How T (AT&T) Makes Money in 2025: A Deep-Dive With Income Statement

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Understanding how a telecommunications giant like T Income Statement Overview (formerly AT&T) makes money is essential for investors and anyone interested in the business of communications and media. In this post, we break down T's quarterly income statement (Q3 2025) using a Sankey chart to visualize the financial flows — what comes in, where it goes, and what's left as profit.

Quick T Income Statement Overview

T Income Statement Overview operates a vast communications network, providing wireless, broadband, and business connectivity services across the United States and Latin America. Revenue comes primarily from wireless service plans, broadband subscriptions, and business solutions. The company’s business segments include Communications (core wireless and broadband), Latin America (regional wireless and broadband), and Corporate & Other (miscellaneous operations).

Revenue Breakdown

• Total Revenue (Q3 2025): $30.7B (+1.6% YoY)
  • Communications Revenue: $29.58B (96.1% of total)
  • Latin America Revenue: $1,095M (3.6% of total)
  • Corporate & Other Revenue: $98M (0.3% of total)
  • WarnerMedia Revenue: $0.0B (0% of total; post-divestiture)
• Growth is powered by expanding wireless subscriber base, increased broadband penetration, and strong performance in Latin America.

Gross Profit and Margins

• Gross Profit: $13.6B (44.2% gross margin)
  • Cost of Revenue: $17.1B (+47.3% YoY)
  • T maintains robust margins due to its scalable network infrastructure and operational efficiencies.
• Most costs come from network operations, device subsidies, and service delivery.

Operating Income and Expenses

• Operating Income: $6,119M (+189.2% YoY, 19.9% margin)
• Operating Expenses: $7,454M (-54.7% YoY)
  • R&D: Not separately disclosed for Q3 2025
  • SG&A: $7,454M (+7.1% YoY, 24.3% of revenue) — includes sales, marketing, and administrative costs
  • T continues to control costs and invest in network upgrades while maintaining efficiency and expanding operations.

Net Income

• Pre-Tax Income: $10.7B (+645.0% YoY, 34.7% margin)
• Income Tax: $976M (9.2% effective tax rate)
• Net Income: $9,314M (+0.0% YoY, 30.3% net margin)
• T converts a significant portion of sales into profit due to network scale, cost discipline, and pricing power.

What Drives T's Money Machine?

• Wireless Service Revenue: Over 96% of revenue comes from communications (wireless and broadband).
• Subscriber Growth: T added hundreds of thousands of new wireless and broadband subscribers, driving top-line growth.
• Network Investment: Billions invested in 5G and fiber infrastructure to support future growth and maintain competitive advantage.
• Latin America Expansion: Latin America segment grew 7.1% YoY, though it remains a small portion of total revenue.

Visualizing T's Financial Flows

The Sankey chart below visualizes how each dollar flows from gross revenue, through costs and expenses, down to net income. This helps investors spot where value is created, what areas weigh on profits, and how efficiently the company operates.

• Most revenue flows into gross profit, with operating expenses (especially SG&A) taking the largest chunk.
• Even after significant network investments and cost of revenue, 30.3% of revenue drops to the bottom line.

Key Takeaways

• T's money comes overwhelmingly from wireless and broadband service revenue
• High gross and net margins illustrate the power of T's scalable network business model
• Heavy investment in network infrastructure, balanced by efficiency in operating costs
• Ongoing growth is driven by subscriber additions, broadband expansion, and Latin America performance

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FAQ About T's Income Statement

1. What is the main source of T's revenue in 2025?

T generates over 96% of its revenue from Communications, primarily wireless and broadband services. Other sources, such as Latin America and Corporate & Other, contribute less than 4% combined.

2. How profitable is T in Q3 2025?

T reported net income of $9,314M in Q3 2025, with a net margin of approximately 30.3%, reflecting strong profitability driven by network scale and cost discipline.

3. What are the largest expense categories for T?

The biggest expenses on T's income statement are operating expenses, particularly Sales, General & Administrative (SG&A) costs, which reached $7,454M in Q3 2025. Network operations and device subsidies also represent major cost areas.

4. Why does Latin America operate at a loss?

Latin America, despite generating $1,095M in revenue, posted an operating loss due to aggressive investment in regional network expansion and subscriber acquisition, as T believes these will drive long-term growth—even if the division is unprofitable today.

5. How does T's effective tax rate compare to previous years?

T's effective tax rate in Q3 2025 was 9.2%, lower than previous years. This low rate is primarily due to tax benefits from international structuring and share-based compensation.