Cingular Wireless Reports Strong First-Quarter 2006 Results

ATLANTA, April 19 /PRNewswire/ -- Cingular Wireless LLC, which is a joint venture between AT&T Inc. and BellSouth Corporation , today reported strong first-quarter results driven by its best-ever postpaid and overall churn, solid net and gross customer additions, continued progress on merger initiatives, growth of data ARPU, and sales to enterprise customers.

For the quarter, the nation's largest wireless provider reported overall monthly subscriber churn of 1.9 percent, its lowest ever. This represents an improvement of 30 basis points over the year-ago first quarter and a sequential improvement of 20 basis points. Postpaid churn improved by 30 basis points both year-over-year and sequentially to 1.6 percent, another record low.

Driven by lower churn and solid gross adds, Cingular also reported 1.7 million net customer additions. This compares to 1.4 million net additions in the year-ago first quarter and to 1.8 million in the fourth quarter of 2005.

Retail customers accounted for more than 1 million of the net adds for the quarter, including a sequential improvement of more than 41 percent in postpaid customers. Cingular's popular GoPhone(R) prepaid offers continued to attract more customers to our retail stores. Net adds also reflect Cingular's national distribution agreement with RadioShack.

Gross additions were 4.7 million, which was flat versus the year-ago first quarter and compares to 5.1 million in the fourth quarter of 2005.

Cingular ended the first quarter of 2006 with 55.8 million cellular/PCS subscribers, an increase of 5.5 million over the year-ago first quarter.

Cingular's data ARPU was $5.22, up more than 41 percent over the year-ago first quarter and nearly 11 percent sequentially. The company's Business Markets Group signed more than 800 new and renewed high-end service contracts in the quarter.

Normalized OIBDA margins* for the first quarter of 2006 were 31.9 percent, an improvement of 640 basis points compared to normalized year-ago first quarter results and is a sequential improvement of 90 basis points.

"Cingular got out of the gate fast in the first quarter of 2006," said Stan Sigman, the company's president and chief executive officer. "We continue to move in the right direction on our major metrics - churn, customer additions, margins, revenue growth, and more.

"In particular, our continuing improvement in churn is directly related to the investments and enhancements we are making in our network, day in and day out, in cities and towns all around the country. No other wireless company invests more in its network than Cingular does. Customers experience these improvements for themselves, and as a result, not only buy from Cingular but stay with Cingular.

"Our first-quarter results are a tribute once again to the creativity, dedication, and hard work of the men and women of Cingular, who continue to build the most highly regarded wireless company in the world."

Cingular's continued strong showing in net and gross customer additions can be attributed to a number of factors, including continuously improving service quality as the company rationalizes and integrates its networks in markets around the country, "fewest dropped calls" and "raising the bar"(TM) marketing campaigns that reinforce service improvements, and a steady stream of innovative products, services, and sponsorships.

In addition, the company continued to transition its customer base to GSM and move former AT&T Wireless customers to Cingular plans.

During the first quarter of 2006, 97 percent of minutes were carried on Cingular's GSM network and 89 percent of the company's subscriber base was GSM-equipped.

Cingular operates the nation's largest digital voice and data network. GSM is the world's most widely used wireless technology. Through roaming alliances with other GSM-based providers around the world, Cingular provides the largest global presence of any U.S. wireless carrier, with voice coverage in more than 180 countries.

Financial Results - In the first quarter of 2006, Cingular's revenues were $9.0 billion, an improvement of 9.1 percent over revenue for the year-ago first quarter and 1.5 percent versus the fourth quarter of 2005. - Average revenue per user (ARPU) in the first quarter of 2006 was $48.48, which was down 2.3 percent from the year-ago first quarter (when ARPU declined 3.3 percent year over year) and down 0.8 percent versus the fourth quarter of 2005. Impacts on ARPU primarily reflect an increase in the number of wholesale customers in Cingular's base. These impacts were largely offset by a continued increase in data ARPU. - ARPU from data services continued its strong growth in the first quarter of 2006, increasing by more than 41 percent to $5.22 compared to the year-ago first quarter and nearly 11 percent compared to the fourth quarter of 2005. This growth was spurred by the increasing popularity of downloadable games, ringtones, mobile instant messaging, mobile email, photo messaging, and media bundles. In addition, text messaging continued to grow. In the first quarter of 2006, Cingular had more than 25 million active data customers, and delivered 91 million multi-media messages and 6.8 billion text messages. - Cingular's 2006 reported first-quarter operating expenses were $8.2 billion, which included merger-related integration costs of $234 million. In addition, operating expenses included $359 million in non-cash amortization of intangibles as part of the merger with AT&T Wireless. - Reported OIBDA margin was 31.1 percent, the highest since the merger and the fifth straight quarter of sequential OIBDA improvement. At 31.9 percent, normalized OIBDA margin was also the highest since the merger. This is an improvement of 640 basis points compared to the year-ago fourth quarter and a sequential improvement of 90 basis points. - Reported operating income for the first quarter of 2006 was $807 million, which compares to $114 million in the year-ago first quarter and to $549 million in the fourth quarter of 2005. Normalized operating income was $1.4 billion, which compares to $710 million in the year-ago first quarter and to $1.3 billion in the fourth quarter of 2005. - Reported net income was $354 million, which compares to a net loss of $240 million in the year-ago first quarter and to $204 million of net income in the fourth quarter of 2005. Normalized net income was $849 million, which compares to $258 million in the year-ago first quarter and to $811 million of normalized net income in the fourth quarter of 2005. - Capital expenditures for first quarter were $1.4 billion. These were driven by, among other developments, continued progress in merger integration, the rollout of UMTS/HSDPA 3G technology, and improvements in network coverage and quality in markets around the country. First-quarter highlights and initiatives - In the first quarter of 2006, the company announced the availability of Cingular Video, an on-demand streaming video service with a large selection of popular mobile content. Cingular Video lets consumers watch video clips of their favorite TV shows, sports, news, weather, entertainment, and premium content on their 3G-capable Cingular phones. - Underscoring the power of its technology, Cingular became the first wireless carrier in the world to complete a mobile data call using a 3.6Mbps (megabits per second) HSDPA device on its commercial 3G network. - The company introduced the ultra-slim Motorola SLVR L7, which offers such features as iTunes (including up to seven hours of music or 100 songs), a VGA camera, video capture and playback, 512 megabytes of optional expandable memory, and more. - Cingular unveiled "Live Idol Ringtones" through which many of the actual live performances of finalists on the spectacularly popular American Idol will be available on the following day exclusively to Cingular customers. The company expects to top the 41.5 million text messages it handled during the show last year. - Cingular's Business Markets Group continued to introduce innovative new products and services. For example, it announced Cingular OfficeReach(TM), an integrated communications management solution that allows businesses to administer their wireline and wireless services as one system to help control costs and increase productivity. Also debuting in the first quarter were the Cingular 2125 Smartphone and Cingular 8100 series Pocket PCs with integrated WiFi, the Option GlobeTrotter GT MAX LaptopConnect card -- the first commercially available global 3G device of its kind -- and Dell Latitude (TM) notebooks that come with built-in access to Cingular's 3G-based BroadbandConnect service. - The Business Markets Group also announced with Lenovo that ThinkPad notebook computers configured with the Cingular UMTS/HSDPA-based 3G technology will be introduced later this year. It also plans to debut in the second quarter new Cingular GlobalConnect plans, which feature unlimited domestic data usage with PC modem cards on the company's BroadbandConnect and EDGE networks in the United States and 100MB of wireless data usage for international travel. - The Business Markets Group also signed more than 800 new and renewed high-end service contracts during the first quarter of 2006. These included business and government accounts such as CH2M Hill Companies Inc., City of San Antonio, Seton Hall University, State of New Jersey, Telzuit Medical Technologies, Inc., Tulane University, Villanova University, Westchester University, and Washington Group International. Conference Call with Investment Community

Cingular will hold a conference call with the investment community beginning at 10 a.m. ET today. During the call, we will discuss our operational and financial results and prospects.

The conference call will be webcast and archived on our website at http://www.cingular.com/investor for 30 days, as well as on the websites of AT&T Inc. and BellSouth Corporation. Our first-quarter news release and downloadable financial statements are also available on that website.

Dial-in information for the conference call is as follows: Domestic: 866-406-3487 International: 630-691-2771 Replay: 877-213-9653 (Domestic) Replay: 630-652-3041 (International) Passcode: 14019047# Replays will be available for five days.

* OIBDA margin is operating income (loss) before depreciation and amortization, divided by total service revenues. OIBDA margins and comparative calculations mentioned in the news release reflect normalization for merger-related integration costs.

About Cingular Wireless

Cingular Wireless is the largest wireless carrier in the United States, serving 55.8 million customers. Cingular, a joint venture between AT&T Inc. and BellSouth Corporation , has the largest digital voice and data network in the nation -- the ALLOVER(TM) network -- and the largest mobile-to-mobile community of any national wireless carrier. Cingular is a leader in third generation wireless technology. Its 3G network is the first widely available service in the world to use HSDPA (High Speed Downlink Packet Access) technology. Cingular is the only U.S. wireless carrier to offer Rollover(R), the wireless plan that lets customers keep their unused monthly minutes. Details of the company are available at http://www.cingular.com/. Get Cingular Wireless press releases emailed to you automatically. Sign up at http://cingular.mediaroom.com/.

FORWARD-LOOKING INFORMATION

In addition to historical information, this document and the conference call referred to above may contain forward-looking statements regarding events and financial trends. Factors that could affect future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements include:

-- the pervasive and intensifying competition in all markets where Cingular operates; -- failure to quickly realize capital and expense synergies from the acquisition of AT&T Wireless as a result of technical, logistical, regulatory and other factors; -- delays or inability of vendors to deliver hardware, software, handsets or network equipment, including failure to deliver such equipment free of claims, including patent claims, of other parties; -- problems associated with the transition of Cingular's network to higher-speed technologies; -- slow growth of Cingular's data services due to lack of popular applications, terminal equipment, advanced technology and other factors; -- sluggish economic and employment conditions in the markets Cingular serves; -- the final outcome of FCC proceedings, including rulemakings, and judicial review, if any, of such proceedings; -- enactment of additional state and federal laws, regulations and requirements pertaining to Cingular's operations; and -- the outcome of pending or threatened complaints and litigation.

Such forward-looking information is given as of this date only, and Cingular assumes no duty to update this information.

Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Quarter Ended 3/31/2006 3/31/2005 % Change Operating revenues: Service revenues $8,005 $7,419 7.9% Equipment sales 975 810 20.4% Total operating revenues 8,980 8,229 9.1% Operating expenses: Cost of services 2,320 2,144 8.2% Cost of equipment sales 1,327 1,295 2.5% Selling, general and administrative 2,846 3,001 (5.2%) Depreciation and amortization 1,680 1,675 0.3% Total operating expenses 8,173 8,115 0.7% Operating income 807 114 607.9% Interest expense 297 338 (12.1%) Minority interest expense 41 16 156.3% Equity in net income of affiliates - 2 (100.0%) Other income (expense), net 9 20 (55.0%) Income (loss) before income tax provision 478 (218) 319.3% Provision for income taxes 124 22 463.6% Net income (loss) $354 ($240) 247.5% Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended 3/31/2006 3/31/2005 % Change (Amounts in millions, except customer data in 000s) OIBDA(1) $2,487 $1,789 39.0% OIBDA margin(2) 31.1% 24.1% 700 BP Total Cellular/PCS Customers(3) 55,810 50,350 10.8% Net Customer Additions - Cellular/PCS 1,679 1,367 22.8% M&A Activity, Partitioned Customers and/or Other Adjs. (13) (149) Churn - Cellular/PCS(4) 1.9% 2.2% -30 BP ARPU - Cellular/PCS(5) $48.48 $49.60 (2.3%) Minutes Of Use Per Cellular/PCS Subscriber(6) 698 628 11.1% Licensed POPs - Cellular/PCS(7) 296 293 1.0% Penetration - Cellular/PCS(8) 19.8% 17.7% 11.9% Capital Expenditures $1,441 $971 48.4% Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended 3/31/2006 3/31/2005 % Change Net income (loss) $354 ($240) 247.5% Plus: Interest expense 297 338 (12.1%) Plus: Minority interest expense 41 16 156.3% Plus: Equity in net income of affiliates - (2) (100.0%) Plus: Other, net (9) (20) (55.0%) Plus: Provision for income taxes 124 22 463.6% Operating income 807 114 607.9% Plus: Depreciation and amortization 1,680 1,675 0.3% OIBDA(1) $2,487 $1,789 39.0% NM - Not Meaningful Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Effective with the 1Q05 reporting period, the Total Minutes of Use Per Cellular/PCS Subscriber (MOUs) definition has been revised to exclude SMS activity, but retains the prior revision to include Local Minutes of Use and Outcollect Minutes of Use in the numerator. Prior to 1Q05, the numerator includes Local Minutes of Use. (7) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service, including areas where we have not yet commenced service. (8) Penetration calculation for 1Q06 is based on licensed "operational" POP's of 282 million. Cingular Wireless LLC Reconciliation of Reported Results to Normalized Results (amounts in millions) Quarter Ended March 31, 2006 Normalized Items AWE Integra- Amorti- tion zation Normal- GAAP Costs(1) Expense(2) ized Operating revenues: Service revenues $8,005 $- $- $8,005 Equipment sales 975 - - 975 Total operating revenues 8,980 - - 8,980 Operating expenses: Cost of services 2,320 (18) - 2,302 Cost of equipment sales 1,327 - - 1,327 Selling, general and administrative 2,846 (46) - 2,800 Depreciation and amortization* 1,680 (170) (359) 1,151 Total operating expenses 8,173 (234) (359) 7,580 Operating income 807 234 359 1,400 Interest expense 297 - - 297 Minority interest expense 41 - - 41 Equity in net income of affiliates - - - - Other income (expense), net 9 - - 9 Income before income tax provision 478 234 359 1,071 Provision for income taxes 124 39 59 222 Net income $354 $195 $300 $849 Notes to Normalized Financial Data Our normalized earnings have been adjusted for the following: (1) Integration costs resulting from the Cingular acquisition of AT&T Wireless and the related tax effect. (2) Amortization expense associated with intangible assets recorded for the AT&T Wireless acquisition and the related tax effect. Cingular Wireless LLC Income Statement, NORMALIZED - amounts in millions (unaudited) Quarter Ended 3/31/2006 3/31/2005 % Change Operating revenues: Service revenues $8,005 $7,419 7.9% Equipment sales 975 810 20.4% Total operating revenues 8,980 8,229 9.1% Operating expenses: Cost of services 2,302 2,141 7.5% Cost of equipment sales 1,327 1,295 2.5% Selling, general and administrative 2,800 2,899 (3.4%) Depreciation and amortization 1,151 1,184 (2.8%) Total operating expenses 7,580 7,519 0.8% Operating income 1,400 710 97.2% Interest expense 297 338 (12.1%) Minority interest expense 41 16 156.3% Equity in net income of affiliates - 2 (100.0%) Other income (expense), net 9 20 (55.0%) Income before income tax provision 1,071 378 183.3% Provision for income taxes 222 120 85.0% Net income $849 $258 229.1% Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended 3/31/2006 3/31/2005 % Change (Amounts in millions, except customer data in 000s) OIBDA - normalized(1) $2,551 $1,894 34.7% OIBDA margin - normalized(2) 31.9% 25.5% 640 BP Total Cellular/PCS Customers(3)** 55,810 50,350 10.8% Net Customer Additions - Cellular/PCS** 1,679 1,367 22.8% M&A Activity, Partitioned Customers and/or Other Adjs.** (13) (149) Churn - Cellular/PCS(4)** 1.9% 2.2% -30 BP ARPU - Cellular/PCS(5)** $48.48 $49.60 (2.3%) Minutes Of Use Per Cellular/PCS Subscriber(6)** 698 628 11.1% Licensed POPs - Cellular/PCS(7)** 296 293 1.0% Penetration - Cellular/PCS(8)** 19.8% 17.7% 11.9% Capital Expenditures** $1,441 $971 48.4% Reconciliations of Normalized Financial Measures to Normalized OIBDA and OIBDA Margin - amounts in millions (unaudited) Quarter Ended 3/31/2006 3/31/2005 % Change Net income $849 $258 229.1% Plus: Interest expense 297 338 (12.1%) Plus: Minority interest expense 41 16 156.3% Plus: Equity in net loss of affiliates - (2) 100.0% Plus: Other, net (9) (20) 55.0% Plus: Provision for income taxes - normalized 222 120 85.0% Operating income - normalized 1,400 710 97.2% Plus: Depreciation and amortization - normalized 1,151 1,184 (2.8%) OIBDA - normalized(1) $2,551 $1,894 34.7% OIBDA margin(2) 31.1% 24.1% 700 BP Plus: OIBDA margin and integration 0.8% 1.4% -60 BP OIBDA margin - normalized 31.9% 25.5% 640 BP NM - Not Meaningful ** Denotes metrics and calculations in this chart that are not impacted by the 1Q06 and YTD 2006 normalization of merger integration costs and AT&T Wireless intangibles amortization expenses. Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Effective with the 1Q05 reporting period, the Total Minutes of Use Per Cellular/PCS Subscriber (MOUs) definition has been revised to exclude SMS activity, but retains the prior revision to include Local Minutes of Use and Outcollect Minutes of Use in the numerator. Prior to 1Q05, the numerator includes Local Minutes of Use. (7) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service, including areas where we have not yet commenced service. (8) Penetration calculation for 1Q06 is based on licensed "operational" POP's of 282 million. Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Full Year 2002 3/31/03 6/30/03 9/30/03 12/31/03 Operating revenues: Service revenues $13,922 $3,414 $3,643 $3,701 $3,559 Equipment sales 981 244 255 383 378 Total operating revenues 14,903 3,658 3,898 4,084 3,937 Operating expenses: Cost of services 3,594 849 921 1,035 970 Cost of equipment sales 1,535 396 451 606 578 Selling, general and administrative 5,429 1,218 1,271 1,442 1,497 Depreciation and amortization 1,849 488 508 521 572 Total operating expenses 12,407 2,951 3,151 3,604 3,617 Operating income (loss) 2,496 707 747 480 320 Interest expense 911 225 230 197 204 Minority interest expense 123 24 35 25 17 Equity in net income (loss) of affiliates (274) (74) (78) (90) (91) Other income (expense), net 29 26 7 4 4 Income (loss) before income tax provision 1,217 410 411 172 12 Provision (benefit) for income taxes 12 2 12 6 8 Net income (loss) $1,205 $408 $399 $166 $4 Cingular Wireless LLC Income Statement - amounts in millions (unaudited) 3/31/04 6/30/04 9/30/04 12/31/04 Operating revenues: Service revenues $3,583 $3,833 $3,873 $6,313 Equipment sales 384 354 419 806 Total operating revenues 3,967 4,187 4,292 7,119 Operating expenses: Cost of services 955 983 1,107 1,692 Cost of equipment sales 537 505 585 1,247 Selling, general and administrative 1,372 1,463 1,567 2,947 Depreciation and amortization 553 565 573 1,386 Total operating expenses 3,417 3,516 3,832 7,272 Operating income (loss) 550 671 460 (153) Interest expense 198 199 200 303 Minority interest expense 27 41 20 (2) Equity in net income (loss) of affiliates (108) (95) (98) (114) Other income (expense), net 4 1 - 11 Income (loss) before income tax provision 221 337 142 (557) Provision (benefit) for income taxes 6 (2) - (62) Net income (loss) $215 $339 $142 $(495) Cingular Wireless LLC Income Statement - amounts in millions (unaudited) 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 Operating revenues: Service revenues $7,419 $7,719 $7,721 $7,779 $8,005 Equipment sales 810 890 1,025 1,070 975 Total operating revenues 8,229 8,609 8,746 8,849 8,980 Operating expenses: Cost of services 2,144 2,293 2,464 2,417 2,320 Cost of equipment sales 1,295 1,230 1,203 1,341 1,327 Selling, general and administrative 3,001 2,953 2,881 2,812 2,846 Depreciation and amortization 1,675 1,629 1,541 1,730 1,680 Total operating expenses 8,115 8,105 8,089 8,300 8,173 Operating income (loss) 114 504 657 549 807 Interest expense 338 326 304 292 297 Minority interest expense 16 41 38 7 41 Equity in net income (loss) of affiliates 2 1 1 1 - Other income (expense), net 20 33 10 1 9 Income (loss) before income tax provision (218) 171 326 252 478 Provision (benefit) for income taxes 22 24 104 48 124 Net income (loss) $(240) $147 $222 $204 $354 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Full Year 2002 3/31/03 6/30/03 9/30/03 12/31/03 OIBDA(1) $4,345 $1,195 $1,255 $1,001 $892 OIBDA margin(2) 31.2% 35.0% 34.4% 27.0% 25.1% Integration, AT&T Wireless Intangibles Amortization and Hurricane Costs $- $- $- $- $- OIBDA - normalized $4,345 $1,195 $1,255 $1,001 $892 OIBDA margin - normalized 31.2% 35.0% 34.4% 27.0% 25.1% Total Cellular/PCS Customers(3) 21,925 22,114 22,640 23,385 24,027 Net Customer Additions - Cellular/PCS 359 189 540 745 642 M&A Activity, Partitioned Customers and/or Other Adjs. (32) - (14) - - Churn - Cellular/PCS(4) 2.8% 2.6% 2.5% 2.8% 2.8% ARPU - Cellular/PCS(5) $52.14 $51.07 $53.47 $52.80 $49.38 Minutes Of Use Per Cellular/PCS Subscriber(6) 423 441 485 500 515 Licensed POPs - Cellular/PCS(7) 219 235 236 236 236 Penetration - Cellular/PCS(8) 10.1% 10.0% 10.2% 10.6% 10.8% Total Cingular Interactive Customers 817 835 788 788 789 Net Customer Additions - Cingular Interactive 84 18 (47) 0 1 Capital Expenditures $3,085 $327 $668 $773 $966 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s 3/31/04 6/30/04 9/30/04 12/31/04 OIBDA(1) $1,103 $1,236 $1,033 $1,233 OIBDA margin(2) 30.8% 32.2% 26.7% 19.5% Integration, AT&T Wireless Intangibles Amortization and Hurricane Costs $- $- $43 $643 OIBDA - normalized $1,103 $1,236 $1,076 $1,478 OIBDA margin - normalized 30.8% 32.2% 27.8% 23.4% Total Cellular/PCS Customers(3) 24,618 25,044 25,672 49,132 Net Customer Additions - Cellular/PCS 554 428 657 1,699 M&A Activity, Partitioned Customers and/or Other Adjs. 37 (2) (29) 21,761 Churn - Cellular/PCS(4) 2.7% 2.7% 2.8% 2.6% ARPU - Cellular/PCS(5) $48.30 $50.75 $50.25 $49.51 Minutes Of Use Per Cellular/PCS Subscriber(6) 527 568 598 617 Licensed POPs - Cellular/PCS(7) 240 243 243 291 Penetration - Cellular/PCS(8) 10.9% 11.1% 11.4% 17.2% Total Cingular Interactive Customers 768 735 653 NA Net Customer Additions - Cingular Interactive (21) (33) (82) NA Capital Expenditures $334 $783 $634 $1,698 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 OIBDA(1) $1,789 $2,133 $2,198 $2,279 $2,487 OIBDA margin(2) 24.1% 27.6% 28.5% 29.3% 31.1% Integration, AT&T Wireless Intangibles Amortization and Hurricane Costs $596 $649 $733 $727 $593 OIBDA - normalized $1,894 $2,228 $2,443 $2,409 $2,551 OIBDA margin - normalized 25.5% 28.9% 31.6% 31.0% 31.9% Total Cellular/PCS Customers(3) 50,350 51,442 52,292 54,144 55,810 Net Customer Additions - Cellular/PCS 1,367 952 867 1,820 1,679 M&A Activity, Partitioned Customers and/or Other Adjs. (149) 140 (17) 32 (13) Churn - Cellular/PCS(4) 2.2% 2.2% 2.3% 2.1% 1.9% ARPU - Cellular/PCS(5) $49.60 $50.51 $49.65 $48.86 $48.48 Minutes Of Use Per Cellular/PCS Subscriber(6) 628 692 698 700 698 Licensed POPs - Cellular/PCS(7) 293 294 294 294 296 Penetration - Cellular/PCS(8) 17.7% 18.0% 18.3% 18.9% 19.8% Total Cingular Interactive Customers NA NA NA NA NA Net Customer Additions - Cingular Interactive NA NA NA NA NA Capital Expenditures $971 $2,188 $1,346 $2,970 $1,441 Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures - amounts in millions (unaudited) Full Year 2002 3/31/03 6/30/03 9/30/03 12/31/03 Net income (loss) $1,205 $408 $399 $166 $4 Plus: Interest expense 911 225 230 197 204 Plus: Minority interest expense 123 24 35 25 17 Plus: Equity in net loss of affiliates 274 74 78 90 91 Plus: Other, net (29) (26) (7) (4) (4) Plus: Provision (benefit) for income taxes 12 2 12 6 8 Operating income (loss) 2,496 707 747 480 320 Plus: Depreciation and amortization 1,849 488 508 521 572 OIBDA(1) $4,345 $1,195 $1,255 $1,001 $892 Plus: Integration costs (excluding depreciation and amortization) - - - - - Plus: Hurricane costs (excluding depreciation and amortization) - - - - - OIBDA - normalized(1) $4,345 $1,195 $1,255 $1,001 $892 Service revenues 13,922 3,414 3,643 3,701 3,559 Less: Mobitex data revenues 189 55 53 54 58 Service revenues used to calculate ARPU $13,733 $3,359 $3,590 $3,647 $3,501 Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures - amounts in millions (unaudited) 3/31/04 6/30/04 9/30/04 12/31/04 Net income (loss) $215 $339 $142 $(495) Plus: Interest expense 198 199 200 303 Plus: Minority interest expense 27 41 20 (2) Plus: Equity in net loss of affiliates 108 95 98 114 Plus: Other, net (4) (1) - (11) Plus: Provision (benefit) for income taxes 6 (2) - (62) Operating income (loss) 550 671 460 (153) Plus: Depreciation and amortization 553 565 573 1,386 OIBDA(1) $1,103 $1,236 $1,033 $1,233 Plus: Integration costs (excluding depreciation and amortization) - - 43 245 Plus: Hurricane costs (excluding depreciation and amortization) - - - - OIBDA - normalized(1) $1,103 $1,236 $1,076 $1,478 Service revenues 3,583 3,833 3,873 6,313 Less: Mobitex data revenues 58 59 54 36 Service revenues used to calculate ARPU $3,525 $3,774 $3,819 $6,277 Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures - amounts in millions (unaudited) 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 Net income (loss) $(240) $147 $222 $204 $354 Plus: Interest expense 338 326 304 292 297 Plus: Minority interest expense 16 41 38 7 41 Plus: Equity in net loss of affiliates (2) (1) (1) (1) - Plus: Other, net (20) (33) (10) (1) (9) Plus: Provision (benefit) for income taxes 22 24 104 48 124 Operating income (loss) 114 504 657 549 807 Plus: Depreciation and amortization 1,675 1,629 1,541 1,730 1,680 OIBDA(1) $1,789 $2,133 $2,198 $2,279 $2,487 Plus: Integration costs (excluding depreciation and amortization) 105 95 149 110 64 Plus: Hurricane costs (excluding depreciation and amortization) - - 96 20 - OIBDA - normalized(1) $1,894 $2,228 $2,443 $2,409 $2,551 Service revenues 7,419 7,719 7,721 7,779 8,005 Less: Mobitex data revenues 18 20 18 17 14 Service revenues used to calculate ARPU $7,401 $7,699 $7,703 $7,762 $7,991 Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Prior to 1Q05, the numerator includes Local Minutes of Use. (7) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service, including areas where we have not yet commenced service. Licensed POPs have been restated in periods 4Q04 through 2Q05 due to a reconciliation of respective licenses. (8) Penetration calculation for 1Q06 is based on licensed "operational" POP's of 282 million. Cingular Wireless LLC Income Statement, Normalized - amounts in millions (unaudited) The normalized financial data presented below exclude the impact of: 1) integration costs that are cash outlays, or specified non-cash charges, directly related to the acquisition of AT&T Wireless; 2) amortization of intangibles associated with the AT&T Wireless acquisition; and 3) costs related to impact of Hurricanes Katrina and Rita in the third and fourth quarters of 2005. Integration costs would not have been incurred if not for the acquisition, as they support the utilization and/or disposal of the acquired assets. Integration costs are separately identifiable from business as usual outlays. Costs recognized in connection with certain rationalization plans approved by management have also been included beginning in the second quarter of 2005. Examples of merger integration costs impacting expenses include (but are not limited to) the following: * Network rationalization (write-offs and accelerated depreciation related to certain "overlap" network assets) * Sales distribution optimization (lease terminations, leasehold improvement write-offs/accelerated depreciation) * Workforce rationalization (severance, relocation, retention) IT System/Application rationalization (system/platform consolidation, contract termination fees, third party support) * Real Estate space rationalization (lease terminations, leasehold improvements write-offs and accelerated depreciation, contract termination fees) Normalized 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 Operating revenues: Service revenues $6,313 $7,419 $7,719 $7,721 $7,779 $8,005 Equipment sales 806 810 890 1,025 1,070 975 Total operating revenues 7,119 8,229 8,609 8,746 8,849 8,980 Operating expenses: Cost of services 1,685 2,141 2,274 2,285 2,326 2,302 Cost of equipment sales 1,244 1,295 1,230 1,203 1,341 1,327 Selling, general and administrative 2,712 2,899 2,877 2,815 2,773 2,800 Depreciation and amortization 988 1,184 1,075 1,053 1,133 1,151 Total operating expenses 6,629 7,519 7,456 7,356 7,573 7,580 Operating income 490 710 1,153 1,390 1,276 1,400 Interest expense 303 338 326 304 292 297 Minority interest expense (2) 16 41 38 7 41 Equity in net income (loss) of affiliates (114) 2 1 1 1 - Other income, net 11 20 33 10 1 9 Income before income tax provision 86 378 820 1,059 979 1,071 Provision for income taxes 39 120 131 224 168 222 Net income $47 $258 $689 $835 $811 $849 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Normalized 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 OIBDA(1) (in millions) $1,478 $1,894 $2,228 $2,443 $2,409 $2,551 OIBDA margin(2) 23.4% 25.5% 28.9% 31.6% 31.0% 31.9% Total Cellular/PCS Customers(3) (000's) 49,132 50,350 51,442 52,292 54,144 55,810 Net Customer Additions - Cellular/PCS (000's) 1,699 1,367 952 867 1,820 1,679 M&A Activity, Partitioned Customers and/or Other Adjs. (000's) 21,761 (149) 140 (17) 32 (13) Churn - Cellular/PCS(4) 2.6% 2.2% 2.2% 2.3% 2.1% 1.9% ARPU - Cellular/PCS(5) $49.51 $49.60 $50.51 $49.65 $48.86 $48.48 Reconciliations of Normalized Financial Measures to Normalized OIBDA and Service Revenues - amounts in millions (unaudited) Normalized 12/31/04 3/31/05 6/30/05 9/30/05 12/31/05 3/31/06 Net income $47 $258 $689 $835 $811 $849 Plus: Interest expense 303 338 326 304 292 297 Plus: Minority interest expense (2) 16 41 38 7 41 Plus: Equity in net (income) loss of affiliates 114 (2) (1) (1) (1) - Plus: Other, net (11) (20) (33) (10) (1) (9) Plus: Provision for income taxes 39 120 131 224 168 222 Operating income 490 710 1,153 1,390 1,276 1,400 Plus: Depreciation and amortization 988 1,184 1,075 1,053 1,133 1,151 OIBDA(1) $1,478 $1,894 $2,228 $2,443 $2,409 $2,551 Service revenues 6,313 7,419 7,719 7,721 7,779 8,005 Less: Mobitex data revenues 36 18 20 18 17 14 Service revenues used to calculate ARPU $6,277 $7,401 $7,699 $7,703 $7,762 $7,991 Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS customer churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. Cingular Wireless LLC Income Statement, Prior Quarter Normalized Reconciliations - amounts in millions (unaudited) Three months ended Three months ended 9/30/04 12/31/04 Normal- Normal- ized Normal- ized Normal- GAAP Expen- ized GAAP Expen- ized Results ses Results Results ses Results Operating revenues: Service revenues $3,873 $- $3,873 $6,313 $- $6,313 Equipment sales 419 - 419 806 - 806 Total operating revenues 4,292 - 4,292 7,119 - 7,119 Operating expenses: Cost of services 1,107 (1) 1,106 1,692 (7) 1,685 Cost of equipment sales 585 - 585 1,247 (3) 1,244 Selling, general and administrative 1,567 (42) 1,525 2,947 (235) 2,712 Depreciation and amortization 573 - 573 1,386 (398) 988 Total operating expenses 3,832 (43) 3,789 7,272 (643) 6,629 Operating income 460 43 503 (153) 643 490 Interest expense 200 - 200 303 - 303 Minority interest expense 20 - 20 (2) - (2) Equity in net income (loss) of affiliates (98) - (98) (114) - (114) Other income (expense), net - - - 11 - 11 Income (loss) before income tax provision 142 43 185 (557) 643 86 Provision (benefit) for income taxes - - - (62) 101 39 Net income (loss) $142 $43 $185 $(495) $542 $47 Three months ended Three months ended 3/31/05 6/30/05 Normal- Normal- ized Normal- ized Normal- GAAP Expen- ized GAAP Expen- ized Results ses Results Results ses Results Operating revenues: Service revenues $7,419 $- $7,419 $7,719 $- $7,719 Equipment sales 810 - 810 890 - 890 Total operating revenues 8,229 - 8,229 8,609 - 8,609 Operating expenses: Cost of services 2,144 (3) 2,141 2,293 (19) 2,274 Cost of equipment sales 1,295 - 1,295 1,230 - 1,230 Selling, general and administrative 3,001 (102) 2,899 2,953 (76) 2,877 Depreciation and amortization 1,675 (491) 1,184 1,629 (554) 1,075 Total operating expenses 8,115 (596) 7,519 8,105 (649) 7,456 Operating income 114 596 710 504 649 1,153 Interest expense 338 - 338 326 - 326 Minority interest expense 16 - 16 41 - 41 Equity in net income (loss) of affiliates 2 - 2 1 - 1 Other income (expense), net 20 - 20 33 - 33 Income (loss) before income tax provision (218) 596 378 171 649 820 Provision (benefit) for income taxes 22 98 120 24 107 131 Net income (loss) $(240) $498 $258 $147 $542 $689 Three months ended Three months ended 9/30/05 12/31/05 Normal- Normal- ized Normal- ized Normal- GAAP Expen- ized GAAP Expen- ized Results ses Results Results ses Results Operating revenues: Service revenues $7,721 $- $7,721 $7,779 $- $7,779 Equipment sales 1,025 - 1,025 1,070 - 1,070 Total operating revenues 8,746 - 8,746 8,849 - 8,849 Operating expenses: Cost of services 2,464 (179) 2,285 2,417 (91) 2,326 Cost of equipment sales 1,203 - 1,203 1,341 - 1,341 Selling, general and administrative 2,881 (66) 2,815 2,812 (39) 2,773 Depreciation and amortization 1,541 (488) 1,053 1,730 (597) 1,133 Total operating expenses 8,089 (733) 7,356 8,300 (727) 7,573 Operating income 657 733 1,390 549 727 1,276 Interest expense 304 - 304 292 - 292 Minority interest expense 38 - 38 7 - 7 Equity in net income (loss) of affiliates 1 - 1 1 - 1 Other income (expense), net 10 - 10 1 - 1 Income (loss) before income tax provision 326 733 1,059 252 727 979 Provision (benefit) for income taxes 104 120 224 48 120 168 Net income (loss) $222 $613 $835 $204 $607 $811 Nine months ended Twelve months ended 9/30/04 12/31/04 Normal- Normal- ized Normal- ized Normal- GAAP Expen- ized GAAP Expen- ized Results ses Results Results ses Results Operating revenues: Service revenues $11,289 $- $11,289 $17,602 $- $17,602 Equipment sales 1,157 - 1,157 1,963 - 1,963 Total operating revenues 12,446 - 12,446 19,565 - 19,565 Operating expenses: Cost of services 3,045 (1) 3,044 4,737 (8) 4,729 Cost of equipment sales 1,627 - 1,627 2,874 (3) 2,871 Selling, general and administrative 4,402 (42) 4,360 7,349 (277) 7,072 Depreciation and amortization 1,691 - 1,691 3,077 (398) 2,679 Total operating expenses 10,765 (43) 10,722 18,037 (686) 17,351 Operating income 1,681 43 1,724 1,528 686 2,214 Interest expense 597 - 597 900 - 900 Minority interest expense 88 - 88 86 - 86 Equity in net income (loss) of affiliates (301) - (301) (415) - (415) Other income (expense), net 5 - 5 16 - 16 Income (loss) before income tax provision 700 43 743 143 686 829 Provision (benefit) for income taxes 4 - 4 (58) 101 43 Net income (loss) $696 $43 $739 $201 $585 $786 Three months ended Six months ended 3/31/05 6/30/05 Normal- Normal- ized Normal- ized Normal- GAAP Expen- ized GAAP Expen- ized Results ses Results Results ses Results Operating revenues: Service revenues $7,419 $- $7,419 $15,138 $- $15,138 Equipment sales 810 - 810 1,700 - 1,700 Total operating revenues 8,229 - 8,229 16,838 - 16,838 Operating expenses: Cost of services 2,144 (3) 2,141 4,437 (22) 4,415 Cost of equipment sales 1,295 - 1,295 2,525 - 2,525 Selling, general and administrative 3,001 (102) 2,899 5,954 (178) 5,776 Depreciation and amortization 1,675 (491) 1,184 3,304 (1,045) 2,259 Total operating expenses 8,115 (596) 7,519 16,220 (1,245) 14,975 Operating income 114 596 710 618 1,245 1,863 Interest expense 338 - 338 664 - 664 Minority interest expense 16 - 16 57 - 57 Equity in net income (loss) of affiliates 2 - 2 3 - 3 Other income (expense), net 20 - 20 53 - 53 Income (loss) before income tax provision (218) 596 378 (47) 1,245 1,198 Provision (benefit) for income taxes 22 98 120 46 205 251 Net income (loss) $(240) $498 $258 $(93) $1,040 $947 Nine months ended Twelve months ended 9/30/05 12/31/05 Normal- Normal- Normal- Normal- GAAP ized ized GAAP ized ized Results Expenses Results Results Expenses Results Operating revenues: Service revenues $22,859 $- $22,859 $30,638 $- $30,638 Equipment sales 2,725 - 2,725 3,795 - 3,795 Total operating revenues 25,584 - 25,584 34,433 - 34,433 Operating expenses: Cost of services 6,901 (201) 6,700 9,318 (292) 9,026 Cost of equipment sales 3,728 - 3,728 5,069 - 5,069 Selling, general and administrative 8,835 (244) 8,591 11,647 (283) 11,364 Depreciation and amortization 4,845 (1,533) 3,312 6,575 (2,130) 4,445 Total operating expenses 24,309 (1,978) 22,331 32,609 (2,705) 29,904 Operating income 1,275 1,978 3,253 1,824 2,705 4,529 Interest expense 968 - 968 1,260 - 1,260 Minority interest expense 95 - 95 102 - 102 Equity in net income (loss) of affiliates 4 - 4 5 - 5 Other income (expense), net 63 - 63 64 - 64 Income (loss) before income tax provision 279 1,978 2,257 531 2,705 3,236 Provision (benefit) for income taxes 150 325 475 198 445 643 Net income (loss) $129 $1,653 $1,782 $333 $2,260 $2,593 No integration costs were incurred prior to the third quarter of 2004. Quarterly amortization expense (in millions) associated with intangible assets recorded for the AT&T Wireless acquisition is as follows: $398 in 4Q04, $491 in 1Q05, $445 in 2Q05, $396 in 3Q05, $381 in 4Q05. Cingular Wireless LLC Balance Sheet - amounts in millions (unaudited) Incr 3/31/06 12/31/05 (Decr) % + / - (audited) Assets Current assets: Cash and cash equivalents $218 $472 (254) (53.8%) Accounts receivable - net of allowance for doubtful accounts 3,707 3,622 85 2.3% Inventories 668 536 132 24.6% Prepaid expenses and other current assets 1,820 1,419 401 28.3% Total current assets 6,413 6,049 364 6.0% Property, plant and equipment - net 21,817 21,745 72 0.3% Intangible assets - net 50,405 50,773 (368) (0.7%) Other assets 709 752 (43) (5.7%) Total assets $79,344 $79,319 25 0.0% Liabilities and members' capital Current liabilities: Debt maturing within one year $2,193 $2,036 157 7.7% Accounts payable and accrued liabilities 7,263 7,972 (709) (8.9%) Total current liabilities 9,456 10,008 (552) (5.5%) Long-term debt to affiliates 6,717 6,717 - 0.0% Long-term debt to external parties 12,589 12,623 (34) (0.3%) Total long-term debt 19,306 19,340 (34) (0.2%) Other noncurrent liabilities 4,676 4,450 226 5.1% Minority interests in consolidated entities 574 543 31 5.7% Members' capital 45,332 44,978 354 0.8% Total liabilities and members' capital $79,344 $79,319 25 0.0%