
	March 31,						Percent
		2017			2016		Change
Linear Video Net Additions1
Satellite		-			328			-	%
U-verse		(233	)		(382	)		39.0	%
Total Linear Video Net Additions		(233	)		(54	)		-	%
Broadband Net Additions
IP		242			186			30.1	%
DSL		(127	)		(181	)		29.8	%
Total Broadband Net Additions		115			5			-	%
1 Includes the impact of customers that migrated to DIRECTV NOW.

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
Unaudited	March 31,						Percent
	2017			2016			Change
Segment Operating Revenues
Service	$	6,609		$	6,943			-4.8	%
Equipment		1,131			1,385			-18.3	%
Total Segment Operating Revenues		7,740			8,328			-7.1	%
Segment Operating Expenses
Operations and support		4,528			4,912			-7.8	%
Depreciation and amortization		873			922			-5.3	%
Total Segment Operating Expenses		5,401			5,834			-7.4	%
Segment Operating Income		2,339			2,494			-6.2	%
Equity in Net Income of Affiliates		-			-			-	%
Segment Contribution	$	2,339		$	2,494			-6.2	%
Segment Operating Income Margin		30.2	%		29.9	%		30	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,						Percent
		2017			2016		Change
Consumer Mobility Subscribers
Postpaid		26,510			28,294			-6.3	%
Prepaid		13,844			12,171			13.7	%
Branded		40,354			40,465			-0.3	%
Reseller		10,549			13,313			-20.8	%
Connected Devices		961			896			7.3	%
Total Consumer Mobility Subscribers		51,864			54,674			-5.1	%
	Three Months Ended
	March 31,						Percent
		2017			2016		Change
Consumer Mobility Net Additions1
Postpaid		(66	)		(4	)		-	%
Prepaid		282			500			-43.6	%
Branded		216			496			-56.5	%
Reseller		(588	)		(378	)		-55.6	%
Connected Devices		19			(26	)		-	%
Total Consumer Mobility Net Additions		(353	)		92			-	%
Total Churn1		2.42	%		2.11	%		31	BP
Postpaid Churn1		1.22	%		1.24	%		-2	BP
1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.

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
Unaudited	March 31,								Percent
	2017				2016				Change
Segment Operating Revenues
Video entertainment	$	1,341			$	1,130				18.7	%
Wireless service		475				455				4.4	%
Wireless equipment		113				82				37.8	%
Total Segment Operating Revenues		1,929				1,667				15.7	%
Segment Operating Expenses
Operations and support		1,759				1,588				10.8	%
Depreciation and amortization		290				277				4.7	%
Total Segment Operating Expenses		2,049				1,865				9.9	%
Segment Operating Income (Loss)		(120	)			(198	)			39.4	%
Equity in Net Income (Loss) of Affiliates		20				14				42.9	%
Segment Contribution	$	(100	)		$	(184	)			45.7	%
Segment Operating Income Margin		(6.2	)	%		(11.9	)	%		570	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,								Percent
		2017				2016			Change
Mexican Wireless Subscribers
Postpaid		5,095				4,404				15.7	%
Prepaid		7,244				4,445				63.0	%
Branded		12,339				8,849				39.4	%
Reseller		267				364				-26.6	%
Total Mexican Wireless Subscribers		12,606				9,213				36.8	%
Latin America Satellite Subscribers
PanAmericana		8,090				7,094				14.0	%
SKY Brazil		5,588				5,342				4.6	%
Total Latin America Satellite Subscribers		13,678				12,436				10.0	%
	Three Months Ended
	March 31,								Percent
		2017				2016			Change
Mexican Wireless Net Additions
Postpaid		130				116				12.1	%
Prepaid		517				450				14.9	%
Branded		647				566				14.3	%
Reseller		(14	)			(37	)			62.2	%
Total Mexican Wireless Net Additions		633				529				19.7	%
Latin America Satellite Net Additions1
PanAmericana		52				28				85.7	%
SKY Brazil		39				(101	)			-	%
Total Latin America Satellite Net Additions		91				(73	)			-	%
1 In 2017 we updated the methodology used to account for prepaid video connections. The impact of this change is excluded.

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
Unaudited	March 31,						Percent
	2017			2016			Change
Operating Revenues
Service	$	14,538		$	14,798			-1.8	%
Equipment		2,629			3,156			-16.7	%
Total Operating Revenues		17,167			17,954			-4.4	%
Operating Expenses
Operations and support		9,998			10,624			-5.9	%
Depreciation and amortization		1,997			2,056			-2.9	%
Total Operating Expenses		11,995			12,680			-5.4	%
Operating Income		5,172			5,274			-1.9	%
Operating Income Margin		30.1	%		29.4	%		70	BP
Supplementary Operating Data
Subscribers and connections in thousands
Unaudited	March 31,						Percent
		2017			2016		Change
AT&T Mobility Subscribers
Postpaid		77,349			77,138			0.3	%
Prepaid		13,844			12,171			13.7	%
Branded		91,193			89,309			2.1	%
Reseller		10,625			13,378			-20.6	%
Connected Devices		32,400			27,758			16.7	%
Total AT&T Mobility Subscribers		134,218			130,445			2.9	%
Domestic Licensed POPs (000,000)		325			322			0.9	%
	Three Months Ended
	March 31,						Percent
		2017			2016		Change
AT&T Mobility Net Additions
Postpaid		(191	)		129			-	%
Prepaid		282			500			-43.6	%
Branded		91			629			-85.5	%
Reseller		(582	)		(400	)		-45.5	%
Connected Devices		2,572			1,552			65.7	%
Total AT&T Mobility Net Additions		2,081			1,781			16.8	%
M&A Activity, Partitioned Customers and   Other Adjustments		(2,723	)		24			-	%
Total Churn1		1.46	%		1.42	%		4	BP
Branded Churn1		1.71	%		1.63	%		8	BP
Postpaid Churn1		1.12	%		1.10	%		2	BP
Postpaid Phone Only Churn1		0.90	%		0.96	%		-6	BP
1 2017 excludes the impact of the 2G shutdown, which was reflected in beginning of period subscriber counts.

SUPPLEMENTAL SEGMENT RECONCILIATION
Three Months Ended
Dollars in millions
Unaudited
March 31, 2017
	Revenues		Operations and Support Expenses			EBITDA			Depreciation and Amortization		Operating Income (Loss)			Equity in Net Income (Loss) of Affiliates			Segment Contribution
Business Solutions	$	16,848	$	10,176		$	6,672		$	2,312	$	4,360		$	-		$	4,360
Entertainment Group		12,623		9,601			3,022			1,419		1,603			(6	)		1,597
Consumer Mobility		7,740		4,528			3,212			873		2,339			-			2,339
International		1,929		1,759			170			290		(120	)		20			(100	)
Segment Total		39,140		26,064			13,076			4,894		8,182		$	14		$	8,196
Corporate and Other		225		221			4			31		(27	)
Acquisition-related items		-		207			(207	)		1,202		(1,409	)
Certain Significant items		-		(118	)		118			-		118
AT&T Inc.	$	39,365	$	26,374		$	12,991		$	6,127	$	6,864
March 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	$	17,609	$	10,802		$	6,807		$	2,508	$	4,299		$	-		$	4,299
Entertainment Group		12,658		9,578			3,080			1,488		1,592			3			1,595
Consumer Mobility		8,328		4,912			3,416			922		2,494			-			2,494
International		1,667		1,588			79			277		(198	)		14			(184	)
Segment Total		40,262		26,880			13,382			5,195		8,187		$	17		$	8,204
Corporate and Other		273		377			(104	)		17		(121	)
Acquisition-related items		-		295			(295	)		1,351		(1,646	)
Certain Significant items		-		(711	)		711			-		711
AT&T Inc.	$	40,535	$	26,841		$	13,694		$	6,563	$	7,131

EX-99.3

Discussion and Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to investors as they are part of AT&T's internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.

Free Cash Flow

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 dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including Capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Free Cash Flow and Free Cash Flow Dividend Payout Ratio
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
Net cash provided by operating activities	$	9,218	$	7,900
Less: Capital expenditures		(6,015)		(4,669)
Free Cash Flow		3,203		3,231
Less: Dividends paid		(3,009)		(2,947)
Free Cash Flow after Dividends	$	194	$	284
Free Cash Flow Dividend Payout Ratio		93.9%		91.2%

EBITDA

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP).

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.

1

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T's ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

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

EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
Net Income	$	3,574	$	3,885
Additions:
Income Tax Expense		1,804		2,122
Interest Expense		1,293		1,207
Equity in Net (Income) Loss of Affiliates		173		(13)
Other (Income) Expense - Net		20		(70)
Depreciation and amortization		6,127		6,563
EBITDA		12,991		13,694
Total Operating Revenues		39,365		40,535
Service Revenues		36,456		37,101
EBITDA Margin		33.0%		33.8%
EBITDA Service Margin		35.6%		36.9%

2

Segment EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
Business Solutions Segment
Segment Contribution	$	4,360	$	4,299
Additions:
Depreciation and amortization		2,312		2,508
EBITDA		6,672		6,807
Total Segment Operating Revenues		16,848		17,609
Segment Operating Income Margin		25.9%		24.4%
EBITDA Margin		39.6%		38.7%
Entertainment Group Segment
Segment Contribution	$	1,597	$	1,595
Additions:
Equity in Net (Income) Loss of Affiliates		6		(3)
Depreciation and amortization		1,419		1,488
EBITDA		3,022		3,080
Total Segment Operating Revenues		12,623		12,658
Segment Operating Income Margin		12.7%		12.6%
EBITDA Margin		23.9%		24.3%
Consumer Mobility Segment
Segment Contribution	$	2,339	$	2,494
Additions:
Depreciation and amortization		873		922
EBITDA		3,212		3,416
Total Segment Operating Revenues		7,740		8,328
Service Revenues		6,609		6,943
Segment Operating Income Margin		30.2%		29.9%
EBITDA Margin		41.5%		41.0%
EBITDA Service Margin		48.6%		49.2%
International Segment
Segment Contribution	$	(100)	$	(184)
Additions:
Equity in Net (Income) of Affiliates		(20)		(14)
Depreciation and amortization		290		277
EBITDA		170		79
Total Segment Operating Revenues		1,929		1,667
Segment Operating Income Margin		-6.2%		-11.9%
EBITDA Margin		8.8%		4.7%

3

Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
AT&T Mobility
Operating Income	$	5,172	$	5,274
Add: Depreciation and amortization		1,997		2,056
EBITDA		7,169		7,330
Total Operating Revenues		17,167		17,954
Service Revenues		14,538		14,798
Operating Income Margin		30.1%		29.4%
EBITDA Margin		41.8%		40.8%
EBITDA Service Margin		49.3%		49.5%

Supplemental Latin America EBITDA and EBITDA Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
International - Latin America
Operating Income	$	77	$	53
Add: Depreciation and amortization		214		196
EBITDA		291		249
Total Operating Revenues		1,341		1,130
Operating Income Margin		5.7%		4.7%
EBITDA Margin		21.7%		22.0%

Supplemental Mexico EBITDA and EBITDA Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
International - Mexico
Operating Income	$	(197)	$	(251)
Add: Depreciation and amortization		76		81
EBITDA		(121)		(170)
Total Operating Revenues		588		537
Operating Income Margin		-33.5%		-46.7%
EBITDA Margin		-20.6%		-31.7%

Adjusting Items

Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

4

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38%. For years prior to 2017, adjustments related to Mexico operations were taxed at the 30% marginal rate for Mexico.

Adjusting Items
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
Operating Expenses
DIRECTV and other video merger integration costs	$	127	$	173
Mexico merger integration costs		39		81
Time Warner merger costs		41		-
Wireless merger integration costs		-		42
Employee separation costs		-		25
(Gain) loss on transfer of wireless spectrum		(118)		(736)
Adjustments to Operations and Support Expenses		89		(415)
Amortization of intangible assets		1,202		1,351
Adjustments to Operating Expenses		1,291		936
Other
Merger related interest expense and exchange fees 1		109		16
(Gain) loss on sale of assets, impairments and other adjustments		257		4
Adjustments to Income Before Income Taxes		1,657		956
Tax impact of adjustments		556		331
Adjustments to Net Income	$	1,101	$	625
1 Includes interest expense incurred on the debt issued prior to the close of merger transactions and fees   associated with the exchange of DIRECTV notes for AT&T notes.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T's calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin
Dollars in millions	Three Months Ended
	March 31,
		2017		2016
Operating Income	$	6,864	$	7,131
Adjustments to Operating Expenses		1,291		936
Adjusted Operating Income		8,155		8,067
EBITDA		12,991		13,694
Adjustments to Operations and Support Expenses		89		(415)
Adjusted EBITDA		13,080		13,279
Total Operating Revenues		39,365		40,535
Service Revenues		36,456		37,101
Operating Income Margin		17.4%		17.6%
Adjusted Operating Income Margin		20.7%		19.9%
Adjusted EBITDA Margin		33.2%		32.8%
Adjusted EBITDA Service Margin		35.9%		35.8%

5

Adjusted Diluted EPS
	Three Months Ended
	March 31,
		2017		2016
Diluted Earnings Per Share (EPS)	$	0.56	$	0.61
Amortization of intangible assets		0.13		0.14
Merger integration and other items1		0.03		0.03
Asset abandonments, impairments and other adjustments		0.03		0.02
(Gain) loss on transfer of wireless spectrum		(0.01)		(0.08)
Adjusted EPS	$	0.74	$	0.72
Year-over-year growth - Adjusted		2.8%
Weighted Average Common Shares Outstanding      with Dilution (000,000)		6,186		6,190
1Includes combined merger integration items, merger-related interest expense and DIRECTV exchange fees.

Net Debt to Adjusted EBITDA

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. The Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt by annualized Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized Adjusted EBITDA is calculated by annualizing the year-to-date Adjusted EBITDA.

Net Debt to Adjusted EBITDA
Dollars in millions	Three Months Ended
	Mar. 31,		YTD
	2017		2017
Adjusted EBITDA	$	13,080	$	13,080
Annualized Adjusted EBITDA				52,320
End-of-period current debt				12,681
End-of-period long-term debt				120,568
Total End-of-Period Debt				133,249
Less: Cash and Cash Equivalents				14,884
Net Debt Balance				118,365
Annualized Net Debt to Adjusted EBITDA Ratio				2.26

6

Supplemental Operational Measures

We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.

Supplemental Operational Measure
		Three Months Ended
		March 31, 2017								March 31, 2016
		Consumer Mobility		Business Solutions		Adjustments1		AT&T Mobility		Consumer Mobility		Business Solutions		Adjustments1		AT&T Mobility
Operating Revenues
Wireless service	$	6,609	$	7,929	$	-	$	14,538	$	6,943	$	7,855	$	-	$	14,798
Fixed strategic services		-		2,974		(2,974)		-		-		2,751		(2,751)		-
Legacy voice and data services		-		3,630		(3,630)		-		-		4,373		(4,373)		-
Other service and equipment		-		817		(817)		-		-		859		(859)		-
Wireless equipment		1,131		1,498		-		2,629		1,385		1,771		-		3,156
Total Operating Revenues		7,740		16,848		(7,421)		17,167		8,328		17,609		(7,983)		17,954
Operating Expenses
Operations and support		4,528		10,176		(4,706)		9,998		4,912		10,802		(5,090)		10,624
EBITDA		3,212		6,672		(2,715)		7,169		3,416		6,807		(2,893)		7,330
Depreciation and amortization		873		2,312		(1,188)		1,997		922		2,508		(1,374)		2,056
Total Operating Expense		5,401		12,488		(5,894)		11,995		5,834		13,310		(6,464)		12,680
Operating Income	$	2,339	$	4,360	$	(1,527)	$	5,172	$	2,494	$	4,299	$	(1,519)	$	5,274
1 Non-wireless (fixed) operations reported in Business Solutions segment.

We provide a supplemental presentation of the Latin America and Mexico Wireless operations within our International segment. The following table presents a reconciliation of our International segment.

Supplemental International
		Three Months Ended
		March 31, 2017						March 31, 2016
		Latin America		Mexico		International		Latin America		Mexico		International
Operating Revenues
Video Service	$	1,341	$	-	$	1,341	$	1,130	$	-	$	1,130
Wireless Service		-		475		475		-		455		455
Wireless Equipment		-		113		113		-		82		82
Total Operating Revenues		1,341		588		1,929		1,130		537		1,667
Operating Expenses
Operations and support		1,050		709		1,759		881		707		1,588
Depreciation and amortization		214		76		290		196		81		277
Total Operating Expense		1,264		785		2,049		1,077		788		1,865
Operating Income		77		(197)		(120)		53		(251)		(198)
Equity in Net Income of Affiliates		20		-		20		14		-		14
Segment Contribution	$	97	$	(197)	$	(100)	$	67	$	(251)	$	(184)

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