This summary is based on the first quarter fiscal 2007 earnings call conducted by AT&T Inc. (T: chart) on April 24, 2007.

Management:

CFO: Rick Lindner
IR: Rich Dietz

Key Investors Issues

- EPS were 45 cents a share compared to 37 cents a share last year.
- Net income was $2.85 billion, up from the year-ago $1.45 billion.
- Revenue rose 84% from a year ago to $28.97 billion.

First Quarter Highlights

Reported EPS was 45 cents per share.

The company reduced that by 4 cents per share for a gain realized on a previously announced wireless asset transaction with T-Mobile. The company adds back 20 cents per share of merger costs associated with the BellSouth, AT&T and AWE/Cingular mergers. The company adds back 3 cents per share associated with the effect of purchase accounting on advertising and publishing''s deferred revenues and expenses.

In accordance with purchase accounting rules, the former BellSouth''s deferred revenues and expenses for all directories delivered prior to the close of the merger have been eliminated. In 2007, this results in a reduction in consolidated revenues, expenses and net income, but does not affect cash from operations.

Factoring in all three items, the result is an adjusted EPS of 65 cents per share. In the first quarter of 2006, reported EPS was 37 cents per share. The company adds back 15 cents per share of merger costs associated with the AT&T and AWE/Cingular mergers, resulting in an adjusted EPS of 52 cents per share. So reported EPS in the first quarter this year was 45 cents per share, up 22% versus the year earlier quarter. Adjusted EPS was 65 cents per share, up 25%.

The company grew total revenues versus pro forma results for 2006 and growth rates have improved every quarter over the past three quarters.

That reflects strong wireless results as well as improved performance in key parts of wireline operations.

Broadband and video net adds were up, reflecting strong customer demand.

- Merger synergies are on track, and from a timing perspective, ahead of outlook.
- The company bought back $3 billion of shares. That brings total repurchases since the plan was announced to $5.7 billion.

Adjusted operating income from wireless operations was up more than 80% year over year, with an adjusted EBITDA service margin of 38.9%.

Strong execution of merger initiatives also drove margin expansion in wireline results.

Adjusted operating income margin was 23.7%.

That is up 640 basis points versus the year-ago quarter and ahead of target range for the year, which was 21% to 23%.

There are a number of drivers behind this margin expansion. BellSouth is included in first quarter margins. Beyond that, wireless business is a key driver, with improvements in revenue and ARPU as well as operating costs and churn. Finally, wireline operational initiatives and merger projects continue to yield benefits.

The company achieved over $1 billion in savings from SBC/AT&T integration.