AT&T Announces Intention to Withdraw from Pay Phone Business by End of 2008

Growing Availability of Alternative Communications, Especially Wireless, Has Led to Decline in Demand for Pay Phone Services

San Antonio, Texas, December 3, 2007

AT&T Inc. (NYSE:T) announced today plans to exit the shrinking pay phone business by the end of 2008. Existing contracts and customer service commitments will continue to be honored during the period that the business is being phased out.

AT&T's Public Communications unit has continued to experience significant pressure from reduced pay phone usage, primarily as a result of the growth of alternative communications choices, such as wireless phones and personal communication devices.

The company plans to phase out both public pay phones and phones provided under contracts at government correctional facilities through the end of next year. All customers will receive advance notification of specific plans as well as information on other potential providers and product options.

The move affects AT&T pay phones in the company's traditional 13-state service area only. BellSouth Corp., which was acquired by AT&T Inc. in late 2006, had previously exited the pay phone business in its nine-state service area. AT&T's wholesale pay phone services are not affected.

Public Communications will honor all existing customer contract terms and conditions while continuing to provide excellent customer service throughout the withdrawal process.

"This is the right time for us to take this step on behalf of our customers, employees and stockholders," said David Huntley, senior vice president for Customer Information Services. "We expect that independent providers will pick up much of this business, and, as we exit the business, we will be able to refocus our resources to areas that offer stronger growth potential and greater opportunity for the company."

Pay phones in the United States have declined across the industry from about 2.6 million phones in 1998 to an estimated 1 million phones today.

Huntley said the company will be attentive to the needs of both customers and employees during the 13-month process of phasing out the business.

Current AT&T Public Communications customers may call 800-809-0878 with questions.

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