AT&T First-Quarter Earnings Package

InvestorBriefing
No. 260 | April 22, 2008

1st QUARTER 2008

AT&T Ramps Revenue Growth, Delivers
Strong First-Quarter Results; Growth
Highlighted by Gains in Wireless,
Broadband and Enterprise Services
Results mark AT&T’s AT&T Inc. reported strong first-quarter results highlighted
by a significant ramp in consolidated revenue growth,
12th consecutive quarter
led by improved results in wireless and enterprise, and
of double-digit growth in
further expansion of wireless margins.
adjusted earnings per share.
• Wireless revenues increased 18.3 percent versus the year-earlier first quarter,
driven by strong subscriber gains and continued robust growth in wireless
data services such as Internet access, e-mail, messaging, data access and
media bundles. AT&T is the U.S. market leader in wireless with 71.4 million
subscribers. Wireless margins expanded significantly, reflecting continued
network and operational improvements.
• Enterprise customer revenue growth took another step up, led by a
22.9 percent increase in revenues from Internet Protocol (IP)-based data
services such as virtual private networks (VPNs), hosting and managed
Internet services. AT&T is the industry leader in serving large business
customers on six continents.

First-Quarter EPS Reconciliation
1Q08 1Q07

Reported EPS . . . . . . . . . . . . . . . . . . ..................................................... $0.57 $0.45
Adjustments to results:
Merger integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.02
Noncash merger-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.13 0.21
Gains from wireless transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (0.04)
Workforce reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.04
Adjusted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.74 $0.65
Pretax adjustments to earnings: in 1Q07, merger integration, noncash intangible amortization and purchase accounting effect totaling
$2,306 million and a gain from wireless transactions of $(409) million; in 1Q08, noncash intangible amortization totaling $1,208 million
and a workforce reduction charge of $374 million.
Totals may not foot due to rounding.

2
InvestorBriefing | 1Q 2008

REPORTED RESULTS
AT&T CONSOLIDATED ADJUSTED REVENUE GROWTH RATES
Compared with results for the year-earlier
Year-Over-Year, Pro Forma
AT&T continues to quarter, AT&T’s reported operating expenses
4.6%
accelerate growth for the first quarter of 2008 were $24.8 billion,
in consolidated up from $24.3 billion; reported operating
income was $6.0 billion, up from $4.7 billion;
revenues, driven by 3.2%
and AT&T’s reported operating income margin
gains in wireless, 2.9%

was 19.5 percent, up from 16.1 percent.
broadband and
AT&T’s reported first-quarter 2008 net
enterprise services. 2.0%
1.7%
income totaled $3.5 billion, up 21.5 percent
from $2.8 billion in the year-earlier quarter,
and reported earnings per diluted share
totaled $0.57, up 26.7 percent from $0.45
in the first quarter of 2007.
1Q07 2Q07 3Q07 4Q07 1Q08

Revenues for 2007 are adjusted to exclude merger-related directory
DOUBLE-DIGIT GROWTH IN
accounting impacts. 2007 comparisons are to 2006 pro forma
ADJUSTED EARNINGS PER SHARE
results, which combine revenues from AT&T, BellSouth and Cingular
Wireless consistently for all periods.
AT&T’s adjusted results for the first quarter
of 2008 exclude merger-related amortization
• Broadband revenues continued their record expenses and costs associated with a
of solid double-digit growth, reflecting workforce reduction. Adjusted results for
subscriber gains and an increased number the first quarter of 2007 excluded merger-
of subscribers who select higher-speed related costs and accounting effects as
service. AT&T is the U.S. leader in broad- well as gains from wireless transactions.
band service with 14.6 million connections. Compared with results for the year-earlier
• AT&T U-verseSM TV subscriber growth quarter, AT&T’s adjusted operating expenses
continued its strong ramp, with a first- for the first quarter of 2008 totaled
quarter net gain of 148,000 to reach $23.2 billion, versus $22.4 billion; adjusted
379,000 in service. The company is on operating income was $7.6 billion, up from
track to reach its target of more than $7.0 billion; and AT&T’s adjusted operating
1 million AT&T U-verse TV subscribers income margin was 24.6 percent, up from
by year-end 2008. 23.7 percent.
AT&T’s adjusted first-quarter 2008 net
REVENUE GROWTH RAMP income totaled $4.5 billion, up 10.3 percent
For the quarter ended March 31, 2008, AT&T’s from $4.1 billion in the year-earlier quarter,
revenues totaled $30.7 billion, up 6.1 percent and adjusted earnings per diluted share
versus reported results in the year-earlier totaled $0.74, up 13.8 percent from $0.65
quarter and up 4.6 percent compared with in the first quarter of 2007.
first-quarter 2007 pro forma revenues, which AT&T’s merger integration and operational
exclude merger-related accounting impacts cost initiatives continue on schedule. For the
on directory revenues. This marks a substan- full year 2007, operating expense savings
tial step up from year-over-year pro forma from BellSouth and AT&T Corp. merger
revenue growth of 2.9 percent in the fourth integration efforts and previously outlined
quarter of 2007 and 1.7 percent in the first operational initiatives totaled approximately
quarter of 2007. $3.9 billion. AT&T expects these expense
AT&T’s first-quarter revenue growth was savings to grow in 2008 by more than
driven by improved growth rates in wireless, $2 billion dollars.
enterprise and wholesale, combined with
stable trends in regional revenues.

3

ADDITIONAL BACKGROUND ON
AT&T ADJUSTED OPERATING INCOME MARGIN
ADJUSTED AND PRO FORMA RESULTS
24.6%
AT&T’s adjusted earnings for the first
Revenue growth
24.0%
23.9% quarter of 2008 exclude (1) noncash pretax
and progress on 23.7%
23.7%
amortization costs related to acquisitions
productivity initiatives
totaling $1.2 billion, or $0.13 per diluted
combined to further
share, and (2) a charge of $374 million, or
expand margins in
$0.04 per diluted share, associated with a
the first quarter.
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
1Q07 2Q07 3Q07 4Q07 1Q08
Reported 16.1% 16.8% 17.6% 18.1% 19.5%
$0.02 per diluted share; (2) noncash, pretax
Merger integration and amortization costs and other one-time items
merger-related costs totaling $1.8 billion, or
are excluded from adjusted operating income margins.
$0.18 per diluted share; (3) a merger-related
directory accounting impact of $301 million,
CASH FROM OPERATIONS,
or $0.03 per diluted share; and (4) a gain of
SHARE REPURCHASES
$409 million, or $0.04 per share, from
Compared with results in the year-earlier
wireless transactions.
quarter, AT&T’s cash from operating activi-
Advertising & Publishing results for 2007
ties for the first quarter of 2008 totaled
were affected by accounting adjustments
$5.0 billion, up from $4.6 billion; capital
following AT&T’s late 2006 acquisition of
expenditures totaled $4.2 billion, versus
BellSouth. In accordance with purchase
$3.3 billion; and free cash flow (cash from
accounting rules, deferred revenues and
operations minus capital expenditures)
expenses for all BellSouth directories
totaled $0.7 billion, compared with
delivered prior to the close of the merger
$1.3 billion.
were eliminated from 2007 consolidated
As it invests in the future of its business,
results. This elimination of amortization
AT&T continues to return substantial value
reduced first-quarter 2007 consolidated
to shareowners through dividends and
revenues by $409 million and consolidated
share repurchases. In the first quarter,
operating expenses by $108 million.
dividends paid totaled $2.4 billion and
AT&T manages its print directory business
shares repurchased totaled 111.6 million
using amortized results. As a result, 2007
for $4.1 billion. AT&T ended the quarter
amortized results are shown in the
with 5.9 billion shares outstanding.
Advertising & Publishing segment on
AT&T’s Statement of Segment Income.
STRONG BALANCE SHEET
In 2008, consolidated and segment results
AT&T’s balance sheet continues to be strong.
reflect amortization accounting.
At the end of the first quarter, AT&T’s long-
term debt was $60.2 billion, and total debt
was $73.5 billion. Cash and cash equivalents
at the end of the quarter totaled $2.0 billion.
AT&T’s first-quarter debt-to-total-capitali-
zation ratio was 39.6 percent, and the
company’s annualized debt-to-EBITDA
was 1.6. AT&T expects its year-end 2008
debt-to-EBITDA ratio will be in the 1.3 to
1.5 range.

4

Wireless
AT&T delivered strong wireless growth in the first quarter, reflecting the
AT&T’s first-quarter wireless
company’s broad high-quality network, innovative services, attractive handset
results were highlighted selection, extensive sales reach and continued improvements in operations.
Results included improved revenue growth, expanded margins and strong
by strong double-digit growth in operating income.

revenue growth driven ACCELERATED WIRELESS REVENUE GROWTH
AT&T’s first-quarter wireless revenues totaled $11.8 billion, up 18.3 percent
by solid subscriber gains versus the year-earlier quarter. This marked AT&T’s seventh consecutive quarter
of improved wireless revenue growth. Wireless service revenues, which exclude
and robust growth in handset and accessory sales, grew 17.1 percent to $10.6 billion.
Revenue growth was driven by strong subscriber gains and continued
wireless data services. 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 quarter. Retail postpaid subscriber ARPU growth was even
stronger, up approximately 5 percent.

IMPROVED SUBSCRIBER GAINS
AT&T’s first-quarter net gain in wireless subscribers totaled 1.3 million,
up 104,000, or 8.7 percent, versus the year-earlier 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 due to the shutdown of
AT&T’s TDMA wireless network in late February. Retail postpaid net adds
totaled 705,000 in the first quarter of 2008, up 3.7 percent versus net
adds in the year-earlier first quarter.
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 quarter. Total average monthly subscriber churn, which includes
postpaid, prepaid and reseller subscribers, was 1.7 percent, flat with the
year-earlier quarter and with the fourth quarter of 2007. Retail postpaid
churn was 1.2 percent, down from 1.3 percent in the year-earlier quarter
and flat with the fourth quarter of 2007.

ROBUST GROWTH IN WIRELESS DATA SERVICES
AT&T‘s wireless data revenues grew 57.3 percent versus results in the year-
earlier 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.

5

the company expects to deliver 3G services
AT&T WIRELESS REVENUES
to nearly 350 leading U.S. markets by the
Year-Over-Year Growth
AT&T posted its end of 2008, including all of the nation’s
18.3%

100 largest cities.
seventh consecutive 16.3%

quarter of accelerated 14.4%
OPERATING INCOME GROWTH,
12.7%
wireless revenue
MARGIN EXPANSION
11.2%
growth, reflecting
Strong growth in wireless revenues, network
solid subscriber gains
efficiencies and operational improvements
and robust adoption
have driven substantial improvement in AT&T’s
of data services.
wireless operating income and margins.
On a reported basis, AT&T’s first-quarter
wireless operating expenses totaled
1Q07 2Q07 3Q07 4Q07 1Q08
$8.9 billion, and operating income was
$3.0 billion, up 94.1 percent from
During the first quarter, AT&T’s wireless
$1.5 billion in the first quarter of 2007.
customers sent more than 620 million
On an adjusted basis, wireless operating
multimedia messages and 44 billion text
expenses totaled $8.3 billion, and operating
messages, both volumes more than double
income was $3.5 billion, up 38.5 percent
totals in the year-earlier quarter.
from $2.5 billion in the first quarter of 2007.
AT&T expects continued robust growth
AT&T’s reported wireless operating
in wireless data services as more customers
income margin was 25.0 percent, up from
adopt integrated devices that deliver
15.2 percent in the year-earlier quarter,
access to a broad array of applications
and its adjusted wireless operating
and content. At the end of the first quarter,
income margin was 29.8 percent, up from
16 percent of AT&T’s postpaid wireless
25.5 percent in the year-earlier quarter.
subscribers had an integrated device, up
AT&T’s first-quarter wireless OIBDA service
from 6 percent one year earlier.
margin was 41.7 percent, the highest ever
Data growth is also spurred by adoption
achieved by the company’s wireless segment,
of 3G-compatible devices. At the end of
up from an unadjusted 37.5 percent and an
the first quarter, 11 million AT&T customers
adjusted 38.9 percent in the year-earlier
had 3G devices. AT&T’s 3G network now
quarter. (OIBDA service margin is operating
includes 272 U.S. metropolitan areas, and
income before depreciation and amortization,
divided by total service revenues.)
AT&T WIRELESS SUBSCRIBERS
In millions
LEADER IN WIRELESS NETWORKS,
AT&T increased its 71.4
70.1
SERVICE INNOVATION
wireless subscriber
AT&T operates the United States’ largest
base by more than 65.7
wireless digital voice and data network, and
9 million over 63.7
through roaming alliances around the world,
62.2
the past year.
provides the largest global presence among
U.S. wireless carriers.
AT&T is moving quickly to create the
next generation of wireless. In addition to
its broad 3G network deployment, by the
middle of this year, the company expects
1Q07 2Q07 3Q07 4Q07 1Q08
to complete its upgrade of the nation’s
Subscriber increase in 4Q07 included 1.7 million subscribers added
through Dobson acquisition.
first High Speed Uplink Packet Access

6

completed successful bids for prime B Block
AT&T WIRELESS DATA REVENUES
spectrum in the Federal Communications
Dollars in billions
AT&T’s wireless data Commission’s Auction 73.
$2.3

The complementary nature of the spectrum
revenues grew $2.0
AT&T acquired through the FCC auction and
57.3 percent year $1.8
$1.7
from Aloha Partners gives AT&T the capacity
over year and now $1.5
to meet customer needs as the company
represent 21.5 percent
moves to higher-speed 4G (fourth-generation)
of total wireless
services. Upon final award of the auctioned
service revenues.
B Block spectrum, AT&T’s 700 MHz spectrum
will cover 100 percent of the top 200 markets
and 87 percent of the U.S. population.
AT&T also sets the pace for innovation in
1Q07 2Q07 3Q07 4Q07 1Q08
wireless with a host of cutting-edge devices,
content and services. In recent weeks, AT&T:
(HSUPA)-enabled network in current 3G
• Added to its HSUPA device lineup with the
markets. The network allows AT&T’s
launch of two new LaptopConnect cards
HSUPA-enabled laptop users to send
from Option, the GT Ultra and GT Ultra
large files faster and take full advantage
Express. The new cards deliver enhanced
of the latest interactive Internet and
mobile broadband performance across two
business applications.
popular notebook computer formats, PC
AT&T also took major steps in the first
Card and ExpressCard. Both the GT Ultra
quarter to add valuable wireless spectrum.
and GT Ultra Express are compatible with
In February, AT&T completed its acquisition
Microsoft Windows Vista, Windows XP,
of spectrum licenses covering 196 million
Windows 2000 and Apple® Mac® OS X
people in 281 license areas from a subsidiary
(version 10.4.10 or later) notebooks.
of Aloha Partners, L.P. In March, AT&T
• Joined with MediaFLO USA Inc. to intro-
duce AT&T Mobile TV with FLO, a mobile
AT&T ADJUSTED WIRELESS MARGINS
television service featuring high-quality
Operating Income Margin OIBDA Service Margin
live programming. The mobile TV service
AT&T’s wireless 41.7% will launch in May 2008 on two new
OIBDA service margin
exclusive handsets, the LG Vu™ and the
expanded 280
Samsung Access™. AT&T Mobile TV will
38.9%
basis points versus 29.8%
deliver full-length television content and
adjusted results 25.5%
sporting events from top networks,
for the first quarter including programming from leading
of 2007. entertainment brands CBS Mobile,
Comedy Central, ESPN Mobile TV, FOX
Mobile, MTV, NBC 2GO, NBC News2Go
and Nickelodeon.
• Unveiled plans for a redesigned MEdia
Mall, the company’s one-stop shopping
1Q08
1Q07 1Q08 1Q07
Unadjusted
41.7%
15.2% 25.0% 37.5%
Results
destination for mobile content. Since
Merger integration and intangible amortization costs excluded launching on AT&T mobile handsets in
from adjusted operating income margins: $1,022 million in 1Q07
December 2004, millions of customers
and $568 million in 1Q08. Merger integration costs excluded from
adjusted OIBDA service margins: $124 million in 1Q07.
have visited MEdia Mall to obtain

7

ringtones, games, videos and other access to YELLOWPAGES.COM, real-time
applications, generating more than traffic updates and route information
$1 billion in sales and helping to spawn and is the only mobile phone-based
a wave of innovation among an ever- GPS service that provides integrated
growing mobile developer community. speech recognition for address entry
Like its predecessor, MEdia Mall 2.0 will and points of interest search, is currently
feature more than 90,000 choices from available on BlackBerry® devices.
more than 115 content providers. • Announced BusinessTalk, a new wireless
• Successfully launched a new unlimited offer that brings the benefits of AT&T
voice plan targeted to wireless users who FamilyTalk plans to small businesses,
want the predictability of flat-rate pricing enabling them to share monthly Anytime
for unlimited minutes. The plan is available Minutes for up to 40 employees.
to new and existing wireless subscribers BusinessTalk plans are designed to
for $99.99 a month for unlimited U.S. help small businesses better manage
calling with no domestic roaming or long their monthly costs by reducing overage
distance charges. charges and simplifying billing. AT&T
• Introduced AT&T Navigator, a next- offers a wide range of wireless phones,
generation navigation service available smart devices, LaptopConnect solutions
on GPS-capable PDAs and handsets. and other services for small businesses,
AT&T Navigator is designed to provide including mobile e-mail, GPS navigation
clear and precise audible and visual and Push To Talk technology.
turn-by-turn driving directions, including
full-color moving maps, using GPS
directly from a customer’s wireless phone.
AT&T Navigator, which offers mobile

8

Wireline
First-quarter revenues in AT&T’s wireline segment totaled $17.6 billion versus
First-quarter results in
$18.0 billion in the year-earlier quarter. This reflects a return to revenue growth
AT&T’s wired operations in the company’s enterprise business, substantial improvement in wholesale
revenue trends and stable revenue trends in regional business and consumer
were highlighted by operations.
Excluding revenues from national mass markets, the small remainder of the
improved enterprise growth, former AT&T’s stand-alone long distance and local bundled business, wireline
revenues increased slightly versus the year-earlier quarter and sequentially.
a double-digit increase AT&T expects further stabilization in overall wireline revenue trends during
the remainder of 2008 as enterprise continues to grow, wholesale trends
in broadband revenues show further improvement and AT&T U-verse services gain additional scale.
Compared with results for the year-earlier first quarter, on a reported basis,
and a further ramp in AT&T wireline operating expenses totaled $14.8 billion, versus $15.1 billion; operating
income was $2.8 billion, versus $2.9 billion; and AT&T’s wireline operating
U-verse TV subscribers. income margin was 16.1 percent, which was unchanged versus the first quarter
of 2007.
Adjusted wireline results for the first quarter of 2007 exclude merger-related
integration and amortization expenses. Adjusted wireline results for the first
quarter of 2008 exclude only merger-related amortization expenses.
Compared with results for the year-earlier first quarter, adjusted wireline
operating expenses totaled $14.4 billion, unchanged from $14.4 billion;
adjusted operating income was $3.3 billion, versus $3.6 billion; and
AT&T’s adjusted wireline operating income margin was 18.5 percent,
versus 20.1 percent.
Moving through 2008, AT&T expects wireline expenses and margins to
benefit from ongoing cost initiatives and improved IP economics.
The following wireline highlights include ongoing shifts in customer
categories to reflect AT&T’s management of customer relationships.

FURTHER STEP UP IN ENTERPRISE GROWTH
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 VPNs, 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

9

Also in the first quarter, AT&T announced
AT&T TOTAL ENTERPRISE REVENUE GROWTH RATES
it is joining forces with SAP America Inc. in
2
a three-year marketing agreement under
AT&T’s enterprise 1.2%
which AT&T will serve as a primary SAP®
1
revenue growth
hosting partner, providing independent
continues to be driven 0
hosting services for large business customers
(0.2)%
by solid demand,
headquartered in North America.
-1
a premier global
Recent major enterprise contract wins
(1.7)%
network and a -2
include a five-year agreement with Royal
(2.0)%
broad portfolio of
Dutch Shell, which calls for AT&T to provide,
-3
advanced services.
manage and maintain Shell’s worldwide
(3.9)%
-4
communications infrastructure while also
managing the company’s global mobility
1Q07 2Q07 3Q07 4Q07 1Q08
Enterprise service
revenue growth (3.0)% (0.7)% 0.4% 1.5% 2.1%
needs. This is one of the largest commercial
2007 comparisons are to 2006 pro forma results, which combine
contracts ever signed by AT&T and the
results from the former BellSouth and AT&T and exclude revenues
largest agreement signed with a company
from acquired operations.

headquartered in Europe. This agreement
Enterprise service revenues, which exclude with Shell follows a series of other large
CPE sales and acquisition impacts, grew wins in the past year, including deals
2.1 percent, following a 1.5 percent increase with Starbucks, General Motors, the
in the preceding quarter and a decline of U.S. Department of the Treasury and IBM.
3.0 percent in the first quarter of 2007.
REGIONAL BUSINESS GROWTH
With solid demand and sales momentum,
AT&T expects to deliver positive growth in AT&T’s regional business revenues increased
total enterprise revenues throughout 2008. 2.6 percent in the first quarter to $3.2 billion,
AT&T is the premier provider for enterprise with continued growth in both voice and
customers, delivering networking services data services. Regional business service
and solutions to multinational corporations, revenues, which exclude CPE sales, grew
U.S. governmental agencies and regionally 3.4 percent.
based domestic companies. AT&T continues Regional business data revenues, which
to take the initiative to expand and enhance make up 30.5 percent of the category, grew
its enterprise capabilities. 6.3 percent, led by strong growth in Ethernet
For example, in March AT&T announced services and by 15.2 percent growth in
that it plans to invest $1 billion in 2008 to IP data services, including gains in broad-
extend its global network reach and capacity, band, managed Internet and VPN services.
globalize its portfolio of business services Regional business revenues from small
and embed the latest utility computing and and midsize firms increased approximately
other technologies in the network so that 5 percent. AT&T’s broad portfolio of
companies can deliver real-time applications communications services for small and
to their customers, suppliers and partners. midsize businesses includes wireless,
Major projects include new subsea fiber broadband Internet access, business
optic cable capacity to Japan and Asia, new e-mail services, Web hosting, unified
core MPLS (MultiProtocol Label Switching) messaging, remote data storage and
routers in Europe, Asia and the United States, network security options.
and new network-to-network connections
to extend network reach into high-growth
markets in Asia Pacific, Eastern Europe
and South America.

10

In April, AT&T announced the availability
AT&T U-VERSE TV CONNECTIONS IN SERVICE
of new turnkey Web hosting solutions and
In thousands
Web site design services developed specifi-
379
AT&T ramped growth
cally for small and midsize businesses.
in its advanced
Using these services, companies can easily
IP-based TV service,
and cost-effectively launch a new or improve
with a net gain of
an existing Web site, sell products or
231
148,000 subscribers
services online, build an online community,
in the first quarter.
manage company e-mail, distribute digital
content, host a gaming server or run many
126
other business applications. The new
offerings are targeted to organizations
51
that need more than shared server space
13
and applications but do not require the
1Q07 2Q07 3Q07 4Q07 1Q08
complex multiserver environment of
enterprise hosting.
These offerings expanded in the first
quarter with the launch of AT&T Business STABLE REGIONAL CONSUMER
in a BoxSM, a service that harnesses the REVENUES, ACCELERATED
power of IP communications to simplify VIDEO RAMP
IT operations for smaller and midsize First-quarter regional consumer results
businesses and branch offices of large continued trends of recent quarters, with
businesses. The service features a single improved growth in broadband and Advanced
device equipped with all necessary data TV services offsetting traditional voice access
ports and connectors and delivers VoIP line pressures, resulting in stable revenues.
functionality through AT&T Voice DNASM, Regional consumer revenues totaled
Internet access routing with built-in firewall $5.5 billion, down 0.4 percent versus results
protection, VPN capabilities, Wi-Fi data for the year-earlier quarter.
access capabilities and local area network Regional consumer revenue connections
connectivity with Power Over Ethernet (retail voice, high speed Internet and
connections. video) totaled 49.3 million at the end of
the first quarter of 2008. This compares
with 49.3 million at the end of the first
AT&T BROADBAND CONNECTIONS
In millions quarter 2007 and 49.4 million at the end
14.6
AT&T added 491,000
of the fourth quarter of 2007. Gains in
broadband connections 14.2
broadband and video connections totaled
in the first quarter
2.6 million over the past year, and
13.8
and 1.8 million over
consumer IP data revenues, which include
the past year.
revenues from broadband and AT&T
13.3

U-verse services, increased 18.5 percent
12.9
versus results for the year-earlier quarter.
Reflecting growth in broadband and video,
average monthly revenues per consumer
primary line have increased steadily over the
past several quarters, reaching $60.16 in the
1Q07 2Q07 3Q07 4Q07 1Q08
first quarter, up 5.4 percent year over year.

11

from any PC; an online voice mailbox so that
AT&T AVERAGE MONTHLY REVENUES PER
customers can listen to, manage and forward
CONSUMER PRIMARY LINE
voice mail from the online portal; and the
AT&T’S regional $60.16
ability to check call history or click-to-call
consumer ARPU has $59.14
from their U-verse TV screen.
$58.62
ramped steadily over $58.15
the past several $57.08
BROADBAND GROWTH
quarters, reflecting
AT&T continues to deliver solid double-digit
growth in broadband
growth in broadband. AT&T’s broadband
and TV service.
revenues totaled $1.4 billion in the first
quarter, up 13.2 percent versus the year-
earlier quarter.
In the first quarter, total high speed
Internet connections, which include DSL,
1Q07 2Q07 3Q07 4Q07 1Q08
U-verse enabled AT&T High Speed Internet
and satellite broadband services, increased
Consumer broadband revenues continue
by 491,000, and AT&T ended the first
to grow at a solid double-digit pace, and
quarter with 14.6 million consumer and
consumer broadband net adds improved
business high speed Internet connections,
from recent quarters, reflecting the success
up 1.8 million, or 13.9 percent, over the
of new wireless/broadband bundles and the
past year.
rapid expansion of AT&T U-verse services.
This growth reflects the quality and broad
Growth in AT&T U-verse TV service, the
availability of AT&T’s broadband services, the
company’s next-generation IP-based video
ramp in AT&T U-verse service, which has a
service, continued its strong ramp during
high broadband attach rate, and innovations
the first quarter, achieving a net subscriber
such as the launch last year of a stand-alone
gain of 148,000 to reach 379,000 in service.
high speed Internet service, also available
AT&T expects a further ramp in the quarters
as part of a new wireless and broadband
ahead and is on track to reach its target of
service bundle.
more than 1 million subscribers by the end
To boost bandwidth choices, AT&T
of 2008.
announced plans to offer AT&T High Speed
Total video connections, which include
Internet Max in February 2008. The new tier,
AT&T U-verse service and bundled satellite
available exclusively to AT&T U-verse
television service, increased by 264,000
customers across the country, will deliver
in the quarter to reach 2.6 million.
more bandwidth with speeds up to 10 Mbps
AT&T also broke new ground in the first
downstream and up to 1.5 Mbps upstream.
quarter by expanding its launch of AT&T
To add convenience and portability for
U-verse Voice services in Sacramento,
broadband users, in January, AT&T and
Kansas City, Austin, San Diego and
Starbucks announced plans to deliver
Connecticut. The service offers a host of
AT&T Wi-FiSM service at more than 7,000
features that integrate AT&T wired and
company-operated Starbucks locations
wireless services including: combined AT&T
across the United States. Starbucks and
U-verse Voice and wireless voice mail with
AT&T will offer a mix of free and paid Wi-Fi
U-verse Messaging, which provides a single
offerings at Starbucks stores. The initiative
voice mailbox that can be accessed from any
will further expand the AT&T Wi-Fi network,
phone line or PC; U-verse Central, an online
already the largest in the United States, to
management portal that gives users the
more than 17,000 U.S. hot spots and more
option to manage their call preferences,
than 71,000 globally.
voice mail, contacts, call history and more

12

To capitalize on tremendous demand for
WHOLESALE
additional data capacity and IP-related
AT&T is a leading global provider of whole-
services, in February, AT&T announced that
sale services, delivering a full portfolio of
it is expanding capacity to deliver key
network, voice, data and IP solutions to
services such as long-haul private line
carriers, wireless operators, cable providers,
and Managed Internet Services in most of
systems integrators, Internet service
the 26 carrier-neutral hotels in which it
providers and content providers.
has a presence nationwide. Carrier-neutral
In the first quarter, AT&T delivered a
hotels are facilities at which multiple
significant improvement in wholesale
carriers interconnect and make their
revenue trends, with total wholesale
telecommunications services available
revenues of $3.4 billion, representing a
to their customers.
decline of 3.9 percent versus results for the
In April, AT&T announced the availability
year-earlier quarter. This marks a step up
of new Voice over Internet Protocol
from declines in the 7 percent to 8 percent
services for wholesale customers. These
range over the past several quarters, as
include a Gigabit Ethernet connectivity
comparisons have reflected concessions
interface for AT&T Voice Over IP Connect
associated with AT&T’s acquisition of
Service and the AT&T BusinessDirect®
BellSouth Corp. and industry shifts as major
portal for AT&T Global Hubbing IP
consolidated carriers move traffic
Access customers.
to their own networks.
Volume demand from wireless carriers,
NATIONAL MASS MARKETS
Internet service providers and content
Mass market revenues totaled $730 million
providers continues to accelerate, and
in the first quarter, representing a decline
AT&T expects that wholesale revenues will
of 33.2 percent year over year. Results are
continue to stabilize in 2008, as merger
as expected and reflect the 2004 decision
conditions pass their one-year anniversary
to discontinue proactive marketing in this
and carrier traffic migration nears
space and AT&T’s strategy of migrating
completion.
customers within its regional footprint to its
In addition, AT&T and IBM have announced
regional platforms to deliver better service
an agreement that calls for AT&T to become
and a broader array of service options.
the primary global network management
National mass markets, which represented
services provider to IBM, which will use
4.1 percent of total wireline revenues in
AT&T’s global telecommunications and
the first quarter, accounted for more than
network management services internally
100 percent of AT&T’s year-over-year
and provide these services to customers.
decline in total wireline revenues.
As a result, AT&T expects to receive up
to $5 billion of additional revenues over
the five-year term of the agreement,
largely in the wholesale customer category.
These revenues are expected to ramp in
mid-2008.

13

WIRELINE VOICE SERVICES
PRODUCT CATEGORIES
AT&T’s first-quarter wireline voice revenues,
which include retail local voice and long
WIRELINE DATA SERVICES
distance as well as wholesale voice, totaled
AT&T’s data revenues, which include results
$9.9 billion, representing a decline of
from several customer categories, grew
7.1 percent versus results for the first quarter
5.9 percent versus results for the year-earlier
of 2007. This comparison is consistent with
first quarter to $6.2 billion.
results in recent quarters, reflecting the
Data growth was led by an 18.2 percent
industrywide migration of voice usage
increase in revenues from IP-based services,
from wired to wireless platforms, customer
with continued gains in high speed Internet,
transitions to broadband and VoIP services
managed Internet, VPN and hosting services.
and increased local voice competition.
Data transport service revenues increased
0.7 percent, and packet switched data
revenues, which include Frame Relay and
ATM services, were down 10.7 percent,
consistent with industry trends.
In the first quarter, 73.0 percent of AT&T’s
data revenues came from retail business
and consumer customers. These retail
data revenues were up 7.9 percent versus
results for the year-earlier quarter.

14

Advertising
& Publishing
AT&T’s Advertising & Publishing segment offers businesses a full suite of local
AT&T is a leader in local
search options including print and Internet Yellow Pages in addition to Web site
search with more than design and search engine marketing.
AT&T’s Advertising & Publishing operations deliver print directories to
1,250 print directories and more than 83 million residences and businesses in 22 states and have a
premier online presence nationwide with YELLOWPAGES.COM, which offers
YELLOWPAGES.COM, consumers access to local business information, the latest business listings,
city guides, maps and driving directions. Combined, these print and online
its fast-growing online products receive approximately 5 billion consumer searches a year for local
business information and provide more than 1 million advertisers with
search service. valuable sales leads to help their businesses grow.
Advertising & Publishing revenue trends over the past several quarters
have been generally stable, with print declines reflecting expected migration
to electronic search, largely offset by rapid growth in YELLOWPAGES.COM.
In the first quarter of 2008, Advertising & Publishing’s Internet revenues
increased 41.1 percent versus the year-earlier quarter and 12.9 percent
sequentially.
In March, AT&T announced a distribution agreement with Microsoft Corp.
that will put YELLOWPAGES.COM’s comprehensive advertising listings and
content in front of consumers who use Microsoft’s local search sites. The
agreement, launched in early April, gives YELLOWPAGES.COM advertisers
exposure through Microsoft’s search pages within the Live Search and Live
Search Maps properties, including MSN Yellow Pages.
Compared with reported results in the year-earlier quarter, Advertising &
Publishing revenues totaled $1.4 billion, unchanged from a reported
$1.4 billion; operating expenses totaled $999 million, up from $976 million;
and operating income totaled $418 million, compared with $467 million.
Adjusted results for Advertising & Publishing exclude merger-related
noncash amortization costs in both quarters. Compared with results in
the year-earlier quarter, first-quarter 2008 adjusted operating expenses
totaled $797 million, up from $744 million, and operating income totaled
$620 million, compared with $699 million.

15

Other
AT&T’s Other segment includes results from AT&T’s Sterling Commerce
AT&T’s Other segment
operations and AT&T’s customer information services operations, both of
includes results from its which are included in segment revenues and operating expenses. Customer
information services include operator services and directory assistance.
Sterling Commerce unit, Sterling Commerce is one of the world’s largest providers of multienterprise
collaboration solutions. The company serves the retail, consumer packaged
customer information goods, manufacturing, financial services, health care and telecommunications
industries.
services and equity The Other segment includes AT&T’s proportionate share of results from
Telmex and América Móvil, which are shown in the Equity in Net Income of
investments in Telmex Affiliates line for this segment. AT&T’s equity interest in each company is
more than 8 percent.
and América Móvil. América Móvil is one of the leading providers of telecommunications
services in Latin America, with more than 153 million wireless subscribers
in countries throughout the region, including 50 million in Mexico, at the
end of 2007.
Telmex is the leading telecommunications company in Mexico. Telmex and
its subsidiaries provide a wide range of telecommunications services, data
and video transmission, Internet access and integrated telecommunications
solutions. Telmex also offers telecommunications services through its
international subsidiaries in countries including Argentina, Brazil, Chile,
Colombia, Ecuador, Peru and Uruguay.
On a reported basis, Other segment income totaled $15 million in the
first quarter, versus $252 million in the year-earlier quarter. Other segment
results for the first quarter of 2008 include the company’s $374 million
workforce reduction charge. Segment revenues totaled $544 million,
unchanged from the first quarter of 2007. Equity in Net Income of Affiliates
totaled $241 million, up from $172 million in the year-earlier quarter.
Adjusted Other segment income, which excludes merger-related and
workforce reduction costs, was $406 million, compared with $287 million

16

AT&T Inc.
Consolidated Statements of Income (Unaudited)
(Dollars in Millions, Except per Share Amounts)
Three Months Ended

3/31/08 3/31/07 % Change
Operating Revenues
Voice $ 9,693 $10,455 -7.3%
Data 5,972 5,655 5.6%
Wireless service 10,605 9,070 16.9%
Directory 1,398 1,022 36.8%
Other 3,076 2,767 11.2%
Total Operating Revenues 30,744 28,969 6.1%
Operating Expenses
Cost of services and sales (exclusive of depreciation
and amortization shown separately below) 11,775 11,252 4.6%
Selling, general and administrative 8,086 7,437 8.7%
Depreciation and amortization 4,903 5,616 -12.7%
Total Operating Expenses 24,764 24,305 1.9%
Operating Income 5,980 4,664 28.2%
Interest Expense 865 873 -0.9%
Equity in Net Income of Affiliates 243 173 40.5%
Other Income (Expense) – Net 33 504 -93.5%
Income Before Income Taxes 5,391 4,468 20.7%
Income Taxes 1,930 1,620 19.1%
Net Income $ 3,461 $ 2,848 21.5%

Basic Earnings Per Share $ 0.58 $ 0.46 26.1%
Weighted Average Common Shares Outstanding (000,000) 5,997 6,224 -3.6%

Diluted Earnings Per Share $ 0.57 $ 0.45 26.7%
Weighted Average Common Shares Outstanding
with Dilution (000,000) 6,033 6,266 -3.7%

17

AT&T Inc.
Statements of Segment Income (Unaudited)
(Dollars in Millions)
Three Months Ended

3/31/08 3/31/07 % Change
Wireless
Segment Operating Revenues
Service $10,645 $ 9,092 17.1%
Equipment 1,180 905 30.4%
Total Segment Operating Revenues 11,825 9,997 18.3%
Segment Operating Expenses
Cost of services and equipment sales 4,110 3,670 12.0%
Selling, general and administrative 3,279 2,913 12.6%
Total Segment Operating Expenses 8,869 8,474 4.7%
Segment Operating Income 2,956 1,523 94.1%
Equity in Net Income of Affiliates 2 7 -71.4%
Minority Interest (60) (48) -25.0%
Segment Income $ 2,898 $ 1,482 95.5%

Wireline
Segment Operating Revenues
Voice $ 9,919 $10,677 -7.1%
Data 6,205 5,862 5.9%
Other 1,500 1,447 3.7%
Total Segment Operating Revenues 17,624 17,986 -2.0%
Cost of sales 7,616 7,558 0.8%
Selling, general and administrative 4,005 4,093 -2.2%
Total Segment Operating Expenses 14,791 15,091 -2.0%
Segment Income $ 2,833 $ 2,895 -2.1%

Advertising & Publishing
Segment Operating Revenues $ 1,417 $ 1,443 -1.8%
Cost of sales 444 455 -2.4%
Selling, general and administrative 343 279 22.9%
Depreciation and amortization 212 242 -12.4%
Total Segment Operating Expenses 999 976 2.4%
Segment Income $ 418 $ 467 -10.5%

Other
Segment Operating Revenues $ 544 $ 544 —
Segment Operating Expenses 770 464 65.9%
Segment Operating Income (Loss) (226) 80 —
Equity in Net Income of Affiliates 241 172 40.1%
Segment Income $ 15 $ 252 -94.0%

18

AT&T Inc.
Consolidated Balance Sheets
(Dollars in Millions, Except per Share Amounts)
3/31/08 12/31/07

Assets (Unaudited)
Current Assets
Cash and cash equivalents $ 1,963 $ 1,970
Accounts receivable – net of allowances for uncollectibles of $1,361 and $1,364 15,697 16,185
Prepaid expenses 1,610 1,524
Deferred income taxes 1,934 2,044
Other current assets 2,742 2,963
Total current assets 23,946 24,686
Property, Plant and Equipment – Net 96,238 95,890
Goodwill 70,815 70,713
Licenses 40,711 37,985
Customer Lists and Relationships – Net 13,692 14,505
Other Intangible Assets – Net 5,877 5,912
Investments in Equity Affiliates 2,578 2,270
Postemployment Benefit 17,645 17,291
Other Assets 6,697 6,392
Total Assets $278,199 $275,644

Liabilities and Stockholders’ Equity
Current Liabilities
Debt maturing within one year $ 13,301 $ 6,860
Accounts payable and accrued liabilities 18,590 21,399
Advanced billing and customer deposits 3,677 3,571
Accrued taxes 4,186 5,027
Dividends payable 2,375 2,417
Total current liabilities 42,129 39,274
Long-Term Debt 60,189 57,255
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes 25,203 24,939
Postemployment benefit obligation 24,510 24,011
Unamortized investment tax credits 144 150
Other noncurrent liabilities 13,766 14,648
Total deferred credits and other noncurrent liabilities 63,623 63,748
Stockholders’ Equity
Common shares issued ($1 par value) 6,495 6,495
Capital in excess of par value 91,598 91,638
Retained earnings 34,311 33,297
Treasury shares (at cost) (19,590) (15,683)
Accumulated other comprehensive loss (556) (380)
Total stockholders’ equity 112,258 115,367
Total Liabilities and Stockholders’ Equity $278,199 $275,644

19

AT&T Inc.
Consolidated Statements of Cash Flows (Unaudited)
(Dollars in Millions, Increase (Decrease) in Cash and Cash Equivalents)
Three Months Ended

3/31/08 3/31/07
Operating Activities
Net income $ 3,461 $ 2,848
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 4,903 5,616
Undistributed earnings from investments in equity affiliates (225) (156)
Provision for uncollectible accounts 480 376
Amortization of investment tax credits (6) (8)
Deferred income tax expense 569 65
Net gain on sales of investments (46) —
Gain on license exchange — (409)
Changes in operating assets and liabilities:
Accounts receivable (150) 237
Other current assets 142 (748)
Accounts payable and accrued liabilities (4,654) (3,232)
Stock-based compensation tax benefit (7) (47)
Other – net 490 71
Total adjustments 1,496 1,765
Net Cash Provided by Operating Activities 4,957 4,613

Investing Activities
Construction and capital expenditures (4,247) (3,338)
Acquisitions, net of cash acquired (3,662) (198)
Dispositions 47 209
Proceeds from sale of securities, net of investments 131 518
Other 32 7
Net Cash Used in Investing Activities (7,699) (2,802)

Financing Activities
Net change in short-term borrowings with original maturities of three months or less 5,786 (2,989)
Issuance of long-term debt 3,972 5,924
Repayment of long-term debt (613) (227)
Purchase of treasury shares (4,071) (3,005)
Issuance of treasury shares 103 687
Dividends paid (2,422) (2,218)
Stock-based compensation tax benefit 7 47
Other (27) (84)
Net Cash Provided by (Used in) Financing Activities 2,735 (1,865)
Net decrease in cash and cash equivalents (7) (54)
Cash and cash equivalents beginning of year 1,970 2,418
Cash and Cash Equivalents End of Period $ 1,963 $ 2,364

AT&T First-Quarter Earnings Package

AT&T First-Quarter Earnings Package

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (18)

Destacado

Destacado (11)

Similar a AT&T First-Quarter Earnings Package

Similar a AT&T First-Quarter Earnings Package (20)

Más de finance1

Más de finance1 (20)

Último

Último (20)

AT&T First-Quarter Earnings Package