AT&T Ramps Revenue Growth, Delivers Strong First-Quarter Results

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AT&T Inc. (NYSE:T) today reported strong first-quarter results,
highlighted by a significant ramp in consolidated revenue growth, led
by improved results in wireless and enterprise, and further expansion
of wireless and consolidated margins. This marked AT&T's 12th
consecutive quarter of double-digit growth in adjusted earnings per
share.

"We delivered an excellent first quarter and a
solid start to the year," said Randall Stephenson, AT&T chairman
and chief executive officer. "Revenue growth continues to ramp, we have
good momentum across key growth areas, major cost initiatives are on
track, and our operational results reinforce the confidence we have in
our outlook.

"AT&T's goal is to innovate and lead
in a communications world driven by mobility and interactivity,"
Stephenson said. "To that end, as we deliver strong earnings and return
substantial value to shareowners, we are also taking important steps to
expand our networks and product sets to drive continued growth in
wireless, broadband and IP-based services.

"AT&T
is moving quickly to create the next generation of wireless,"
Stephenson said. "The future of wireless has never been more promising,
and I am very pleased that through our transaction with Aloha Partners
and our successful bids in the recently completed auction, we have
assembled the industry's premier, high-quality wireless spectrum
position. This spectrum will provide a terrific foundation for new
wireless and integrated services, and it significantly advances
AT&T's long-term growth potential."

Reported Results: Ramp in Revenue Growth, Net Income Growth

For the quarter ended March 31, 2008, AT&T's revenues totaled $30.7
billion, up 6.1 percent versus reported results in the year-earlier
quarter and up 4.6 percent compared with first-quarter 2007 pro forma
revenues, which exclude merger-related accounting impacts on directory
revenues. This marks a substantial step up from year-over-year pro
forma revenue growth of 2.9 percent in the fourth quarter of 2007 and
1.7 percent in the first quarter of 2007.

Compared
with results for the year-earlier first quarter, AT&T's reported
operating expenses for the first quarter of 2008 were $24.8 billion, up
from $24.3 billion; reported operating income was $6.0 billion, up from
$4.7 billion; and AT&T's reported operating income margin was 19.5
percent, up from 16.1 percent.

AT&T's reported
first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent
from $2.8 billion in the year-earlier first quarter, and reported
earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in
the first quarter of 2007.

Double-Digit Growth in Adjusted EPS

AT&T's adjusted results for the first quarter of 2008 exclude
merger-related amortization expenses and costs associated with a
workforce reduction. Adjusted results for the first quarter of 2007
excluded merger-related costs and accounting effects as well as gains
from wireless transactions.

Compared with results for
the year-earlier first quarter, AT&T's adjusted operating expenses
for the first quarter of 2008 totaled $23.2 billion, versus $22.4
billion; adjusted operating income was $7.6 billion, up from $7.0
billion; and AT&T's adjusted operating income margin was 24.6
percent, up from 23.7 percent.

AT&T's adjusted
first-quarter 2008 net income totaled $4.5 billion, up 10.3 percent
from $4.1 billion in the year-earlier first quarter, and adjusted
earnings per diluted share totaled $0.74, up 13.8 percent from $0.65 in
the first quarter of 2007.

AT&T's merger
integration and operational cost initiatives continue on schedule. For
the full year 2007, operating expense savings from BellSouth and
AT&T Corp. merger integration efforts and previously outlined
operational initiatives totaled approximately $3.9 billion. AT&T
expects these expense savings to grow in 2008 by more than $2 billion
dollars.

Cash From Operations, Share Repurchases

Compared with results in the year-earlier first quarter, AT&T's
cash from operating activities for the first quarter of 2008 totaled
$5.0 billion, up from $4.6 billion; capital expenditures totaled $4.2
billion, versus $3.3 billion; and free cash flow (cash from operations
minus capital expenditures) totaled $0.7 billion, compared with $1.3
billion.

As it invests in the future of its
business, AT&T continues to return substantial value to shareowners
through dividends and share repurchases. In the first quarter,
dividends paid totaled $2.4 billion and shares repurchased totaled
111.6 million for $4.1 billion. AT&T ended the quarter with 5.9
billion shares outstanding.

First-Quarter Operational Highlights

Wireless

AT&T delivered strong wireless growth in the first quarter,
reflecting the company's high-quality network, innovative services,
attractive handset selection, extensive sales reach and continued
improvements in operations. First-quarter 2008 results included:

• Accelerated Wireless Revenue Growth. Total
  wireless revenues increased 18.3 percent versus the year-earlier first
  quarter to $11.8 billion. Wireless service revenues, which exclude
  handset and accessory sales, grew 17.1 percent to $10.6 billion.
  Revenue growth was driven by strong subscriber gains and continued
  improvement in ARPU (average monthly revenues per subscriber). AT&T
  has now posted seven consecutive quarters of year-over-year growth in
  wireless service ARPU, which was $50.18 in the first quarter, up 2.0
  percent versus the year-earlier first quarter. Retail postpaid
  subscriber ARPU growth was even stronger, up approximately 5 percent.
• Robust Growth in Wireless Data Services.
  Wireless data revenues grew 57.3 percent versus results in the
  year-earlier first quarter to $2.3 billion, reflecting robust increases
  in Internet access, e-mail, messaging, data access and media bundles.
  Data now represents 21.5 percent of AT&T's total wireless service
  revenues, up from 16.0 percent in the first quarter of 2007 and 10.9
  percent in the first quarter of 2006. During the first quarter,
  AT&T's wireless customers sent more than 620 million multimedia
  messages and 44 billion text messages, both volumes more than double
  totals in the year-earlier first quarter.
• Improved Wireless Subscriber Gains.
  AT&T's first-quarter net gain in wireless subscribers totaled 1.3
  million, up 104,000, or 8.7 percent, versus net adds in the
  year-earlier first quarter. AT&T ended the quarter with 71.4
  million subscribers in service. Total net adds in the first quarter
  were reduced by approximately 330,000 because of the shutdown of
  AT&T's TDMA wireless network in late February. Retail postpaid net
  adds totaled 705,000 in the first quarter, up 3.7 percent versus net
  adds in the year-earlier first quarter.
• Strong Gross Adds.
  AT&T continued its strong record of wireless subscriber flow share
  with 5.0 million first-quarter gross subscriber additions, up from 4.3
  million in the year-earlier first quarter. Total average monthly
  subscriber churn, which includes postpaid, prepaid and reseller
  subscribers, was 1.7 percent, flat with the year-earlier first quarter
  and with the fourth quarter of 2007. Retail postpaid churn was 1.2
  percent, down from 1.3 percent in the year-earlier first quarter and
  flat with the fourth quarter of 2007.
• Strong Wireless Operating Income Growth.
  On a reported basis, AT&T's first-quarter wireless operating
  expenses totaled $8.9 billion, and operating income was $3.0 billion,
  up 94.1 percent from $1.5 billion in the first quarter of 2007. On an
  adjusted basis, wireless operating expenses, which exclude
  merger-related costs, totaled $8.3 billion, and operating income was
  $3.5 billion, up 38.5 percent from $2.5 billion in the first quarter of
  2007.
• Wireless Margin Expansion.
  AT&T's reported wireless operating income margin was 25.0 percent,
  up from 15.2 percent in the year-earlier first quarter, and its
  adjusted wireless operating income margin was 29.8 percent, up from
  25.5 percent in the year-earlier first quarter. AT&T's
  first-quarter wireless OIBDA service margin was 41.7 percent, the
  highest ever achieved by the company's wireless segment, up from an
  unadjusted 37.5 percent and an adjusted 38.9 percent in the
  year-earlier first quarter. (OIBDA service margin is operating income
  before depreciation and amortization, divided by total service
  revenues.)

Wireline

AT&T's first-quarter wireline results were highlighted by further
improvement in enterprise revenue growth, a solid double-digit increase
in broadband revenues and a continued strong ramp in AT&T U-verse
TV subscribers. Results included:

• Further Step Up in Enterprise Growth.
  Driven by solid demand and a strong record of contract wins, AT&T
  delivered further improvement in enterprise revenue growth in the first
  quarter, led by a 22.9 percent increase in enterprise IP data revenues,
  including areas such as virtual private networks, managed Internet
  services and hosting. Total enterprise revenues continued their ramp
  and were up 1.2 percent versus results for the first quarter of 2007.
  This compares with year-over-year pro forma declines of 2.0 percent in
  the fourth quarter of 2007 and 3.9 percent in the first quarter of
  2007. Enterprise service revenues, which exclude effects from
  acquisitions and CPE sales, grew 2.1 percent, following a 1.5 percent
  increase in the preceding quarter and a decline of 3.0 percent in the
  first quarter of 2007. AT&T is the premier provider for enterprise
  customers, delivering networking services and solutions to
  multinational corporations, U.S. governmental agencies and regionally
  based domestic companies.
• Continued Solid Regional Business Growth.
  AT&T's total regional business revenues increased 2.6 percent in
  the first quarter to $3.2 billion, with continued growth in both voice
  and data services. Regional business service revenues, which exclude
  CPE sales, grew 3.4 percent. Regional business data revenues, which
  make up 30.5 percent of the category, grew 6.3 percent, led by strong
  growth in Ethernet services and 15.2 percent growth in IP data
  services, including gains in broadband, managed Internet and VPN
  services. Regional business revenues from small and midsize firms
  increased approximately 5 percent.
• Double-Digit Broadband Growth.
  AT&T's broadband revenues grew 13.2 percent in the first quarter to
  $1.4 billion. Total high speed Internet connections, which include DSL,
  U-verse enabled AT&T High Speed Internet and satellite broadband
  services, increased by 491,000, and AT&T ended the quarter with
  14.6 million consumer and business high speed Internet connections, up
  1.8 million, or 13.9 percent, over the past year.
• Accelerated Ramp in AT&T U-verse TV Services.
  Growth in AT&T U-verse TV service, the company's next-generation
  IP-based video service, continued its strong ramp during the first
  quarter, achieving a net subscriber gain of 148,000 to reach 379,000 in
  service. AT&T expects a further ramp in the quarters ahead and is
  on track to reach its target of more than 1 million subscribers by the
  end of 2008. Total video connections, which include AT&T U-verse
  service and bundled satellite television service, increased by 264,000
  in the quarter to reach 2.6 million.
• Stable Regional Consumer Trends.
  First-quarter regional consumer results continued trends of recent
  quarters, with improved growth in broadband and Advanced TV services
  offsetting traditional voice access line pressures, resulting in stable
  revenues. Regional consumer revenues totaled $5.5 billion, down 0.4
  percent versus results for the year-earlier first quarter. Regional
  consumer revenue connections (retail voice, high speed Internet and
  video) totaled 49.3 million at the end of the quarter. This compares
  with 49.3 million at the end of the first quarter of 2007 and 49.4
  million at the end of the fourth quarter of 2007. Gains in broadband
  and TV connections over the past year totaled 2.6 million, and consumer
  IP data revenues, which include revenues from broadband and AT&T
  U-verse services, increased 18.5 percent versus results for the
  year-earlier quarter.
• Stable Wireline Expense Trends.
  On a reported basis, wireline operating expenses totaled $14.8 billion
  in the first quarter of 2008, versus $15.1 billion for the year-earlier
  first quarter. On an adjusted basis, wireline operating expenses
  totaled $14.4 billion, unchanged from the year-earlier first quarter.

Additional Background on Adjusted and Pro Forma Results

AT&T's
adjusted earnings for the first quarter of 2008 exclude: (1) noncash,
pretax amortization costs related to acquisitions totaling $1.2
billion, or $0.13 per diluted share, and (2) a charge of $374 million,
or $0.04 per diluted share, associated with a workforce reduction
previously disclosed in a Form 8-K filing. Adjusted results for the
first quarter of 2007 excluded: (1) pretax merger-related integration
costs totaling $245 million, or $0.02 per diluted share; (2) noncash,
pretax merger-related costs totaling $1.8 billion, or $0.18 per diluted
share; (3) a merger-related directory accounting impact of $301
million, or $0.03 per diluted share; and (4) a gain of $409 million, or
$0.04 per share, from wireless transactions.

Advertising
& Publishing results for 2007 were affected by accounting
adjustments following AT&T's late 2006 acquisition of BellSouth. In
accordance with purchase accounting rules, deferred revenues and
expenses for all BellSouth directories delivered prior to the close of
the merger were eliminated from 2007 consolidated results. This
elimination of amortizations reduced first-quarter 2007 consolidated
revenues by $409 million and consolidated operating expenses by $108
million.

AT&T manages its print directory
business using amortized results. As a result, 2007 amortized results
are shown in the Advertising & Publishing segment on AT&T's
Statement of Segment Income. In 2008, both consolidated and segment
results reflect amortization accounting.

Cautionary Language Concerning Forward-Looking Statements
Information set forth in this news release contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results may 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 or revise statements contained in this news
release based on new information or otherwise. This news release 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 Web site at www.att.com/investor.relations [2]. Accompanying financial statements follow.

NOTE: OIBDA is defined as operating income (loss)
before depreciation and amortization. OIBDA differs from Segment
Operating Income (loss), as calculated in accordance with generally
accepted accounting principles (GAAP), in that it excludes depreciation
and amortization. OIBDA does not give effect to cash used for debt
service requirements and thus does not reflect available funds for
distributions, reinvestment or other discretionary uses. OIBDA is not
presented as an alternative measure of operating results or cash flows
from operations, as determined in accordance with GAAP. Our calculation
of OIBDA, as presented, may differ from similarly titled measures
reported by other companies.

NOTE: Free cash flow is defined as cash from
operations minus capital expenditures. Free cash flow yield is defined
as cash from continuing operations less capital expenditures as a
percentage of market capitalization computed on the last trading day of
the quarter. Market capitalization is computed by multiplying the end
of period stock price by the end of period shares outstanding. We
believe these metrics provide useful information to our investors
because management monthly reviews free cash flow as an important
indicator of how much cash is generated by normal business operations,
including capital expenditures, and makes decisions based on it.
Management also views it as a measure of cash available to pay debt and
return cash to shareowners.

About AT&T
AT&T Inc. (NYSE:T) 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 www.att.com [3].

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