How AT&T Makes Money

Communications segment generates the most revenue and profits

AT&T Inc. (T) is one of the biggest telecommunications companies in the world. It operates as a holding company that provides telecommunications, media, and technology services globally. AT&T offers a broad range of products and services that vary by market, and it operates through three reportable business segments: Communications; WarnerMedia; and Latin America.

AT&T faces considerable competition from companies offering wireless, video and broadband, voice and data, media, and advertising services. Major competitors include Verizon Communications Inc. (VZ), T-Mobile US Inc. (TMUS), U.K.-based Vodafone Group PLC (VOD), and Germany-based Deutsche Telekom AG (DTEGY).

Key Takeaways

  • AT&T offers telecommunications, media, and technology services.
  • Its communications segment generates the most revenue and profits.
  • AT&T is seeking to speed up revenue growth as consumers expand the use of wireless video.
  • The company has agreed to sell a 30% stake in its U.S. video business unit.

AT&T's Financials

AT&T's financial results in Q4 2020, which ended Dec. 31, 2020, were adversely impacted by the COVID-19 pandemic. Its WarnerMedia and domestic wireless service revenue were the most affected, largely due to lower international roaming charges. The company posted a quarterly net loss of $13.5 billion compared to a net income of $2.7 billion in the year-ago quarter. Operating revenue fell 2.4% to $45.7 billion.

AT&T's operating revenues are comprised of two main categories: services and equipment. Services accounted for 85% of total operating revenue while equipment accounted for the remaining 15%. The company also generated $8.9 billion in operating income across its three business segments. After deducting corporate and other expenses, AT&T posted an operating loss of $10.7 billion in Q4 2020.

AT&T's Business Segments

AT&T operates through three main business segments: Communications; WarnerMedia; and Latin America. It provides a breakdown of revenue and operating income for each of these segments. The company also reports results for a Corporate and another segment, which reconciles the results for the three segments above with AT&T's consolidated results and includes various corporate expenses, acquisition-related items, eliminations and consolidations, and certain other significant items. The pie charts above do not include amounts from this Corporate and Other category nor any negative amounts from the company's three primary business segments.


The Communications segment offers a broad range of bundled products to businesses and consumers. The segment includes the following units: Mobility, which provides wireless service and equipment; Video, which provides video services and sells multi-platform advertising services; Broadband, which provides internet and legacy telephone communications services; and Business Wireline, which provides advanced IP-based services as well as voice and data services.

Operating income for the Communications segment fell 12.7% to $6.6 billion in Q4 2020. The segment comprises the majority, or about 72%, of total operating income across all segments. Quarterly revenue rose 0.5% to $36.7 billion, accounting for about 79% of total revenue.


The WarnerMedia segment develops, produces, and distributes feature films, television, gaming, and other content through a range of physical and digital formats. It includes Turner, which operates multichannel basic TV networks and digital properties, and sells advertising; Home Box Office, which offers premium pay-TV, as well as the HBO Max streaming platform and international streaming. WarnerMedia also includes Warner Bros., which produces, distributes, and licenses TV programming and feature films, and distributes other home entertainment products and games.

Operating income for the WarnerMedia segment declined 10.4% to $2.5 billion in Q4 2020, comprising nearly 28% of the total across all segments. Segment revenue fell 9.5% to $8.6 billion, accounting for more than 18% of the total.

Latin America

The Latin America segment provides entertainment and wireless services to customers in Latin America. The segment's Vrio unit offers video services to residential customers via satellite and streaming technology in Latin America and the Caribbean. Its Mexico unit offers wireless service and equipment to customers in Mexico.

The Latin America segment posted an operating loss of $165 million in Q4 2020, nearly double the operating loss of $89 million reported in the year-ago quarter. Quarterly revenue fell 14.8% to $1.5 billion, comprising about 3% of total revenue for all segments.

AT&T's Recent Developments

On February 25, 2021, AT&T announced that it agreed to sell a 30% stake in its U.S. video business unit consisting of DirecTV, AT&T TV, and U-verse video services to private equity firm TPG Capital. The transaction would separate AT&T's U.S. video business into a new company named DirecTV and would be jointly run by both AT&T and TPG. AT&T will retain a 70% stake in the business while TPG will pay $1.8 billion for a 30% stake. AT&T said that it plans to use the proceeds from the transaction, which is expected to close in the second half of 2021, to reduce its debt.

Article Sources

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  1. AT&T Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Pages 1 and 2. Accessed March 22, 2021.

  2. AT&T Inc. "Form 10-K for the fiscal year ended December 31, 2020," Pages 12 and 13. Accessed March 22, 2021.

  3. AT&T Inc. "AT&T Reports Fourth-Quarter and Full-Year Results," Page 2. Accessed March 22, 2021.

  4. AT&T Inc. "Q4 2020 Financial Statements," Page 1. Accessed March 22, 2021.

  5. AT&T Inc. "Q4 2020 Financial Statements," Page 16. Accessed March 22, 2021.

  6. AT&T Inc. "Form 10-K for the Fiscal Year Ended December 31, 2020," Page 2. Accessed March 22, 2021.

  7. AT&T Inc. "Q4 2020 Financial Statements," Pages 16 and 17. Accessed March 22, 2021.

  8. The Wall Street Journal. "AT&T Carves Out Pay-TV Business in Deal With TPG." Accessed March 22, 2021.

  9. AT&T Inc. "AT&T & TPG to Form New Entity to Operate AT&T’s U.S. Video Unit." Accessed March 22, 2021.