AT&T Inc. (NYSE:T) today reported strong fourth-quarter results
and reaffirmed its positive outlook for 2008 and beyond. This marked
AT&T's 11th consecutive quarter and third straight year of
double-digit growth in adjusted earnings per share.

Fourth-quarter results were highlighted by record wireless gains, a
significant step up in recurring enterprise services growth, continued
double-digit growth in broadband revenues, and accelerated expansion of
the company's advanced TV service.

Solid trends in these areas and progress in productivity initiatives
reinforce AT&T's expectation for continued strong results as
outlined at its December 2007 analyst conference. AT&T's 2008
outlook includes mid-teens percentage growth in wireless service
revenues, mid-single-digit percentage growth in consolidated revenues
and continued double-digit growth in adjusted earnings per share.

“We had an excellent fourth quarter, which affirms our outlook for
2008,” said Randall Stephenson, AT&T chairman, chief executive
officer and president.

“Our wireless business delivered outstanding results, with the
largest quarterly subscriber gain ever posted by a U.S. provider,”
Stephenson said. “Enterprise service revenue growth continues to
improve. Broadband subscribers and revenues continue to grow at a solid
double-digit pace. The ramp in our AT&T U-verse TV service
accelerated, and we are on track to reach more than 1 million
subscribers by the end of 2008.

“These growth trends, combined with the significant opportunities we
have for continuous cost improvements, reinforce the positive outlook
we have for our business,” Stephenson said. “AT&T has a terrific
set of assets and an impressive record in terms of executing and
delivering on targets, and I am very confident in our ability to drive
strong results in 2008.”

Revenue Growth

For the quarter ended Dec. 31, 2007, AT&T's reported
fourth-quarter revenues totaled $30.3 billion, up from $15.9 billion in
the year-earlier quarter. AT&T's 2007 reported results reflect the
Dec. 29, 2006 acquisition of BellSouth Corporation and the accompanying
consolidation of wireless results.

As a further basis for comparison, AT&T also provides pro forma
results, which combine revenues from AT&T, BellSouth and Cingular
Wireless consistently in all periods. On this basis, AT&T's
fourth-quarter 2007 revenues totaled $30.4 billion, up 2.9 percent
versus results for the year-earlier quarter. Excluding revenues from
enterprise CPE (customer premises equipment) sales, which AT&T
began de-emphasizing after the fourth quarter of 2006, consolidated pro
forma revenue growth was 3.5 percent.

AT&T's fourth-quarter revenue growth was driven by a solid
mid-teens increase in wireless revenues, improved growth in recurring
enterprise services, continued growth in regional business and stable
regional consumer revenues. Growth across these areas more than offset
anticipated declines in revenues from wholesale and national mass
market customers.

Reported Earnings

AT&T's reported net income for the fourth quarter totaled $3.1
billion, or $0.51 per diluted share, compared with $1.9 billion, or
$0.50 per diluted share, in the year-earlier quarter.

Compared with results in the fourth quarter of 2006, reported
operating expenses were $24.9 billion, up from $13.3 billion; reported
operating income was $5.5 billion, up from $2.6 billion; and AT&T's
reported operating income margin was 18.1 percent versus 16.2 percent.

Double-Digit Growth in Adjusted Earnings Per Share

AT&T's adjusted earnings, which exclude costs and accounting
effects associated with acquisitions, totaled $4.3 billion, up from
$2.4 billion in the year-earlier fourth quarter. Adjusted earnings per
diluted share increased 16.4 percent to $0.71, up from $0.61 in the
year-earlier quarter.

AT&T's adjusted operating income for the fourth quarter of 2007
was $7.3 billion, versus $2.9 billion in the year-earlier quarter.
AT&T's adjusted operating income margin was 24.0 percent, up from
18.2 percent in the fourth quarter of 2006.

AT&T's merger integration initiatives continue on schedule, and
merger synergies continue to run ahead of the company's original
outlook. For the full year 2007, cost savings from BellSouth and
AT&T Corp. merger integration initiatives totaled approximately
$4.0 billion, approximately 75 percent expense and 25 percent capital.

Increased Cash From Operations

AT&T's cash from operating activities totaled $9.9 billion in
the fourth quarter of 2007, up from $5.0 billion in the year-earlier
fourth quarter, and $34.1 billion for the full year 2007, up from $15.6
billion for the full year 2006. In addition to operational progress,
increased cash from operating activities reflects the inclusion of
results from former BellSouth operations and the accompanying
consolidation of wireless results.

Full-year 2007 capital expenditures totaled $17.7 billion, free cash
flow totaled $16.4 billion, and free cash flow after dividends totaled
$7.6 billion, significantly above AT&T's original outlook of $5
billion to $6 billion. (Free cash flow is cash from operations minus
capital expenditures; free cash flow after dividends also subtracts
dividends paid.)

Dividend Growth and Share Repurchases

AT&T continues to return substantial value to shareowners through dividends and share repurchases.

Dividends paid totaled $2.2 billion in the fourth quarter and $8.7
billion for the full year 2007. Shares repurchased totaled $1.5 billion
for 37.0 million shares in the fourth quarter, and for the full year
2007 they totaled $10.4 billion for 266.6 million shares. AT&T
ended the year with 6.0 billion shares outstanding.

Combining dividends and share repurchases, AT&T returned $19.1 billion of value to shareowners in 2007.

On Dec. 11, 2007, AT&T announced that its board of directors had
approved a 12.7 percent increase in the company's quarterly dividend,
from $0.355 to $0.40 a share on a quarterly basis and from $1.42 to
$1.60 a share on an annualized basis, the largest annual increase in
the company's history. The dividend will be payable on Feb. 1, 2008, to
common shareowners of record on Jan. 10, 2008.

The board also approved a new authorization for the repurchase of
400 million shares, which represents approximately 6.6 percent of
AT&T's shares outstanding as of Dec. 31, 2007. Based on current
market conditions and the company's outlook, AT&T expects to
complete the repurchases available in the new authorization by the end
of 2009. The timing and nature of repurchases are subject to market
conditions and applicable securities laws.

Fourth-Quarter Operational Highlights

Wireless

In the fourth quarter, AT&T delivered strong wireless growth
with record gross subscriber additions, reduced subscriber churn, solid
mid-teens percentage growth in revenues and robust growth in operating
income. These results reflect the company's broad high-quality network,
attractive handset selection, extensive sales reach and continued
improvements in operations.

In the fourth quarter, AT&T achieved:

• Record Wireless Subscriber Gains.
  AT&T's net gain of 2.7 million wireless subscribers was the highest
  quarterly subscriber increase ever for any U.S. wireless provider, up
  13.5 percent from 2.4 million net adds in the year-earlier fourth
  quarter. This year-over year improvement in quarterly net adds was
  almost entirely driven by stronger growth in retail postpaid net adds,
  which totaled 1.2 million, up 36.8 percent versus results in the
  year-earlier quarter. In addition, AT&T's acquisition of Dobson
  Communications, which was completed on Nov. 15, 2007, added 1.7 million
  subscribers, bringing AT&T's wireless subscriber base at year end
  to 70.1 million.
• Strong Gross Adds, Reduced Churn. AT&T also
  delivered the industry's best-ever quarterly gross wireless subscriber
  additions, which totaled 6.0 million, up 9.6 percent versus the
  year-earlier fourth quarter. Total average monthly subscriber churn was
  1.7 percent, down 10 basis points versus the year-earlier quarter, and
  postpaid churn was 1.2 percent, down 30 basis points from the fourth
  quarter of 2006.
• Accelerated Wireless Revenue Growth. AT&T's total
  wireless revenues were $11.4 billion, up 16.3 percent versus the
  year-earlier quarter. This marked AT&T's sixth consecutive quarter
  of improved wireless revenue growth. Wireless service revenues, which
  exclude handset and accessory sales, grew 15.7 percent to $10.2
  billion. AT&T also posted its sixth consecutive quarter of
  year-over-year growth in wireless service ARPU (average monthly
  revenues per subscriber), which was $50.28 in the fourth quarter, up
  1.9 percent versus the year-earlier quarter. Retail postpaid ARPU
  growth was even stronger, up more than 5 percent.
• Robust Growth in Wireless Data Services. Wireless
  data revenues increased 57.5 percent versus results in the year-earlier
  quarter, driven by increased adoption of smart phones and 3G wireless
  devices. Data growth reflects increases in messaging, media bundles,
  laptop connectivity, smart phone connectivity and enterprise vertical
  market solutions.
• Strong Wireless Operating Income Growth. On a
  reported basis, AT&T's fourth-quarter wireless operating expenses
  totaled $9.4 billion, and operating income was $1.9 billion, up 45.0
  percent from $1.3 billion in the fourth quarter of 2006. Before
  merger-related costs, wireless operating expenses totaled $8.4 billion,
  and operating income was $2.9 billion, up 58.2 percent from $1.8
  billion in the fourth quarter of 2006.
• Wireless Margin Expansion. AT&T's reported
  wireless operating income margin was 17.0 percent, up from 13.6 percent
  in the year-earlier quarter. Before merger-related costs, AT&T's
  fourth-quarter adjusted wireless operating income margin was 25.7
  percent, up from 18.9 percent in the year-earlier quarter. AT&T's
  unadjusted fourth-quarter wireless OIBDA service margin was 35.3
  percent, up from 33.1 percent in the year-earlier quarter. Before
  merger-related costs, AT&T's wireless OIBDA service margin was 38.2
  percent, up from 34.4 percent for the year-earlier quarter. (OIBDA
  service margin is operating income before depreciation and
  amortization, divided by total service revenues.)

Wireline

AT&T's fourth-quarter wireline results were highlighted by
improved growth in enterprise service revenues, solid double-digit
growth in broadband revenues and an accelerated ramp in AT&T
U-verse video service.

The following wireline highlights are based on pro forma revenue and
volume comparisons that combine results from AT&T and BellSouth in
all periods and include ongoing shifts in customer categories to
reflect AT&T's management of customer relationships. In the fourth
quarter, AT&T delivered:

• Further Step Up in Enterprise Services Growth.
  Recurring enterprise service revenues, which exclude revenues from CPE
  and from assets acquired during the past year, increased 1.8 percent,
  up from 0.3 percent year-over-year growth in the third quarter of 2007
  and a 3.5 percent decline in the fourth quarter of 2006. Fourth-quarter
  enterprise services growth was led by a 20.9 percent increase in
  revenues from IP-based data services such as virtual private networking
  (VPN), hosting and managed Internet services. Total enterprise revenues
  declined 1.9 percent year over year, reflecting a decreased emphasis on
  CPE sales following the fourth quarter of 2006.
• Accelerated Ramp in AT&T U-verse Video Services .
  At the end of the fourth quarter, subscribers to AT&T U-verse, the
  company's next-generation IP-based video service, totaled 231,000, up
  from 126,000 three months earlier. AT&T's U-verse TV weekly install
  rate in mid-December was approximately 12,000, above the company's year
  end target of 10,000. In December, AT&T announced a major expansion
  of its AT&T-U-verse services to include the company's Southeast
  region, with deployment expected to reach approximately 30 million
  living units across 22 states by the end of 2010. Growth in total video
  connections, which include AT&T U-verse service and bundled
  satellite television service, increased by 235,000 in the quarter to
  2.3 million. Over the past year, total video connections increased 55.4
  percent, and at the end of 2007, 7.6 percent of AT&T's primary
  consumer lines had a video solution from AT&T, up from 4.6 percent
  one year earlier.
• Double-Digit Broadband Growth. AT&T's broadband
  revenues grew 13.7 percent in the fourth quarter to $1.4 billion. Total
  high speed Internet connections, which include DSL, AT&T U-verse
  high speed Internet and satellite broadband services, increased by
  396,000 in the quarter to reach 14.2 million, up 2.0 million, or 16.3
  percent, over the past year.
• Year-Over-Year Growth in Consumer Connections.
  AT&T regional consumer revenue connections (retail access lines,
  high speed Internet plus video connections) totaled 49.5 million at the
  end of the fourth quarter, up 568,000, or 1.2 percent, over the past
  year, as gains in high speed Internet and video more than offset
  declines in voice access lines. Regional consumer revenues were up 0.2
  percent year over year.
• Solid Regional Business Growth. Total regional
  business revenues increased 2.8 percent versus the year-earlier quarter
  to $3.1 billion. Regional business data revenues, which make up 29.4
  percent of the category, delivered 4.2 percent growth, led by gains in
  broadband connectivity, managed Internet and VPN services.

2008 and Multi-Year Outlook

As outlined at its Dec. 11, 2007, analyst conference, AT&T is
confident in its outlook for sustained double-digit growth in adjusted
earnings per share driven by advances in wireless, broadband,
enterprise, IP data and a new generation of converged services. This
outlook takes into account current consumer access line and broadband
market conditions and resulting impacts on consumer volumes. AT&T
expects to deliver:

• Further ramp in consolidated revenue growth into the
  mid-single-digit range in 2008 with growth at mid-single-digit or
  better in the years following.
• Continued mid-teens wireless service revenue growth in 2008,
  including results from the acquisition of Dobson Communications,
  reflecting strong subscriber growth and continued robust growth in
  wireless data services.
• Positive growth in enterprise revenues throughout 2008 with line of sight to mid-single-digit enterprise revenue growth by 2010.
• Positive regional consumer revenue growth in 2008 and beyond driven
  by video, broadband and converged services, and continued
  mid-single-digit growth in regional business revenues.
• A 2008 adjusted consolidated operating income margin in the 25
  percent to 26 percent range, up from 23.8 percent for the full year
  2007, reflecting continued wireless progress and increased expense
  savings from merger synergies and operational initiatives, which are
  expected to offset expected increased expense for deployment of
  AT&T U-verse services.
• An adjusted wireless OIBDA service margin for the full year 2008 in
  the low-40 percent range, trending toward the mid-40 percent range by
  year's end.
• Continued double-digit growth in adjusted earnings per share in
  2008. AT&T is confident that its ramping revenue growth combined
  with continuous cost improvements and share repurchases give it the
  ability to deliver sustained double-digit growth in adjusted earnings
  per share and strong growth in free cash flow in 2008 and on an ongoing
  basis.
• 2008 free cash flow in the $16 billion to $17 billion range. (Free
  cash flow is cash from operations minus capital expenditures.)
• Continued capital expenditures in the mid-teens as a percentage of
  total revenues as the company expands its advanced wireless and wired
  network capabilities.
• Significant progress in AT&T U-verse deployment with total
  AT&T U-verse video subscribers expected to exceed 1 million by the
  end of 2008. For the full year 2008, AT&T's outlook anticipates
  additional dilution from its U-verse deployment of approximately $0.12
  to $0.14 per share.
• Substantial opportunities to reduce costs over the next few years.
  AT&T expects its annual operating expense savings run rate from
  AT&T Corp. and BellSouth merger synergies and from operational
  initiatives to increase by approximately $2 billion from 2007 levels to
  approximately $5.9 billion in 2008 and more than $7.0 billion in 2010.

Additional Background on Adjusted and Pro Forma Results

AT&T's reported revenues, expenses and operating income for the
fourth quarter of 2006 do not include revenues and expenses from
BellSouth Corporation prior to Dec. 29, 2006, when AT&T acquired
the company. Nor do they include results from Cingular Wireless, whose
results before the BellSouth transaction were accounted for as part of
a joint venture. To give investors further basis for comparison, in
addition to historical reported results, AT&T has provided
supplementary pro forma results for 2005 and 2006, which combine
revenues from AT&T, BellSouth and Cingular Wireless in all periods.
These pro forma results are available at www.att.com/investor.relations [1].

AT&T's adjusted earnings for the fourth quarter of 2007 exclude
(1) pretax integration and amortization costs totaling $1.8 billion
related to acquisitions and (2) a reduction to operating income of $36
million due to the merger-related purchase accounting treatment of
deferred Advertising & Publishing revenues and associated expenses.
Combined, these adjustments reduced fourth-quarter 2007 reported
earnings per share by $0.19. Adjusted results for the fourth quarter of
2006 excluded pretax merger-related costs totaling $624 million, or
$0.11 per diluted share.

AT&T's 2007 Advertising & Publishing results are affected by
the BellSouth acquisition. Prior to its acquisition by AT&T,
BellSouth amortized the revenues and expenses of printed directory
advertising books over the lives of the directories, typically 12
months. In accordance with purchase accounting rules, BellSouth's
deferred revenues and expenses for all directories delivered prior to
the close of the merger have been eliminated in consolidated results.
In 2007, eliminating this amortization resulted in reductions to
consolidated revenues, expenses and net income from the pre-acquisition
BellSouth directory operations, but the adjustment did not affect cash
from operations. These adjustments reduced fourth-quarter 2007
consolidated revenues by $53 million and consolidated operating
expenses by $17 million.

AT&T continues to manage its print directory business using
amortized results. As a result, amortized results are shown in the
Advertising & Publishing segment on AT&T's Statement of Segment
Income. In 2008, consolidated and segment results will both reflect
amortization accounting.

As shown in AT&T's Statement of Segment Income, AT&T's
Advertising & Publishing revenues totaled $1.5 billion in the
fourth quarter, operating expenses were $1.0 billion and operating
income was $507 million.

Also excluding merger-related intangible amortization and
integration costs, fourth-quarter Advertising & Publishing
operating expenses were $790 million and operating income was $683
million.

This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss [2].

About AT&T
AT&T Inc. is a premier communications holding company. Its
subsidiaries and affiliates, AT&T operating companies, are the
providers of AT&T services in the United States and around the
world. Among their offerings are the world's most advanced IP-based
business communications services and the nation's leading wireless,
high speed Internet access and voice services. In domestic markets,
AT&T is known for the directory publishing and advertising sales
leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and
the AT&T brand is licensed to innovators in such fields as
communications equipment. As part of its three-screen integration
strategy, AT&T is expanding its TV entertainment offerings.
Additional information about AT&T Inc. and the products and
services provided by AT&T subsidiaries and affiliates is available
at http://www.att.com [3].