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 makes money is essential for investors and anyone interested in the business of communications. 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 as a leading telecommunications provider, delivering wireless, broadband, and enterprise communication services to consumers and businesses. Revenue comes primarily from its Communications segment, which includes wireless service, broadband, and business connectivity. The company also operates in Latin America and maintains a small Corporate & Other segment, though WarnerMedia is no longer a revenue contributor.

Revenue Breakdown

• Total Revenue (Q3 2025): $30.7B (+1.6% YoY)
  • Communications Revenue: $29.58B (96.1% of total)
  • Latin America Revenue: $1.10B (3.6% of total)
  • Corporate & Other Revenue: $98M (0.3% of total)
  • WarnerMedia Revenue: $0.0B (0% of total)
  • Growth is powered by steady expansion in core wireless and broadband services, with Latin America showing the fastest segment growth at +7.1% YoY.

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 in its core communications business.
• Most costs come from network operations, maintenance, and service delivery.

Operating Income and Expenses

• Operating Income: $6.12B (+189.2% YoY, 19.9% margin)
• Operating Expenses: $7.45B (-54.7% YoY)
  • R&D: [Not separately disclosed]
  • SG&A: $7.45B (+7.1% YoY, 24.3% of revenue) — Includes sales, marketing, customer support, and administrative functions.
  • T continues to control costs and invest in growth, focusing on expanding its 5G and fiber networks while maintaining efficiency in operations.

Net Income

• Pre-Tax Income: $10.7B (+645.0% YoY, 34.7% margin)
• Income Tax: $976M (9.2% effective tax rate)
• Net Income: $9.31B (+0.0% YoY, 30.3% net margin)
• T converts a significant portion of sales into profit due to its scale, efficient cost structure, and strong pricing power in its core markets.

What Drives T's Money Machine?

• Communications Revenue: 96%+ of revenue comes from wireless, broadband, and business connectivity services.
• Key metric: Wireless subscriber growth and average revenue per user (ARPU) are critical, with steady gains in both driving top-line performance.
• Investment area: Heavy capital investment in 5G and fiber network expansion to support future service growth and maintain competitive advantage.
• Future growth areas: Latin America and advanced enterprise solutions, though these segments are not yet major profit contributors.

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 costs, 30.3% of revenue drops to the bottom line.

Key Takeaways

• T's money comes overwhelmingly from its core Communications segment (wireless, broadband, business connectivity)
• High gross and net margins illustrate the power of T's scalable, infrastructure-driven business model
• Heavy investment in network expansion, balanced by efficiency in operating costs
• Ongoing growth is driven by wireless subscriber gains, ARPU growth, and Latin American expansion

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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 its Communications segment, which includes wireless, broadband, and business connectivity services. Additional revenue comes from Latin America 3.6% and Corporate & Other 0.3%.

2. How profitable is T in Q3 2025?

T reported net income of $9.31B in Q3 2025, with a net margin of approximately 30.3%, reflecting strong profitability driven by scale, efficient operations, and pricing power.

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. SG&A reached $7.45B in Q3 2025 (24.3% of revenue), as T prioritizes customer acquisition, support, and administrative efficiency.

4. Why does Latin America operate at a loss?

Latin America, despite generating $1.10B in revenue, posted an operating loss in Q3 2025. This is because T aggressively invests in network expansion and customer acquisition in the region, believing 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%, consistent with previous years. This moderate rate is primarily due to tax benefits from international structuring and other corporate tax strategies.