Wireless Opportunities
Ralph de la VegaPresident and CEO-AT&T Mobility
AT&T Inc.
Cautionary Language Concerning Forward-Looking Statements
Information set forth in these presentations 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 presentation based on new information or otherwise.
These presentations 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.
Market Share
Flow Share
Revenue
Profitability
Customer Retention
Lead in Wireless
number
Objective:
to be
Strongest Set of Assets:
Average Spectrum Depth Top-100 Markets(MHz)
AT&T
1. Strong spectrum holdings
77
58 Cellular/PCS
10 AWS9 Aloha Partners
Percent of Global Subscribers by Technology
Strongest Set of Assets:
GSM, UMTS or HSPA86%
CDMA12%
Other2%
2.7 Billion Subscribers
2. The most widely deployed technology
1. Strong spectrum holdings
Source: 3G Americas
3. The largest international roaming footprint
Strongest Set of Assets:
2. The most widely deployed technology
1. Strong spectrum holdings Countries/Regions Covered for International Voice Roaming
28 28
162 162196 193
AT&T T-Mobile Verizon Sprint
GSM or CDMA
Additional coverage with GSM/CDMA dual-band phones
4. The greatest number of customers
3. The largest international roaming footprint
Strongest Set of Assets:
53.1
63.767.3
27.7
AT&T Verizon Sprint T-Mobile
Total Customers by Carrier 3Q07(millions)2. The most widely
deployed technology
1. Strong spectrum holdings
AT&T shows pro forma customers including Dobson.
Strongest Set of Assets:
5. The most compelling products and services
2. The most widely deployed technology
1. Strong spectrum holdings
Rollover®
4. The greatest number of customers
3. The largest international roaming footprint
Strongest Set of Assets:
6. The most complete provider
5. The most compelling products and services
2. The most widely deployed technology
1. Strong spectrum holdings
4. The greatest number of customers
3. The largest international roaming footprint
Solid Momentum:
Return on Operations — 1,350 basis points of adjusted OIBDA improvement since AT&T Wireless merger
Market leader in total gross adds for 11 straight quarters — since AT&T Wireless merger
Annual data revenue growth has exceeded 60% for five consecutive quarters
Greatest churn improvement in industry over last three years
1
2
3
4
Deliver Compelling Products and Services
Achieve a Competitive Cost Structure
Build the Best Network
Create Unmatched Distribution
Earn Industry-Leading Retention
Keys to Success: Strategic Imperatives
Dobson and Edge, Verizon Swap
– Dobson: Adding >3,000 cell sites
– Edge: Adding 360 cell sites
– Verizon swap: Adding 160 cell sites
Aloha Partners
– 700 MHz spectrum
– Adding 12 MHz covering 196M POPs
– 72 of top 100 markets
Build the Best Network:Expanding and Improving the Network
Wireless Coverage
AT&T
Dobson
Edge
VZ SwapRoaming
350 – 500500 – 800500 – 800Uplink
600 – 1,400600 – 1,400600 – 1,400Downlink
Build the Best Network:3G Deployment — UMTS/HSPA
3G Expansion
- Cover 255 major metro areas including 89 of the top-100 cities
- Plan to expand coverage in 2008
HSUPA Deployment
- Faster 3G speeds
- Deployed nationwide in 2Q08
8996 92
Number of Top-100 Cities With 3G Coverage
3G Speeds
Speed claims for devices with advanced receivers.
Cost of Service as a % of Wireless Service Revenue and Adjusted OIBDA
29.6% 28.4% 24.0%
35.6%39.1%
31.7%
3Q05 3Q06 3Q07 2008
Achieve a Competitive Cost Structure:Cost of Service Improvement
100 bps reduction in Cost of Service = ~ $400M annual savings
Key Actions:
– TDMA sunset
– Dobson integration
– Network rationalization
– Improved capital utilization
Cost of Service % of Service Revenue
Adjusted OIBDA Margin
1.90%1.80%
1.87%
1.59% 1.32%1.45% 1.54% 1.49%
1.22%1.31%
1.97%
1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07
AT&T Sprint T-Mobile Verizon
35 bps
Earn Industry-Leading Retention:Closing the Gap
Competitive Postpaid Churn Rates
87 bps
57 bps
Earn Industry-Leading Retention:Closing the Gap
Current Churn Level
12-16 bps
Industry-Leading Churn
8-12 bps
35 bps
TDMA Sunset
Wired Bundles and Family Talk
Network Improvements
Service Improvements
6-7 bps
2-3 bps
Create Unmatched Distribution
Strong Direct Distribution– 2,000 company-owned stores– Dedicated business organization– Strong sales from call centers– Largest volume of online sales
Unmatched Indirect Distribution– High-quality agent partners– #1 in national retail– Apple retail and online stores
Strong Resale Partners
4.7
4.34.4
5.1
4.74.44.6
5.5
4.34.5
5.3
1Q05 3Q05 1Q06 3Q06 1Q07 3Q07
AT&T Verizon
Sprint T-Mobile
Industry-Leading Gross Adds(in millions)
Source: UBS
Create Unmatched Distribution:Experience Stores
Create Unmatched Distribution:National Retail Leadership
#1 in National Retail
– Wired and wireless
Strong in postpaid and prepaid
Well-positioned to maximize the prepaid opportunity
– Strong GoPhone brand
– Good margins
– Extensive distribution2Q07 Current
National Retail Stores Selling GoPhones
20K
48K
Compelling Products and Services:Exclusive Devices
Pantech Duo
AT&T Tilt
Samsung a737
BlackBerry 8820
iPhone
Samsung SLM
Focus on exclusives
Lead in PDAs
Expand capabilities
Cool form factors
Compelling Products and Services:Convergence through Wi-Fi
You are here
Annualized data revenue is more than $7B with a growth rate of more than 60%
Wireless Data Revenue
SMS
Media Bundles
Data Access
Other
3Q06 3Q07
$1.1B
$1.8B
Compelling Products and Services:Data Growth
2G Devices
3G Devices
IntegratedDevices
Postpaid ARPU Improves With Device Capabilities
Compelling Products and Services:Data Growth
Increased ARPU with 3G and integrated devices
Opportunity to increase penetration
– 11% of subs have 3G device
– 14% of subs have integrated device
+20%
+120%
Open Access
Devices Operating Systems Applications
Allow any device on any network
Support devices that run various operating systems
Download and use applications from any source
AT&T is an open access carrier that runs GSM —a SIM-based standard
AT&T provides customers with a choice of six operating systems
AT&T offers the broadest selection
of applications
Customers want good choices, good prices and an unconstrained ability to reach the people, information and entertainment they care about.
the 4 R’s
R1
Revenue Intensity
Rate of Penetration
ReputationReturn on Operations
R2
R3R4
Total Net Adds (in 000s)
Progress Report and Outlook
2008 Outlook: AT&T maintains #1 net flow share
867
1,358
1,993
3Q05 3Q06 3Q07
Year-over-year growth rates for 3Q05 based on pro forma.
Service Revenue Growth
2008 Outlook:Service revenue growth in the midteens
4.3%
12.2%13.7%
3Q05 3Q06 3Q07
R2: Revenue IntensityR1: Rate of Penetration
31.7%
35.6%39.1%
3Q05 3Q06 3Q07
2.0%
1.5%1.3%
3Q05 3Q06 3Q07
Progress Report and Outlook
Adjusted OIBDA Margin
2008 Outlook:OIBDA margins averaging in the low 40% range
Average Postpaid Churn
2008 Outlook:Continued improvement in postpaid and overall churn
R4: ReputationR3: Return on Operations
Lead
in
Wir
ele
ssWe had a great 2007, and we’ll deliver even more in 2008
We have a great plan and a track record for delivering results
Focus on execution to:– Maintain strong flowshare
– Deliver on data to grow revenue
– Continue reducing cost of service
– Close gap to industry-leading postpaid churn
– Deliver OIBDA margins in the low 40s
Wireless Opportunities
Ralph de la VegaPresident and CEO-AT&T Mobility
AT&T Inc.