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FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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Wireless Opportunities Ralph de la Vega President and CEO-AT&T Mobility AT&T Inc.
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Page 1: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Wireless Opportunities

Ralph de la VegaPresident and CEO-AT&T Mobility

AT&T Inc.

Page 2: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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.

Page 3: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Market Share

Flow Share

Revenue

Profitability

Customer Retention

Lead in Wireless

number

Objective:

to be

Page 4: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 5: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 6: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 7: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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.

Page 8: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 9: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 10: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 11: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 12: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 13: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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.

Page 14: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 15: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 16: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 17: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 18: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Create Unmatched Distribution:Experience Stores

Page 19: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 20: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 21: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Compelling Products and Services:Convergence through Wi-Fi

You are here

Page 22: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Annualized data revenue is more than $7B with a growth rate of more than 60%

Wireless Data Revenue

SMS

Media Bundles

Data Access

Other

E-Mail

3Q06 3Q07

$1.1B

$1.8B

Compelling Products and Services:Data Growth

Page 23: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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%

Page 24: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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.

Page 25: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

the 4 R’s

R1

Revenue Intensity

Rate of Penetration

ReputationReturn on Operations

R2

R3R4

Page 26: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 27: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 28: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

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

Page 29: FINAL de la Vega An Conf 12-10-07 Webcast-compressed

Wireless Opportunities

Ralph de la VegaPresident and CEO-AT&T Mobility

AT&T Inc.


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