at&t third-quarter earnings package

3rd QUARTER 2008

InvestorBriefing No. 262 | October 22, 2008

AT&T Inc. reported third-quarter results highlighted by strong wireless gains and stable business trends, including continued double-digit growth in IP data services and a major turnaround in wholesale revenue growth. Total wireless revenues grew 15.4 percent, driven by a significant step up in retail postpaid subscriber additions, continued rapid adoption of wireless data services and robust demand for integrated devices, led by the Apple iPhone 3G. Third-quarter highlights included the following:• Totalwirelesssubscribersincreasedby2.0milliontoreach74.9millionin

service,withanetgaininretailpostpaidwirelesssubscribersof1.7million.This was the largest quarterly postpaid subscriber increase in the company’s history.

Strong Wireless Gains, Sound Operational Execution Highlight AT&T’s Third Quarter; Results Led by 2.4 Million iPhone 3G Activations, Rapid Wireless Data Growth

AT&T delivered its best-ever

quarterly postpaid wireless

subscriber gain, accelerated its

U-verse video subscriber ramp

and sustained stable trends

in business services.

Third-Quarter EPS Reconciliation 3Q08 3Q07

Reported EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.55 $0.50

Adjustments:

Merger integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.04

Noncash merger-related costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.12 0.17

Adjusted EPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.67 $0.71

Pretaxadjustmentstoearnings:in3Q07,mergerintegrationcosts,noncashintangibleamortizationandadirectory-relatedpurchaseaccountingeffecttotaling$1,898million;in3Q08,noncashintangibleamortizationtotaling$1,096million.

2InvestorBriefing | 3Q 2008

• Postpaidsubscribergrowthwasboostedbythe dramatic market success of the Apple iPhone 3G, which was launched in the United States as an AT&T exclusive on July 11. Third-quarter activations of the iPhone3Gtotaled2.4million,approximately40percentofthemforwirelesscustomerswho were new to AT&T.

• Wirelessdatarevenuesgrew50.5percent,reflecting continued strong increases in areas such as Internet access, messaging, e-mailandrelatedservices.WirelessInternet access revenues and multimedia message volumes more than doubled versus results for the year-earlier quarter.

• Wirelinebusinesstrendswerestable, with enterprise, regional business and wholesale revenues all up sequentially, led by growth in IP data services such as virtual private networks (VPNs), managed Internet services and hosting.

• AT&Tfurtheraccelerateditsrampofnext-generation, IP-based TV service and endedthethirdquarterwith781,000 AT&T U-verseSM TV subscribers in service. This reflects a third-quarter net gain of 232,000,upfrom170,000subscribersadded in the second quarter of this year. AT&T is on a trajectory to exceed its target of more than 1 million U-verse TV subscribersbyyear-end2008.U-versenetwork deployment now passes 14 million living units.

REPORTED RESULTS ForthequarterendedSept.30,2008,AT&T’sconsolidated revenues totaled $31.3 billion, up4.0percentversusreportedresultsintheyear-earlier quarter and up 3.3 percent comparedwiththird-quarter2007proformarevenues, which exclude merger-related accounting impacts on directory revenues.

Consolidated revenue growth was driven by 15.4 percent growth in wireless revenues anda16.2percentincreaseinwirelineIPdata revenues, which includes AT&T U-verse services and business offerings such as VPNs, managed Internet services and hosting. Gains in these areas more than offset pressures in the macro-environment and a decline in wireline consumer voice, which was consistent with trends in recent quarters.

Compared with results for the year-earlier quarter, AT&T’s reported operating expenses forthethirdquarterof2008were$25.7billionversus$24.8billion;reportedoperatingincomewas$5.6billion,upfrom$5.3billion;and AT&T’s reported operating income margin was17.9percent,upfrom17.6percent.

AT&T’sreportedthird-quarter2008netincometotaled$3.2billion,upfrom$3.1 billion in the year-earlier quarter, and reported earnings per diluted share totaled$0.55,upfrom$0.50inthethirdquarterof2007.

USE THESE

2Q08 3Q08

$30.3 $30.4

Revenues for 2007 are adjusted to exclude merger-related directory purchase accounting impacts.

AT&T ADJUSTED CONSOLIDATED REVENUES

Dollars in billions

Page TWO

2Q0716.8%Reported

3Q0717.6%

4Q0718.1%

1Q0819.5%

2Q0821.3%

23.9%23.7%

24.6%

Merger integration and amortization costs and other one-time items are excluded from adjusted operating income margins.

AT&T ADJUSTED OPERATING INCOME MARGIN

24.0%

Page THREE

3Q07 4Q07 1Q08

$30.9

$31.3

$30.725.1%

Strong gains in wireless and

continued double-digit growth in

IP data services drove AT&T’s third-quarter

revenue growth.

InvestorBriefing | 3Q 20083

ADJUSTED RESULTSAT&T’s adjusted results for the third quarter of2008excludenoncashmerger-relatedamortizationexpenses.Forthethirdquarterof2007,adjustedresultsexcludedmergerintegration costs, merger-related amortizationexpensesandamerger- related directory accounting effect.

Compared with results for the year-earlier quarter, AT&T’s adjusted operating expenses forthethirdquarterof2008totaled$24.6billionversus$23.1billion;adjustedoperatingincomewas$6.7billion,comparedwith$7.2billion;andAT&T’sadjusted operatingincomemarginwas21.4percentversus23.7percent.AT&T’sadjusted third-quarter2008netincometotaled$3.9billionversus$4.3billioninthe year-earlier quarter, and adjusted earnings perdilutedsharetotaled$0.67,comparedwith$0.71inthethirdquarterof2007.

iPHONE 3G IMPACTS AND HURRICANE-RELATED EXPENSESAT&T’sthird-quarter2008reportedandadjusted margins and earnings reflect revenue growth and continued progress with previously outlined cost initiatives, offset by hurricane-related expenses and effects on wireless results from the iPhone 3G. Impacts from the company’s iPhone 3G initiative reduced third-quarter pretax earnings by approximately$900millionor$0.10pershare, and costs related to hurricanes reduced pretax earnings by approximately $145millionor$0.02pershare.

Based on third-quarter customer response, AT&T is optimistic regarding continued strong iPhone 3G activations and is confident in the long-term value created by this investment in acquiring high-value, data-centric wireless subscribers. As a result, AT&T expects its dilution associated with the iPhone 3G will run above its previous expectation, and AT&T now expects, depending on volumes, itsfull-year2008wirelessserviceOIBDAmargintobebetterthan37percentversusitspreviousoutlookof39percentto40percent.AT&Texpectsitsfull-yearadjusted consolidated operating income margintobeapproximately23percentversus its previous outlook of approximately 24percent.

STRONG BALANCE SHEETAT&T’s cash from operating activities for the thirdquarterof2008totaled$9.3billion,capital expenditures totaled $5.3 billion and free cash flow (cash from operations minus capitalexpenditures)totaled$4.0billion.Throughthefirstthreequartersof2008,cash from operating activities totaled $22.8billion,capitalexpenditurestotaled$14.8 billion and free cash flow totaled $7.9billion.AT&Tcontinuestoexpectfull-year2008capitalexpendituresinthe mid-teens as a percentage of total revenues andexpectsfull-year2008freecashflow of approximately $14 billion.

Throughthefirstthreequartersof2008,dividendspaidtotaled$7.2billion,sharesrepurchasedtotaled164.2millionfor$6.1billionandAT&Tendedthethirdquarterwith5.9billionsharesoutstanding.


Advertising&Publishingresultsfor2007were affected by accounting adjustments followingAT&T’slate2006acquisitionofBellSouth. In accordance with purchase accounting rules, deferred revenues and expenses for all BellSouth directories delivered prior to the close of the merger wereeliminatedfrom2007consolidatedresults.Thiseliminationofamortizationsreducedthird-quarter2007consolidatedrevenuesby$196millionandconsolidatedoperatingexpensesby$64million.

AT&T manages its print directory business usingamortizedresults.Asaresult,2007amortizedresultsareshowninthe Advertising & Publishing segment on AT&T’s Statement of Segment Income. In2008,bothconsolidatedandsegmentresultsreflectamortizationaccounting.

AT&T’s balance sheet continues to be strong.Duringthethirdquarter,AT&Treduced total debt by $3.4 billion. At the end of the quarter, AT&T’s long-term debt was$59.4billionandtotaldebtwas$76.8billion.Cashandcashequivalentsattheendofthequartertotaled$1.6billion.AT&T’s third-quarter debt-to-total-capitalizationratiowas40.6percent,and thecompany’sannualizeddebt-to-EBITDAratiowas1.7.

ADDITIONAL BACKGROUND ON ADJUSTED AND PRO FORMA RESULTSAT&T’s adjusted earnings for the third quarterof2008excludenoncash,pretax amortizationcostsrelatedtoacquisitionstotaling$1.1billionor$0.12perdilutedshare. Adjusted results for the third quarter of2007excluded:(1)pretaxcashmerger-related integration costs totaling $322millionor$0.04perdilutedshare; (2)noncash,pretaxmerger-relatedcoststotaling$1.4billionor$0.16perdilutedshare;and(3)amerger-relateddirectoryaccountingimpactof$132millionor$0.01perdilutedshare.


WirelessAT&T significantly accelerated growth in advanced wireless services in the third quarter. Results included a major step up in retail postpaid subscriber additions and a continued strong ramp in wireless data revenues from areas such as Internet access, e-mail and multimedia messaging. Expansion in these areas was boosted by robust demand for integrated devices, led by strong performance from the Apple iPhone 3G, which was launched in the United States as an AT&T exclusive on July 11.

STRONGEST QUARTERLY POSTPAID NET ADDS IN COMPANY’S HISTORYIn the third quarter, AT&T posted the largest postpaid net subscriber gain for any quarter in its history. Retail postpaid net subscriber additions of 1.7millionwereupnearly40percentversusresultsintheyear-earlier thirdquarterandaccountedformorethan85percentofAT&T’s2.0milliontotal wireless net adds.

Grosssubscriberflowtotaled5.7million,andpostpaidgrossaddsforthethird quarter topped 3.8 million, with both totals exceeding results in the year-earlier quarter. Total monthly subscriber churn in the third quarter was 1.7percent,flatwithresultsfortheyear-earlierquarter,andpostpaidchurnimprovedto1.2percentfrom1.3percentinthethirdquarterof2007.

2.4 MILLION iPHONE 3G ACTIVATIONSPostpaid subscriber growth was boosted by the dramatic market success of theiPhone3G.Third-quarteractivationsoftheiPhone3Gtotaled2.4million,2.4timesresultsfortheoriginaliPhonethroughtheendofthethirdquarterin2007.Approximately40percentofiPhone3Gactivationsinthethirdquarter of2008wereforwirelesscustomerswhowerenewtoAT&T.Inaddition, AT&T’s iPhone exclusive has delivered subscribers with ARPU (average monthly revenuespersubscriber)approximately1.6timeshigherandchurnratessignificantly lower than the company’s overall postpaid subscriber base.

The iPhone and other integrated devices are key to AT&T’s success in driving wireless data growth and in expanding flow share of high-value subscribers. Duringthethirdquarter,morethantwo-thirdsofthecompany’spostpaidnetaddscamefromcustomerschoosinganintegrateddevice,and22percentofAT&T’s postpaid wireless subscribers now have an integrated device, up from 10.5percentoneyearearlier.

AT&T delivered strong

wireless subscriber

and revenue growth in

the third quarter, powered

by 2.4 million iPhone 3G

activations and rapid

adoption of advanced

data services.


CONTINUED RAPID EXPANSION IN WIRELESS DATAAT&T’s wireless data revenues grew 50.5percentversustheyear-earlierquarterto$2.7billion,reflectingstrongincreasesinareas such as Internet access, messaging, e-mailandrelatedservices.WirelessInternetaccess revenues more than doubled versus results for the year-earlier quarter, and multimedia message volumes were also morethandoublethird-quarter2007levels.In the third quarter, data represented 24.2percentofAT&T’stotalwirelessservicerevenues, up from 18.4 percent in the third quarterof2007.

USE THESE

3Q07 4Q07 1Q08 2Q08 3Q08

1,212 1,178

705

1,693

AT&T POSTPAID NET SUBSCRIBER ADDITIONS

In thousands

894

AT&T WIRELESS REVENUES

Dollars in billions

3Q07 4Q07 1Q08 2Q08 3Q08

$10.9$11.4

$11.8 $12.0$12.6

3Q07 4Q07 1Q08 2Q08 3Q08

65.7

70.171.4

72.9

74.9

Wireless - Chart ONEWireless - Chart TWO

AT&T WIRELESS SUBSCRIBERS

In millions

Wireless - Chart THREE

Wireless - Chart FOUR

3Q07 4Q07 1Q08 2Q08 3Q08

$1.8$2.0

$2.3

$2.7

AT&T WIRELESS DATA REVENUES

Dollars in billions

$2.5


2Q0715.4%

2Q0825.5%

2Q0735.8%

2Q0841.2%

24.9%

29.9%

37.5%

41.2%

Merger integration and intangible amortization costs excluded from adjusted operating income margins: $983 million in 2Q07 and $529 million in 2Q08. Merger integration costs excluded from adjusted OIBDA service margins: $163 million in 2Q07.

AT&T ADJUSTED WIRELESS MARGINS

UnadjustedResults

Operating Income Margin OIBDA Service Margin

Subscriber increase in 4Q07 included 1.7 million subscribers added through acquisition; 2Q08 increase included 182,000 subscribers added through acquisition.

USE THESE

3Q07 4Q07 1Q08 2Q08 3Q08

1,212 1,178

705

1,693


In thousands

894


Dollars in billions

3Q07 4Q07 1Q08 2Q08 3Q08

$10.9$11.4

$11.8 $12.0$12.6

3Q07 4Q07 1Q08 2Q08 3Q08

65.7

70.171.4

72.9

74.9



In millions



3Q07 4Q07 1Q08 2Q08 3Q08

$1.8$2.0

$2.3

$2.7


Dollars in billions

$2.5


2Q0715.4%

2Q0825.5%

2Q0735.8%

2Q0841.2%

24.9%

29.9%

37.5%

41.2%



UnadjustedResults



Strong subscriber gains and rapid

adoption of data services drove

AT&T’s 15.4 percent third-quarter

growth in total wireless revenues.

AT&T increased its wireless subscriber

base by 2.0 million in the third quarter

and by 9.2 million over the past year.

Drivenbysubscribergainsanddatagrowth, AT&T’s total wireless revenues increased15.4percentto$12.6billion,andwireless service revenues, which exclude handset and accessory sales, grew 14.3 percent to $11.3 billion. Total service ARPUwas$50.80,flatversustheyear-earlier third quarter, and retail postpaid subscriberARPUwas$58.99,up2.6percentversusthethirdquarterof2007.

To spur continued strong growth in wireless data services, AT&T has expanded its3Gnetworkcoverageto324cities,withplanstoexpandtonearly350bytheend of the year. AT&T’s 3G network is the nation’s fastest, according to third-party data, and allows typical download speeds ofupto1.7megabitspersecond.

Morethan17millionAT&Twireless subscribers now use 3G devices, up approximately 4 million over the past three months. At the end of the third quarter, AT&T’s total wireless broadband-capable subscribers — those using 3G LaptopConnect cards and broadband-speed integrated deviceswithaQWERTYortouch-screenkeyboard—totalednearly5.9million,up2.8millionoverthepastthreemonthsandmore than 4.4 million over the past year.

WIRELESS MARGINSOnareportedbasis,third-quarterwirelessoperatingexpensestotaled$10.2billion,operatingincomewas$2.4billionand AT&T’s wireless operating income margin was18.9percentversus18.0percentintheyear-earlierthirdquarter.Onanadjustedbasis, third-quarter wireless operating expensestotaled$9.7billion,operatingincomewas$2.9billionandAT&T’swirelessoperatingincomemarginwas22.8percentversus26.4percentintheyear-earlierthirdquarter.AT&T’sthird-quarterwirelessOIBDAservice margin was 33.5 percent versus an unadjusted37.3percentandanadjusted39.1percentintheyear-earlierquarter.


USE THESE

3Q07 4Q07 1Q08 2Q08 3Q08

1,212 1,178

705

1,693


In thousands

894


Dollars in billions

3Q07 4Q07 1Q08 2Q08 3Q08

$10.9$11.4

$11.8 $12.0$12.6

3Q07 4Q07 1Q08 2Q08 3Q08

65.7

70.171.4

72.9

74.9



In millions



3Q07 4Q07 1Q08 2Q08 3Q08

$1.8$2.0

$2.3

$2.7


Dollars in billions

$2.5


2Q0715.4%

2Q0825.5%

2Q0735.8%

2Q0841.2%

24.9%

29.9%

37.5%

41.2%



UnadjustedResults



USE THESE

3Q07 4Q07 1Q08 2Q08 3Q08

1,212 1,178

705

1,693


In thousands

894


Dollars in billions

3Q07 4Q07 1Q08 2Q08 3Q08

$10.9$11.4

$11.8 $12.0$12.6

3Q07 4Q07 1Q08 2Q08 3Q08

65.7

70.171.4

72.9

74.9



In millions



3Q07 4Q07 1Q08 2Q08 3Q08

$1.8$2.0

$2.3

$2.7


Dollars in billions

$2.5


2Q0715.4%

2Q0825.5%

2Q0735.8%

2Q0841.2%

24.9%

29.9%

37.5%

41.2%



UnadjustedResults



AT&T delivered its best-ever quarterly net gain in postpaid

subscribers, up 39.7 percent versus

results in the third quarter of 2007.

AT&T’s wireless data revenues grew

50.5 percent year over year, driven by increased usage of

wireless Internet and data access,

messaging and media bundles.

wireless research firms. AT&T also offers the broadest global coverage of any U.S. provider, with voice roaming available in morethan200countries;accesstoe-mail,theWebandotherdataapplicationsin morethan145countries;andaccesstomobile broadband 3G networks in more than60countries.

Building on this foundation, AT&T is defining and delivering the next generation of wireless by advancing network capa bilities, offering breakthrough devices and launching innovative services. In addition to its highly successful launch of the Apple iPhone 3G, over the past several weeks, AT&T:• JoinedwithSamsungMobiletolaunch

Samsung RugbyTM, the first rugged handset to feature AT&T’s breakthrough Video ShareSM calling and to run on the largest Push to Talk network in the country.

• Expandeditslocation-basedservices (LBS) portfolio with the launch of two new navigation applications, MapQuest Navigator and AAA Mobile navigator, and announced the deployment of assisted GPS technology (A-GPS) in its wireless network to enhance existing and planned location-based services. The new applications add to the company’s AT&T Navigator and AT&T Navigator Global Edition offerings, and AT&T’s deployment of A-GPS paves the way for new offers from AT&T in the LBS space, including plans for a family-oriented service and a location-enabled social networking service.

• Announcedthelaunchof“My Commu nities,” a new downloadable gateway that lets users create and manage multiple social networking accounts through a single dashboard view on their mobile phone. My Communities offers a diverse roster of social networks, and through My Communities, subscribers can register for social sites directly from their phone. From an easy-to-use

In addition to operational improvements, year-over-year margin comparisons reflect approximately$900millionofpressureassociated with the iPhone 3G and approximately $55 million of expenses due tohurricanes.WithouttheiPhoneandhurricane impacts, AT&T’s third-quarter wirelessOIBDAservicemarginwouldhavebeenapproximately42percent.(OIBDAservice margin is operating income before depreciationandamortization,dividedbytotal service revenues.)

LEADER IN WIRELESS INNOVATIONAT&T operates the nation’s largest wireless digital voice and data network and offers the nation’s fastest 3G network according to data compiled by leading independent


dashboard view, My Communities users can upload photos from their phone, view and respond to new messages, approve and deny friend requests and view and post new comments across multiple sites. Updates are synched across mobile and online channels in real time.

• WithSierraWireless,announcedtheavailability of the AT&T USBConnect Mercury, the newest and smallest addition to AT&T’s High Speed Packet Access (HSPA)-capable lineup of LaptopConnect devices. The device provides plug-and-play installation by including a preloaded version of AT&T Communication Manager softwareforMicrosoftWindowsVista, XPand2000notebooksandSierra’sWatcherTM software for Mac notebooks (versions10.4.11orlater).

• JoinedwithLGMobilePhonestolaunchthe LG InvisionTM, a new multimedia device for users who want the best in video on their mobile phone. It is the smallest Mobile TV-capable phone in the U.S., at just a little more than 4 inches tall, 2incheswideandlessthanone-half inch thick.

• AnnouncedtheavailabilityofAT&T Navigator Global Edition, the only GPS-based service available from a U.S. wireless carrier to provide international navigation capabilities. The service can be usedin20countriesonAT&T-poweredsmartphones featuring built-in GPS capabilities. AT&T Navigator Global Edition’s coverage area includes most countries in western Europe, North America, the U.S. Caribbean and six cities in China.

• AnnouncedtheavailabilityofMicrosoftSystemCenterMobileDeviceManager2008,anenterprise-grademobiledevicemanagement solution that also provides security, mobile VPN and software distributionforWindowsMobiledevices.AT&T also announced the availability of theMDMEarlyAdopterQuickStart Program that was developed cooperatively by AT&T and Enterprise Mobile and is an exclusive offering designed to assist AT&T customers with deploying the Microsoft mobility solution.


WirelineThird-quarter results in

AT&T’s wired operations

included continued

double-digit growth in

IP data revenues,

stable business trends,

including a major

turnaround in wholesale,

and an accelerated ramp

in AT&T U-verse

TV subscribers.

Third-quarterrevenuesinAT&T’swirelinesegmenttotaled$17.6billionversus$17.9billionintheyear-earlierquarter.ResultsincludedAT&T’sfourthconsecutivequarter of strong mid-teens growth in total wireline IP data revenues, up 16.2percentversustheyear-earlierquarter.ConsumerIPdatarevenues,whichincludebroadbandandU-verseservices,grew19.0percent,andbusinessIPdatarevenues from products such as VPNs, managed Internet services and hosting wereup14.7percent.Growthintheseareaslargelyoffsetexpecteddeclinesinvoice and legacy packet-switched data products.

Third-quarter wireline results were highlighted by an accelerated ramp in AT&T U-verse TV subscribers and stable business trends, including a return to growth in wholesale revenues. AT&T’s total business revenues — comprised of theenterprise,regionalandwholesalecustomercategories—grew0.3percentversus the year-earlier quarter to $11.5 billion. All three business categories posted sequential revenue growth in the third quarter.

Compared with results for the year-earlier quarter, on a reported basis, third-quarter wireline operating expenses totaled $14.8 billion versus $15.0billion;operatingincomewas$2.7billionversus$3.0billion;andAT&T’swirelineoperatingincomemarginwas15.6percentversus16.5percent.

Adjustedwirelineresultsexcludemerger-relatedintegrationandamortizationexpensesforthethirdquarterof2007andexcludeonlymerger-related amortizationexpensesforthethirdquarterof2008.Comparedwithresultsforthe year-earlier quarter, third-quarter adjusted wireline operating expenses totaled$14.4billionversus$14.4billion;adjustedoperatingincomewas$3.1billionversus$3.6billion;andAT&T’sadjustedwirelineoperatingincomemarginwas17.9percentversus19.9percent.Inadditiontooperationaldrivers,third-quarter2008resultsincludeapproximately$90millionincostsrelated to hurricanes.

The following wireline highlights include ongoing shifts in customer categories to reflect AT&T’s management of customer relationships.

WHOLESALE TURNAROUNDIn the third quarter, AT&T delivered a return to growth in wholesale revenues, extending a major turnaround of trends in this category over the past year. Wholesalerevenuestotaled$3.5billion,up0.8percentsequentiallyand0.7percentversustheyear-earlierquarter.ThiswasAT&T’sthirdconsecutivequarter of sequential revenue growth in wholesale revenues.


The turnaround in wholesale trends reflects solid demand from wireless carriers, Internet service providers, content providers and other customers along with increased revenues from the agreement announced last fall that makes AT&T the primary global network management services provider to IBM.

AT&T is one of the largest wholesale transport and communications service providers in the world, maintaining connectionstomorethan600carriersinmorethan220countriesandterritories, and delivers a full portfolio of end-to-end, reliable and highly secure network, voice, data and IP solutions to carriers, wireless operators, cable providers, systems

integrators, Internet service providers and content providers.

In recent weeks, AT&T announced it has received a Market Leadership Award for its U.S.WholesaleMetroSONETserviceportfoliofrom Frost & Sullivan, a global growth consulting company. In addition, the AT&TWholesaleorganizationreceivedfour2008ATLANTIC-ACMWholesaleMetroCarrier Excellence Awards based on the results of the third annual Metro Carrier Report Card, which evaluates the performance of metro carriers by their wholesale customers and is based on more than3,000individualcarrierevaluations.

STABLE ENTERPRISE TRENDSTotal enterprise revenues in the third quarter totaled$4.7billion,up0.8percent sequentially and down 1.4 percent versus the year-earlier quarter, reflecting solid sales results with some economic pressures on voice and data transport volumes. Enterprise fundamentals in terms of closed sales, a strong sales funnel and new service adoption remain solid, and the company expects revenues from major contracts, suchasitsagreementswithRoyalDutchShell and with U.S. government agencies, to increase in the quarters ahead.

AT&T is the premier provider for enterprise customers, delivering networking services and solutions to multinational corporations, governmental agencies and regionally based domestic companies. The company continues to expand its capabilities through network expansion and enhancement of service capabilities. For example, in August, AT&T announced the global launch of AT&T Synaptic HostingSM, its next-generation utility computing service with managed networking, security and storage for businesses. And in September, the company launched AT&T Mobile Enterprise Applications, which offers hosted and managed mobile integration solutions and application consulting services for companies that want to extend their business-critical information to mobile employees.

USE THESE

3Q0739.9%

4Q0741.5%

1Q0842.3%

2Q0843.4%

3Q0844.0%

$2.4$2.6 $2.6

Wireline

AT&T WIRELINE IP DATA REVENUES

Dollars in billions

Wireline

3Q07 4Q07 1Q08 2Q08 3Q08

126

231

549

781

AT&T U-VERSE TV CONNECTIONS IN SERVICE

In thousands

379

$2.7

2Q07 3Q07 4Q07 1Q08 2Q08

$58.91$59.43 $59.73

$61.40

AT&T AVERAGE MONTHLY CONSUMER REVENUES PER HOUSEHOLD SERVED

$60.57

Wireline

2007 comparisons are to 2006 pro forma results, which combine results from the former BellSouth and AT&T and exclude revenues from acquired operations.

AT&T WHOLESALE REVENUES — YEAR-OVER-YEAR GROWTH RATES

3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

Wireline

$2.8

Enterprise servicerevenue growth


AT&T TOTAL ENTERPRISE REVENUE GROWTH RATES

1Q07(3.0)%

2Q07(0.7)%

3Q070.4%

4Q071.5%

1Q082.1%

(3.9)%

(1.7)%

(0.2)%

(2.0)%

2

1

0

-1

-2

-3

-4

Wireline

1.2%


Unchanged from 1Q Earnings

(8.5)%

(4.0)%

0.7%

IP data as a percentageof total wireline data revenues



3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

1

0

-1

-2

-3

-4

-5

-6

-7

-8

-9

Wireline


(8.5)%

(4.0)%

0.7%

USE THESE

3Q0739.9%

4Q0741.5%

1Q0842.3%

2Q0843.4%

3Q0844.0%

$2.4$2.6 $2.6

Wireline


Dollars in billions

Wireline

3Q07 4Q07 1Q08 2Q08 3Q08

126

231

549

781


In thousands

379

$2.7

2Q07 3Q07 4Q07 1Q08 2Q08

$58.91$59.43 $59.73

$61.40


$60.57

Wireline



3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

Wireline

$2.8




1Q07(3.0)%

2Q07(0.7)%

3Q070.4%

4Q071.5%

1Q082.1%

(3.9)%

(1.7)%

(0.2)%

(2.0)%

2

1

0

-1

-2

-3

-4

Wireline

1.2%



(8.5)%

(4.0)%

0.7%




3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

1

0

-1

-2

-3

-4

-5

-6

-7

-8

-9

Wireline


(8.5)%

(4.0)%

0.7%

AT&T’s IP data service revenues, including

U-verse services and business products

such as VPNs, managed Internet

services and hosting, grew 16.2 percent

year over year.

AT&T has delivered a substantial

turnaround in wholesale revenue

growth, driven by solid demand and

increased revenues from the company’s

global network services agreement

with IBM.


REGIONAL CONSUMER RESULTSThird-quarter regional consumer revenues continued trends of recent quarters, with growth in revenues from broadband and AT&T U-verse services in large part offsetting pressures in traditional voice, as the consumer space moves through a transformation from primarily voice- centered relationships to connections driven by mobility, broadband and video.

Third-quarter regional consumer revenues totaled $5.5 billion, down 3.8 percent. This reflects operational trends and a change inAT&T’srelationshipwithYahoo!®Inc.,which provides portal services to AT&T’s nearly 15 million wireline broadband subscribers. Under the new arrangement, announcedinthesecondquarterof2008,AT&T no longer pays monthly portal fees and receives a reduced level of shared advertisingrevenuesfromYahoo!

Reflecting growth in wireline broadband and AT&T U-verse services, revenues per consumer household served increased 4.3 percent versus the year-earlier third quarter. Regional consumer revenue connections (retail voice, high speed Internetandvideo)totaled47.5million attheendofthequarterversus49.6millionattheendofthethirdquarterof2007and48.4 million at the end of the second quarter of2008.Overthepastyear,totalconsumerbroadband and TV connections increased by1.9million.

AT&T’s innovations in the consumer space include marketing broadband/wireless bundles and combining wireline broadband with wireless LaptopConnect service and AT&T’sextensiveWi-Fiavailability.

In September, AT&T announced the introduction of AT&T HomeManagerTM — an innovative home phone that combines access to Internet content and popular wireless phone applications with traditional

In recognition of the high quality of AT&T’s enterprise capabilities, in August, leading industry analyst firm Gartner Inc. positioned AT&TintheLeadersQuadrantofits“MagicQuadrantforU.S.WirelessServiceProviders,2008”report,andGartnergavethecompanythesamerankinginits“ManagedandProfessional Network Service Providers, Worldwide”report.

REGIONAL BUSINESS GROWTHAT&T posted third-quarter growth in regional businessrevenuesof0.7percentsequentiallyand2.3percentversustheyear-earlierquarterto$3.2billion.

Regional business data revenues grew 8.4 percent year over year, led by Ethernet and IP data services including managed Internet and VPNs. IP data and Ethernet, whichmadeup53.6percentofAT&T’sregional business data revenues, grew 18.9percentversustheyear-earlierthirdquarter.

AT&T’s portfolio of communications services for its regional business customers includes wireless, broadband Internet access, business e-mailservices,Webhosting,unified messaging, remote data storage and network security options.

To further differentiate its products for regional business customers, AT&T is offering attractive bundles and term contract offers with an increased focus onwirelessincludingFamilyTalk®plans forsmallandmidsizedfirms.Inaddition,AT&T is expanding its data and broadband capabilities. For example, in September, the company launched AT&T Tech Support 360SM, an information technology helpdesk that provides live, technical service designed specifically for small businesses, including online computer support.


home phone service. Using a portable, seven-inch color touch-screen frame, AT&T HomeManager provides one-touch access from anywhere in the home to a robust lineup of popular features and content, including visual voice mail, weather reports, e-mail access, local news, a portable speakerphone and more.

ACCELERATED RAMP IN AT&T U-VERSE TV SUBSCRIBERSAT&T further accelerated its ramp in U-verse TVgrowthwithanetgainof232,000 subscribers in the third quarter, up from 170,000addedinthesecondquarterof this year. At the end of the quarter, subscribers to the company’s next- generation, IP-based TV service totaled 781,000,onatrajectorytoexceedAT&T’starget of more than 1 million U-verse TV subscribersbyyear-end2008.U-versenetwork deployment now passes 14 million living units. AT&T’s rollout of Total Home DVRserviceisunderwayandexpectedto be completed by the end of the year. Attach rates for broadband service continue to be high, at more than 85 percent.

OnOctober1,AT&TannouncedthatAT&TU-verse TV ranked highest in customer satisfaction among residential television customers in the North Central, South and WestregionsintheJ.D.PowerandAssociates2008ResidentialTelevisionService Provider Satisfaction StudySM. Customers evaluated AT&T’s performance and reliability, customer service, cost of service, billing and offerings and promotions.

InOctober,AT&TannouncedagreementswithCircuitCityandWal-MarttosellAT&TU-verse TV and AT&T U-verse High Speed Internetinmorethan600retaillocations.These are the first national retail agreements for AT&T U-verse.

BROADBAND GROWTHAt the end of the third quarter, AT&T’s wireline broadband subscribers, including both consumer and business customers, totaled14.8million,up148,000inthequarter and 1.1 million over the past year.

Customers increasingly use both wireline and wireless connections for broadband connectivity, as reflected in AT&T’s strong growth in wireless LaptopConnect cards and integrated devices. In recognition of this trend, AT&T now also provides data on total broadband connections, which combines wireline and wireless subscribers. Total broadband-capable connections in serviceincreased2.9millioninthethirdquartertoreach20.7million.(Wirelessbroadband connections include data users with 3G LaptopConnect cards and broadband-speed integrated devices with aQWERTYortouchscreenkeyboard.)

USE THESE

3Q0739.9%

4Q0741.5%

1Q0842.3%

2Q0843.4%

3Q0844.0%

$2.4$2.6 $2.6

Wireline


Dollars in billions

Wireline

3Q07 4Q07 1Q08 2Q08 3Q08

126

231

549

781


In thousands

379

$2.7

2Q07 3Q07 4Q07 1Q08 2Q08

$58.91$59.43 $59.73

$61.40


$60.57

Wireline



3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

Wireline

$2.8




1Q07(3.0)%

2Q07(0.7)%

3Q070.4%

4Q071.5%

1Q082.1%

(3.9)%

(1.7)%

(0.2)%

(2.0)%

2

1

0

-1

-2

-3

-4

Wireline

1.2%



(8.5)%

(4.0)%

0.7%




3Q07(3.0)%

4Q07(0.7)%

1Q080.4%

2Q081.5%

3Q082.1%

(7.0)%

(0.2)%

1

0

-1

-2

-3

-4

-5

-6

-7

-8

-9

Wireline


(8.5)%

(4.0)%

0.7%

AT&T continues to accelerate subscriber

growth in its advanced IP-based TV service,

as customers respond positively to the

high-quality viewing experience and rich

set of features U-verse offers.


Datatransportservicerevenuesincreased1.6percentyearoveryear,andpacket-switched data revenues, which include Frame Relay and ATM services, were down 15.1 percent, consistent with industry trends.

Inthethirdquarter,73.4percentofAT&T’sdata revenues came from retail business and consumer customers. These retail data revenueswereup7.4percentversusresultsfor the year-earlier quarter.

WIRELINE VOICE SERVICESAT&T’s third-quarter wireline voice revenues, which include retail local voice and long distance as well as wholesale voice, totaled $9.5billion,representingadeclineof 8.1 percent versus results for the third quarterof2007.Theseresultscontinuetrends in recent quarters, reflecting the industrywide migration of voice usage from wired to wireless platforms, customer transitions to broadband and VoIP services and increased local voice competition.

NATIONAL MASS MARKETSRevenues from AT&T’s national mass markets category, which includes the remainder of the former AT&T’s standalone long distance and local bundled business, totaled $636millioninthethirdquarter, representingadeclineof28.7percentyearover year. Results are as expected and consistent with trends over the past several quarters. National mass markets represented3.6percentoftotalwirelinerevenues in the third quarter and accountedfor65.5percentofAT&T’syear-over-year decline in total wireline revenues.

PRODUCT CATEGORIES

WIRELINE DATA SERVICESAT&T’s data revenues, which include results from several customer categories, grew 5.3 percent versus results for the year-earlier thirdquarterto$6.4billion.

Datagrowthwasledbya16.2percentincrease in revenues from IP-based services, with continued gains in high speed Internet, managed Internet, VPN and hosting services.


Advertising & Publishing

AT&T is a leader in local

search, with more than

1,250 print directories and

YELLOWPAGES.COM,

its fast-growing online

search service.

AT&T’s Advertising & Publishing segment offers businesses a full suite of local searchoptions,includingprintandInternetYellowPagesinadditiontoWebsitedesign, search engine marketing and mobile search.

AT&T’sAdvertising&Publishingoperationsdeliver173milliondirectoriestoresidencesandbusinessesin22statesandhaveapremieronlinepresencenationwidewithYELLOWPAGES.COM,whichoffersconsumersaccesstolocalbusiness information, the latest business listings, city guides, maps and driving directions. Combined, these print and online products receive approximately 5 billion consumer searches a year for local business information and provide more than 1 million advertisers with valuable sales leads to help their businesses grow.

Advertising & Publishing revenue trends reflect migration from print to electronicsearch,includingrapidgrowthatAT&T’sYELLOWPAGES.COM. Advertising&Publishing’sInternetrevenuesincreased29.7percentversustheyear-earlier quarter, and total Advertising & Publishing revenues declined 7.3percent,inpartreflectingrevenueslostthroughthesaleofasalesagencybusiness that serves independent telephone companies. That transaction closed inthesecondquarterof2008.Excludingrevenuesfromthissoldunit,Advertising&Publishingrevenueswouldhavedeclined5.0percentyearoveryear.

Compared with reported results in the year-earlier quarter, reported operating expensestotaled$929millionversus$993million;operatingincometotaled$421million,comparedwith$464million;andthesegment’soperatingincomemarginwas31.2percentversus31.8percent.

Adjusted results for Advertising & Publishing exclude merger-related noncash amortizationcostsinbothquarters.Comparedwithresultsintheyear-earlierquarter,third-quarter2008adjustedoperatingexpensestotaled$744millionversus$763million;adjustedoperatingincometotaled$606million,comparedwith$694million;andthesegment’sadjustedoperatingincomemarginwas44.9percentversus47.6percent.


OtherAT&T’sOthersegmentincludesresultsfromAT&T’sSterlingCommerce operations and AT&T’s customer information services operations, both of which are included in segment revenues and operating expenses. Customer information services include operator services and directory assistance. Sterling Commerce is one of the world’s largest providers of multi-enterprise collaboration solutions, serving the retail, consumer packaged goods, manufacturing, financial services, health care and telecommunications industries.

TheOthersegmentalsoincludesAT&T’sproportionateshareofresults from Telmex, América Móvil and Telmex Internacional, which are shown in the Equity in Net Income of Affiliates line for this segment. AT&T’s equity interest in each company is more than 8 percent.

América Móvil is one of the leading providers of telecommunications servicesinLatinAmerica,withmorethan165millionwirelesssubscribers attheendofthesecondquarterof2008incountriesthroughouttheregion,including52.9millioninMexico.

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 Internacional has telecommunications operations in Argentina,Brazil,Chile,Colombia,Ecuador,Mexico,PeruandUruguay.

Onareportedbasis,Othersegmentincometotaled$338millioninthe thirdquarterversus$203millionintheyear-earlierquarter.Segmentrevenuestotaled$501million,comparedwith$562millionforthethirdquarterof2007.EquityinNetIncomeofAffiliatestotaled$257million,upfrom$159million in the year-earlier quarter.

AT&T’s Other segment

includes results from its

Sterling Commerce unit,

customer information

services and equity

investments in Telmex,

América Móvil and

Telmex Internacional.


AT&T Inc.Consolidated Statements of Income (Unaudited)(DollarsinMillionsExceptperShareAmounts)

Three Months Ended Nine Months Ended

9/30/08 9/30/07 %Change 9/30/08 9/30/07 %Change

Operating Revenues Wirelessservice $11,227 $ 9,834 14.2% $32,726 $28,417 15.2%

Voice 9,313 10,164 -8.4% 28,525 30,997 -8.0%

Data 6,144 5,880 4.5% 18,170 17,281 5.1%

Directory 1,333 1,240 7.5% 4,114 3,417 20.4%

Other 3,325 3,014 10.3% 9,417 8,467 11.2%

Total Operating Revenues 31,342 30,132 4.0% 92,952 88,579 4.9%

Operating Expenses Cost of services and sales (exclusive of depreciation

andamortizationshownseparatelybelow) 13,070 11,736 11.4% 36,972 34,816 6.2%

Selling, general and administrative 7,676 7,770 -1.2% 22,976 22,497 2.1%

Depreciationandamortization 4,978 5,322 -6.5% 14,839 16,354 -9.3%

Total Operating Expenses 25,724 24,828 3.6% 74,787 73,667 1.5%

Operating Income 5,618 5,304 5.9% 18,165 14,912 21.8%

Interest Expense 858 887 -3.3% 2,577 2,639 -2.3%

Equity in Net Income of Affiliates 257 162 58.6% 712 545 30.6%

Other Income (Expense) – Net (81) (17) — (91) 614 —

Income Before Income Taxes 4,936 4,562 8.2% 16,209 13,432 20.7%

Income Taxes 1,706 1,499 13.8% 5,746 4,617 24.5%

Net Income $ 3,230 $ 3,063 5.5% $10,463 $ 8,815 18.7%

Basic Earnings Per Share $ 0.55 $ 0.50 10.0% $ 1.76 $ 1.43 23.1%

WeightedAverageCommon

SharesOutstanding(000,000) 5,893 6,088 -3.2% 5,938 6,152 -3.5%

Diluted Earnings Per Share $ 0.55 $ 0.50 10.0% $ 1.75 $ 1.42 23.2%

WeightedAverageCommonShares

OutstandingwithDilution(000,000) 5,921 6,129 -3.4% 5,971 6,196 -3.6%


AT&T Inc.Statements of Segment Income (Unaudited)(DollarsinMillions)


9/30/08 9/30/07 %Change 9/30/08 9/30/07 %Change

WirelessSegment Operating Revenues

Service $11,273 $ 9,860 14.3% $32,869 $28,492 15.4%

Equipment 1,345 1,077 24.9% 3,607 2,837 27.1%

Total Segment Operating Revenues 12,618 10,937 15.4% 36,476 31,329 16.4%Segment Operating Expenses

Cost of services and equipment sales 4,989 4,079 22.3% 13,261 11,690 13.4%

Selling, general and administrative 3,849 3,183 20.9% 10,489 9,136 14.8%


Total Segment Operating Expenses 10,239 8,971 14.1% 28,077 26,236 7.0%

Segment Operating Income 2,379 1,966 21.0% 8,399 5,093 64.9%

Equity in Net Income of Affiliates — 3 -100.0% 5 12 -58.3%

Minority Interest (57) (43) -32.6% (186) (143) -30.1%

Segment Income $ 2,322 $ 1,926 20.6% $ 8,218 $ 4,962 65.6%

WirelineSegment Operating Revenues

Voice $ 9,515 $10,356 -8.1% $29,191 $31,619 -7.7%

Data 6,401 6,076 5.3% 18,893 17,918 5.4%

Other 1,634 1,509 8.3% 4,698 4,389 7.0%

Total Segment Operating Revenues 17,550 17,941 -2.2% 52,782 53,926 -2.1%Segment Operating Expenses

Cost of sales 8,128 7,778 4.5% 23,908 23,396 2.2%

Selling, general and administrative 3,354 3,868 -13.3% 10,305 11,354 -9.2%


Total Segment Operating Expenses 14,813 14,980 -1.1% 43,983 44,826 -1.9%

Segment Income $ 2,737 $ 2,961 -7.6% $ 8,799 $ 9,100 -3.3%

Advertising & PublishingSegment Operating Revenues $ 1,350 $ 1,457 -7.3% $ 4,174 $ 4,378 -4.7%Segment Operating Expenses

Cost of sales 461 417 10.6% 1,321 1,214 8.8%

Selling, general and administrative 274 338 -18.9% 972 1,067 -8.9%

Depreciationandamortization 194 238 -18.5% 609 743 -18.0%

Total Segment Operating Expenses 929 993 -6.4% 2,902 3,024 -4.0%

Segment Income $ 421 $ 464 -9.3% $ 1,272 $ 1,354 -6.1%

OtherSegment Operating Revenues $ 501 $ 562 -10.9% $ 1,557 $ 1,658 -6.1%

Segment Operating Expenses 420 518 -18.9% 1,862 1,673 11.3%

Segment Operating Income (Loss) 81 44 84.1% (305) (15) —

Equity in Net Income of Affiliates 257 159 61.6% 707 533 32.6%

Segment Income $ 338 $ 203 66.5% $ 402 $ 518 -22.4%


AT&T Inc.Consolidated Balance Sheets(DollarsinMillionsExceptperShareAmounts)

9/30/08 12/31/07

Assets (Unaudited)

Current Assets

Cash and cash equivalents $ 1,594 $ 1,970

Accountsreceivable–netofallowancesforuncollectiblesof$1,328and$1,364 16,395 16,185

Prepaid expenses 1,657 1,524

Deferredincometaxes 1,560 2,044

Othercurrentassets 2,239 2,963

Total current assets 23,445 24,686

Property, Plant and Equipment – Net 97,771 95,890

Goodwill 71,537 70,713

Licenses 46,931 37,985

Customer Lists and Relationships – Net 11,495 14,505

Other Intangible Assets – Net 5,816 5,912

Investments in Equity Affiliates 2,839 2,270

Postemployment Benefit 18,164 17,291

Other Assets 6,530 6,392

Total Assets $284,528 $275,644

Liabilities and Stockholders’ EquityCurrent Liabilities

Debtmaturingwithinoneyear $ 17,419 $ 6,860

Accounts payable and accrued liabilities 18,690 21,399

Advanced billing and customer deposits 3,896 3,571

Accrued taxes 2,976 5,027

Dividendspayable 2,357 2,417

Total current liabilities 45,338 39,274

Long-Term Debt 59,355 57,255

Deferred Credits and Other Noncurrent Liabilities

Deferredincometaxes 27,776 24,939

Postemployment benefit obligation 25,493 24,011

Othernoncurrentliabilities 14,048 14,798

Total deferred credits and other noncurrent liabilities 67,317 63,748

Stockholders’ Equity

Common shares issued ($1 par value) 6,495 6,495

Capital in excess of par value 91,684 91,638

Retained earnings 36,613 33,297

Treasury shares (at cost) (21,412) (15,683)

Accumulated other comprehensive income/(loss) (862) (380)

Total stockholders’ equity 112,518 115,367

Total Liabilities and Stockholders’ Equity $284,528 $275,644


AT&T Inc.Consolidated Statements of Cash Flows (Unaudited)(DollarsinMillionsIncrease[Decrease]inCashandCashEquivalents)

Nine Months Ended

9/30/08 9/30/07

Operating ActivitiesNet income $ 10,463 $ 8,815

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciationandamortization 14,839 16,354

Undistributed earnings from investments in equity affiliates (572) (434)

Provision for uncollectible accounts 1,297 1,142

Deferredincometaxexpense 4,063 486

Net gain on sales of investments (2) (29)

Gain on license exchange — (409)

Changes in operating assets and liabilities:

Accounts receivable (1,597) (1,253)

Othercurrentassets 616 (661)

Accounts payable and accrued liabilities (5,958) (46)

Stock-based compensation tax benefit (15) (149)

Other–net (361) 529

Total adjustments 12,310 15,530

Net Cash Provided by Operating Activities 22,773 24,345

Investing ActivitiesConstruction and capital expenditures

Capital expenditures (14,388) (12,124)

Interest during construction (455) (125)

Acquisitions, net of cash acquired (10,086) (233)

Dispositions 1,444 993

Proceeds from sale of securities, net of investments (103) 584

Sale of other investments 436 —

Other 33 28

Net Cash Used in Investing Activities (23,119) (10,877)

Financing ActivitiesNet change in short-term borrowings with original maturities of three months or less 5,188 (4,279)

Issuance of long-term debt 10,924 7,898

Repayment of long-term debt (3,143) (3,008)

Purchase of treasury shares (6,077) (8,912)

Issuance of treasury shares 317 1,736

Dividendspaid (7,150) (6,584)

Stock-based compensation tax benefit 15 149

Other (104) (172)

Net Cash Used in Financing Activities (30) (13,172)

Net increase (decrease) in cash and cash equivalents (376) 296

Cash and cash equivalents beginning of year 1,970 2,418

Cash and Cash Equivalents End of Period $ 1,594 $ 2,714


AT&T Inc.Supplementary Operating and Financial Data (Unaudited)(DollarsinMillionsExceptperShareAmounts)


9/30/08 9/30/07 %Change 9/30/08 9/30/07 %Change

Wireless WirelessCustomers(000) 74,871 65,666 14.0%

NetCustomerAdditions(000) 1,976 1,993 -0.9% 4,604 4,640 -0.8%

M&AActivity,PartitionedCustomersandOtherAdjs.(000) 13 — — 215 64 —

PostpaidCustomers(000) 58,735 52,689 11.5%

NetPostpaidCustomerAdditions(000) 1,693 1,212 39.7% 3,292 2,804 17.4%

Postpaid Churn 1.2% 1.3% -10BP 1.2% 1.3% -10BP

LicensedPOPs(000,000) 304 299 1.7%

In-Region Wireline1

TotalConsumerRevenueConnections(000)6

Retail Consumer Voice Connections2 28,329 31,658 -10.5%

Retail Consumer Additional Voice Connections2 3,526 4,112 -14.3%

Consumer Broadband Connections3 12,730 11,716 8.7%

Video Connections:4

Satellite Connections 2,182 1,986 9.9%

U-verse Video Connections 781 126 —

TotalConsumerRevenueConnections(000) 47,548 49,598 -4.1%

NetConsumerRevenueConnectionChanges(000) (869) 85 — (1,890) 737 —

TotalBroadbandConnections(000)3,6 14,841 13,760 7.9%

NetBroadbandConnectionChanges(000)3,6 148 499 -70.3% 685 1,590 -56.9%

TotalVideoConnections(000)4 2,963 2,112 40.3%

NetVideoConnectionChanges(000)4 179 215 -16.7% 616 602 2.3%

AT&T Inc. Construction and capital expenditures

Capital expenditures $ 5,068 $ 4,664 8.7% $ 14,388 $ 12,124 18.7%

Interest during construction $ 198 $47 — $455 $125 —

DividendsDeclaredPerShare $0.4000 $0.3550 12.7% $ 1.2000 $ 1.0650 12.7%

EndofPeriodCommonSharesOutstanding(000,000) 5,893 6,072 -2.9%

DebtRatio5 40.6% 35.3% 530BP

Total Employees 303,530 303,670 —1In-region wireline represents access lines served by AT&T’s incumbent local exchange companies.2Includes consumer U-verse voice over IP connections.3BroadbandconnectionsincludeDSLlines,U-versehighspeedInternetaccessandsatellitebroadband.4VideoconnectionsincludesalesunderagencyagreementswithEchoStarandDirecTVcustomersandU-verseconnections.5Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders’ equity.6Prior year amounts restated to conform to current period reporting methodology.

Note:Fortheendof3Q08,totalswitchedaccesslineswere57,191,businessswitchedaccesslinestotaled22,159,andwholesaleandcoinswitchedaccesslinestotaled3,281.


Fourth-Quarter 2008 Earnings Date: Jan. 28, 2009

AT&T will release fourth-quarter 2008 earnings on Jan. 28, 2009, before the market opens.

The company’s InvestorBriefing and related earnings materials will be available on theAT&TWebsiteatwww.att.com/investor.relations by 8 a.m. Eastern time.

AT&T will also host a conference call to discuss the results at 10a.m.Easterntimethesameday.Dial-inandreplayinformationwillbeannouncedonFirstCallapproximatelyeight weeks before the call, which will also be broadcast live and will be available for replay over the Internet at www.att.com/investor.relations.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this InvestorBriefing 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 InvestorBriefing based on new information or otherwise.

This InvestorBriefing may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are availableonthecompany’sWebsiteatwww.att.com/investor.relations.

AT&T InvestorBriefing The AT&T InvestorBriefing is published by the Investor Relations staff of AT&T Inc. Requests for further information may be directed to one of the Investor Relations managers byphoneat210-351-3327.

Correspondence should be sent to: Investor Relations AT&T Inc. 208S.AkardStreet Dallas,TX75202

E-mail address: [email protected]

Senior Vice President- Investor Relations Brooks McCorcle

Investor Relations StaffTameka CallowayRay CarpenterKent EvansJeff FancherLisa ForkinJerry Healy

Shelly MathewsLizMortonJerrell RossDerekRoyBlake StewardChrisWomack

at&t third-quarter earnings package

Economy & Finance