SBC Forms Alliance With Williams Communications To Transport Long-Distance Data, Voice Traffic

Agreement Another Milestone In SBC's Goal To Become Single-Source, Global Provider

SBC To Take 10 Percent Equity Stake In Williams Communications Group

New York, New York, February 8, 1999

SBC Communications Inc. (NYSE:SBC) today announced a long-term strategic alliance with Williams Communications, Inc., a subsidiary of Williams (NYSE:WMB), that provides for the transport of its long-distance data and voice traffic. Together with its pending Ameritech merger, this deal moves SBC significantly closer to its goal of transforming itself from one of the best regional providers into a world-class competitor that offers integrated telecommunications services to customers in the United States and around the world.

For Williams Communications, the alliance provides an anchor tenant on its advanced fiber-based ATM backbone network. Williams has facilities that currently serve 50 of the top U.S. markets and will soon cover 32,000 miles and reach more than 125 cities nationwide. The deal also provides Williams with enhanced network platforms such as calling cards and 800 number services, which Williams will acquire from SBC and resell to its other wholesale customers.

Under the terms of the agreement, SBC will receive long-haul transport capacity at industry-leading prices for its data and voice business. For SBC's customers, this alliance positions the company to provide competitive prices and innovative products and services once regulatory approvals are obtained allowing SBC to offer in-region long-distance.

In addition, the companies will cooperate on international facilities to bring the same high-quality services that SBC offers to its customers locally, anywhere in the world. The alliance will make SBC Williams' preferred provider for international transport services and will connect SBC's international cables to Williams' domestic network.

As part of the relationship, SBC plans to acquire up to 10 percent of the common stock of Williams' communications subsidiary, Williams Communications Group, Inc. The investment will occur simultaneously with the initial public offering of Williams' communications division, currently scheduled for the second quarter. SBC will be limited to an investment of $500 million in the IPO. If that investment equals less than 10 percent of the common stock, SBC has the ability to purchase the remainder of the 10 percent in subsequent public offerings, if they occur. Additionally, once SBC receives regulatory approval to enter the long-distance business within its local service territory, SBC will have a seat on Williams Communications Group's board of directors.

"This is a strategically significant alliance that, along with the pending Ameritech merger, helps bring together the elements necessary for SBC to become a full-service, end-to-end, global provider," said SBC Chairman and CEO Edward Whitacre. "We've made numerous strategic transactions and investments which have brought critical dimension to our datacomm, national-local and international strategies, and this deal is yet another major milestone.

"This relationship creates significant value for our customers and shareholders by placing us in the best position to deliver on our long-distance strategy, while minimizing SBC's capital investment. Together, we can take advantage of both companies' strengths, creating a mutually beneficial, long-lasting relationship," said Whitacre. "We believe that with Williams, we've teamed with the best possible ally - an ally that shares our vision and values, is a complementary player in the industry, and owns a network that is built with state-of-the-art technology and recognized as being among the highest quality in the world."

"This alliance is a 'win-win' for both SBC and Williams and promises to deliver lasting benefits to both companies," said Williams Chairman and CEO Keith Bailey. "The deal takes advantage of the competitive assets and strengths of each company and has numerous synergies."

The alliance consists of a series of agreements that give SBC:

  • Low-cost access to Williams' advanced fiber-based, ATM backbone network.
  • Integrated product development and marketing, allowing the alliance to offer competitively priced and differentiated data and voice products that meet the distinct and changing needs of each companies' customers.
  • Access to Williams' extensive nationwide network of technicians, sales force and physical presence. Williams is the industry's largest independent distributor and integrator of business communications solutions.
  • A powerful combined sales channel since SBC and Williams will jointly market each other's services. For example, since Williams is focused on the wholesale market, in the near-term it will sell SBC retail local, data and Internet product offerings, and upon regulatory relief, long-distance products to the customers of its Solutions subsidiary.
  • A voice in the development of Williams' network as it expands to reach new markets.

"This relationship is extremely valuable to SBC, helping us deliver on our data strategy in the near term," said Whitacre. "As SBC continues working with regulators to develop a clear path toward long distance and to ultimately secure regulatory relief, the alliance will allow us to offer superior long-distance products and services to our 17 million in-region residential customers and our more than 12 million business access lines."

"With an asset like Williams' world-class backbone network and the fact that they are also the backbone provider to another strategic partner of ours, Concentric, this alliance moves us closer to realizing our vision of becoming a premier data and voice communications provider. With the Williams alliance and our merger with Ameritech, we're expanding our national and international capabilities, and in short, growing into the global competitor we need to be to follow our customers anywhere, while meeting their needs in the years ahead," said Whitacre.

The Williams alliance is an important step forward in SBC's commitment to offer a high-speed, high-capacity network to handle next-generation data communications traffic. As recently reported, SBC's data business has grown approximately 33 percent a year, and the company is continuing to execute its plan to develop a full range of new data products and services to meet customers' evolving data needs.

SBC's "national-local strategy" calls for it, upon completion of its merger with Ameritech, to enter 30 of the nation's biggest markets, that currently are not in its traditional service region, and to compete for business and residential customers. SBC recently announced that it would enter at least 15 new markets within 18 months after completing the merger with Ameritech, with Boston, Miami and Seattle being the first cities outside its local territory where SBC will compete as a full-service telecommunications provider for residential and business customers.

Williams, through its subsidiaries, provides a full range of traditional and leading-edge communications and energy services, and is the nation's largest volume transporter of natural gas. Williams Communications offers wholesale fiber-optic network services, North American single-source business communications systems integration, international video satellite and fiber-optic transmission, multipoint video and audio conferencing and satellite business applications. Information is available at www.twc.com and www.wilcom.com.

SBC Communications Inc. (www.sbc.com) is a global leader in the telecommunications industry, with more than 37 million access lines and 6.9 million wireless customers across the United States, as well as investments in telecommunications businesses in 11 countries. Under the Southwestern Bell, Pacific Bell, SNET, Nevada Bell and Cellular One brands, SBC, through its subsidiaries, offers a wide range of innovative services. SBC offers local and long-distance telephone service, wireless communications, data communications, paging, Internet access, and messaging, as well as telecommunications equipment, and directory advertising and publishing. SBC has approximately 129,000 employees and its annual revenues rank it in the top 50 among FORTUNE 500 companies.