Cingular Wireless Shows More than 49.1 million cellular/PCS subscribers at year?s end


Cingular Wireless Posts Strong Fourth-Quarter Growth:
1.8 Million Pro Forma Net Subscriber Additions; Improved Churn, Solid Progress in Key Integration Initiatives


ATLANTA-/24 Jan, 2005 - Wi-Fi Technology News/- Cingular Wireless, America's largest wireless provider, today reported fourth-quarter results driven by robust subscriber growth, lower subscriber churn versus the past several quarters, and solid progress in key integration initiatives following its acquisition of AT&T Wireless.

Cingular, which is owned by SBC Communications Inc. (NYSE: SBC) and BellSouth Corporation (NYSE: BLS), completed its acquisition of AT&T Wireless on Oct. 26, 2004, creating a wireless provider that now owns spectrum licenses covering a total population of 290 million and currently serves all of the nation?s top 100 metropolitan areas.

In its first quarter of combined operations, the new Cingular delivered a net increase in subscribers of nearly 1.8 million on a pro forma basis, which incorporates results from AT&T Wireless for the first 25 days of October, includes net additions from other acquired properties and excludes results from markets that Cingular has agreed to divest. This increase was more than double Cingular?s pro forma net subscriber additions in both the preceding quarter (808,000) and the year-ago fourth quarter (736,000). It was Cingular?s highest net-add quarter ever, when historical results of Cingular and AT&T Wireless are combined. Not counting net customer additions of AT&T Wireless for the first 25 days of the quarter and other pro forma adjustments for dispositions and other acquisitions, reported net customer additions were 1.7 million.

Cingular ended 2004 with 49.1 million total subscribers.



Cingular?s gross customer additions in the fourth quarter totaled 5.7 million on a pro forma basis, the highest quarter ever when historical results of the two companies are combined, and average monthly pro forma subscriber churn declined significantly versus pro forma results for the third quarter of 2004 and the fourth quarter of 2003.


?The merger is working, and it is everything we had hoped it would be. The new Cingular is off to a very strong start,? said Stan Sigman, President and chief executive officer of Cingular Wireless. ?We developed a thorough, disciplined integration plan to follow through on our acquisition of AT&T Wireless. Our execution of that plan has been crisp, with all initiatives on or ahead of schedule. And customers have responded very positively, choosing Cingular ? and choosing to stay with Cingular ? in record numbers.


?In addition to outstanding volumes, I am particularly pleased that we have moved churn in the right direction right out of the gate,? Sigman said. ?And I am very confident in our ability to deliver continued solid progress in both churn and margins as we move forward.

?Our goal at Cingular is to be the best wireless provider in the business,? Sigman continued. ?To that end, we have developed focused plans to further expand and advance our network, enhance customer service and strengthen distribution ? while delivering substantial operational cost synergies. We will execute with intensity in all of these areas in 2005, with the clear expectation of delivering steady progress to reach industry-leading metrics by 2007.?


Detailed Customer Metrics, GSM Progress

In addition to robust subscriber growth, during the fourth quarter, Cingular achieved solid progress in three additional key focus areas: growing its GSM customer base, retaining former AT&T Wireless subscribers by transitioning them to new Cingular plans, and reducing churn.

At year?s end, more than 65 percent of Cingular?s subscriber base was GSM-equipped, up from a pro forma 57 percent at the end of the third quarter of 2004. More than 8 percent of Cingular?s customer base upgraded handsets during the quarter ? almost entirely onto GSM.

Cingular operates the nation's largest digital voice and data network, and 79 percent of Cingular's total combined minutes are now carried on its GSM network. GSM is the world's most widely used wireless technology. Through roaming alliances with other GSM-based providers around the world, Cingular provides the largest global presence of any U.S. wireless carrier, with coverage in more than 170 countries.

Also during the final two months of the quarter, Cingular converted more than 1 million AT&T Wireless subscribers to new Cingular postpaid plans, as subscribers responded positively to Cingular?s broad network coverage and attractive features.


Cingular?s progress in growing its GSM base and its network improvements contributed to significantly improved churn levels. Pro forma average monthly churn improved to 2.6 percent ? 60 basis points lower than pro forma churn for the third quarter of 2004.



In addition, starting in the first quarter of 2005, Cingular will adopt a new calculation for reseller churn that is more consistent with some of its major competitors. Cingular currently includes reseller disconnects in its churn calculation. In the future, Cingular will base its calculations on total reseller net additions or reductions, in line with industry peers. If this methodology had been in place in the fourth quarter, Cingular?s pro forma churn would have been 2.4 percent overall.



Financial Results

Cingular?s fourth-quarter financial results reflect strong subscriber growth and merger-related expenses.

In accordance with purchase accounting rules, Cingular?s reported results for the quarter ended Dec. 31, 2004, are composed of Cingular stand-alone results for the first 25 days of the quarter, prior to the transaction?s close, plus combined Cingular and AT&T Wireless results for the remainder of the quarter.

To provide comparability with previous quarters, Cingular also is furnishing revenue comparisons based on pro forma results, which include acquired properties and exclude divested properties from all periods.

- In the fourth quarter, Cingular?s reported revenues were $7.1 billion. Pro forma revenues, which incorporate results from AT&T Wireless and other acquired properties for the first 25 days of October and exclude results from divested operations and operations to be divested, totaled $8.1 billion, up 1.8 percent from the fourth quarter pro forma revenue of 2003.



- Reported average revenue per user (ARPU) in the fourth quarter was $49.22. Pro forma ARPU was $49.67, down 5.8 percent versus pro forma results in the year-earlier fourth quarter. ARPU was adversely impacted primarily by the transition of customers to lower-priced GSM plans and the continued popularity of FamilyTalk?.

- ARPU from data services continued its strong growth in the fourth quarter, increasing to $2.89 on a reported basis compared with $1.75 for standalone Cingular in the third quarter of this year. This 65-percent growth was driven by the popularity of text messaging, mobile instant messaging, mobile e-mail, downloadable ringtones, games and photo messaging. Cingular delivered more than 3.8 billion text messages during the quarter.

- Cingular?s reported fourth-quarter operating expenses totaled $7.3 billion, and its reported OIBDA service margin was 19.3 percent. (OIBDA margin is operating income (loss) before depreciation and amortization divided by total service revenues.)

- Direct merger integration costs increased Cingular?s operating expenses by $245 million in the fourth quarter. Normalized to exclude these integration costs, Cingular?s fourth-quarter OIBDA service margin was 23.2 percent. Purchase and other accounting impacts added an additional $171 million to Cingular?s fourth-quarter operating expenses. This $171 million impact included $415 million for amortization of intangible assets, partially offset by reduced depreciation, primarily from lower network asset valuations.

- Fourth-quarter expenses and margins also reflect increased operating costs from higher levels of gross customer additions, progress in customer conversions to new Cingular GSM contracts, and a range of customer service and marketing initiatives. Expected synergies from the merger of Cingular Wireless and AT&T Wireless operations are on plan; however, they are not expected to significantly reduce operating expense until later in 2005.


Major Initiatives

As it drove strong subscriber growth, Cingular also took important steps in strategic areas that are key to future success:

- Business Markets Group. In the fourth quarter, Cingular created a new Business Markets Group to give business customers access to sales and support professionals focused solely on their specialized needs. During the quarter, Cingular closed sales with more than 300 high-end business and government customers. Cingular Wireless serves 95 of the Fortune 100 companies, and counts more than 80 percent of the Fortune 500 and more than 1,200 federal, state and local government agencies as customers. Cingular was named the ?front runner? in the wireless business-to-business marketplace in Forrester Research, Inc.?s January 2005 ?U S 2.5 And 3G Business Services? report.

- Network expansion. Following the acquisition?s close, Cingular moved quickly to improve coverage and strengthen network quality in selected areas. In the fourth quarter, Cingular completed network enhancement programs in several states, adding more than 1,000 cell sites. In addition, Cingular began a major expansion of its California and Nevada network, which it expects to complete in 2006.

- UMTS 3G deployment. Cingular also is moving forward with plans to deploy UMTS (Universal Mobile Telecommunications System) 3G network technology with HSDPA (High-Speed Downlink Packet Access) concurrent with its AT&T Wireless network integration over the next two years. UMTS with HSDPA provides superior speeds for data and video services, and it delivers outstanding operating efficiencies, using the same spectrum and infrastructure for voice and data on an IP-based platform. Earlier this month, Cingular and Lucent Technologies announced that the two companies have successfully completed the first HSDPA data calls on the third-generation (3G) UMTS trial network deployed by the two companies in the Atlanta market.



Outlook


Cingular expects further progress in key network and integration initiatives, which will drive steady improvement in metrics. In 2005, Cingular expects:

- Positive total revenue growth versus 2004 pro forma results.

- 2005 OIBDA margins before one-time integration costs will continue to improve, increasing as synergies are realized and churn is reduced.

- Total capital expenditures in the $6.8 billion to $7.2 billion range as Cingular expands network coverage, builds out the California/Nevada network and deploys UMTS. Cingular expects to return to a capital expenditure run rate in the mid teens as a percent of total revenue starting in 2007.


About Cingular Wireless


Cingular Wireless is the largest wireless carrier in the United States, serving more than 49 million customers. Cingular, a joint venture between SBC Communications Inc. (NYSE: SBC) and BellSouth Corporation (NYSE: BLS), has the largest digital voice and data network in the nation ? the ALLOVER℠ network ? and the largest mobile-to-mobile community of any national wireless carrier. Cingular is the only U.S. wireless carrier to offer Rollover℠, the wireless plan that lets customers keep their unused monthly minutes. Details of the company are available at http://www.cingular.com .


Fourth-Quarter Conference Calls


BellSouth's fourth-quarter earnings conference call, during which Cingular's earnings results will be discussed, will be held at 10 a.m. Eastern time on Jan. 25, 2005 and can be accessed at http://www.bellsouth.com/investor/ .

SBC will host its fourth quarter earnings conference call, during which Cingular's earnings results will be discussed, on Jan. 26, 2005. It will be broadcast live via the Internet at 10 a.m. Eastern time at http://www.sbc.com/investor_relations .