2nd Quarter Earnings Conference Call AT&T Investor Update July 21, 2016

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Agenda

2Q16 Results Business Update Q&A

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Cautionary Language Concerning Forward-Looking Statements Information set forth in this presentation contains financial estimates and other forwardlooking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this presentation based on new information or otherwise. 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. 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.

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2Q16 Results

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

2Q16 Financial Summary $ in billions, except EPS

Revenues

% Entertainment

$40.5

Adjusted EPS

Adj. OI Margin

$0.70 $0.72

Free Cash Flow

Capital Investment2

$4.5

$4.8

17.5%

2Q15

2Q16

19.8%

20.1%

2Q15

2Q16

Reported EPS

$4.7

$5.6

2Q15

2Q16

$0.59

$0.55

Cash from operations of $10.3 billion, up 12.5% • Free cash flow of $4.8 billion

$0.01

$0.14

Merger, integration and other1

$0.10

$0.03

$0.70

$0.72

includes merger-related items for DIRECTV ($0.01) and Mexico/Other wireless ($0.01). 2Q16 includes $95 million capital purchases in Mexico with favorable vendor payment terms.

2

5

• Adjusted EPS of $0.72 for the quarter,

2Q16

2Q15

Amortization of intangibles

12Q16

Net Income continues to grow up 6.7% year to date • Adjusted operating margins expand year over year

Adjustments:

Adjusted EPS

• DIRECTV acquisition and gains in IP-based

services drove growth

$33.0 31.4%

Consolidated revenues of $40.5 billion, up 22.7%

• Capital investment of $5.6 billion;

$10.3 billion year to date • Dividends of $3 billion per quarter ̵ 61% of second-quarter free cash flow ̵ 73% year to date

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

2Q16 Results: Business Solutions Financial Results ($ in billions)

Revenues

EBITDA

$17.7

EBITDA Margin

• Continued margin expansion

$17.6

• Revenue down slightly due to divested business and FX

Growth in Enterprise on an adjusted basis ̵ Small business growth driven by mobility ̵ Legacy continues to be challenged ̵

37.9%

38.2%

$6.7

$6.7

2Q15

2Q16

Business Solutions Revenue Mix Strategic Services

Wireless

Wireline Strategic Services Revenues $2.6

$2.8

16% 55%

11%

Other Data

18%

Legacy Voice/Other

6

32%

2Q15

36%

2Q16

• Wireless and strategic services more than 70%

of revenues ̵ Strong demand for highly secure, mobile business solutions

• Strategic services revenues up more than $200 million,

or 8%, year over year ̵ 36% of business wireline revenues

% of Wireline Bus. Rev.

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

2Q16 Results: Entertainment Group Revenue Trends1

($ in billions)

Video/Ad Sales $12.7

IP Voice/Data

Legacy/Other

$12.7 70%

19% 11%

+12.2% -17.1%

2Q15

2Q16

• Continued margin expansion, with content savings

on track

EBITDA Margin

1

revenues up nearly 7%

non-recurring PPV events

($ in billions)

7

• IP Broadband revenues up 15%; total broadband • Offsetting continued legacy pressure and

EBITDA

$2.4

subscription revenue

• Ad Sales growing double-digit year to date

+0.8%

Adjusted

• Video led by growth in recurring

$2.9

$3.1

$3.1

• 342,000 U.S satellite TV net adds; nearly 1 million

added since close

22%

22%

24%

3Q15

4Q15

1Q16

25%

• More than 80% of TV subscribers on satellite platform • Seasonality impacted total video net results

2Q16

• 54,000 IPBB adds (74,000 including Business Solutions)

Adjusted to include prior-period DIRECTV revenues on a comparable basis.

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

2Q16 Results: U.S. Wireless Wireless Trends ($ in billions) 2Q15

2Q16

Δ

Service Rev. Equipment Rev. Total Revenues

15.1 3.2 18.3

14.9 3.0 17.9

(0.2) (0.2) (0.4)

Cash Opex

11.0

10.5

(0.5)

EBITDA

7.3

7.4

0.1

40.1% 48.5%

41.4% 49.8%

130bps 130bps

EBITDA Margin EBITDA Svc. Mgn.

Phone Subscribers Postpaid-Smart Postpaid-Feature Postpaid Churn 77.0

• Record 2Q BYOD and upgrade rate impact revenues • Postpaid phone-only ARPU + Next grows to $70 • 75% of smartphone base off subsidy • More than 90% of smartphone sales off subsidy

• 0.97% postpaid churn, second-best quarter ever

(in thousands)

77.3

• Record EBITDA margins – 41.4% and 49.8% service

77.2

77.4

Prepaid

• 1.4 million total net adds

185,000 branded phone net adds ̵

77.6

• Almost 800,000 branded smartphones added to base ̵

57.5

57.7 1.16%

58.1

58.3

1.10%

8

0.97% 3Q15

• 2.1 million North American net adds,

including 1.4 million branded

1.18%

1.01% 2Q15

58.5

~600,000 feature phone migrations and disconnects

4Q15

1Q16

2Q16

U.S. Phone Base Continues to Grow

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2Q16 Results: International Mexico 10 million wireless subscribers

2Q16 Mexico Wireless Subscribers (in thousands)

614

• Nearly 780,000 branded net adds

165

• Mexico City launched 9,955

(37)

• 65 million LTE POPs covered and

9,213

742 Net Adds

1Q16

Reseller Postpaid Prepaid

61 cities launched

2Q16

Mexico LTE Deployment (millions of POPs)

27 6 3Q15

51

40

41

4Q15

1Q16

65 61

2Q16

DIRECTV Latin America Subscriber growth and stable cash flows • Revenues of $1.2 billion, up 8% sequentially

Cities Launched

44

• Revenues up 13% sequentially

75 162

• Continued profitability and positive cash flow • 87,000 TV net adds, even with losses from

natural disaster in Ecuador • Sky Mexico added 121,000 net subscribers1

4Q16e 1 AT&T owns a

9

41% equity interest in Sky Mexico

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2016 Guidance on Track Double-digit consolidated revenue growth DIRECTV drives revenue growth even with pressure from equipment sales and FX

Adjusted1 EPS growth in the mid-single digit range or better Up nearly 7% year to date

Stable consolidated margins even with ramp in Mexico investment Improved consolidated operating margins Expanding EBITDA margins in all domestic segments

Capital spending in the $22 billion range Trending toward the low end at mid-year

Free cash flow growth with dividend coverage in the 70s% 73% year to date

1 Expected

10

range excludes adjustments for non-cash mark-to-market benefit plan adjustments, merger integration costs and other adjustments that are not reasonably estimable at this time.

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Business Update

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Strategy – Be the World’s Premier Integrated Communications Company Connectivity Building Blocks

Industry-Leading Cost Structure

Integrated Solutions

Financial Foundation

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•

•

•

Project VIP/LTE Fiber

Merger synergies

Global business solutions

Strong liquidity position

•

•

•

•

Spectrum

Project Agile efficiencies

Unique consumer offers

Benefit and compensation plans

•

•

•

•

Strategic acquisitions

Softwaredefined network

Expansion of product set

Debt refinancing & diversification

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

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•

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5G

Product profitability focus

Secure & flexible

Sound corporate governance

Connectivity: Sustained Data Growth Requires Multi-Layer Strategy Expand network assets • 4G LTE and network densification; Mexico buildout;

380 million North American 4G LTE POPs • Drive fiber deeper into network; GigaPower and Business Fiber deployment • 5G development; trials, testing, standards

Deploy broad spectrum portfolio • 150 MHz of spectrum; 40 MHz of readily

available spectrum ̵ WCS and AWS bands will be deployed over the next several years • Continuous 2G and 3G spectrum refarming and acquisition

Software-defined Network • Upgrading traditional architecture with flexible,

dynamic, intelligent network that can rapidly adjust and deliver next-generation services

AT&T Mobile Data Traffic Growth 150,000% (2007 – 2015) Expect 10x traffic growth by 2020

2007

2015

Capital Intensity Total Wireless Wireless capacity added 20%

Gigabytes (millions) 1500

18%

1200

16%

900

14%

600

12%

300 0

10% 2012

2013

2014

Project VIP 13

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2015

2016e

Industry-Leading Cost Structure: Drives Margins and Cash Flows DIRECTV merger synergies

EBITDA Margin Expansion

• On track to $1.5 billion+ run rate by end of year

Illustrative

• $2.5 billion+ run rate by end of 2018

40%

Project Agile and automation benefits

35%

• Digital First, automating and streamlining

operations, exiting less profitable lines of business • On track for $3 billion run-rate cost savings

Virtualize network with software • Software-defined networks, standardized

hardware with open-source software • Capital and operational efficiencies; new revenue opportunities

30% 25% 2013

2014

2015

2016e

2017e+

2016e

2020e+

Free Cash Flow (in billions) Illustrative $20

$15

$10

Significant free cash flow growth expected

$5 2013

2014

2015

Free cash flow is cash from operations less capital expenditures.

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© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

Integrated Solutions: Unique Set of Assets Drives Growth Opportunities Unmatched portfolio of integrated assets • World’s largest pay TV provider + largest North

American wireless network + pervasive broadband coverage1 • Fiber deployment to 12.5 million customer locations on track

Unique consumer offers • Game-changing OTT launch on track; choice

and flexibility for every segment • TV bundle with unlimited wireless, NFL Sunday Ticket and other promotional offers • Cross selling, advertising, Cricket, IoT, Mexico wireless

Go-to-market integrated business services • Mobile and fixed business solutions • Network Functions on Demand, NetBond®,

global reach with secure network 1 Wireless and

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U.S. Wireless Subscribers (millions) 2Q11

2Q16

60 40

71%

154%

153%

20 0 Postpaid Smartphones

Prepaid

broadband assessment based on coverage.

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

Connected Devices

Summary Becoming the premier integrated communications company Unprecedented assets and capabilities to lead in connectivity and integrated solutions

Redefining seamless connectivity Virtualized functionality of networks drives efficiencies and new services

Operating with an industry-leading cost structure Merger synergies, Project Agile, SDN and cost efficiencies

Increasing growth opportunities Cross selling, integrated services, advertising, new products, OTT services, international

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© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.

© 2016 AT&T Intellectual Property. All rights reserved. AT&T, Globe logo, Mobilizing Your World and DIRECTV are registered trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks are the property of their respective owners. AT&T Proprietary (Internal Use Only). Not for use or disclosure outside the AT&T companies except under written agreement.