Transformation in a Growth Industry

Beyond our financial results, AT&T's most important achievement has been to transform our company for industry leadership in four key areas.

FIRST, we have built the United States' largest wireless business while delivering the industry's greatest improvement in wireless operating metrics.
Just over three years ago, Cingular Wireless, in which we owned a majority stake, acquired AT&T Wireless. That acquisition gave Cingular nationwide coverage. Then the BellSouth acquisition gave us 100 percent ownership of Cingular. Today, AT&T operates the nation's largest wireless digital voice and data network, with more than 70 million subscribers and the broadest international reach.

Over these same three years, we've delivered the industry's largest improvement in customer loyalty and led the industry in bringing innovative smartphones to market, including collaborating with Apple on the highly successful, exclusive U.S. launch of their iPhone. In that time, we've also added more wireless subscribers than any other U.S. provider. In the process, we have positioned our company as the leader in defining the next generation of wireless products and services.

SECOND, we have energized and expanded the industry's premier enterprise business.
Just over two years ago, our acquisition of the former AT&T Corp. gave us a world-class set of assets to serve large U.S. and multinational companies. In the second half of 2007, we saw enterprise service revenues return to growth a year ahead of plan, and we anticipate growth in overall enterprise revenues in 2008.

We've invested in new capabilities and have executed well, and business customers have responded enthusiastically to the total range of innovative services we deliver with world-class reliability. And thanks to customer demand for more mobile communications, more Internet-based applications and expansive global connectivity, we have additional growth opportunities in 2008 and beyond.

THIRD, we have greatly expanded broadband access to the Internet.
Broadband is becoming the primary connection for linking consumers and businesses to entertainment and information. We lead the industry with more than 14 million broadband subscribers, and through the broadest U.S. Wi-Fi footprint, we're making high speed Internet access mobile. And by the end of 2008, our Wi-Fi footprint will include more than 7,000 Starbucks locations in the U.S.

Broadband usage is ramping. Customers are demanding higher speeds for such bandwidth-hungry applications as video. And there's substantial growth potential ahead as we make broadband access increasingly seamless across wired and mobile devices.

LAST, we are well under way with a major network transformation to build a seamless all-Internet Protocol (IP) infrastructure as the foundation for future growth.
In a connectivity-driven world, IP is the future. It creates a platform for wired and wireless services that truly work together for our customers. AT&T is building the fastest Internet backbone in the U.S., and we are the only major U.S. communications company deploying a pure, 100 percent IP video network. Our next-generation AT&T U-verseSM service — which delivers interactive TV, broadband and voice — ramped throughout 2007 to more than 231,000 TV customers. We expect to end 2008 with more than 1 million U-verse TV customers and to expand our network deployment to 30 million customer locations by the end of 2010.

These major transformations form the foundation of AT&T's future as an integrated wireless, wired, voice, data and video company that connects our customers to their world, everywhere they live and work. And we'll do that better than anyone else. That's because at every level — local, national, global — we've shaped ourselves around meeting our customers' total needs. We've built a company around our customers. That's the new AT&T.

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