AT&T Delivers Strong Fourth Quarter, Reaffirms 2008 and Multi-Year Outlook

Results Highlighted by Record Wireless Gains, Significant Step Up in Enterprise Services Growth

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

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

Fourth-Quarter Operational Highlights – Wireline

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

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

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

AT&T expects to deliver significant progress in AT&T U-verse deployment with total AT&T U-verse video subscribers expected to exceed 1 million by the end of 2008. For the full year 2008, AT&T’s outlook anticipates additional dilution from its U-verse deployment of approximately $0.12 to $0.14 per share.