Built upon Cisco TelePresence, the AT&T Telepresence Solution provides business customers with High-Definition video conferencing systems that are a viable alternative to traditional face-to-face meetings. Businesses can improve collaboration among partners, suppliers and customers, accelerate productivity and achieve substantial cost savings through reduced travel.

Following the close of the quarter, Oracle was among the first business customers to deploy iPhone 3G, which went on sale July 11 and includes business-class wireless data features, and e-mail.

These announcements and others made by the business unit underscored AT&T's industry leadership and commitment to delivering intelligent and secure networking, application-enabling platforms, business solution expertise and a world-class customer experience. The announcements also represent significant milestones in the company's yearlong deployment of nearly $1 billion in network infrastructure upgrades designed to deliver IP-enabled services and solutions for businesses with operations in key markets worldwide.

Over the past two years, AT&T has delivered a major turnaround in enterprise growth rates, and in the second quarter results were highlighted by an 18.4 percent increase in enterprise IP data revenues, including areas such as Virtual Private Networks (VPN), managed Internet services and hosting. Enterprise fundamentals in terms of closed sales, a strong sales funnel and new service adoption remain solid. AT&T expects to deliver positive growth in total enterprise revenues for the full year 2008.

The business unit also announced significant contract wins in the quarter highlighted by a Government Solutions agreement worth $37.5 million to build a single global network for the National Polar-Orbiting Operational Environmental Satellite System. Other key sales include a global hosting service agreement with Hyatt Hotels and Resorts(TM), a three-year, networking services contract worth more than $3 million with Meredith Corporation to deliver managed Internet services and content distribution services, and a three-year, $4.3 million win with PepsiAmericas to enable its global operations with expanded VPN locations in the U.S., Hungary and Romania.

Following up its announcement earlier this year that it will serve as a primary SAP(R) hosting partner for business customers in North America, AT&T completed agreements to manage SAP enterprise applications for American Wood Moulding and MEI -- one of the world's leading manufacturers of electronic bill acceptors and coin mechanisms.

AT&T GBS also made news during the quarter by releasing the results of its annual study on business continuity and disaster recovery preparedness for U.S. businesses. This year's survey revealed that one in five U.S. businesses does not have a business continuity plan in place. And AT&T's BusinessDirect(R) customer portal also was in the news as it was named the top telecom carrier Customer Web Portal for the fourth consecutive year in a study conducted by The Yankee Group(1).

AT&T's GBS unit serves the company's enterprise and wholesale customers globally, providing networking services and solutions to companies ranging from the largest multinationals to national and smaller, regionally based domestic companies, plus U.S. governmental agencies.

Enhancements to the Core Portfolio

During 2Q08, AT&T made the following updates to its core portfolio of services for business customers:

    Customer Experience

    --  Converged Wireless/Wireline Portal: AT&T enhanced its AT&T
        BusinessDirect customer portal to give business customers who have
        both AT&T Wireless and Wireline Services, a single Internet access
        point to all of their online business management tools.

        In another enhancement to the customer portal, AT&T's Mobility
        Services have been integrated within AT&T BusinessDirect eBill,
        allowing business customers that qualify to get a single, easy-to-read
        online bill for their AT&T Wireless and Wireline services.


    Enterprise Mobility

    --  Remote Access: AT&T's Global Network Client Version 7.3 has enhanced
        support for roaming connections to a Virtual Private Network (VPN),
        including a persistent connection capability that automatically re-
        establishes network connectivity with minimal user interaction, as
        well as a VPN mobility capability where users can connect from a wired
        connection and move to their associated Wi-Fi connection.

    VPN Enhancements

    --  VPN Expansion: The AT&T VPN portfolio now offers clients six Classes
        of Service, which enhances the ability of customers to control the use
        of their bandwidth.  AT&T also expanded its VPN global footprint to
        include 143 countries, and VPN access via Ethernet connections to
        32 countries.


    Voice Over IP

    --  Global Resale Agreement With Avaya: This expanded agreement extends
        the reach of AT&T's equipment services including Avaya equipment,
        installation and Day Two services to cover 47 countries globally,
        providing customers with a single source for Avaya-based unified
        communications and contact center solutions.

    --  AT&T Business VoIP Usage-Based Billing Availability: Usage-based
        billing is now available with AT&T Business VoIP Service including
        AT&T Voice DNA, AT&T IP Flexible Reach and AT&T IP Toll Free. Usage-
        based billing provides price savings to customers who need bandwidths
        above a DS-1 circuit but can't justify the full capability of a DS-3
        circuit. Customers can specify a minimum committed rate with the
        ability to burst to the full DS-3 bandwidth as needed.

    --  Equipment Certification With AT&T IP Flexible Reach: Two manufacturers
        have had their switches and telephone equipment certified with AT&T IP
        Flexible Reach, AT&T's premises-based Voice over IP solution:

        --  ShoreTel(R)ShoreGear(R) Voice Switches and ShorePhone(TM) IP
            Telephones. ShoreGear voice switches and ShorePhone IP telephones
            deliver reliable unified communications across multiple enterprise
            locations, enabling organizations of any size to easily integrate
            all communications -- including voice, data, messaging and
            video -- with business processes.

        --  The Toshiba Strata CIX family of IP business communication systems
            from Toshiba America Information Systems Inc. Telecommunication
            Systems Division. The combination of Toshiba voice communications
            systems and AT&T's IP Flexible Reach service is now available from
            the network of Authorized Toshiba Dealers nationwide.


    Traditional Voice

    --  AT&T Business Network (ABN) Loyalty Pricing: AT&T introduced an
        improved AT&T Business Network long distance pricing structure
        effective July 1, 2008.  Under this new pricing method customer get
        preferred rates for calls made using AT&T owned facilities and calls
        made to AT&T business mobile devices. This simplified pricing, which
        is now a standard part of ABN, makes it a more attractive offer for
        business customers nationwide.

    --  AT&T NetPROTECT Expansion: AT&T has expanded our NetPROTECT service to
        include all eligible business customers who subscribe to AT&T voice
        services.  This service provides increased fraud liability protection
        and a consistent customer experience for toll fraud monitoring and
        private branch exchange (PBX) dispute processing throughout our entire
        domestic network.

GBS Second-Quarter 2008 Highlights:

During the second quarter 2008, the GBS business unit issued these press releases:

AT&T Announces New Digital Media Solutions Portfolio to Deliver and Manage Multimedia Content for Businesses Worldwide (June 24) Agreements Struck With ExtendMedia, Qumu and Stratacache to Deliver Rich Video, Web Content http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25853

    AT&T First Service Provider to Deliver Intercompany Cisco Telepresence for
Businesses around the World (April 21)
Fully Managed AT&T Telepresence Solution Enables New Way to Collaborate and
Drive Business Productivity
http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25523

AT&T to Offer Next-Generation iPhone on Its High-Performance 3G Network (June 9) Broadband Speed and New Capabilities Enhance Iconic Mobile Device; $199 Starting Price Significantly Expands Mass Market Appeal; New Corporate E-Mail and Web Applications Move iPhone Further Into Business Market http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25791

Other GBS Announcements

AT&T Launches College Mobile Applications Developer Contest (April 1) 'Big Mobile on Campus Challenge' to Award $10,000 Scholarship to Winner http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25415

AT&T Launches New Services to Help Wholesale Customers Meet Increased Demand (April 2) Offers Include VoIP With Ethernet Access and eMaintenance http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25422

AT&T Positioned In the Leaders Quadrant in Magic Quadrant for U.S. Network Service Providers, 1H08 (April 3) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25427

AT&T Positioned by Analyst Firm in 2008 Leaders Quadrant for Web Hosting Services (April 14) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25481

AT&T Recognized by Nemertes with a 2008 Nemertes Pilothouse Award (April 15) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25505

AT&T Appoints New Vice President for Germany and Central Europe (April 16) Joachim Kathmann Appointed as Vice President for AT&T Germany, Austria, Switzerland and Eastern Europe http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25607

PepsiAmericas Awards $4.3 Million Networking Services Contract to AT&T (April 16) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25479

AT&T Expands Business Development Team in Asia Pacific (April 17) Business Development Executive Appointed to Strengthen Sales and Support for Multinational Investments http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25614

AT&T Stands Ready, Helps Prepare Customers for Forecasted 'Active' Hurricane Season (May 5) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25616

AT&T and Pyxis Mobile Announce Exclusive Alliance to Deliver Mobile Applications to Financial Services Industry (May 7) Companies to Extend Critical Business Data to AT&T Mobile Devices http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25646

MEI Migrates SAP Application to AT&T (May 14) AT&T's Leading Application Services Capabilities Allow MEI to Manage Its Business in a Cost-Effective, Flexible Environment http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25694

AT&T Positioned in the Leaders Quadrant in Magic Quadrant for Managed and Professional Network Service Providers, North America (May 16) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25698

AT&T Offers Hyatt a Suite of Global Hosting and Managed Solutions (May 22) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25730

AT&T Launches the GPS-Enabled Blackberry Pearl 8110 Smartphone (May 23) Built-In GPS Makes Navigation Easy With Maps and Audible Step-by-Step Directions

Perfect Handset for Small Businesses - Especially When Combined With New BusinessTalk Plans and BlackBerry Professional Software to Create Complete Voice and Data Solution http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25563

Gulf Finance House Signs Strategic Alliance with AT&T and NavLink (May 25) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25736AT&T

    Study: One in Five U.S. Businesses Does Not Have a Business Continuity
Plan in Place (June 2)
IT Execs: 'Hacking' Will Be Most Significant Threat to Cybersecurity in the
Next Five Years
http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25760

    AT&T Launches Encryption Services to Help Businesses Secure E-Mail and
Data (June 3)
AT&T Expands Managed Security Services Portfolio
http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25761

Ramco Systems Delivers Software-As-A-Service via AT&T (June 4) Enterprise Application Vendor Meets Midmarket Customer Needs by Presenting its Solution over the Internet, as a Service http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25783

AT&T Announces $37.5 Million Contract to Deploy Global Technology Solution for NPOESS (June 10) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25811

Meredith Corp. Boosts Bandwidth with AT&T (June 11) http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25814

    AT&T BusinessDirect Leads the Pack in Analyst Firm's Review of Customer
Portals (June 18)
AT&T Is the Only Carrier to Receive the Highest Measurement in All Areas
Evaluated
http://www.att.com/gen/press-room?pid=4800&cdvn=news&newsarticleid=25846

About AT&T

AT&T Inc. (NYSE: T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. In 2008, AT&T again ranked No. 1 on Fortune magazine's World's Most Admired Telecommunications Company list and No. 1 on America's Most Admired Telecommunications Company list. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this press release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might 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 and revise statements contained in this news release based on new information or otherwise.

(C) 2008 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies.

Note: This AT&T news release and other announcements are available as part of an RSS feed at http://www.att.com/rss. For more information, please review this announcement in the AT&T newsroom at http://www.att.com/newsroom.

(1) Source: Yankee Group Research, Inc., Fixed-Line Carrier Enterprise Portal Development Further Empowers the End User, June 2008.

SOURCE AT&T Inc.

http://www.att.com

"The up to' marketing strategy has drawn the ire of broadband customers for years," notes Ben Piper, Director of the Strategy Analytics Multiplay Market Dynamics service. "It is widely perceived as a classic bait-and-switch' technique, analogous to a supermarket advertising a six pack with up to six cans.'"

There are clearly service issues beyond the Service Provider's control, including customer equipment and distance from the central office. However, the policy shift ensures that customers get a better understanding of the types of speeds they can reasonably expect. This alone could help AT&T differentiate itself in the market.

David Mercer, Vice-President of the Strategy Analytics Digital Consumer Practice, welcomes AT&T's move. "We have long urged Service Providers to move toward a tiered pricing model, and are pleased to see AT&T take this step."

About Strategy Analytics Strategy Analytics, Inc focuses on market opportunities and disruptive forces in the areas of Automotive Electronics and Entertainment, Broadband Connected Home, Mobile & Wireless Intelligent Systems Implementation Strategies and High Frequency Market intelligence. Headquartered in Boston, MA, with offices in the UK, France, Germany, Japan, S. Korea and China, Strategy Analytics works with clients through annual multi-client services, management team workshops and custom consulting engagements. For more information, please visit www.strategyanalytics.com

CONTACT: Ben Piper, Strategy Analytics Tel: +1 617 614 0700 e-mail: bpiper@strategyanalytics.com David Mercer, Strategy Analytics Tel: +44 (0)1908 423 600 e-mail: dmercer@strategyanalytics.com WWW: http://www.strategyanalytics.com

M2 Communications Ltd disclaims all liability for information provided within M2 PressWIRE. Data supplied by named party/parties. Further information on M2 PressWIRE can be obtained at http://www.presswire.net on the world wide web. Inquiries to info@m2.com.

--Short-term IDR 'F1'.

In addition, Fitch has affirmed the ratings assigned to AT&T's debt classes and the IDRs and ratings of the other AT&T-related issuers listed at the end of this release. The Rating Outlook is Stable.

The rating incorporates Fitch's expectations that AT&T has the financial flexibility to maintain leverage in a range appropriate for the current rating category. At the end of first quarter-2008 (1Q'08), leverage was 1.6 times (x), slightly higher than AT&T's target level of 1.3x to 1.5x, but within Fitch's expectations for the rating category. In 2008, free cash flow will only fund part of financing requirements brought about by wireless spectrum acquisitions and stock repurchases. Fitch believes AT&T will end the year with leverage remaining around 1.6x, slightly above the high end of the company's target range. Fitch notes that the periodic nature of spectrum acquisitions, which are needed to support continued strong wireless growth, have contributed to the temporary higher leverage level. Fitch expects that over the longer term EBITDA growth will return AT&T's credit-protection metrics back into AT&T's target range.

AT&T's ratings also reflect its diversified revenue mix, its significant size and economies of scale as the largest wireline, wireless and enterprise services operator in the United States, as well as Fitch's expectation that AT&T will benefit from continued growth in wireless operating cash flows. AT&T's revenue mix is diversified among three key lines of business. In 1Q'08, wireless segment revenues grew 18.3 percent while generating approximately 38 percent of total segment revenues and the enterprise line of business, which returned to growth in 2007, produced more than 15 percent of total segment revenues. Both the wireless segment and the enterprise line of business are expected to continue to grow revenues in 2008. The in-region consumer line of business, facing rising competition from cable operators, continued wireless substitution and a weakening economic environment, approximated 18 percent of AT&T's total segment revenues in 1Q'08. Despite these pressures, consumer revenues declined only 0.4 percent.

In order to support the growth needs of its wireless business and to remain competitive in future years through the deployment of fourth generation wireless technologies, in the first half of 2008 AT&T spent approximately $9.1 billion on wireless spectrum in the 700 MHz frequency band. AT&T's winning bids in the Federal Communications Commission's 700 MHz spectrum auction, which ended in March 2008, totaled approximately $6.6 billion and the company also completed the purchase of additional spectrum from Aloha Partners, L.P., in February 2008 for $2.5 billion.

Fitch believes in-region consumer revenues could fall modestly in 2008, with pressure on revenues from competition and the weakening economy and housing downturn being mitigated by revenues from the continued deployment of video and broadband services. Revenues are also derived from in-region business (small and medium-sized business), wholesale services, national mass markets (which are declining rapidly), as well as the advertising and publishing businesses. The 2006 BellSouth Corp. (BellSouth) and 2005 AT&T Corp. mergers have provided increased scale, as AT&T achieved approximately $3.9 billion in synergies and operational expense savings in 2007 and expects savings to grow by more than $2 billion in 2008. By 2010, expense synergies -- plus additional operational cost initiatives -- are expected to reach $7 billion annually.

Issues to monitor regarding AT&T's ratings include competition in the consumer line of business and the effect of AT&T's stock-repurchase activities on debt levels. To offset the effects of competition on cash flow, AT&T must continue to be successful in controlling costs, achieve merger-related synergies and successfully implement its network-based video strategy.

At the end of 1Q'08, AT&T had $73.5 billion in debt outstanding and cash amounted to $2 billion. AT&T's liquidity is strong. To back its commercial paper program, AT&T currently has a $3 billion facility which expires on Dec. 15, and a five-year credit facility that expires in July 2011 with $10 billion of availability. With regard to the five-year facility, AT&T has an option to increase the $10 billion amount to $12 billion, with agreement by the lending banks. The principal financial covenant in both agreements requires debt-to-EBITDA, as defined in the agreements, to be no more than 3x. In 2007, AT&T produced $7.6 billion in free cash flow, and Fitch believes free cash flow could approach this level in 2008, given potential additional merger synergies and continued growth in wireless and enterprise service revenues. There will be some pressure on free cash flow in 2008 owing to subsidies AT&T is providing in marketing the latest version of Apple's iPhone.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, fitchratings.com.

((Comments on this story may be sent to newsdesk@closeupmedia.com))

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Comments on this story may be sent to newsdesk@closeupmedia.com

"As we generate sound financial results, AT&T also has taken the lead to innovate and create great solutions for customers," Stephenson said. "Mobility, broadband connectivity and integrated services that encompass voice, data and video are driving a new world of communications. AT&T is all about deploying and enhancing premier networks and products to deliver this world to both business and consumers.

"The Apple iPhone 3G is a dramatic example of this transformation," Stephenson added. "In the days following our exclusive U.S. launch of this new device, powered by the nation's fastest 3G wireless network, customer response has been everything we had anticipated and more. This strengthens our wireless business, and it reinforces our positive view of the opportunities ahead for AT&T and the industry."

Reported Results

For the quarter ended June 30, 2008, AT&T's consolidated revenues totaled $30.9 billion, up 4.7 percent versus reported results in the year-earlier quarter and up 3.6 percent compared with second-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues.

Compared with results for the year-earlier quarter, AT&T's reported operating expenses for the second quarter of 2008 were $24.3 billion, down from $24.5 billion; reported operating income was $6.6 billion, up from $4.9 billion; and AT&T's reported operating income margin was 21.3 percent, up from 16.8 percent.

AT&T's reported second-quarter 2008 net income totaled $3.8 billion, up from $2.9 billion in the year-earlier quarter, and reported earnings per diluted share totaled $0.63, up from $0.47 in the second quarter of 2007.

Adjusted Results

AT&T's adjusted results for the second quarter of 2008 exclude noncash merger-related amortization expenses. For the second quarter of 2007, adjusted results excluded merger integration costs, merger-related amortization expenses and a merger-related directory accounting effect.

Compared with results for the year-earlier quarter, AT&T's adjusted operating expenses for the second quarter of 2008 totaled $23.1 billion, versus $22.7 billion; adjusted operating income was $7.7 billion, up from $7.1 billion; and AT&T's adjusted operating income margin was 25.1 percent, up from 23.9 percent. This margin expansion reflects revenue growth along with benefits from merger synergies and other productivity initiatives.

AT&T's adjusted second-quarter 2008 net income totaled $4.5 billion, up from $4.3 billion in the year-earlier quarter, and adjusted earnings per diluted share totaled $0.76, up from $0.70 in the second quarter of 2007.

Cash From Operations, Share Repurchases

AT&T's cash from operating activities for the second quarter of 2008 totaled $8.5 billion, capital expenditures totaled $5.3 billion, and free cash flow (cash from operations minus capital expenditures) totaled $3.2 billion. Year to date through the first half of 2008, cash from operating activities totaled $13.5 billion, capital expenditures totaled $9.6 billion, and free cash flow totaled $3.9 billion.

As it invests in the future of its business, AT&T continues to return substantial value to shareowners through dividends and share repurchases. Dividends paid totaled $2.4 billion in the second quarter and $4.8 billion year to date. Shares repurchased totaled 52.6 million for $2.0 billion in the second quarter and 164.2 million for $6.1 billion through the first half of the year. AT&T ended the second quarter with 5.9 billion shares outstanding.

Wireless Operational Highlights

AT&T delivered strong wireless growth in the second quarter with solid subscriber gains, continued rapid growth in wireless data revenues and improved margins. Highlights include the following:

15.8 Percent Wireless Revenue Growth. Total wireless revenues increased 15.8 percent to $12.0 billion in the second quarter, and wireless service revenues, which exclude handset and accessory sales, grew 14.8 percent to $11.0 billion. Wireless revenue growth was driven by solid subscriber gains and a greater number of customers choosing more advanced smartphones and integrated devices, spurring increased usage of data services. Retail postpaid subscriber ARPU (average monthly revenues per subscriber) was up 3.5 percent versus the year-earlier second quarter.

Wireless Data Services Up 52.0 Percent. Wireless data revenues grew 52.0 percent versus the year-earlier quarter to $2.5 billion, reflecting continued strong adoption of services such as Internet and data access, e-mail and messaging. Wireless Internet access revenues more than doubled versus results for the year-earlier second quarter, while revenues from e-mail, messaging and data access all delivered greater than 50 percent growth. Text messaging volumes tripled versus totals for the year-earlier quarter, and multimedia message volumes increased more than 170 percent. At the end of the second quarter, approximately 18 percent of AT&T's postpaid wireless subscribers had an integrated device, up from 8 percent one year earlier. On average, these subscribers have ARPUs roughly double the company average. AT&T expects continued strong growth in wireless data services as more customers choose data plans and advanced wireless devices such as the new iPhone 3G, which was launched as an AT&T U.S. exclusive on July 11. In the first 12 days following launch, sales of the iPhone 3G were nearly double levels achieved in AT&T's 2007 iPhone launch.

Solid Wireless Subscriber Growth with Reduced Postpaid Churn. AT&T's second-quarter net gain in total wireless subscribers exceeded 1.3 million, down 123,000 versus results in the second quarter of 2007 and up 38,000 compared with the first quarter of this year. Retail postpaid net adds totaled 894,000, down 2.0 percent versus the year-earlier second quarter and up 26.8 percent from results in the first quarter of this year. This sequential postpaid improvement was achieved despite reduced iPhone sales ahead of the early July iPhone 3G launch. Retail postpaid churn moved down to 1.1 percent in the second quarter, the lowest level in the company's history.

Wireless Operating Income Growth. On a reported basis, AT&T's second-quarter wireless operating expenses totaled $9.0 billion, and operating income was $3.1 billion, up 91.0 percent from $1.6 billion in the second quarter of 2007. Adjusting for merger integration costs, wireless operating expenses totaled $8.4 billion, and operating income was $3.6 billion, up 38.9 percent from $2.6 billion in the second quarter of 2007.

Continued Strength in Wireless Margins. Strong revenue growth, network efficiencies and operational improvements continue to drive strong wireless margins. AT&T's reported wireless operating income margin in the second quarter was 25.5 percent, up from 15.4 percent in the year-earlier quarter, and its adjusted wireless operating income margin was 29.9 percent, up from 24.9 percent in the year-earlier quarter. AT&T's second-quarter wireless OIBDA service margin was 41.2 percent, up from an unadjusted 35.8 percent and an adjusted 37.5 percent in the year-earlier quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline Operational Highlights

AT&T's second-quarter wireline results were highlighted by continued strong double-digit growth in business and consumer IP-based data revenues, a substantial turnaround in wholesale revenues and a further ramp in AT&T U-verse TV subscribers:

Major Turnaround in Wholesale. In the second quarter, AT&T further advanced the significant improvement in wholesale revenue trends it has achieved over the past year. Total wholesale revenues were $3.5 billion, down just 0.2 percent versus the year-earlier quarter. This represents a major step up from a year-over-year decline of 8.3 percent in the second quarter of 2007 and marks the company's second consecutive quarter of sequential revenue growth in this category. This reflects solid demand from wireless carriers, Internet service providers, content providers and other customers, offsetting expected declines in local voice. AT&T and IBM last fall announced an agreement that calls for AT&T to become the primary global network management services provider to IBM. As a result, AT&T expects to receive up to $5 billion of additional revenues over the five-year term of the agreement, initially in the wholesale customer category. These revenues are expected to ramp further in the second half of 2008 and in 2009.

Continued Strength in Enterprise. Over the past two years, AT&T has delivered a major turnaround in enterprise growth rates, and in the second quarter results were highlighted by an 18.4 percent increase in enterprise IP data revenues, including areas such as VPNs, managed Internet services and hosting. Total enterprise revenues in the second quarter were $4.7 billion, down 1.0 percent versus results for the year-earlier quarter, and enterprise service revenues, which exclude CPE sales, were down 0.1 percent. Enterprise fundamentals in terms of closed sales, a strong sales funnel and new service adoption remain solid. AT&T expects to deliver positive growth in total enterprise revenues for the full year 2008.

Regional Business Growth. AT&T's total regional business revenues increased 1.6 percent in the second quarter to $3.2 billion. Regional business data revenues grew 5.2 percent, led by robust growth in Ethernet services and 13.7 percent growth in IP data services, including double-digit gains in managed Internet, VPN and hosting services.

Further Ramp in AT&T U-verse TV Services. AT&T U-verse TV, the company's next-generation IP-based video service, continued its strong ramp during the second quarter, with a net subscriber gain of 170,000 to reach 549,000 in service. U-verse network deployment is on schedule, install times continue to decline and the attach rates for broadband service continue to be high. The company is on a trajectory to reach its target of more than 1 million AT&T U-verse TV subscribers by year-end 2008.

Growth in Consumer ARPU, with Strong Double-Digit Growth in Regional Consumer IP Data Revenues. Second-quarter regional consumer results reflect continued strong growth in revenues from broadband and AT&T U-verse services in large part offsetting traditional voice access line pressures. Regional consumer IP revenues, which combine revenues from broadband and AT&T U-verse services, grew 19.3 percent versus the year-earlier quarter, and revenues per consumer household served increased 4.2 percent. Total regional consumer revenues were $5.6 billion, down 2.1 percent versus the year-earlier quarter and down 0.7 percent sequentially. In addition to operational trends, these comparisons also reflect a change in AT&T's relationship with Yahoo!(R) Inc., which provides portal services to AT&T's more than 14 million wireline broadband subscribers. Under the new arrangement, AT&T no longer pays monthly portal fees and receives a reduced level of shared advertising revenues from Yahoo! Regional consumer revenue connections (retail voice, high speed Internet and video) totaled 48.4 million at the end of the quarter, versus 49.5 million at the end of the second quarter of 2007 and 49.3 million at the end of the first quarter of 2008. Total consumer broadband and TV connections over the past year increased by 2.2 million. At the end of the second quarter, AT&T had 14.7 million total broadband connections, up 1.4 million over the past year and up 46,000 in the second quarter of 2008.

Wireline Expense Reduction. AT&T's reported second-quarter wireline operating expenses totaled $14.5 billion, down 2.1 percent from results in the year-earlier quarter, and on an adjusted basis, wireline operating expenses were $14.1 billion, down 0.1 percent versus results for the second quarter of 2007.

Additional Background on Adjusted and Pro Forma Results

AT&T's adjusted earnings for the second quarter of 2008 exclude noncash, pretax amortization costs related to acquisitions totaling $1.2 billion, or $0.13 per diluted share. Adjusted results for the second quarter of 2007 excluded: (1) pretax cash merger-related integration costs totaling $324 million, or $0.03 per diluted share; (2) noncash, pretax merger-related costs totaling $1.7 billion, or $0.18 per diluted share; and (3) a merger-related directory accounting impact of $187 million, or $0.02 per diluted share.

Advertising & Publishing results for 2007 were affected by accounting adjustments following AT&T's late 2006 acquisition of BellSouth. In accordance with purchase accounting rules, deferred revenues and expenses for all BellSouth directories delivered prior to the close of the merger were eliminated from 2007 consolidated results. This elimination of amortizations reduced second-quarter 2007 consolidated revenues by $306 million and consolidated operating expenses by $119 million.

AT&T manages its print directory business using amortized results. As a result, 2007 amortized results are shown in the Advertising & Publishing segment on AT&T's Statement of Segment Income. In 2008, both consolidated and segment results reflect amortization accounting.

About AT&T

AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at www.att.com.

(C) 2008 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Note: This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release 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 news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.att.com/investor.relations. Accompanying financial statements follow.

NOTE: OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from Segment Operating Income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. 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 GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

----------------------------------------------------------------------
Financial Data

AT&T Inc.
----------------------------------------------------------------------
Consolidated Statements of Income
Dollars in millions except per share
 amounts
------------------------------------------- --------------------------
Unaudited            Three Months Ended          Six Months Ended
                  ------------------------- --------------------------
                  6/30/2008 6/30/2007 %Chg  6/30/2008 6/30/2007  %Chg
------------------------------------------- --------------------------
Operating Revenues
  Wireless service $10,894     $9,513 14.5%  $21,499    $18,583  15.7%
  Voice              9,519     10,378 -8.3%   19,212     20,833  -7.8%
  Data               6,054      5,746  5.4%   12,026     11,401   5.5%
  Directory          1,383      1,155 19.7%    2,781      2,177  27.7%
  Other              3,016      2,686 12.3%    6,092      5,453  11.7%
------------------------------------------- --------------------------
    Total
     Operating
     Revenues       30,866     29,478  4.7%   61,610     58,447   5.4%
------------------------------------------- --------------------------

Operating Expenses
  Cost of services
   and sales
   (exclusive of
   depreciation
   and
   amortization
   shown
   separately
   below)           11,900     11,658  2.1%   23,902     23,080   3.6%
  Selling, general
   and
   administrative    7,441      7,460 -0.3%   15,300     14,727   3.9%
  Depreciation and
   amortization      4,958      5,416 -8.5%    9,861     11,032 -10.6%
------------------------------------------- --------------------------
    Total
     Operating
     Expenses       24,299     24,534 -1.0%   49,063     48,839   0.5%
------------------------------------------- --------------------------
Operating Income     6,567      4,944 32.8%   12,547      9,608  30.6%
------------------------------------------- --------------------------
Interest Expense       854        879 -2.8%    1,719      1,752  -1.9%
Equity in Net
 Income of
 Affiliates            212        210  1.0%      455        383  18.8%
Other Income
 (Expense) - Net       (43)       127    -       (10)       631     -
------------------------------------------- --------------------------
Income Before
 Income Taxes        5,882      4,402 33.6%   11,273      8,870  27.1%
Income Taxes         2,110      1,498 40.9%    4,040      3,118  29.6%
------------------------------------------- --------------------------
Net Income          $3,772     $2,904 29.9%   $7,233     $5,752  25.7%
=========================================== ==========================


Basic Earnings Per
 Share               $0.64      $0.47 36.2%    $1.21      $0.93  30.1%
Weighted Average
 Common Shares
 Outstanding
 (000,000)           5,926      6,145 -3.6%    5,962      6,184  -3.6%

Diluted Earnings
 Per Share           $0.63      $0.47 34.0%    $1.21      $0.92  31.5%
Weighted Average
 Common Shares
 Outstanding with
 Dilution
 (000,000)           5,962      6,195 -3.8%    5,997      6,230  -3.7%

----------------------------------------------------------------------

----------------------------------------------------------------------
Financial Data

AT&T Inc.
----------------------------------------------------------------------
Statements of Segment Income
Dollars in millions
----------------------------------------------------------------------
Unaudited
                     Three Months Ended          Six Months Ended
                 -------------------------- --------------------------

Wireless         6/30/2008 6/30/2007  %Chg  6/30/2008 6/30/2007  %Chg
------------------------------------------- --------- ----------------
Segment Operating
 Revenues
  Service        $10,951    $9,540    14.8% $21,596   $18,632    15.9%
  Equipment        1,082       855    26.5%   2,262     1,760    28.5%
------------------------------------------- --------------------------
    Total Segment
     Operating
     Revenues     12,033    10,395    15.8%  23,858    20,392    17.0%
------------------------------------------- --------------------------

Segment Operating
 Expenses
  Cost of
   services and
   equipment
   sales           4,162     3,941     5.6%   8,272     7,611     8.7%
  Selling,
   general and
   administrative  3,361     3,040    10.6%   6,640     5,953    11.5%
  Depreciation
   and
   amortization    1,446     1,810   -20.1%   2,926     3,701   -20.9%
------------------------------------------- --------------------------
    Total Segment
     Operating
     Expenses      8,969     8,791     2.0%  17,838    17,265     3.3%
------------------------------------------- --------------------------
Segment Operating
 Income            3,064     1,604    91.0%   6,020     3,127    92.5%
Equity in Net
 Income of
 Affiliates            3        17   -82.4%       5        24   -79.2%
Minority Interest    (69)      (67)   -3.0%    (129)     (115)  -12.2%
------------------------------------------- --------------------------
Segment Income    $2,998    $1,554    92.9%  $5,896    $3,036    94.2%
=========================================== ==========================


Wireline
------------------------------------------- --------------------------
Segment Operating
 Revenues
  Voice           $9,757   $10,586    -7.8% $19,676   $21,263    -7.5%
  Data             6,287     5,980     5.1%  12,492    11,842     5.5%
  Other            1,564     1,427     9.6%   3,064     2,880     6.4%
------------------------------------------- --------------------------
    Total Segment
     Operating
     Revenues     17,608    17,993    -2.1%  35,232    35,985    -2.1%
------------------------------------------- --------------------------

Segment Operating
 Expenses
  Cost of sales    7,818     7,817       -   15,780    15,618     1.0%
  Selling,
   general and
   administrative  3,409     3,685    -7.5%   6,951     7,486    -7.1%
  Depreciation
   and
   amortization    3,269     3,301    -1.0%   6,439     6,742    -4.5%
------------------------------------------- --------------------------
    Total Segment
     Operating
     Expenses     14,496    14,803    -2.1%  29,170    29,846    -2.3%
------------------------------------------- --------------------------
Segment Income    $3,112    $3,190    -2.4%  $6,062    $6,139    -1.3%
=========================================== ==========================


Advertising &
 Publishing
------------------------------------------- --------------------------
Segment Operating
 Revenues         $1,407    $1,478    -4.8%  $2,824    $2,921    -3.3%
------------------------------------------- --------------------------

Segment Operating
 Expenses
  Cost of sales      439       364    20.6%     860       797     7.9%
  Selling,
   general and
   administrative    332       428   -22.4%     698       729    -4.3%
  Depreciation
   and
   amortization      203       263   -22.8%     415       505   -17.8%
------------------------------------------- --------------------------
    Total Segment
     Operating
     Expenses        974     1,055    -7.7%   1,973     2,031    -2.9%
------------------------------------------- --------------------------
Segment Income      $433      $423     2.4%    $851      $890    -4.4%
=========================================== ==========================


Other
------------------------------------------- --------------------------
Segment Operating
 Revenues           $512      $558    -8.2%  $1,056    $1,096    -3.6%
Segment Operating
 Expenses            554       643   -13.8%   1,442     1,155    24.8%
------------------------------------------- --------------------------
Segment Operating
 Loss                (42)      (85)   50.6%    (386)      (59)      -
Equity in Net
 Income of
 Affiliates          209       202     3.5%     450       374    20.3%
------------------------------------------- --------------------------
Segment Income      $167      $117    42.7%     $64      $315   -79.7%
=========================================== ==========================

----------------------------------------------------------------------
Financial Data

AT&T Inc.
----------------------------------------------------------------------
Consolidated Balance Sheets
Dollars in millions except per share amounts
----------------------------------------------------------------------
                                                    6/30/08  12/31/07
                                                   Unaudited
----------------------------------------------------------------------

Assets
Current Assets
 Cash and cash equivalents                           $1,631    $1,970
 Accounts receivable - net of allowances for
  uncollectibles of $1,303 and $1,364                15,971    16,185
 Prepaid expenses                                     1,671     1,524
 Deferred income taxes                                1,407     2,044
 Other current assets                                 2,545     2,963
----------------------------------------------------------------------
  Total current assets                               23,225    24,686
----------------------------------------------------------------------
Property, Plant and Equipment - Net                  97,368    95,890
----------------------------------------------------------------------
Goodwill                                             71,528    70,713
Licenses                                             46,771    37,985
Customer Lists and Relationships - Net               12,568    14,505
Other Intangible Assets - Net                         5,844     5,912
Investments in Equity Affiliates                      2,838     2,270
Postemployment Benefit                               17,898    17,291
Other Assets                                          6,468     6,392
----------------------------------------------------------------------
   Total Assets                                    $284,508  $275,644
======================================================================

Liabilities and Stockholders' Equity
Current Liabilities
 Debt maturing within one year                      $16,472    $6,860
 Accounts payable and accrued liabilities            18,927    21,399
 Advanced billing and customer deposits               3,573     3,571
 Accrued taxes                                        3,782     5,027
 Dividends payable                                    2,357     2,417
----------------------------------------------------------------------
  Total current liabilities                          45,111    39,274
----------------------------------------------------------------------
Long-Term Debt                                       63,675    57,255
----------------------------------------------------------------------
Deferred Credits and Other Noncurrent Liabilities
 Deferred income taxes                               25,136    24,939
 Postemployment benefit obligation                   24,832    24,011
 Other noncurrent liabilities                        13,817    14,798
----------------------------------------------------------------------
  Total deferred credits and other noncurrent
   liabilities                                       63,785    63,748
----------------------------------------------------------------------

Stockholders' Equity
 Common shares issued ($1 par value)                  6,495     6,495
 Capital in excess of par value                      91,647    91,638
 Retained earnings                                   35,719    33,297
 Treasury shares (at cost)                          (21,420)  (15,683)
 Accumulated other comprehensive loss                  (504)     (380)
----------------------------------------------------------------------
  Total stockholders' equity                        111,937   115,367
----------------------------------------------------------------------
   Total Liabilities and Stockholders' Equity      $284,508  $275,644
======================================================================

----------------------------------------------------------------------
Financial Data

AT&T Inc.
----------------------------------------------------------------------
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
----------------------------------------------------------------------
Unaudited                                            Six Months Ended
                                                     6/30/08   6/30/07
----------------------------------------------------------------------
Operating Activities
Net income                                          $  7,233  $ 5,752
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                        9,861   11,032
  Undistributed earnings from investments in equity
   affiliates                                           (415)    (344)
  Provision for uncollectible accounts                   860      738
  Deferred income tax expense (benefit)                1,384     (546)
  Net gain on sales of investments                       (27)     (64)
  Gain on license exchange                                 -     (409)
Changes in operating assets and liabilities:
   Accounts receivable                                  (776)      87
   Other current assets                                  274     (665)
   Accounts payable and accrued liabilities           (5,117)    (287)
   Stock-based compensation tax benefit                  (14)    (107)
Other - net                                              242     (108)
----------------------------------------------------------------------
Total adjustments                                      6,272    9,327
----------------------------------------------------------------------
Net Cash Provided by Operating Activities             13,505   15,079
----------------------------------------------------------------------

Investing Activities
Construction and capital expenditures
  Capital expenditures                                (9,320)  (7,460)
  Interest during construction                          (257)     (78)
Acquisitions, net of cash acquired                   (10,087)    (221)
Dispositions                                             623      520
Proceeds from sale of securities, net of investments     (73)     509
Other                                                     41       17
----------------------------------------------------------------------
Net Cash Used in Investing Activities                (19,073)  (6,713)
----------------------------------------------------------------------

Financing Activities
Net change in short-term borrowings with original
 maturities of three months or less                    6,590   (1,993)
Issuance of long-term debt                            10,924    5,924
Repayment of long-term debt                           (1,605)  (2,065)
Purchase of treasury shares                           (6,077)  (6,904)
Issuance of treasury shares                              310    1,252
Dividends paid                                        (4,802)  (4,414)
Stock-based compensation tax benefit                      14      107
Other                                                   (125)    (121)
----------------------------------------------------------------------
Net Cash Provided by (Used in) Financing Activities    5,229   (8,214)
----------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents    (339)     152
----------------------------------------------------------------------
Cash and cash equivalents beginning of year            1,970    2,418
----------------------------------------------------------------------
Cash and Cash Equivalents End of Period             $  1,631  $ 2,570
======================================================================

----------------------------------------------------------------------
Financial Data

AT&T Inc.
----------------------------------------------------------------------
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
----------------------------------------------------------------------

Unaudited                                       Three Months Ended
                                            --------------------------
                                            6/30/2008 6/30/2007  %Chg
----------------------------------------------------------------------

Wireless
  Wireless Customers (000)
     Net Customer Additions (000)              1,333     1,456   -8.4%
     M&A Activity, Partitioned Customers and
      Other Adjs. (000)                          182         -      -
  Postpaid Customers (000)
     Net Postpaid Customer Additions (000)       894       912   -2.0%
     Postpaid Churn                              1.1%      1.2% -10 BP
  Licensed POPs (000,000)

In-Region Wireline(1)
  Total Consumer Revenue Connections
   (000)(8)
  ------------------------------------------
     Retail Consumer Primary Switched/VoIP
      connections(2)
     Retail Consumer Additional
      Switched/VoIP connections(2)
     Consumer Broadband Connections(3)
     Video Connections:(4)
       Satellite Connections
       U-verse Video Connections
             Total Consumer Revenue
              Connections (000)

             Net Consumer Revenue Connection
              Changes (000)                     (923)      248      -

  Switched Access Lines (000)(8)
  ------------------------------------------
       Retail Consumer - Primary
       Retail Consumer - Additional
       Retail Business
     Retail

     Wholesale(5)
     Coin(6)
             Total Switched Access Lines
              (000)

             Net Switched Access Line
              Changes (000)                   (1,555)   (1,351) -15.1%

  Total Broadband Connections (000)(3,8)
     Net Broadband Connection Changes
      (000)(3,8)                                  46       400  -88.5%
  Total Video Connections (000)(4)
     Net Video Connection Changes (000)(4)       173       200  -13.5%

AT&T Inc.
  Construction and capital expenditures
     Capital expenditures                     $5,142    $4,122   24.7%
     Interest during construction               $187       $43      -

  Dividends Declared per Share               $0.4000   $0.3550   12.7%
  End of Period Common Shares Outstanding
   (000,000)
  Debt Ratio(7)
  Total Employees


Unaudited                                        Six Months Ended
                                            --------------------------
                                            6/30/2008 6/30/2007  %Chg
------------------------------------------- --------------------------

Wireless
  Wireless Customers (000)                    72,882    63,673   14.5%
     Net Customer Additions (000)              2,628     2,647   -0.7%
     M&A Activity, Partitioned Customers
      and Other Adjs. (000)                      202        64      -
  Postpaid Customers (000)                    57,043    51,488   10.8%
     Net Postpaid Customer Additions (000)     1,599     1,592    0.4%
     Postpaid Churn                              1.2%      1.3% -10 BP
  Licensed POPs (000,000)                        304       299    1.7%

In-Region Wireline(1)
  Total Consumer Revenue Connections
   (000)(8)
  -----------------------------------------
     Retail Consumer Primary Switched/VoIP
      connections(2)                          29,349    32,124   -8.6%
     Retail Consumer Additional
      Switched/VoIP connections(2)             3,703     4,232  -12.5%
     Consumer Broadband Connections(3)        12,581    11,260   11.7%
     Video Connections:(4)
       Satellite Connections                   2,235     1,846   21.1%
       U-verse Video Connections                 549        51      -
                                            -------------------
             Total Consumer Revenue
              Connections (000)               48,417    49,513   -2.2%
                                            ===================

             Net Consumer Revenue
              Connection Changes (000)        (1,021)      652      -

  Switched Access Lines (000)(8)
  -----------------------------------------
       Retail Consumer - Primary              29,319    32,124   -8.7%
       Retail Consumer - Additional            3,701     4,232  -12.5%
       Retail Business                        22,428    23,144   -3.1%
                                            -------------------
     Retail                                   55,448    59,500   -6.8%

     Wholesale(5)                              3,248     4,283  -24.2%
     Coin(6)                                     164       295  -44.4%
                                            -------------------
             Total Switched Access Lines
              (000)                           58,860    64,078   -8.1%
                                            ===================

             Net Switched Access Line
              Changes (000)                   (2,722)   (2,391) -13.8%

  Total Broadband Connections (000)(3,8)      14,693    13,261   10.8%
     Net Broadband Connection Changes
      (000)(3,8)                                 537     1,091  -50.8%
  Total Video Connections (000)(4)             2,784     1,897   46.8%
     Net Video Connection Changes (000)(4)       437       387   12.9%

AT&T Inc.
  Construction and capital expenditures
     Capital expenditures                     $9,320    $7,460   24.9%
     Interest during construction               $257       $78      -

  Dividends Declared per Share               $0.8000   $0.7100   12.7%
  End of Period Common Shares Outstanding
   (000,000)                                   5,892     6,107   -3.5%
  Debt Ratio(7)                                 41.7%     35.6% 610 BP
  Total Employees                            307,550   301,840    1.9%



----------------------------------------------------------------------
(1) In-region wireline represents access lines served by AT&T's
 incumbent local exchange companies.
(2) Primarily switched access lines. Also includes VoIP.
(3) Broadband connections include DSL lines, U-verse high speed
 Internet access and satellite broadband.
(4) Video connections include sales under agency agreements with
 EchoStar and DirecTV customers and U-verse connections.
(5) Wholesale lines include 0.2 million lines purchased by AT&T Corp.
 at 06/30/08 and 0.6 million at 06/30/07.
(6) Coin includes both retail and wholesale access lines.
(7) Total long-term debt plus debt maturing within one year divided by
 total debt plus total stockholders' equity.
(8) Prior year amounts restated to conform to current period reporting
 methodology.

----------------------------------------------------------------------
Financial Data

AT&T Inc.
Non-GAAP Wireless Reconciliations
----------------------------------------------------------------------
Wireless Segment Adjusted OIBDA
Dollars in Millions
Unaudited
----------------------------------------------------------------------
Quarter Ended June 30, 2008                    Adjusting Items

                                                 Intangible
                                         GAAP    Amortization Adjusted
                                       -------- ----------------------
Service Revenues                       $10,951                $10,951
Equipment Revenues                       1,082                  1,082
-------------------------------------- -------- ------------- --------
Total Operating Revenues               $12,033           $-   $12,033
-------------------------------------- -------- ------------- --------

Operating Expenses
  Cost of Services and Equipment Sales   4,162            -     4,162
  Selling, General and Administrative    3,361            -     3,361
  Depreciation and Amortization          1,446         (529)      917
-------------------------------------- -------- ------------- --------
Total Operating Expenses                 8,969         (529)    8,440
-------------------------------------- -------- ------------- --------

Operating Income                         3,064                  3,593

Plus: Depreciation and Amortization      1,446                    917
OIBDA                                    4,510                  4,510
----------------------------------------------------------------------
OIBDA as a % of Service Revenue           41.2%                  41.2%
======================================================================

----------------------------------------------------------------------
Quarter Ended June 30, 2007              Adjusting Items

                                    Integration  Intangible
                             GAAP      Costs     Amortization Adjusted
                           -------- ----------------------------------
Service Revenues            $9,540                             $9,540
Equipment Revenues             855                                855
----------------------------------- ----------- ------------- --------
Total Operating Revenues   $10,395    $-          $-          $10,395
----------------------------------- ----------- ------------- --------

Operating Expenses
  Cost of Services and
   Equipment Sales           3,941   (48)          -            3,893
  Selling, General and
   Administrative            3,040  (115)          -            2,925
  Depreciation and
   Amortization              1,810   (83)       (737)             990
----------------------------------- ----------- ------------- --------
Total Operating Expenses     8,791  (246)       (737)           7,808
----------------------------------- ----------- ------------- --------

Operating Income             1,604                              2,587

Plus: Depreciation and
 Amortization                1,810                                990
OIBDA                        3,414                              3,577
----------------------------------------------------------------------
OIBDA as a % of Service
 Revenue                      35.8%                              37.5%
======================================================================

OIBDA is defined as operating income (loss) before depreciation and
 amortization. OIBDA differs from Segment operating Income (loss), as
 calculated in accordance with generally accepted accounting
 principles (GAAP), in that it excludes depreciation and amortization.
 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 GAAP. Our calculation of
 OIBDA, as presented, may differ from similarly titled measures
 reported by other companies.

----------------------------------------------------------------------
Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliations
----------------------------------------------------------------------
Reconciliation of Free Cash Flow
----------------------------------------------------------------------
Dollars in Millions

Unaudited
----------------------------------------------------------------------
June 30, 2008                      Three Months Ended Six Months Ended
                                   -----------------------------------

Net cash provided by operating
 activities                                    $8,548          $13,505
Less: Construction and capital
 expenditures                                   5,329            9,577
----------------------------------------------------------------------
Free Cash Flow                                 $3,219           $3,928
----------------------------------------------------------------------

Free cash flow is defined as cash from operations minus capital
 expenditures. We believe these metrics provide useful information to
 our investors because management regularly reviews free cash flow as
 an important indicator of how much cash is generated by normal
 business operations, including capital expenditures, and makes
 decisions based on it. Management also views it as a measure of cash
 available to pay debt and return cash to shareowners.

----------------------------------------------------------------------
Financial Data

AT&T Inc.
Non-GAAP Consolidated Reconciliations
----------------------------------------------------------------------
Adjusted and Reported Wireline Operating Expenses
----------------------------------------------------------------------
Dollars in Millions

Unaudited
----------------------------------------------------------------------
                                       Three Months Ended
                                        6/30/08  6/30/07  YoY % Change
----------------------------------------------------------------------

Reported Wireline Operating Expenses     $14,496  $14,803        -2.1%
  Operating Adjustments
    Cash Integration Costs                     -      141            -
    Intangible Amortization                  432      578       -25.3%
----------------------------------------------------------------------
  Total Adjusting Items                      432      719       -39.9%
----------------------------------------------------------------------
Adjusted Wireline Operating Expenses     $14,064  $14,084        -0.1%
----------------------------------------------------------------------

Adjusted Wireline operating expenses differs from reported operating
 expenses in that it excludes the merger-related expenses shown above
 and provides additional comparability to prior periods.

SOURCE: AT&T Inc.

AT&T Inc.
Jamie Anderson, 210-352-6973
Mobile: 210-219-1580
janderso@attnews.us