This summary is based on the first quarter fiscal 2006 earnings call conducted by AT&T Inc. (T: chart) on April 25, 2006.

Management:

CFO: Rick Lindner
SVP, IR: Rich Dietz

Key Investor Issues:

- Q1 reported EPS rose 37% to 37 cents from 27 cents in the year ago quarter.
- The company anticipates $2 billion worth of share buybacks in 2006.
- Full year merger savings are expected to be in the $600 million to $700 million range.

First-Quarter Financial Highlights:

In the first quarter, data made up more than 30% of total revenues.

- This compares with 28% in the year ago quarter on a pro forma basis.
- During the quarter, total data revenues grew 2.6% and this was the best growth in the past five quarters.
- The retail data revenues grew 4.8%, also the best in five quarters. Three-quarters of total data revenue is from retail.

- The data transport revenues increased 1.6% helped by good volume growth.
- The DS1 and DS3 volumes were up in 2005 reversing the declines in 2004.
- Packet data declined 12.5% reflecting migration from frame relay to EVPN and managed Internet services.

AT&T and BellSouth announced an agreement to merge on March 5, 2006.

- The management filed documents with the Securities and Exchange Commission on March 31, 2006.
- The management also anticipates a shareowner vote sometime in the summer.
- On the last day of March, filings were made with the Department of Justice and applications were submitted to the FCC.
- There are six states in the BellSouth region that have an approval process and notices are required in three additional BellSouth states.
- According to the management, applications are required in 12 other states and in a few foreign countries.

In Q1 of 2006, the adjusted EPS was 52 cents.

- The reported Q1 EPS was 37 cents.
- The Cingular merger integration and intangible amortization costs were 6 cents.
- About 9 cents related to costs of the AT&T merger.
- During the quarter, approximately two-thirds of the adjustments are for non-cash items such as amortization of intangible at both AT&T and Cingular and accelerated depreciation at Cingular.

- The adjusted EPS in the year ago quarter was 34 cents.
- The reported EPS for the same period was 27 cents.
- About 7 cents was incurred under Cingular merger-related costs.

- The EPS growth drivers include higher contributions from wire less and additional upside ahead.
- Secondly, the company continues to execute excellently in wire line.
- Thirdly, the company has begun to realize some SBC/AT&T merger synergies.
- According to the management, the AT&T merger was accretive to adjusted earnings from the outset with contribution growing as synergies are realized.

The wire less segment, under the new structure, still remains unchanged, that is Cingular.

- At Cingular, network performance is on an upward curve, customer service has improved and this resulted in substantial reduction in churn.
- In each of the past several quarters, Cingular has led the industry with the highest gross additions.
- The quarterly overall churn was 1.9%, the post paid churn was 1.6% and both were Cingular’s best ever.
- Over the past two quarters, both were down 40 basis points.

- The lower churns comes from delivering on the fundamentals; the fewest dropped calls of any national provider, broad coverage, feature-rich attractive handsets, exclusives in handsets and great customer care.
- The lower churn and continued strength in gross additions resulted in a net subscriber gain of 1.7 million with post paid additions up more than 40% versus the previous quarter.

- Cingular’s revenue growth was more than 9% for the second straight quarter.
- The drivers are strong subscriber growth and stabilizing ARPUs.
- Over the past year, subscribers are up more than 5 million and overall ARPU declined 2.3%.
- A year ago, the ARPU declines were mainly about overall pricing and customer migration to new plans.
- At this point, the numbers reflect different factors especially the impact of reseller ARPU which tends to be lower and pulls down the overall average.
- However, Cingular’s ARPU, excluding impacts from growth in reseller subs, increased year-over-year and this was driven by higher data ARPU.

- The Data ARPUs increased markedly.
- The company added 89 cents of data ARPU in the past two quarters as more customers have data capable handsets.
- The Q1 data ARPU of $522 is an overall average.
- The company includes in the base all the 55.8 million of its subscribers.