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

Continued ramp in AT&T U-verse^SM TV subscriber totals, with a first-quarter net gain of 148,000 to reach 379,000 in service; on track to reach target of more than 1 million subscribers by year-end 2008

SAN ANTONIO, Texas — AT&T Inc. (NYSE:T) today reported strong first-quarter results, highlighted by a significant ramp in consolidated revenue growth, led by improved results in wireless and enterprise, and further expansion of wireless and consolidated margins.

Wireline

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

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

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