BLS Bellsouth Cp

Cingular Wireless Posts Strong Second-Quarter Results, Advances Merger Integration Initiatives - Net subscriber additions of 1.1 million, third consecutive quarter of more than 1 million postpaid net additions ATLANTA, July 20 /PRNewswire/ -- Cingular Wireless, a joint venture between SBC Communications Inc. (NYSE:SBC) and BellSouth Corporation (NYSE:BLS), today posted strong second-quarter results driven by continued solid subscriber growth, improvement in margins and postpaid churn, and strength in data and enterprise services. For the quarter, the nation's largest wireless provider delivered net subscriber additions of 1.1 million, nearly all of which were postpaid. Second-quarter postpaid net additions were comparable to the number delivered in the first quarter of 2005, and represent the third straight quarter of more than 1 million postpaid net additions. Net additions in the second quarter were 2.5 times higher than pro forma net additions in the year-ago second quarter. (Pro forma results reflect the acquisition of AT&T Wireless, plus related acquisitions and dispositions, as if they had occurred on January 1, 2003.) Cingular ended the second quarter of 2005 with 51.6 million cellular/PCS subscribers. Gross additions continue to be very strong at 4.4 million. Postpaid churn improved sequentially to 1.8 percent -- a record low for the company. This compares to 1.9 percent in the first quarter of 2005 and to 2.1 percent (pro forma) in the fourth quarter of 2004. Overall churn held at 2.2, which was the same as in the first quarter of 2005, primarily reflecting the transition of customers on former AT&T Wireless prepaid plans. As it sustained strong subscriber growth, Cingular also improved its margins. OIBDA margin, normalized to exclude merger-related integration costs, was 28.9 percent, a sequential improvement of 340 basis points. (OIBDA margin is operating income (loss) before depreciation and amortization, divided by total service revenues.) "Cingular continues to make good progress on a variety of fronts," said Stan Sigman, Cingular's president and chief executive officer. "We are pleased with our performance in margins, postpaid subscriber net additions, and revenue. "These results show once again that our merger is working," Sigman said. "We are making progress and growing the business, though we of course have a long way to go before our work is done. The complex tasks of integrating networks, systems, processes, and people continue to go well and are on or ahead of schedule. At the same time, we are improving, in large ways and small, how we serve our customers, who continue to choose Cingular and stay with Cingular." Improved postpaid churn, very strong gross additions, and retention of former AT&T Wireless customers Cingular's "more bars in more places" (SM) and ALLOVER (SM) network messages resonated with current and new customers, and drove lower postpaid churn and very strong gross subscriber additions. As well, the company continued to transition its customer base to GSM and move former AT&T Wireless customers to Cingular plans. These two developments also contributed to the quarter's improved postpaid churn results, the company noted. At the end of the second quarter, 90 percent of the company's total combined minutes were 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, which operates the nation's largest digital voice and data network, also provides the largest global presence of any U.S. wireless carrier, with coverage in more than 170 countries. Seventy-eight percent of Cingular's subscriber base was GSM-equipped by the end of the second quarter, up from 72 percent in the first quarter of 2005. More than 7 percent of Cingular's customer base upgraded handsets during the second quarter -- almost entirely onto GSM. Cingular has now converted more than 4 million former AT&T Wireless subscribers to new Cingular plans as customers responded positively to Cingular's broad network coverage and attractive products and services. Financial Results - In the second quarter, Cingular's revenues were $8.6 billion, which is an improvement of 5.4 percent over pro forma revenue of $8.2 billion during the year-ago second quarter and up 4.6 percent versus the first quarter of this year. - Average revenue per user (ARPU) in the quarter was $50.43, up 1.7 percent from $49.59 in the first quarter of this year but down 5.6 percent from pro forma ARPU in the year-ago second quarter. The sequential increase in ARPU was driven by growth in data revenues and seasonal usage patterns. The year-over-year ARPU change primarily reflects the transition of customers to more inclusive plans, the popularity of FamilyTalk(R) and Rollover(SM) plans, and the increase in the reseller subscriber base, partially offset by increased data ARPU. - ARPU from data services continued its strong growth in the second quarter, increasing more than 12 percent to $4.16 compared to $3.70 in the first quarter of this year. This growth continued to be spurred by the ever-increasing popularity of text messaging, mobile instant messaging, mobile e-mail, downloadable ringtones, games, photo messaging and media bundles. Cingular delivered 5 billion text messages during the quarter. - Cingular's reported second-quarter operating expenses were $8.1 billion, of which merger-related integration expenses totaled $204 million. These merger-related integration expenses decreased Cingular's OIBDA by $95 million, and added $109 million in accelerated depreciation costs related to shortened asset lives. In addition, operating expenses included $445 million in non-cash amortization of intangibles that were acquired as part of the merger with AT&T Wireless. - Reported OIBDA margin was 27.6 percent for the second quarter. Normalized to exclude merger-related integration costs, OIBDA margin was 28.9 percent -- a sequential improvement of 340 basis points. - Reported operating income was $504 million, a sequential increase of 342 percent. Reported net income increased to $147 million, compared to a loss of $240 million in the first quarter. - Normalized to exclude merger-related integration costs, operating income for the second quarter was $708 million, a sequential increase of 223 percent. - Normalized net income increased to $317 million, compared to a loss of $152 million in the first quarter. Second-quarter highlights and initiatives - Cingular's Business Markets Group introduced several new products and services. These included: the Sony VAIO(R), the first widely available notebook PC with integrated high-speed wireless wide area network (WAN) technology; Good Technology's GoodLink(TM) wireless messaging and data access software and service; and two new flagship offers, Cingular Corporate Digital Advantage and Cingular Business Edge, which are targeted to large and small businesses, respectively. - In addition to announcing these new products and services, the Business Markets Group also signed more than 325 new high-end service contracts during the quarter, including such important accounts as Sun Microsystems, CIBC World Markets, Drexel University, Insight Enterprises, the City of Houston, Humana Inc., Energen Corporation, O'Neal Steel, Inc. and Brasfield and Gorrie, LLC. - The company reintroduced and enhanced GoPhone(R), its selection of popular prepaid services that give consumers unprecedented freedom and flexibility in buying wireless without a contract but with many of the benefits of traditional wireless plans. - Cingular made available powerful and stylish new wireless devices, including the Audiovox SMT 5600, the world's smallest Microsoft Windows Mobile-based Smartphone, and the Motorola RAZR Black, the exclusive sleek successor to the Motorola RAZR. - The company announced an innovative new music program called Cingular Sounds(TM), which launches new singles as ringtones on wireless phones before they are heard anywhere else or simultaneously with their radio debut. - Cingular recorded more than 41.5 million text messages throughout the 12-week voting period of "American Idol," which represents the largest volume of text messaging in a single campaign in the history of the U.S. wireless industry. - The company remains on track to launch UMTS/HSDPA in 15-20 markets by the end of 2005. 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. Conference Call with Investment Community Cingular will hold a conference call with the investment community beginning at 10:00 a.m. (ET) today. During the call, we will discuss our operational and financial results for the quarter. The conference call will be webcast and archived on our website at http://www.cingular.com/investor for 30 days, as well as on the websites of SBC Communications Inc. and BellSouth Corporation. Our second-quarter news release and downloadable financial statements are now available on our website. Dial-in information for the conference call is as follows: Domestic: 866-406-3487 International: 630-691-2771 Replay: 877-213-9653 (Domestic) Replay: 630-652-3041 (International) Passcode: 11947895# Replays will be available for five days. About Cingular Wireless Cingular Wireless is the largest wireless carrier in the United States, serving 51.6 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 . FORWARD-LOOKING INFORMATION In addition to historical information, this document and the conference call 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 Discussion OIBDA is defined as operating income (loss) before depreciation and amortization. Although we have used substantively similar measures in the past, which we called "EBITDA", we now use the term OIBDA to describe the measure we use as it more clearly defines 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) and operating margin, 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 Statements 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 that 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 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 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). 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 service 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, 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 U.S. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. ARPU Discussion ARPU is defined as cellular/PCS service revenues during the period divided by average cellular/PCS customers during the period. This metric is used to compare the recurring revenue amounts generated on our cellular/PCS network to prior periods and internal targets. Our ARPU calculation excludes Mobitex data revenues and thereby makes our metric more comparable with other wireless carriers. We believe that this metric provides useful information concerning the performance of our ongoing initiatives to attract and retain high value customers and the use of our network. Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Quarter Ended Year to Date 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Restated) (Restated) Operating revenues: Service revenues $7,719 $3,833 101.4% $15,138 $7,416 104.1% Equipment sales 890 354 151.4% 1,700 738 130.4% Total operating revenues 8,609 4,187 105.6% 16,838 8,154 106.5% Operating expenses: Cost of services 2,293 983 133.3% 4,437 1,938 128.9% Cost of equipment sales 1,230 505 143.6% 2,525 1,042 142.3% Selling, general and administrative 2,953 1,463 101.8% 5,954 2,835 110.0% Depreciation and amortization 1,629 565 188.3% 3,304 1,118 195.5% Total operating expenses 8,105 3,516 130.5% 16,220 6,933 134.0% Operating income (loss) 504 671 (24.9%) 618 1,221 (49.4%) Interest expense 326 199 63.8% 664 397 67.3% Minority interest expense 41 41 0.0% 57 68 (16.2%) Equity in net income (loss) of affiliates 1 (95) NM 3 (203) NM Other income (expense), net 33 1 NM 53 5 NM Income (loss) before income tax and cum. effect of acctng. chg. 171 337 (49.3%) (47) 558 (108.4%) Provision (benefit) for income taxes 24 (2) NM 46 4 NM Income (loss) before cumulative effect of accounting change 147 339 (56.6%) (93) 554 (116.8%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Restated) (Restated) (Amounts in millions, except customer data in 000s) OIBDA(1) $2,133 $1,236 72.6% $3,922 $2,339 67.7% OIBDA margin(2) 27.6% 32.2% -460 BP 25.9% 31.5% -560 BP Total Cellular/PCS Customers(3) 51,596 25,044 106.0% 51,596 25,044 106.0% Net Customer Additions - Cellular/PCS 1,071 428 150.2% 2,490 982 153.6% M&A Activity, Partitioned Customers and/or Other Adjs. 156 (2) (3) 35 Churn - Cellular/PCS(4) 2.2% 2.7% -50 BP 2.2% 2.7% -50 BP ARPU - Cellular/PCS(5) $50.43 $50.75 (0.6%) $50.01 $49.54 0.9% Minutes Of Use Per Cellular/PCS Subscriber(6) 704 568 23.9% 674 547 23.2% Licensed POPs - Cellular/PCS(7) 292 243 292 243 Penetration - Cellular/PCS(8) 18.0% 11.1% 18.0% 11.1% Capital Expenditures(9) 2,188 783 179.4% 3,159 1,117 182.8% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year To Date 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Restated) (Restated) Income (loss) before cumulative effect of accounting change 147 339 (56.6%) (93) 554 (116.8%) Plus: Interest expense 326 199 63.8% 664 397 67.3% Plus: Minority interest expense 41 41 0.0% 57 68 (16.2%) Plus: Equity in net loss of affiliates (1) 95 NM (3) 203 NM Plus: Other, net (33) (1) NM (53) (5) NM Plus: Provision (benefit) for income taxes 24 (2) NM 46 4 NM Operating income (loss) 504 671 (24.9%) 618 1,221 (49.4%) Plus: Depreciation and amortization 1,629 565 188.3% 3,304 1,118 195.5% OIBDA(1) $2,133 $1,236 72.6% $3,922 $2,339 67.7% NM - Not Meaningful On February 18, 2005, our management and the Audit Committee of the board of directors of our Manager concluded that our financial statements for fiscal periods ending December 31, 2000 through December 31, 2003 and the first three interim periods of 2004 should be restated to correct certain errors relating to accounting for operating leases and that such previously filed financial statements should no longer be relied upon. Additionally, our network infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted for under the equity method, reached a similar conclusion with respect to operating leases, requiring correction and restatement of the venture's previously issued financial statements for the years ended December 31, 2003 and 2002. Please see our 2004 Form 10-K filed with the Securities and Exchange Commission on March 7, 2005 for further information. 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. (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) Total Minutes Of Use Per Cellular/PCS Subscriber definition was changed effective with the 2Q05 reporting period. Prior to the change, the numerator was defined as Local Minutes of Use. Effective with this change, the numerator is now defined as including Local Minutes of Use and Outcollect Minutes of Use. (7) 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. (8) Penetration calculation for 2Q05 is based on licensed "operational" POP's of 286 million. (9) Capital expenditures reflect GAAP disclosure and accordingly do not include cash/capital contributed to our previous joint ventures with T-Mobile and AT&T Wireless (pre-merger). Cingular Wireless LLC Normalized Earnings Summary and Reconciliation to Reported Results (amounts in millions) Quarter Ended June 30, 2005 Normalized Item Integration GAAP Costs(1) Normalized Operating revenues: Service revenues $7,719 $0 $7,719 Equipment sales 890 - 890 Total operating revenues 8,609 - 8,609 Operating expenses: Cost of services 2,293 (19) 2,274 Cost of equipment sales 1,230 - 1,230 Selling, general and administrative 2,953 (76) 2,877 Depreciation and amortization * 1,629 (109) 1,520 Total operating expenses 8,105 (204) 7,901 Operating income (loss) 504 204 708 Interest expense 326 - 326 Minority interest expense 41 - 41 Equity in net income (loss) of affiliates 1 - 1 Other income (expense), net 33 - 33 Income (loss) before income tax and cum. effect of acctng. chg. 171 204 375 Provision (benefit) for income taxes 24 34 58 Income (loss) before cumulative effect of accounting change 147 170 317 Year to Date - June 30, 2005 Normalized Item Integration GAAP Costs(1) Normalized Operating revenues: Service revenues $15,138 $0 $15,138 Equipment sales 1,700 - 1,700 Total operating revenues 16,838 - 16,838 Operating expenses: Cost of services 4,437 (22) 4,415 Cost of equipment sales 2,525 - 2,525 Selling, general and administrative 5,954 (178) 5,776 Depreciation and amortization * 3,304 (109) 3,195 Total operating expenses 16,220 (309) 15,911 Operating income (loss) 618 309 927 Interest expense 664 - 664 Minority interest expense 57 - 57 Equity in net income (loss) of affiliates 3 - 3 Other income (expense), net 53 - 53 Income (loss) before income tax and cum. effect of acctng. chg. (47) 309 262 Provision (benefit) for income taxes 46 51 97 Income (loss) before cumulative effect of accounting change (93) 258 165 Notes to Normalized Financial Data * Results for the quarter ended June 30, 2005, include a reduction for depreciation and amortization for prior quarters of $57 million ($47 million net income impact), in connection with valuation adjustments recorded in the second quarter to assets acquired in the AT&T Wireless acquisition. The valuation adjustments to the AT&T Wireless assets were the result of integration plans approved in the second quarter of 2005 and adjustments to the preliminary purchase price allocation. Of the $57 million reduction in depreciation and amortization expenses, $23 million ($19 million net income) relates to the fourth quarter of 2004. The impacts are not included in our normalized integration costs. 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 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Normal- (Restated) (Normal- (Restated) ized) ized) Operating revenues: Service revenues $7,719 $3,833 101.4% $15,138 $7,416 104.1% Equipment sales 890 354 151.4% 1,700 738 130.4% Total operating revenues 8,609 4,187 105.6% 16,838 8,154 106.5% Operating expenses: Cost of services 2,274 983 131.3% 4,415 1,938 127.8% Cost of equipment sales 1,230 505 143.6% 2,525 1,042 142.3% Selling, general and administrative 2,877 1,463 96.7% 5,776 2,835 103.7% Depreciation and amortization 1,520 565 169.0% 3,195 1,118 185.8% Total operating expenses 7,901 3,516 124.7% 15,911 6,933 129.5% Operating income (loss) 708 671 5.5% 927 1,221 (24.1%) Interest expense 326 199 63.8% 664 397 67.3% Minority interest expense 41 41 0.0% 57 68 (16.2%) Equity in net income (loss) of affiliates 1 (95) NM 3 (203) NM Other income (expense), net 33 1 NM 53 5 NM Income (loss) before income tax and cum. effect of acctng. chg. 375 337 11.3% 262 558 (53.0%) Provision (benefit) for income taxes 58 (2) NM 97 4 NM Income (loss) before cumulative effect of accounting change 317 339 (6.5%) 165 554 (70.2%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Normal- (Restated) (Normal- (Restated) ized) ized) (Amounts in millions, except customer data in 000s) OIBDA - normalized(1) $2,228 $1,236 80.3% $4,122 $2,339 76.2% OIBDA margin - normalized(2) 28.9% 32.2% -330 BP 27.2% 31.5% -430 BP Total Cellular/PCS Customers(3) ** 51,596 25,044 106.0% 51,596 25,044 106.0% Net Customer Additions - Cellular/PCS ** 1,071 428 150.2% 2,490 982 153.6% M&A Activity, Partitioned Customers and/or Other Adjs. ** 156 (2) (3) 35 Churn - Cellular/PCS (4) ** 2.2% 2.7% -50 BP 2.2% 2.7% -50 BP ARPU - Cellular/PCS (5) ** $50.43 $50.75 (0.6%) $50.01 $49.54 0.9% Minutes Of Use Per Cellular/PCS Subscriber(6) ** 704 568 23.9% 674 547 23.2% Licensed POPs - Cellular/PCS(7) ** 292 243 292 243 Penetration - Cellular/PCS(8) ** 18.0% 11.1% 18.0% 11.1% Capital Expenditures (9) ** 2,188 783 179.4% 3,159 1,117 182.8% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year To Date 6/30/05 6/30/04 % Change 6/30/05 6/30/04 % Change (Normal- (Restated) (Normal- (Restated) ized) ized) Income (loss) before cumulative effect of accounting change 317 339 (6.5%) 165 554 (70.2%) Plus: Interest expense 326 199 63.8% 664 397 67.3% Plus: Minority interest expense 41 41 0.0% 57 68 (16.2%) Plus: Equity in net loss of affiliates (1) 95 -101.1% (3) 203 -101.5% Plus: Other, net (33) (1) NM (53) (5) NM Plus: Provision (benefit) for income taxes 58 (2) NM 97 4 NM Operating income (loss) 708 671 5.5% 927 1,221 (24.1%) Plus: Depreciation and amortization 1,520 565 169.0% 3,195 1,118 185.8% OIBDA - normalized(1) $2,228 $1,236 80.3% $4,122 $2,339 76.2% OIBDA margin(2) 27.6% 32.2% -460 BP 25.9% 31.5% -560 BP Plus: OIBDA margin, merger integration expenses 1.3% - 1.3% - OIBDA margin - normalized 28.9% 32.2% -330 BP 27.2% 31.5% -430 BP ** Metrics and calculations are not impacted by the 2Q05 and YTD 2005 normalization of merger integration costs. On February 18, 2005, our management and the Audit Committee of the board of directors of our Manager concluded that our financial statements for fiscal periods ending December 31, 2000 through December 31, 2003 and the first three interim periods of 2004 should be restated to correct certain errors relating to accounting for operating leases and that such previously filed financial statements should no longer be relied upon. Additionally, our network infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted for under the equity method, reached a similar conclusion with respect to operating leases, requiring correction and restatement of the venture's previously issued financial statements for the years ended December 31, 2003 and 2002. Please see our 2004 Form 10-K filed with the Securities and Exchange Commission on March 7, 2005 for further information. 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. (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) Total Minutes Of Use Per Cellular/PCS Subscriber definition was changed effective with the 2Q05 reporting period. Prior to the change, the numerator was defined as Local Minutes of Use. Effective with this change, the numerator is now defined as including Local Minutes of Use and Outcollect Minutes of Use. (7) 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. (8) Penetration calculation for 2Q05 is based on licensed "operational" POP's of 286 million. (9) Capital expenditures reflect GAAP disclosure and accordingly do not include cash/capital contributed to our previous joint ventures with T-Mobile and AT&T Wireless (pre-merger). Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Full Year 2002 3/31/2003 6/30/2003 9/30/2003 12/31/2003 (Restated)(Restated)(Restated)(Restated)(Restated) Operating revenues: Service revenues $13,922 $3,414 $3,643 $3,701 $3,559 Equipment sales 981 244 255 383 378 Total operating revenues 14,903 3,658 3,898 4,084 3,937 Operating expenses: Cost of services 3,594 849 921 1,035 970 Cost of equipment sales 1,535 396 451 606 578 Selling, general and administrative 5,429 1,218 1,271 1,442 1,497 Depreciation and amortization 1,849 488 508 521 572 Total operating expenses 12,407 2,951 3,151 3,604 3,617 Operating income (loss) 2,496 707 747 480 320 Interest expense 911 225 230 197 204 Minority interest expense 123 24 35 25 17 Equity in net income (loss) of affiliates (274) (74) (78) (90) (91) Other income (expense), net 29 26 7 4 4 Income (loss) before income tax and cum. effect of acctng. chg. 1,217 410 411 172 12 Provision (benefit) for income taxes 12 2 12 6 8 Income (loss) before cumulative effect of accounting change 1,205 408 399 166 4 Cingular Wireless LLC Income Statement - amounts in millions (unaudited) 3/31/2004 6/30/2004 9/30/2004 12/31/2004 (Restated) (Restated) (Restated) (Revised) Operating revenues: Service revenues $3,583 $3,833 $3,873 $6,313 Equipment sales 384 354 419 806 Total operating revenues 3,967 4,187 4,292 7,119 Operating expenses: Cost of services 955 983 1,107 1,692 Cost of equipment sales 537 505 585 1,247 Selling, general and administrative 1,372 1,463 1,567 2,947 Depreciation and amortization 553 565 573 1,386 Total operating expenses 3,417 3,516 3,832 7,272 Operating income (loss) 550 671 460 (153) Interest expense 198 199 200 303 Minority interest expense 27 41 20 (2) Equity in net income (loss) of affiliates (108) (95) (98) (114) Other income (expense), net 4 1 - 11 Income (loss) before income tax and cum. effect of acctng. chg. 221 337 142 (557) Provision (benefit) for income taxes 6 (2) - (62) Income (loss) before cumulative effect of accounting change 215 339 142 (495) Cingular Wireless LLC Income Statement - amounts in millions (unaudited) 3/31/2005 6/30/2005 Operating revenues: Service revenues $7,419 $7,719 Equipment sales 810 890 Total operating revenues 8,229 8,609 Operating expenses: Cost of services 2,144 2,293 Cost of equipment sales 1,295 1,230 Selling, general and administrative 3,001 2,953 Depreciation and amortization 1,675 1,629 Total operating expenses 8,115 8,105 Operating income (loss) 114 504 Interest expense 338 326 Minority interest expense 16 41 Equity in net income (loss) of affiliates 2 1 Other income (expense), net 20 33 Income (loss) before income tax and cum. effect of acctng. chg. (218) 171 Provision (benefit) for income taxes 22 24 Income (loss) before cumulative effect of accounting change (240) 147 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Full Year 2002 3/31/2003 6/30/2003 9/30/2003 12/31/2003 (Restated)(Restated)(Restated)(Restated)(Restated) OIBDA (1) $4,345 $1,195 $1,255 $1,001 $892 OIBDA margin (2) 31.2% 35.0% 34.4% 27.0% 25.1% Integration Costs $0 $0 $0 $0 $0 OIBDA - normalized $4,345 $1,195 $1,255 $1,001 $892 OIBDA margin - normalized 31.2% 35.0% 34.4% 27.0% 25.1% Total Cellular/PCS Customers (3) 21,925 22,114 22,640 23,385 24,027 Net Customer Additions - Cellular/PCS 359 189 540 745 642 M&A Activity, Partitioned Customers and/or Other Adjs. (32) - (14) - - Churn - Cellular/PCS (4) 2.8% 2.6% 2.5% 2.8% 2.8% ARPU - Cellular/PCS (5) $52.14 $51.07 $53.47 $52.80 $49.38 Minutes Of Use Per Cellular/PCS Subscriber (6) 423 441 485 500 515 Licensed POPs - Cellular/ PCS (7) 219 235 236 236 236 Penetration - Cellular/ PCS (8) 10.1% 10.0% 10.2% 10.6% 10.8% Total Cingular Interactive Customers 817 835 788 788 789 Net Customer Additions - Cingular Interactive 84 18 (47) - 1 Capital Expenditures (9) 3,085 327 668 773 966 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s 3/31/2004 6/30/2004 9/30/2004 12/31/2004 (Restated) (Restated) (Restated) (Revised) OIBDA (1) $1,103 $1,236 $1,033 $1,233 OIBDA margin (2) 30.8% 32.2% 26.7% 19.5% Integration Costs $0 $0 $43 $245 OIBDA - normalized $1,103 $1,236 $1,076 $1,478 OIBDA margin - normalized 30.8% 32.2% 27.8% 23.4% 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) $48.30 $50.75 $50.25 $49.51 Minutes Of Use Per Cellular/ PCS Subscriber (6) 527 568 598 617 Licensed POPs - Cellular/ PCS (7) 240 243 243 290 Penetration - Cellular/ PCS (8) 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 Capital Expenditures (9) 334 783 634 1,698 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s 3/31/2005 6/30/2005 OIBDA (1) $1,789 $2,133 OIBDA margin (2) 24.1% 27.6% Integration Costs $105 $204 OIBDA - normalized $1,894 $2,228 OIBDA margin - normalized 25.5% 28.9% Total Cellular/PCS Customers (3) 50,369 51,596 Net Customer Additions - Cellular/PCS 1,419 1,071 M&A Activity, Partitioned Customers and/or Other Adjs. (159) 156 Churn - Cellular/PCS (4) 2.2% 2.2% ARPU - Cellular/PCS (5) $49.59 $50.43 Minutes Of Use Per Cellular/PCS Subscriber (6) 642 704 Licensed POPs - Cellular/PCS (7) 292 292 Penetration - Cellular/PCS (8) 17.7% 18.0% Total Cingular Interactive Customers NA NA Net Customer Additions - Cingular Interactive NA NA Capital Expenditures (9) 971 2,188 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Full Year 2002 3/31/2003 6/30/2003 9/30/2003 12/31/2003 (Restated)(Restated)(Restated)(Restated)(Restated) Income (loss) before cumulative effect of accounting change 1,205 408 399 166 4 Plus: Interest expense 911 225 230 197 204 Plus: Minority interest expense 123 24 35 25 17 Plus: Equity in net loss of affiliates 274 74 78 90 91 Plus: Other, net (29) (26) (7) (4) (4) Plus: Provision (benefit) for income taxes 12 2 12 6 8 Operating income (loss) 2,496 707 747 480 320 Plus: Depreciation and amortization 1,849 488 508 521 572 OIBDA (1) $4,345 $1,195 $1,255 $1,001 $892 Plus: Integration costs - - - - - OIBDA - normalized (1) $4,345 $1,195 $1,255 $1,001 $892 Service revenues 13,922 3,414 3,643 3,701 3,559 Less: Mobitex data revenues 189 55 53 54 58 Service revenues used to calculate ARPU $13,733 $3,359 $3,590 $3,647 $3,501 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) 3/31/2004 6/30/2004 9/30/2004 12/31/2004 (Restated) (Restated) (Restated) (Revised) Income (loss) before cumulative effect of accounting change 215 339 142 (495) Plus: Interest expense 198 199 200 303 Plus: Minority interest expense 27 41 20 (2) Plus: Equity in net loss of affiliates 108 95 98 114 Plus: Other, net (4) (1) - (11) Plus: Provision (benefit) for income taxes 6 (2) - (62) Operating income (loss) 550 671 460 (153) Plus: Depreciation and amortization 553 565 573 1,386 OIBDA (1) $1,103 $1,236 $1,033 $1,233 Plus: Integration costs - - 43 245 OIBDA - normalized (1) $1,103 $1,236 $1,076 $1,478 Service revenues 3,583 3,833 3,873 6,313 Less: Mobitex data revenues 58 59 54 36 Service revenues used to calculate ARPU $3,525 $3,774 $3,819 $6,277 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) 3/31/2005 6/30/2005 Income (loss) before cumulative effect of accounting change (240) 147 Plus: Interest expense 338 326 Plus: Minority interest expense 16 41 Plus: Equity in net loss of affiliates (2) (1) Plus: Other, net (20) (33) Plus: Provision (benefit) for income taxes 22 24 Operating income (loss) 114 504 Plus: Depreciation and amortization 1,675 1,629 OIBDA (1) $1,789 $2,133 Plus: Integration costs 105 95 OIBDA - normalized (1) $1,894 $2,228 Service revenues 7,419 7,719 Less: Mobitex data revenues 18 20 Service revenues used to calculate ARPU $7,401 $7,699 On February 18, 2005, our management and the Audit Committee of the board of directors of our Manager concluded that our financial statements for fiscal periods ending December 31, 2000 through December 31, 2003 and the first three interim periods of 2004 should be restated to correct certain errors relating to accounting for operating leases and that such previously filed financial statements should no longer be relied upon. Additionally, our network infrastructure venture with T-Mobile USA, Inc., GSM Facilities LLC, accounted for under the equity method, reached a similar conclusion with respect to operating leases, requiring correction and restatement of the venture's previously issued financial statements for the years ended December 31, 2003 and 2002. Please see our 2004 Form 10-K filed with the Securities and Exchange Commission on March 7, 2005 for further information. In 2003, to be consistent with industry practices, historical consolidated statements of income for all periods presented were reclassified to reflect billings to our customers for the Universal Service Fund (USF) and other regulatory fees as operating revenues and the costs related to payments into the associated regulatory funds as operating expenses. Similar reclassifications have also been made to 2003 and 2004 historical results for certain gross receipts taxes and other fees which are billed to our customers. Operating income and net income for all periods were 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. (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) Total Minutes Of Use Per Cellular/PCS Subscriber definition was changed effective with the 2Q05 reporting period. Prior to the change, the numerator was defined as Local Minutes of Use. Effective with this change, the numerator is now defined as including Local Minutes of Use and Outcollect Minutes of Use. (7) 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. (8) Penetration calculation for 2Q05 is based on licensed "operational" POP's of 286 million. (9) Capital expenditures reflect GAAP disclosure and accordingly do not include cash/capital contributed to our previous joint ventures with T-Mobile and AT&T Wireless (pre-merger). Cingular Wireless LLC Income Statement, Normalized - amounts in millions (unaudited) The normalized financial data presented below exclude the impact of integration costs are one-time cash outlays, or specified non-cash charges, directly related to the acquisition of AT&T Wireless. These costs would not have been incurred if not for the acquisition, as they support the utilization and/or disposal of the acquired assets. Integration costs are separately identifiable from business as usual outlays. In connection with certain rationalization plans approved by management, costs were recognized in the income statement during the second quarter of 2005 for exiting certain activities of Cingular. Purchase accounting impacts of the AT&T Wireless acquisition are not included in integration costs. Examples of merger integration costs impacting expenses include (but are not limited to) the following: * Network rationalization (write-offs and accelerated depreciation related to certain "overlap" network assets) * Sales distribution optimization (lease terminations, leasehold improvement write-offs/accelerated depreciation) * Workforce rationalization (severance, relocation, retention) * IT System/Application rationalization (system/platform consolidation, contract termination fees, third party support) * Real Estate space rationalization (lease terminations, leasehold improvements write-offs and accelerated depreciation, contract termination fees) Normalized 12/31/2004 3/31/2005 6/30/2005 Operating revenues: (Revised) Service revenues $6,313 $7,419 $7,719 Equipment sales 806 810 890 Total operating revenues 7,119 8,229 8,609 Operating expenses: Cost of services 1,685 2,141 2,274 Cost of equipment sales 1,244 1,295 1,230 Selling, general and administrative 2,712 2,899 2,877 Depreciation and amortization 1,386 1,675 1,520 Total operating expenses 7,027 8,010 7,901 Operating income 92 219 708 Interest expense 303 338 326 Minority interest expense (2) 16 41 Equity in net income (loss) of affiliates (114) 2 1 Other income (expense), net 11 20 33 Income (loss) before income tax and cum. effect of acctng. chg. (312) (113) 375 Provision for income taxes (27) 39 58 Income (loss) before cumulative effect of accounting change (285) (152) 317 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Normalized 12/31/2004 3/31/2005 6/30/2005 (Revised) OIBDA(1) (in millions) $1,478 $1,894 $2,228 OIBDA margin(2) 23.4% 25.5% 28.9% Total Cellular/PCS Customers(3) (000's) 49,109 50,369 51,596 Net Customer Additions - Cellular/PCS (000's) 1,713 1,419 1,071 M&A Activity, Partitioned Customers and/or Other Adjs. (000's) 21,724 (159) 156 Churn - Cellular/PCS(4) 2.6% 2.2% 2.2% ARPU - Cellular/PCS(5) $49.51 $49.59 $50.43 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Normalized 12/31/2004 3/31/2005 6/30/2005 (Revised) Income (loss) before cumulative effect of accounting change (285) (152) 317 Plus: Interest expense 303 338 326 Plus: Minority interest expense (2) 16 41 Plus: Equity in net (income) loss of affiliates 114 (2) (1) Plus: Other, net (11) (20) (33) Plus: Provision for income taxes (27) 39 58 Operating income 92 219 708 Plus: Depreciation and amortization 1,386 1,675 1,520 OIBDA(1) 1,478 1,894 2,228 Service revenues 6,313 7,419 7,719 Less: Mobitex data revenues 36 18 20 Service revenues used to calculate ARPU $6,277 $7,401 $7,699 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. (3) Cellular/PCS customers include customers served through reseller agreements. (4) Cellular/PCS customer 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. Cingular Wireless LLC Balance Sheet - amounts in millions (unaudited) 6/30/2005 12/31/2004 Incr(Decr) % +/- (audited) Assets (Revised) Current assets: Cash and cash equivalents 267 352 (85) (24.1%) Accounts receivable - net of allowance for doubtful accounts 3,468 3,448 20 0.6% Inventories 543 690 (147) (21.3%) Prepaid expenses and other current assets 821 1,080 (259) (24.0%) Total current assets 5,099 5,570 (471) (8.5%) Property, plant and equipment - net 21,749 21,958 (209) (1.0%) Intangible assets - net 50,846 51,338 (492) (1.0%) Other assets 2,868 3,372 (504) (14.9%) Total assets 80,562 82,238 (1,676) (2.0%) Liabilities and members' capital Current liabilities: Debt maturing within one year 1,257 2,158 (901) (41.8%) Accounts payable and accrued liabilities 6,818 5,825 993 17.0% Total current liabilities 8,075 7,983 92 1.2% Long-term debt to affiliates 9,327 9,628 (301) (3.1%) Long-term debt to external parties 13,158 14,229 (1,071) (7.5%) Total long-term debt 22,485 23,857 (1,372) (5.8%) Other noncurrent liabilities 4,914 5,253 (339) (6.5%) Minority interests in consolidated entities 526 609 (83) (13.6%) Members' capital 44,562 44,536 26 0.1% Total liabilities and members' capital 80,562 82,238 (1,676) (2.0%) On February 18, 2005, our management and the Audit Committee of the board of directors of our Manager concluded that our financial statements for fiscal periods ending December 31, 2000 through December 31, 2003 and the first three interim periods of 2004 should be restated to correct certain errors relating to accounting for operating leases and that such previously filed financial statements should no longer be relied upon. Additionally, our network infrastructure venture with T.Mobile USA, Inc., GSM Facilities LLC, accounted for under the equity method, reached a similar conclusion with respect to operating leases, requiring correction and restatement of the venture's previously issued financial statements for the years ended December 31, 2003 and 2002. Please see our 2004 Form 10-K filed with the Securities and Exchange Commission on March 7, 2005 for further information. DATASOURCE: Cingular Wireless CONTACT: Media, Mark Siegel, +1-404-236-6312, or , or Clay Owen, +1-404-236-6153, or , or Investor Relations, Kent Evans, +1-404-236-6203, or , or Jeff Cannon, +1-404-236-5486, or , or Kristi Taylor, +1-404-236-6532, or , all of Cingular Wireless Web site: http://www.cingular.com/ http://www.cingular.com/investor

Copyright