BLS Bellsouth Cp

Cingular Wireless Posts Strong Fourth-Quarter Growth: 1.8 Million Pro Forma Net Subscriber Additions, Improved Churn, Solid Progress in Key Integration Initiatives -- More than 49.1 million cellular/PCS subscribers at year's end ATLANTA, Jan. 24 /PRNewswire-FirstCall/ -- Cingular Wireless, the nation'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(R). -- 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(SM) network - and the largest mobile-to-mobile community of any national wireless carrier. Cingular is the only U.S. wireless carrier to offer Rollover(SM), the wireless plan that lets customers keep their unused monthly minutes. Details of the company are available at http://www.cingular.com/ . Get Cingular Wireless press releases e-mailed to you automatically. Sign up at http://www.cingular.com/newsroom . 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 . FORWARD-LOOKING INFORMATION In addition to historical information, this document and the conference calls referred to above may contain forward-looking statements regarding events and financial trends. Factors that could affect future results and could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: -- the pervasive and intensifying competition in all markets where Cingular operates; -- failure to quickly realize capital and expense synergies from the acquisition of AT&T Wireless as a result of technical, logistical, regulatory and other factors; -- problems associated with the transition of Cingular's network to Higher-speed technologies; -- slow growth of Cingular's data services due to lack of popular applications, terminal equipment, advanced technology and other factors; -- sluggish economic and employment conditions in the markets Cingular serves; -- the final outcome of FCC proceedings, including rulemakings, and judicial review, if any, of such proceedings; -- enactment of additional state and federal laws, regulations and requirements pertaining to Cingular's operations; and -- the outcome of pending or threatened complaints and litigation. Such forward-looking information is given as of this date only, and Cingular assumes no duty to update this information. OIBDA OIBDA is defined as operating income (loss) before depreciation and amortization. Although we have used substantively similar measures in the past, we now use the term OIBDA to describe the measure we use as it more clearly reflects the elements of the measure. OIBDA margin is calculated as OIBDA divided by services revenue. These are non-GAAP financial measures. They differ from operating income (loss), as calculated in accordance with GAAP, in that they exclude depreciation and amortization. They differ from net income (loss), as calculated in accordance with GAAP, in that they exclude, as presented in our Consolidated Statement of Income: (i) depreciation and amortization, (ii) interest expense, (iii) minority interest expense, (iv) equity in net income (loss) of affiliates, (v) other, net, and (vi) provision (benefit) for income taxes. We believe these measures are relevant and useful information to our investors as they are an integral part of our internal management reporting and planning processes and are important metrics our management uses to evaluate the operating performance of our consolidated operations. They are used by management as a measurement of our success in acquiring, retaining, and servicing customers because we believe these measures reflect our ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing our performance with that of many of our competitors. The components of OIBDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance. Lastly, we use this measure for planning purposes and in presentations to our board of directors, and we use multiples of this current or projected measure in our discounted cash flow models to determine the value of our licensing costs and our overall enterprise valuation. OIBDA excludes other, net, minority interest expense and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base and our national footprint that we utilize to obtain and service our subscribers. Equity in net income (loss) of affiliates represents our proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. As we do not control these entities, our management excludes these results when evaluating the performance of our primary operations. Although excluded, equity in net income (loss) of affiliates may include results that are material to our overall net income (loss). We may record impairment charges in the future related to our investments if there are declines in the fair values of our investments, which we deem to be other than temporary. OIBDA also excludes interest expense and the provision (benefit) for income taxes. Excluding these items eliminates the expenses associated with our capitalization and tax structures. Finally, OIBDA excludes depreciation and amortization, in order to eliminate the impact of capital investments. We believe OIBDA as a percentage of services revenue to be a more relevant measure of our operating margin than OIBDA as a percentage of total revenue. We generally subsidize a portion of our handset sales, all of which are recognized in the period in which we sell the handset. This results in a disproportionate impact on our margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing services revenue that is generated by the subscriber. We also use services revenue to calculate margin to facilitate comparison, both internally and externally, with our competitors, as they calculate their margins using services revenue as well. There are material limitations to using these non-GAAP financial measures, including the difficulty associated with comparing these performance measures as we calculate them to similar performance measures presented by other companies, and the fact that these performance measures do not take into account certain significant items, including depreciation and amortization, interest, and tax expense, and equity in net income (loss) of affiliates that directly affect our net income or loss. Management compensates for these limitations by carefully analyzing how our competitors present performance measures that are similar in nature to OIBDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income (loss) as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Pro Forma Revenues and ARPU Pro forma revenues and pro forma ARPU are used to provide more meaningful period to period comparisons of reported revenues and ARPU. These unaudited pro forma measures incorporate AT&T Wireless' results for the first 25 days of October 2004 and the three months ended December 31, 2003. The measures also include results from other acquired properties, exclude results from divested operations, and reflect intercompany eliminations and other adjustments for such periods. For further detail regarding other pro forma combined historical financial information, see the information filed by Cingular on Form 8-K dated October 25, 2004, as amended on November 29, 2004. The unaudited pro forma information is not intended to represent or be indicative of the results of Cingular that would have been reported had the merger and the above mentioned items been completed as of the dates presented, and should not be taken as representative of the future results of Cingular. Financial Results and Reconciliations Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Quarter Ended Year to Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change Operating revenues: Service revenues $6,276 $3,534 77.6% $17,473 $14,223 22.9% Equipment sales 806 378 113.2% 1,963 1,260 55.8% Total operating revenues 7,082 3,912 81.0% 19,436 15,483 25.5% Operating expenses: Cost of services 1,676 938 78.7% 4,613 3,652 26.3% Cost of equipment sales 1,247 578 115.7% 2,874 2,031 41.5% Selling, general and administrative 2,946 1,495 97.1% 7,347 5,422 35.5% Depreciation and amortization 1,390 572 143.0% 3,079 2,089 47.4% Total operating expenses 7,259 3,583 102.6% 17,913 13,194 35.8% Operating income (loss) (177) 329 (153.8%) 1,523 2,289 (33.5%) Interest expense 303 204 48.5% 900 856 5.1% Minority interest expense (2) 17 (111.8%) 86 101 (14.9%) Equity in net income (loss) of affiliates (97) (88) 10.2% (390) (323) 20.7% Other income (expense), net 11 4 175.0% 16 41 (61.0%) Income (loss) before income tax and cum. effect of acctng. chg. (564) 24 NM 163 1,050 (84.5%) Provision (benefit) for income taxes (67) 8 NM (63) 28 (325.0%) Income (loss) before cumulative effect of accounting change (497) 16 NM 226 1,022 (77.9%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change OIBDA (1) $1,213 $901 34.6% $4,602 $4,378 5.1% OIBDA margin (2) 19.3% 25.5% -620 BP 26.3% 30.8% -450 BP Total Cellular/PCS Customers (3) 49,109 24,027 104.4% 49,109 24,027 104.4% Net Customer Additions - Cellular/PCS 1,713 642 166.8% 3,352 2,116 58.4% M&A Activity, Partitioned Customers and/or Other Adjs. 21,724 -- 21,730 (14) Churn - Cellular/PCS (4) 2.6% 2.8% -20 BP 2.7% 2.7% 0 BP ARPU - Cellular/PCS (5) $49.22 $49.03 0.4% $49.30 $51.32 (3.9%) Minutes Of Use Per Cellular/PCS Subscriber 526 475 10.7% 520 446 16.6% Licensed POPs - Cellular/PCS (6) 290 236 290 236 Penetration - Cellular/PCS (7) 17.2% 10.8% 17.2% 10.8% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year To Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change Income (loss) before cumulative effect of accounting change (497) 16 NM 226 1,022 (77.9%) Plus: Interest expense 303 204 48.5% 900 856 5.1% Plus: Minority interest expense (2) 17 (111.8%) 86 101 (14.9%) Plus: Equity in net loss of affiliates 97 88 10.2% 390 323 20.7% Plus: Other, net (11) (4) 175.0% (16) (41) (61.0%) Plus: Provision (benefit) for income taxes (67) 8 NM (63) 28 (325.0%) Operating income (loss) (177) 329 (153.8%) 1,523 2,289 (33.5%) Plus: Depreciation and amortization 1,390 572 143.0% 3,079 2,089 47.4% OIBDA (1) $1,213 $901 34.6% $4,602 $4,378 5.1% In an effort to be consistent with emerging industry practices, the income statement for all periods presented reflects billings to our customers for the Universal Service Fund (USF) and other regulatory fees as "Service revenues" and the related payments into the associated regulatory funds as "Cost of services" expenses. Operating income and net income for all periods have been unaffected. Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues only. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service including areas where we have not yet commenced service. (7) Penetration calculation for 4Q04 is based on licensed "operational" POP's of 286 million. Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended ARPU 12/31/2004 12/31/2003 % Change Service revenues $6,276 $3,534 77.6% Less: Mobitex data revenues 36 58 Service revenue used to calculate ARPU 6,240 3,476 79.5% Average revenue per user per month (ARPU) $49.22 $49.03 0.4% Service revenue used to calculate ARPU 6,240 3,476 79.5% Add: Pro Forma Adjustments AT&T Wireless 1,001 3,904 Other Acquisitions and Dispositions (57) (81) Intercompany and Other (61) (150) Service revenue used to calculate Pro Forma ARPU * $7,123 $7,149 -0.4% Average revenue per user per month (ARPU) (Pro Forma) $49.67 $52.71 -5.8% Quarter Ended Total Operating Revenues 12/31/2004 12/31/2003 % Change Total operating revenue (GAAP) $7,082 $3,912 81.0% Add: Pro Forma Adjustments AT&T Wireless 1,092 4,215 Other Acquisitions and Dispositions (62) (65) Intercompany and Other (61) (150) Total operating revenue (Pro Forma) * $8,051 $7,912 1.8% * Pro forma revenues and pro forma ARPU are used to provide more meaningful period to period comparisons of reported revenues and ARPU. These unaudited pro forma measures incorporate AT&T Wireless' results for the first 25 days of October 2004 and the three Cingular Wireless LLC Normalized Earnings Summary and Reconciliation to Reported Results (amounts in millions, unaudited) Quarter Ended December 31, 2004 Normalized Item Integration GAAP Costs (1) Normalized Operating revenues: Service revenues $6,276 $0 $6,276 Equipment sales 806 -- 806 Total operating revenues 7,082 -- 7,082 Operating expenses: Cost of services 1,676 (7) 1,669 Cost of equipment sales 1,247 (3) 1,244 Selling, general and administrative 2,946 (235) 2,711 Depreciation and amortization 1,390 -- 1,390 Total operating expenses 7,259 (245) 7,014 Operating income (loss) (177) 245 68 Interest expense 303 -- 303 Minority interest expense (2) -- (2) Equity in net income (loss) of affiliates (97) -- (97) Other income (expense), net 11 -- 11 Income (loss) before income tax and cum. effect of acctng. chg. (564) 245 (319) Provision (benefit) for income taxes (67) 35 (32) Income (loss) before cumulative effect of accounting change (497) 210 (287) Year to Date - December 31, 2004 Normalized Item Integration GAAP Costs (1) Normalized Operating revenues: Service revenues $17,473 $0 $17,473 Equipment sales 1,963 -- 1,963 Total operating revenues 19,436 -- 19,436 Operating expenses: Cost of services 4,613 (8) 4,605 Cost of equipment sales 2,874 (3) 2,871 Selling, general and administrative 7,347 (277) 7,070 Depreciation and amortization 3,079 -- 3,079 Total operating expenses 17,913 (288) 17,625 Operating income (loss) 1,523 288 1,811 Interest expense 900 -- 900 Minority interest expense 86 -- 86 Equity in net income (loss) of affiliates (390) -- (390) Other income (expense), net 16 -- 16 Income (loss) before income tax and cum. effect of acctng. chg. 163 288 451 Provision (benefit) for income taxes (63) 35 (28) Income (loss) before cumulative effect of accounting change 226 253 479 Notes to Normalized Financial Data Our normalized earnings have been adjusted for the following: (1)Tax-effected integration costs resulting from the Cingular acquisition of AT&T Wireless. Cingular Wireless LLC Income Statement, Normalized - amounts in millions (unaudited) Quarter Ended Year to Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change Operating revenues: Service revenues $6,276 $3,534 77.6% $17,473 $14,223 22.9% Equipment sales 806 378 113.2% 1,963 1,260 55.8% Total operating revenues 7,082 3,912 81.0% 19,436 15,483 25.5% Operating expenses: Cost of services 1,669 938 77.9% 4,605 3,652 26.1% Cost of equipment sales 1,244 578 115.2% 2,871 2,031 41.4% Selling, general and administrative 2,711 1,495 81.3% 7,070 5,422 30.4% Depreciation and amortization 1,390 572 143.0% 3,079 2,089 47.4% Total operating expenses 7,014 3,583 95.8% 17,625 13,194 33.6% Operating income (loss) 68 329 (79.3%) 1,811 2,289 (20.9%) Interest expense 303 204 48.5% 900 856 5.1% Minority interest expense (2) 17 (111.8%) 86 101 (14.9%) Equity in net income (loss) of affiliates (97) (88) 10.2% (390) (323) 20.7% Other income (expense), net 11 4 175.0% 16 41 (61.0%) Income (loss) before income tax and cum. effect of acctng. chg. (319) 24 NM 451 1,050 (57.0%) Provision (benefit) for income taxes (32) 8 NM (28) 28 (200.0%) Income (loss) before cumulative effect of accounting change (287) 16 NM 479 1,022 (53.1%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change OIBDA - normalized (1) $1,458 $901 61.8% $4,890 $4,378 11.7% OIBDA margin - normalized (2) 23.2% 25.5% -230 BP 28.0% 30.8% -280 BP ** Total Cellular/ PCS Customers (3) 49,109 24,027 104.4% 49,109 24,027 104.4% ** Net Customer Additions - Cellular/PCS 1,713 642 166.8% 3,352 2,116 58.4% ** M&A Activity, ** Partitioned Customers and/ or Other Adjs. 21,724 -- 21,730 (14) ** Churn - Cellular/PCS (4) 2.6% 2.8% -20 BP 2.7% 2.7% 0 BP ** ARPU - Cellular/PCS (5) $49.22 $49.03 0.4% $49.30 $51.32 (3.9%) ** Minutes Of Use Per Cellular/PCS Subscriber 526 475 10.7% 520 446 16.6% ** Licensed POPs - Cellular/PCS (6) 290 236 290 236 ** Penetration - Cellular/PCS (7) 17.2% 10.8% 17.2% 10.8% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year To Date % % 12/31/2004 12/31/2003 Change 12/31/2004 12/31/2003 Change Income (loss) before cumulative effect of accounting change (287) 16 NM 479 1,022 (53.1%) Plus: Interest expense 303 204 48.5% 900 856 5.1% Plus: Minority interest expense (2) 17 (111.8%) 86 101 (14.9%) Plus: Equity in net loss of affiliates 97 88 10.2% 390 323 20.7% Plus: Other, net (11) (4) 175.0% (16) (41) (61.0%) Plus: Provision (benefit) for income taxes (32) 8 NM (28) 28 (200.0%) Operating income (loss) 68 329 (79.3%) 1,811 2,289 (20.9%) Plus: Depreciation and amortization 1,390 572 143.0% 3,079 2,089 47.4% OIBDA - normalized (1) $1,458 $901 61.8% $4,890 $4,378 11.7% OIBDA margin (2) 19.3% 25.5% -620 BP 26.3% 30.8% -450 BP Plus: OIBDA margin, merger integration expenses 3.9% -- 1.6% -- OIBDA margin - normalized * 23.2% 25.5% -230 BP 28.0% 30.8% -280 BP * OIBDA margin percentages do not sum due to rounding. ** Highlighted metrics and calculations are not impacted by the 4Q04 and YTD 2004 normalization of merger integration costs. In an effort to be consistent with emerging industry practices, the income statement for all periods presented reflects billings to our customers for the Universal Service Fund (USF) and other regulatory fees as "Service revenues" and the related payments into the associated regulatory funds as "Cost of services" expenses. Operating income and net income for all periods have been unaffected. Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues only. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service including areas where we have not yet commenced service. (7) Penetration calculation for 4Q04 is based on licensed "operational" POP's of 286 million. Cingular Wireless LLC Income Statement - amounts in millions (unaudited) 3/31/2002 6/30/2002 9/30/2002 12/31/2002 Operating revenues: Service revenues $3,360 $3,535 $3,567 $3,460 Equipment sales 227 256 254 244 Total operating revenues 3,587 3,791 3,821 3,704 Operating expenses: Cost of services 767 831 929 1,044 Cost of equipment sales 404 408 362 361 Selling, general and administrative 1,299 1,375 1,436 1,316 Depreciation and amortization 450 455 478 467 Total operating expenses 2,920 3,069 3,205 3,188 Operating income (loss) 667 722 616 516 Interest expense 225 221 233 232 Minority interest expense 31 34 27 31 Equity in net income (loss) of affiliates (58) (67) (64) (76) Other income (expense), net 19 (1) 4 7 Income (loss) before income tax and cum. effect of acctng. chg. 372 399 296 184 Provision (benefit) for income taxes 2 4 3 3 Income (loss) before cumulative effect of accounting change 370 395 293 181 3/31/2003 6/30/2003 9/30/2003 12/31/2003 Operating revenues: Service revenues $3,394 $3,619 $3,676 $3,534 Equipment sales 244 255 383 378 Total operating revenues 3,638 3,874 4,059 3,912 Operating expenses: Cost of services 821 890 1,003 938 Cost of equipment sales 396 451 606 578 Selling, general and administrative 1,217 1,269 1,441 1,495 Depreciation and amortization 488 508 521 572 Total operating expenses 2,922 3,118 3,571 3,583 Operating income (loss) 716 756 488 329 Interest expense 225 230 197 204 Minority interest expense 24 35 25 17 Equity in net income (loss) of affiliates (72) (76) (87) (88) Other income (expense), net 26 7 4 4 Income (loss) before income tax and cum. effect of acctng. chg. 421 422 183 24 Provision (benefit) for income taxes 2 12 6 8 Income (loss) before cumulative effect of accounting change 419 410 177 16 3/31/2004 6/30/2004 9/30/2004 12/31/2004 Operating revenues: Service revenues $3,558 $3,801 $3,838 $6,276 Equipment sales 384 354 419 806 Total operating revenues 3,942 4,155 4,257 7,082 Operating expenses: Cost of services 922 943 1,072 1,676 Cost of equipment sales 537 505 585 1,247 Selling, general and administrative 1,372 1,462 1,567 2,946 Depreciation and amortization 552 565 572 1,390 Total operating expenses 3,383 3,475 3,796 7,259 Operating income (loss) 559 680 461 (177) Interest expense 198 199 200 303 Minority interest expense 27 41 20 (2) Equity in net income (loss) of affiliates (105) (92) (96) (97) Other income (expense), net 4 1 -- 11 Income (loss) before income tax and cum. effect of acctng. chg. 233 349 145 (564) Provision (benefit) for income taxes 6 (2) -- (67) Income (loss) before cumulative effect of accounting change 227 351 145 (497) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s 3/31/2002 6/30/2002 9/30/2002 12/31/2002 OIBDA (1) $1,117 $1,177 $1,094 $983 OIBDA margin (2) 33.2% 33.3% 30.7% 28.4% Total Cellular/PCS Customers (3) 21,830 22,183 22,076 21,925 Net Customer Additions - Cellular/PCS 234 353 (107) (121) M&A Activity, Partitioned Customers and/or Other Adjs. (1) -- -- (31) Churn - Cellular/PCS (4) 2.9% 2.7% 3.0% 2.7% ARPU - Cellular/PCS (5) $51.11 $52.76 $52.81 $51.84 Minutes Of Use Per Cellular/PCS Subscriber 355 398 399 406 Licensed POPs - Cellular/PCS (6) 219 219 219 219 Penetration - Cellular/PCS (7) 11.1% 11.2% 10.2% 10.1% Total Cingular Interactive Customers 765 788 801 817 Net Customer Additions - Cingular Interactive 31 23 14 16 3/31/2003 6/30/2003 9/30/2003 12/31/2003 OIBDA (1) $1,204 $1,264 $1,009 $901 OIBDA margin (2) 35.5% 34.9% 27.4% 25.5% Total Cellular/PCS Customers (3) 22,114 22,640 23,385 24,027 Net Customer Additions - Cellular/PCS 189 540 745 642 M&A Activity, Partitioned Customers and/or Other Adjs. -- (14) -- -- Churn - Cellular/PCS (4) 2.6% 2.5% 2.8% 2.8% ARPU - Cellular/PCS (5) $50.76 $53.12 $52.43 $49.03 Minutes Of Use Per Cellular/PCS Subscriber 405 445 456 475 Licensed POPs - Cellular/PCS (6) 235 236 236 236 Penetration - Cellular/PCS (7) 10.0% 10.2% 10.6% 10.8% Total Cingular Interactive Customers 835 788 788 789 Net Customer Additions - Cingular Interactive 18 (47) -- 1 3/31/2004 6/30/2004 9/30/2004 12/31/2004 OIBDA (1) $1,111 $1,245 $1,033 $1,213 OIBDA margin (2) 31.2% 32.8% 26.9% 19.3% Total Cellular/PCS Customers (3) 24,618 25,044 25,672 49,109 Net Customer Additions - Cellular/PCS 554 428 657 1,713 M&A Activity, Partitioned Customers and/or Other Adjs. 37 (2) (29) 21,724 Churn - Cellular/PCS (4) 2.7% 2.7% 2.8% 2.6% ARPU - Cellular/PCS (5) $47.95 $50.32 $49.78 $49.22 Minutes Of Use Per Cellular/PCS Subscriber 488 523 537 526 Licensed POPs - Cellular/PCS (6) 240 243 243 290 Penetration - Cellular/PCS (7) 10.9% 11.1% 11.4% 17.2% Total Cingular Interactive Customers 768 735 653 NA Net Customer Additions - Cingular Interactive (21) (33) (82) NA Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) 3/31/2002 6/30/2002 9/30/2002 12/31/2002 Income (loss) before cumulative effect of accounting change 370 395 293 181 Plus: Interest expense 225 221 233 232 Plus: Minority interest expense 31 34 27 31 Plus: Equity in net loss of affiliates 58 67 64 76 Plus: Other, net (19) 1 (4) (7) Plus: Provision (benefit) for income taxes 2 4 3 3 Operating income (loss) 667 722 616 516 Plus: Depreciation and amortization 450 455 478 467 OIBDA (1) $1,117 $1,177 $1,094 $983 3/31/2003 6/30/2003 9/30/2003 12/31/2003 Income (loss) before cumulative effect of accounting change 419 410 177 16 Plus: Interest expense 225 230 197 204 Plus: Minority interest expense 24 35 25 17 Plus: Equity in net loss of affiliates 72 76 87 88 Plus: Other, net (26) (7) (4) (4) Plus: Provision (benefit) for income taxes 2 12 6 8 Operating income (loss) 716 756 488 329 Plus: Depreciation and amortization 488 508 521 572 OIBDA (1) $1,204 $1,264 $1,009 $901 3/31/2004 6/30/2004 9/30/2004 12/31/2004 Income (loss) before cumulative effect of accounting change 227 351 145 (497) Plus: Interest expense 198 199 200 303 Plus: Minority interest expense 27 41 20 (2) Plus: Equity in net loss of affiliates 105 92 96 97 Plus: Other, net (4) (1) -- (11) Plus: Provision (benefit) for income taxes 6 (2) -- (67) Operating income (loss) 559 680 461 (177) Plus: Depreciation and amortization 552 565 572 1,390 OIBDA (1) $1,111 $1,245 $1,033 $1,213 In an effort to be consistent with emerging industry practices, the income statement for all periods presented reflects billings to our customers for the Universal Service Fund (USF) and other regulatory fees as "Service revenues" and the related payments into the associated regulatory funds as "Cost of services" expenses. Operating income and net income for all periods have been unaffected. Notes: (1) OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from operating income (loss), as calculated in accordance with GAAP, in it excludes depreciation and amortization. It differs from net income (loss), as calculated in accordance with GAAP, in that it excludes, as presented on our Consolidated Statement of Income: (1) depreciation and amortization, (2) interest expense, (3) minority interest expense, (4) equity in net income (loss) of affiliates, (5) other, net, and (6) provision (benefit) for income taxes. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies. (2) OIBDA margin is defined as OIBDA divided by service revenues only. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS churn is calculated by dividing the aggregate number of cellular/PCS customers who cancel service during each month in a period by the total number of cellular/PCS customers at the beginning of each month in that period. (5) ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. (6) Licensed POPs refers to the number of people residing in areas where we and our partners have licenses to provide cellular or PCS service including areas where we have not yet commenced service. (7) Penetration calculation for 4Q04 is based on licensed "operational" POP's of 286 million. Cingular Wireless LLC Balance Sheet - amounts in millions (unaudited) 12/31/2004 12/31/2003 Incr(Decr) % +/- (audited) Assets Current assets: Cash and cash equivalents 435 1,139 (704) (61.8%) Accounts receivable - net of allowance for doubtful accounts 3,448 1,592 1,856 116.6% Inventories 690 273 417 152.7% Prepaid expenses and other current assets 1,016 296 720 243.2% Total current assets 5,589 3,300 2,289 69.4% Property, plant and equipment - net 21,950 10,939 11,011 100.7% Intangible assets - net 51,346 8,773 42,573 485.3% Other assets 3,399 2,514 885 35.2% Total assets 82,284 25,526 56,758 222.4% Liabilities and members' capital Current liabilities: Debt maturing within one year 2,158 95 2,063 2171.6% Accounts payable and accrued liabilities 5,855 3,092 2,763 89.4% Total current liabilities 8,013 3,187 4,826 151.4% Long-term debt to affiliates 9,628 9,678 (50) (0.5%) Long-term debt to external parties 14,229 2,914 11,315 388.3% Total long-term debt 23,857 12,592 11,265 89.5% Other noncurrent liabilities 5,108 604 4,504 745.7% Minority interests in consolidated entities 609 659 (50) (7.6%) Members' capital 44,697 8,484 36,213 426.8% Total liabilities and members' capital 82,284 25,526 56,758 222.4% DATASOURCE: Cingular Wireless CONTACT: INVESTOR RELATIONS: Kent Evans, +1-404-236-6203, , Jeff Cannon, +1-404-236-5486, , Tim Schneider, +1-404-236-5625, ; MEDIA RELATIONS: Clay Owen, +1-404-236-6153 (office), +1-404-538-0124 (wireless), , all of Cingular Wireless Web site: http://www.cingular.com/

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