2. Cautionary Language Concerning
Forward-Looking Statements
Information set forth in this presentation contains financial estimates
and other forward-looking statements that are subject to risks and
uncertainties, and actual results might differ materially. A discussion
of factors that may affect future results is contained in AT&T’s filings
with the Securities and Exchange Commission. AT&T disclaims any
obligation to update and revise statements contained in this
presentation based on new information or otherwise.
This presentation may contain certain non-GAAP financial measures.
Reconciliations between the non-GAAP financial measures and the
GAAP financial measures are available on the company’s Web site
at www.att.com/investor.relations.
2
3. 1Q09 Financial Summary
Solid quarter, strong cost execution,
results in line with full-year outlook:
AT&T Diluted Earnings
Per Share
$0.53 EPS – includes $0.05 of pressure
$0.57
from incremental noncash pension/retiree
$0.53
benefits costs
Stable consolidated revenues –
(0.6)% versus 1Q08; continuing economic
impacts largely offset by growth in wireless,
U-verseSM, broadband and strategic
business services
Stable consolidated margins – 18.8%
in 1Q09 versus 18.6% for full-year 2008
1Q08 1Q09
$4.6 billion in free cash flow
before dividends
3
4. AT&T 1Q09 Highlights
• Strong wireless growth – 1.2 million total net adds;
875,000 postpaid net adds, up 24.1% versus 1Q08
• 1.6 million iPhone activations – >40% new to AT&T,
ARPU and churn characteristics continue to be strong
Strong execution,
• 40.9% wireless OIBDA service margin – up more
solid cost discipline, than 500 basis points sequentially
• Strong U-verse TV growth – 284,000 net adds to reach
continued advances
1.3 million, with strong broadband and VoIP attach rates
in key growth areas • 471,000 increase in total broadband subscribers –
significant step up from recent quarters
for the future
• 16.4% growth in wireline IP data revenues –
driven by AT&T U-verse growth and continued double-digit
gains in business IP revenues
• Margin strength, on track with full-year outlook –
driven by wireless improvement and disciplined execution
of wireline cost initiatives
4 OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.
5. Revenue Trends
AT&T Consolidated Revenues $30.6 billion 1Q09 consolidated
operating revenues, down 0.6%
($ in billions)
$31.3
$30.9 $31.1
$30.7 $30.6
• Economic impacts primarily
affecting wireline voice, which
was down 12.2%
• Growth in wireless and
data services:
Wireless Services +9.6%
1Q08 2Q08 3Q08 4Q08 1Q09
Wireline Data +5.3%
1Q09 Revenue Mix
Wireline IP Data +16.4%
Wireless – 100% owned 42%
Wired Data/
Managed Services 24% Diversified mix with increased
percentage of revenues coming
Wired Voice 28%
from wireless and data services
Advertising
Solutions/Other 6%
5
6. Continued Strong Wireless Growth
AT&T Wireless Service Revenues
Wireless service revenues up
($ in billions)
$11.7
$11.5
>$1 billion or 9.6% versus 1Q08
$11.3
$11.0
$10.6
Total wireless subscribers up
6.9 million over past year, led
by strong postpaid gains
Year-over-year postpaid
subscriber metrics:
1Q08 2Q08 3Q08 4Q08 1Q09
Gross adds +9%
Postpaid Postpaid
Postpaid Net adds +24%
Net Adds Subscriber
Gross Adds
ARPU
(in thousands)
(in millions)
Data ARPU +27%
$59.21
3.0 875
$58.02
2.8
705
Total ARPU +2%
1Q08 1Q09 1Q08 1Q09
1Q08 1Q09
6
7. Continued Robust Wireless
Data Growth, Up 38.6%
Wireless data revenue growth
Wireless Data driven by more data-capable
Wireless Data
ARPU
Revenues
devices, richer applications
($ in billions)
$3.2
• Continued strong data ARPU
$13.64
growth, up >25% year over year
• >94 billion text messages sent
in 1Q09, more than double 1Q08
$10.80
$2.3
• >40% growth in media bundles
and Internet access revenues
• Postpaid subscribers with data
plans up 900 basis points over
past year, approaching 50%
1Q08 1Q09 1Q08 1Q09
7
8. Strong Integrated Device Growth,
More Than 1.6 Million iPhone Activations
AT&T Wireless Postpaid
United States’ fastest 3G network –
Integrated Devices in Service
strong spectrum position, increased
(in millions)
use of 850 MHz for 3G
19.3
Percentage of Postpaid
Subscribers with
Integrated Devices
16.2
Broad array of attractive devices –
Apple iPhone, BlackBerry® BoldTM,
quick messaging devices, netbooks
13.1 31.7%
27.0%
10.3
Explosion of applications and
8.8
content – AT&T Apps Beta launched
22.3%
in first quarter, largest catalog of mobile
music among U.S. wireless companies
18.0%
15.8%
2Q08 3Q08
1Q08 4Q08 1Q09
8
9. 40.9% Wireless OIBDA Service Margin
Wireless margin expansion
AT&T Wireless OIBDA
on track with full-year outlook.
Service Margin
Major drivers:
• ARPU and churn characteristics of
41.7%
growing iPhone 3G customer base
41.2% 40.9%
• Continuing operational
improvements in network and
iPhone 3G
support functions
launch
35.8% • >10 basis point year-over-year
improvement in total churn
33.5%
Continue to expect wireless
OIBDA margin in the mid 40%
range long term
2Q08
1Q08 4Q08
3Q08 1Q09
9 OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.
10. Strong AT&T U-verse Growth
AT&T U-verse TV Subscribers
AT&T U-verse TV subscriber growth
1,329
(in thousands)
delivering high broadband and VoIP
1,045
attach rates
781
• Double-digit U-verse TV penetration
549
of eligible living units
379
• Mid-teens penetration in areas
marketed to for at least 18 months
1Q08 2Q08 3Q08 4Q08 1Q09
• Service includes a host of advanced
Net Gain – AT&T U-verse TV Subscribers features including:
(in thousands)
– Total Home DVR
284
Net gain: AT&T U-verse VoIP
– 100+ High Definition channels
264
– integrated voice and broadband
232 170
– AT&T U-verse voice launched
120
170
in 86% of markets
148 73
• Total video penetration of
27
4
households served at 12.6%
1Q08 2Q08 3Q08 4Q08 1Q09
10
11. Step Up in Broadband Growth
AT&T Total Broadband Connections
Strong broadband growth driven
Wireline Broadband Users Plus Wireless 3G
by strength in wireline consumer
LaptopConnect Users
(in millions) connections
• 471,000 first-quarter increase
Net gain: AT&T U-verse
high speed Internet subscribers
in total broadband subscribers
16.7
16.3
• >50% sequential increase in wireline
16.0
15.6
broadband net adds
15.4
• AT&T U-verse high speed Internet
284
connections more than tripled
264
over the past year to 1.3 million
238
• Continued growth in wireless/
broadband bundles
168
• Industry’s largest Wi-Fi footprint,
148
with >20,000 U.S. hotspots
1Q08 4Q08
2Q08 3Q08 1Q09
11
12. Wireline Consumer Revenue
and Connections Trends
Regional consumer
revenues down 6.8%
AT&T Regional Sequential Change In Regional
Consumer Connections
Consumer Revenue year over year; ARPU
Per Household (in thousands) growth and improved
Served connections trends
driven by U-verse TV
1Q08 2Q08 3Q08 4Q08 1Q09
$63.50
and broadband
$62.23
(98)
• 2.0% increase in
(196)
consumer ARPU
• 23.0% year-over-year
(504) growth in consumer IP
revenues (AT&T U-verse
and broadband services)
(870)
• Improved connections
(923)
trends where AT&T
U-verse TV is marketed
1Q08 1Q09
12
13. AT&T Business Solutions
Total business trends reflect
AT&T Business Solutions Revenues strong growth in IP data and
($ in billions) strategic services, offset by
Year-Over-
continuing economic pressures,
Year Growth
1Q09
primarily impacting voice
Total $10.7 (4.0)%
• Economic impacts focused on voice
Services (Excludes CPE) $10.3 (2.8)%
usage; largest impacts in financial,
transportation and general
IP Data $1.5 10.5%
merchandise retailing sectors
Strategic Business Services Revenues
• Largest economic impacts in
($ in millions)
low-margin areas such as CPE and
$969
international voice, with cost offsets
$941
$907
• New service adoption continues
$873
to be solid
$810
• 10.5% growth in business IP
data revenues
• 19.6% growth in strategic services
1Q08 2Q08 3Q08 4Q08 1Q09
– Ethernet and VPNs up >20%
Strategic business services include the new-generation capabilities that
– IP conferencing up >70%
lead AT&T’s most advanced solutions – including Ethernet, VPNs, hosting,
IP conferencing and applications services.
13
14. Stable Consolidated Margin
1Q09 margin stable versus 2008
and on track with full-year outlook,
AT&T Consolidated
Operating Income Margin reflecting operational improvements
in both wireless and wireline
18.8%
18.6%
• Execution of major operational
cost initiatives on track:
– Consolidate support organizations
– Integrate network planning and
operations, business services
– Total force down by 8,000
since year end 2008
• Further decline in dilution from iPhone
3G initiative along with improvements
in wireless network and support costs
Full Year 1Q09
2008
14
15. Cash Flow, Balance Sheet Strength
Free cash flow and
AT&T Cash Summary
capital expenditures in line
($ in billions)
with previously outlined
full-year outlook
Cash From
Operations
Capital • Cash from operations
$7.9
$3.4
Expenditures
improvement reflects progress
on cost initiatives and lower
cash taxes
Free Cash Flow $4.6
$5.0
• Full-year 2009 capital
expenditures expected to be
$2.4
Dividends Paid in the $17 – $18 billion range
• Total debt reduced by
Debt-to-Capital $5.8 billion over the past
Ratio 43.2%
three quarters
1Q08 1Q09 Totals may not foot due to rounding.
15 Free Cash Flow is defined as cash from operations less capital expenditures.
16. 1Q09 Summary: Strong Execution,
on Track with Full-Year Outlook
• Cost discipline – expense initiatives on track, driving stable margins
• Continued investment, strong ramp in major growth platforms –
wireless, advanced business solutions, AT&T U-verse services
• Strong wireless momentum, well positioned for next wave
of wireless data growth – strong network, attractive device lineup,
innovation in applications and new services
• Solid U-verse TV ramp – with high broadband and VoIP attach rates
helping drive improved consumer connection trends
• Strong free cash flow – with sound balance sheet and credit metrics
Clear focus: disciplined execution as economy works
toward recovery; ramp capabilities and scale to lead
in industry’s best growth areas
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