This summary is based on the first quarter fiscal 2008 earnings call conducted by AT&T Inc. (T: chart) on April 22, 2008.

Management:

SVP Investor Relations: Rich Dietz
SEVP and CFO: Rick Lindner

Key Investors Issues

- EPS were 57 cents a share compared to 45 cents a share last year.
- Net income was $3.46 billion, up from $2.85 billion in the 2006 first quarter.
- Revenue increased 6.1% to $30.74 billion from $28.97 billion.

First Quarter Highlights

Revenues totaled $30.7 billion, up 6.1% versus reported results in the year-earlier quarter and up 4.6% compared with first-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues.

- This marks a step up from year-over-year pro forma revenue growth of 2.9% in the fourth quarter of 2007 and 1.7% in the first quarter of 2007.
- Compared with results for the year-earlier first quarter, AT&T''s reported operating expenses were $24.8 billion, up from $24.3 billion; reported operating income was $6 billion, up from $4.7 billion; and AT&T''s reported operating income margin was 19.5%, up from 16.1%.
- AT&T''s reported net income totaled $3.5 billion, up 21.5% from $2.8 billion in the year-earlier first quarter, and reported earnings per share totaled 57 cents, up 26.7% from 45 cents in the first quarter of 2007.

AT&T''s adjusted results exclude merger-related amortization expenses and costs associated with a workforce reduction.

- Adjusted results for the first quarter of 2007 excluded merger-related costs and accounting effects as well as gains from wireless transactions.
- Compared with results for the year-earlier first quarter, AT&T''s adjusted operating expenses totaled $23.2 billion, versus $22.4 billion, adjusted operating income was $7.6 billion, up from $7 billion and AT&T''s adjusted operating income margin was 24.6%, up from 23.7%.
- AT&T''s adjusted net income totaled $4.5 billion, up 10.3% from $4.1 billion in the year-earlier first quarter, and adjusted earnings per share totaled 74 cents, up 13.8% from 65 cents in the first quarter of 2007.
- AT&T''s merger integration and operational cost initiatives continue on schedule. For the full year 2007, operating expense savings from BellSouth and AT&T Corp. merger integration efforts and previously outlined operational initiatives totaled approximately $3.9 billion. AT&T expects these expense savings to grow in 2008 by more than $2 billion dollars.

Compared with results in the year-earlier first quarter, AT&T''s cash from operating activities totaled $5 billion, up from $4.6 billion.

- Capital expenditures totaled $4.2 billion, versus $3.3 billion.
- Free cash flow (cash from operations minus capital expenditures) totaled $0.7 billion, compared with $1.3 billion.
- As it invests in the future of its business, AT&T continues to return substantial value to shareowners through dividends and share repurchases. In the first quarter, dividends paid totaled $2.4 billion and shares repurchased totaled 111.6 million for $4.1 billion. AT&T ended the quarter with 5.9 billion shares outstanding.

Total wireless revenues increased 18.3% versus the year-earlier first quarter to $11.8 billion.

- Wireless service revenues, which exclude handset and accessory sales, grew 17.1% to $10.6 billion. Revenue growth was driven by strong subscriber gains and continued improvement in ARPU (average monthly revenues per subscriber).
- AT&T has now posted seven consecutive quarters of year-over-year growth in wireless service ARPU, which was $50.18 in the first quarter, up 2% versus the year-earlier first quarter.
- Retail postpaid subscriber ARPU growth was even stronger, up approximately 5%.

Wireless data revenues grew 57.3% versus results in the year-earlier first quarter to $2.3 billion, reflecting robust increases in Internet access, e-mail, messaging, data access and media bundles.

- Data now represents 21.5% of AT&T''s total wireless service revenues, up from 16% in the first quarter of 2007 and 10.9% in the first quarter of 2006. AT&T''s wireless customers sent more than 620 million multimedia messages and 44 billion text messages, both volumes more than double totals in the year-earlier first quarter.
- AT&T''s net gain in wireless subscribers totaled 1.3 million, up 104,000, or 8.7%, versus net adds in the year-earlier first quarter. AT&T ended the quarter with 71.4 million subscribers in service.
- Total net adds were reduced by approximately 330,000 because of the shutdown of AT&T''s TDMA wireless network in late February. Retail postpaid net adds totaled 705,000 in the first quarter, up 3.7% versus net adds in the year-earlier first quarter.

AT&T continued its strong record of wireless subscriber flow share with 5 million first-quarter gross subscriber additions, up from 4.3 million in the year-earlier first quarter.

- Total average monthly subscriber churn, which includes postpaid, prepaid and reseller subscribers, was 1.7%, flat with the year-earlier first quarter and with the fourth quarter of 2007.
- Retail postpaid churn was 1.2%, down from 1.3% in the year-earlier first quarter and flat with the fourth quarter of 2007.

- On a reported basis, AT&T''s first-quarter wireless operating expenses totaled $8.9 billion, and operating income was $3 billion, up 94.1% from $1.5 billion in the first quarter of 2007. On an adjusted basis, wireless operating expenses, which exclude merger-related costs, totaled $8.3 billion, and operating income was $3.5 billion, up 38.5% from $2.5 billion in the first quarter of 2007.
- AT&T''s reported wireless operating income margin was 25%, up from 15.2% in the year-earlier first quarter, and its adjusted wireless operating income margin was 29.8%, up from 25.5% in the year-earlier first quarter.
- AT&T''s first-quarter wireless OIBDA service margin was 41.7%, the highest ever achieved by the company''s wireless segment, up from an unadjusted 37.5% and an adjusted 38.9% in the year-earlier first quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Driven by solid demand and a strong record of contract wins, AT&T wireline delivered further improvement in enterprise revenue growth in the first quarter, led by a 22.9% increase in enterprise IP data revenues, including areas such as virtual private networks, managed Internet services and hosting.