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- Normalized OIBDA margin of 31.6 percent for the quarter, a 270-basis- point sequential improvement ATLANTA, Oct. 19 /PRNewswire/ -- Cingular Wireless, which is a joint venture between SBC Communications Inc. (NYSE:SBC) and BellSouth Corporation (NYSE:BLS), today reported solid third-quarter results driven by expanded margins, progress on merger initiatives, growth of data ARPU, and continued strength in enterprise services. For the quarter, the nation's largest wireless provider had OIBDA margins, normalized to exclude merger-related integration costs and costs associated with Hurricanes Katrina and Rita, of 31.6 percent, which represents a sequential improvement of 270 basis points. (OIBDA margin is operating income (loss) before depreciation and amortization, divided by total service revenues.) For the first time since its acquisition of AT&T Wireless, Cingular's OIBDA margins were higher than in the comparable quarter in the prior year. This strong showing in margins was in part the result of the company's continued progress in its merger integration initiatives, which are on or ahead of schedule. For example, by the end of the year Cingular will have integrated its own and former AT&T Wireless GSM networks in 30 markets and created a single TDMA network in all its markets. Cingular's data ARPU improved 4.1 percent sequentially to $4.33, and the company's Business Markets Group signed up more than 700 new high-end service contracts in the quarter. Gross subscriber additions continued to be strong at 4.4 million. Net additions were 867 thousand, which was 7.3 percent higher than pro forma net additions in the year-ago third quarter. Postpaid net additions were up by 56 percent compared to the year-ago third 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 third quarter of 2005 with 52.3 million cellular/PCS subscribers. Monthly subscriber churn was 2.3 percent, which was a sequential increase of 10 basis points, and post-paid churn was 2.0 percent, which was a sequential increase of 20 basis points. Churn results reflect seasonal patterns and a relatively high number of contract expirations in the quarter, the company noted. "Next Wednesday, October 26, marks the first anniversary of Cingular's life as the largest wireless company in the United States, and our third- quarter results show once again that we are making solid progress delivering on the promise of the merger," said Stan Sigman, Cingular's president and chief executive officer. "I am pleased with our continued improvement in margins, with the performance of our enterprise business, and with our steady stream of new and innovative offers for consumers. Though we of course have not yet realized all the benefits of the merger, we are already ahead of where we planned to be on the journey. In just a year we have added nearly 5 million customers, significantly boosted our margins, improved churn, and delivered positive financial performance. "Several members of Cingular's senior team took a very different journey last month to Louisiana, Alabama, Mississippi, and Texas to view first-hand the effects of Hurricanes Katrina and Rita. We saw destruction and devastation that go far beyond what anyone ever wants to see. We also watched with awe and gratitude the work of the people of Cingular to restore our service and facilities and to help their colleagues and communities in need. These are the men and women who every day are transforming the country's biggest wireless company into the best," Sigman said. Strong gross additions and continued retention of former AT&T Wireless customers Cingular's "More Bars in More Places"(SM) and ALLOVER(SM) network messages continue to resonate with our customers as well as with the customers of our competitors, driving Cingular's strong showing in gross subscriber additions. In addition, the company continued to transition its customer base to GSM and move former AT&T Wireless customers to Cingular plans. During the third quarter, 82 percent of Cingular's subscriber base was GSM-equipped, up from 78 percent in the second quarter of 2005. More than 6 percent of Cingular's customer base upgraded handsets during the quarter -- almost entirely onto GSM. Cingular has now converted nearly 6 million former AT&T Wireless subscribers to new Cingular plans as customers continued to respond positively to Cingular's broad network coverage and innovative products and services. Cingular operates the nation's largest digital voice and data network, and 93 percent of the company's total 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 nearly 180 countries. Financial Results - In the third quarter, Cingular's revenues were $8.7 billion, which is an improvement of 6.2 percent over pro forma revenue of $8.2 billion during the year-ago third quarter and up 1.6 percent versus the second quarter of this year. (Revenues were reduced in the quarter by $31 million in credits given to Cingular customers in areas affected by Hurricanes Katrina and Rita.) - Average revenue per user (ARPU) in the quarter was $49.65, which was down 5.2 percent from pro forma ARPU in the year-ago third quarter. ARPU continued to be adversely affected primarily by the transition of customers to lower-priced GSM plans, the ongoing popularity of FamilyTalk(R) plans, and the impact of Rollover(SM) plans, though these impacts were partially offset by a continued increase in data ARPU. (Adjusted for hurricane-related customer credits, ARPU would have been 20 cents higher at $49.85 and the year-over-year decline would have been 4.8 percent.) - ARPU from data services continued its strong growth in the third quarter, increasing 4.1 percent to $4.33 compared to $4.16 in the second quarter of this year. This growth was spurred by the ever- increasing popularity of text messaging, mobile instant messaging, mobile e-mail, downloadable ringtones, games, photo messaging and media bundles. In the third quarter, Cingular had 22 million active data customers, and delivered 5.2 billion text messages and 60 million multi-media messages. - Cingular's reported third-quarter operating expenses were $8.1 billion. These included merger-related integration costs of $241 million and expenses of $96 million in connection with Hurricanes Katrina and Rita. Merger- and hurricane-related expenses reduced Cingular's OIBDA by $245 million. In addition, operating expenses included $396 million in non-cash amortization of intangibles that were acquired as part of the merger with AT&T Wireless. - Reported OIBDA margin was 28.5 percent for the third quarter. Normalized to exclude merger-related integration costs and hurricane- related expenses, OIBDA margin was 31.6 percent -- a sequential improvement of 270 basis points. - Reported operating income was $657 million, a sequential increase of 30 percent. Normalized to exclude merger-related integration costs and hurricane-related expenses, operating income for the third quarter was $994 million, a sequential increase of 40 percent. - Reported net income was $222 million compared to $147 million in the second quarter. Normalized to exclude merger-related integration costs and hurricane-related expenses, net income increased to $504 million compared to $317 million in the second quarter. Third-quarter highlights and initiatives - Cingular's Business Markets Group continued to introduce innovative new products, services, and alliances. These included, among many others, the EDGE-powered Nokia 9300, which comes with popular BlackBerry (R) wireless services, and an alliance with Dell to bring Cingular's 3G wireless broadband technology to Dell's notebook computers. - In addition, the Business Markets Group also signed more than 700 new high-end service contracts during the quarter, including such business and government accounts as Xcel Energy; California Teachers Association; United States Marine Corps - Camp Lejeune; Conmed Corp.; U.S. Navy Air Command; Hillsborough County, Fla., Sheriff's Department; The Sports Authority; Flying J, Inc.; and Sealy. - With Apple (R) and Motorola, Cingular launched the first wireless phone with iTunes (R), enabling music lovers to transfer their favorite songs to their mobile phone. - The company announced a 10-year distribution agreement with RadioShack Corp. that will give Cingular more than 5,000 new sales outlets across the United States. - Cingular is still 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. The cities of Dallas, Phoenix, and Seattle have already been upgraded to HSDPA. 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 third-quarter news release and downloadable financial statements are also available on that 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: 12765500 Replays will be available for five days. About Cingular Wireless Cingular Wireless is the largest wireless carrier in the United States, serving 52.3 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; -- delays or inability of vendors to deliver hardware, software, handsets or network equipment; -- 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. Cingular Wireless LLC Income Statement - amounts in millions (unaudited) Quarter Ended Year to Date % % 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change (Restated) (Restated) Operating revenues: Service revenues $7,721 $3,873 99.4% $22,859 $11,289 102.5% Equipment sales 1,025 419 144.6% 2,725 1,157 135.5% Total operating revenues 8,746 4,292 103.8% 25,584 12,446 105.6% Operating expenses: Cost of services 2,464 1,107 122.6% 6,901 3,045 126.6% Cost of equipment sales 1,203 585 105.6% 3,728 1,627 129.1% Selling, general and administrative 2,881 1,567 83.9% 8,835 4,402 100.7% Depreciation and amortization 1,541 573 168.9% 4,845 1,691 186.5% Total operating expenses 8,089 3,832 111.1% 24,309 10,765 125.8% Operating income (loss) 657 460 42.8% 1,275 1,681 (24.2%) Interest expense 304 200 52.0% 968 597 62.1% Minority interest expense 38 20 90.0% 95 88 8.0% Equity in net income (loss) of affiliates 1 (98) NM 4 (301) NM Other income (expense), net 10 - NM 63 5 NM Income (loss) before income tax and cum. effect of acctng. chg. 326 142 129.6% 279 700 (60.1%) Provision (benefit) for income taxes 104 - NM 150 4 NM Income (loss) before cumulative effect of accounting change 222 142 56.3% 129 696 (81.5%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date (Amounts in millions, % % except customer 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change data in 000s) (Restated) (Restated) OIBDA(1) $2,198 $1,033 112.8% $6,120 $3,372 81.5% OIBDA margin(2) 28.5% 26.7% 180 BP 26.8% 29.9% -310 BP Total Cellular/PCS Customers(3) 52,292 25,672 103.7% 52,292 25,672 103.7% Net Customer Additions - Cellular/PCS 867 657 32.0% 3,186 1,639 94.4% M&A Activity, Partitioned Customers and/or Other Adjs. (17) (29) (26) 6 Churn - Cellular/PCS(4) 2.3% 2.8% -50 BP 2.2% 2.7% -50 BP ARPU - Cellular/PCS(5) $49.65 $50.25 (1.2%) $49.92 $49.78 0.3% Minutes Of Use Per Cellular/PCS Subscriber(6) 727 598 21.6% 692 565 22.5% Licensed POPs - Cellular/PCS(7) 294 243 294 243 Penetration - Cellular/PCS(8) 18.3% 11.4% 18.3% 11.4% Capital Expenditures(9) 1,346 634 112.3% 4,505 1,751 157.3% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year to Date % % 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change (Restated) (Restated) Income (loss) before cumulative effect of accounting change 222 142 56.3% 129 696 (81.5%) Plus: Interest expense 304 200 52.0% 968 597 62.1% Plus: Minority interest expense 38 20 90.0% 95 88 8.0% Plus: Equity in net loss of affiliates (1) 98 NM (4) 301 NM Plus: Other, net (10) - NM (63) (5) NM Plus: Provision (benefit) for income taxes 104 - NM 150 4 NM Operating income (loss) 657 460 42.8% 1,275 1,681 (24.2%) Plus: Depreciation and amortization 1,541 573 168.9% 4,845 1,691 186.5% OIBDA(1) $2,198 $1,033 112.8% $6,120 $3,372 81.5% 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 3Q05 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 September 30, 2005 Normalized Items Integration Hurricane GAAP Costs (1) Costs (2) Normalized Operating revenues: Service revenues $7,721 $0 $0 $7,721 Equipment sales 1,025 - - 1,025 Total operating revenues 8,746 - - 8,746 Operating expenses: Cost of services 2,464 (101) (78) 2,285 Cost of equipment sales 1,203 - - 1,203 Selling, general and administrative 2,881 (48) (18) 2,815 Depreciation and amortization * 1,541 (92) - 1,449 Total operating expenses 8,089 (241) (96) 7,752 Operating income (loss) 657 241 96 994 Interest expense 304 - - 304 Minority interest expense 38 - - 38 Equity in net income (loss) of affiliates 1 - - 1 Other income (expense), net 10 - - 10 Income (loss) before income tax and cum. effect of acctng. chg. 326 241 96 663 Provision (benefit) for income taxes 104 39 16 159 Income (loss) before cumulative effect of accounting change 222 202 80 504 Year to Date - September 30, 2005 Normalized Normalized Item Item Integration Hurricane GAAP Costs (1) Costs (2) Normalized Operating revenues: Service revenues $22,859 $0 $0 $22,859 Equipment sales 2,725 - - 2,725 Total operating revenues 25,584 - - 25,584 Operating expenses: Cost of services 6,901 (123) (78) 6,700 Cost of equipment sales 3,728 - - 3,728 Selling, general and administrative 8,835 (226) (18) 8,591 Depreciation and amortization * 4,845 (201) - 4,644 Total operating expenses 24,309 (550) (96) 23,663 Operating income (loss) 1,275 550 96 1,921 Interest expense 968 - - 968 Minority interest expense 95 - - 95 Equity in net income (loss) of affiliates 4 - - 4 Other income (expense), net 63 - - 63 Income (loss) before income tax and cum. effect of acctng. chg. 279 550 96 925 Provision (benefit) for income taxes 150 90 16 256 Income (loss) before cumulative effect of accounting change 129 460 80 669 Notes to Normalized Financial Data * "Results for the quarter ended September 30, 2005, include a reduction for depreciation and amortization for prior quarters of $51 million ($43 million net income impact), in connection with valuation adjustments recorded in the third 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 2005. Of the $51 million reduction in depreciation and amortization expenses, $12 million ($10 million net income) relates to the fourth quarter of 2004. The impacts are not included in our normalized integration costs. On a YTD basis, depreciation true-ups (i.e. reduction to depreciation expense) associated with valuation and other purchase price allocation changes to PP&E acquired from AT&T Wireless include $35 million ($29 million net income) of impacts related to the fourth quarter of 2004. Our normalized earnings have been adjusted for the following: (1) Tax-effected integration costs resulting from the Cingular acquisition of AT&T Wireless. (2) "Tax-effected operating costs resulting from hurricanes Katrina and Rita. Approximately $31M in customer bill credits issued to customers affected by hurricanes Katrina and Rita have not been normalized. If such customer bill credits had been normalized, ARPU would have increased to $49.85 (from $49.65) and the normalized OIBDA margin for the third quarter of 2005 would have increased to 31.9% (from 31.6%). Cingular Wireless LLC Income Statement, Normalized - amounts in millions (unaudited) Quarter Ended Year to Date % % 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change (Normal (Normal (Normal (Normal -ized) -ized) -ized) -ized) Operating revenues: (Restated) (Restated) Service revenues $7,721 $3,873 99.4% $22,859 $11,289 102.5% Equipment sales 1,025 419 144.6% 2,725 1,157 135.5% Total operating revenues 8,746 4,292 103.8% 25,584 12,446 105.6% Operating expenses: Cost of services 2,285 1,106 106.6% 6,700 3,044 120.1% Cost of equipment sales 1,203 585 105.6% 3,728 1,627 129.1% Selling, general and administrative 2,815 1,525 84.6% 8,591 4,360 97.0% Depreciation and amortization 1,449 573 152.9% 4,644 1,691 174.6% Total operating expenses 7,752 3,789 104.6% 23,663 10,722 120.7% Operating income (loss) 994 503 97.6% 1,921 1,724 11.4% Interest expense 304 200 52.0% 968 597 62.1% Minority interest expense 38 20 90.0% 95 88 8.0% Equity in net income (loss) of affiliates 1 (98) NM 4 (301) NM Other income (expense), net 10 - NM 63 5 NM Income (loss) before income tax and cum. effect of acctng. chg. 663 185 258.4% 925 743 24.5% Provision (benefit) for income taxes 159 - NM 256 4 NM Income (loss) before cumulative effect of accounting change 504 185 172.4% 669 739 (9.5%) Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Quarter Ended Year to Date % % 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change (Amounts in millions, (Normal (Normal (Normal (Normal except customer -ized) -ized) -ized) -ized) data in 000s) (Restated) (Restated) OIBDA - normalized(1) $2,443 $1,076 127.0% $6,565 $3,415 92.2% OIBDA margin - normalized(2) 31.6% 27.8% 380 BP 28.7% 30.3% -160 BP Total Cellular/PCS Customers(3)** 52,292 25,672 103.7% 52,292 25,672 103.7% Net Customer Additions - Cellular/PCS ** 867 657 32.0% 3,186 1,639 94.4% M&A Activity, Partitioned Customers and/or Other Adjs. ** (17) (29) (26) 6 Churn - Cellular/PCS(4) ** 2.3% 2.8% -50 BP 2.2% 2.7% -50 BP ARPU - Cellular/PCS(5) ** $49.65 $50.25 (1.2%) $49.92 $49.78 0.3% Minutes Of Use Per Cellular/PCS Subscriber(6)** 727 598 21.6% 692 565 22.5% Licensed POPs - Cellular/PCS(7)** 294 243 294 243 Penetration - Cellular/PCS(8)** 18.3% 11.4% 18.3% 11.4% Capital Expenditures (9)** 1,346 634 112.3% 4,505 1,751 157.3% Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Quarter Ended Year to Date % % 09/30/05 09/30/04 Change 09/30/05 09/30/04 Change (Normal (Normal (Normal (Normal -ized) -ized) -ized) -ized) (Restated) (Restated) Income (loss) before cumulative effect of accounting change 504 185 172.4% 669 739 (9.5%) Plus: Interest expense 304 200 52.0% 968 597 62.1% Plus: Minority interest expense 38 20 90.0% 95 88 8.0% Plus: Equity in net loss of affiliates (1) 98 -101.0% (4) 301 -101.3% Plus: Other, net (10) - NM (63) (5) NM Plus: Provision (benefit) for income taxes 159 - NM 256 4 NM Operating income (loss) 994 503 97.6% 1,921 1,724 11.4% Plus: Depreciation and amortization 1,449 573 152.9% 4,644 1,691 174.6% OIBDA - normalized(1) $2,443 $1,076 127.0% $6,565 $3,415 92.2% OIBDA margin(2) 28.5% 26.7% 180 BP 26.8% 29.9% -310 BP Plus: OIBDA margin, merger integration expenses 3.1% - 1.9% - OIBDA margin - normalized 31.6% 27.8% 380 BP 28.7% 30.3% -160 BP NM - Not Meaningful ** Metrics and calculations are not impacted by the 3Q05 and YTD 2005 normalization of merger integration and hurricane 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 3Q05 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 03/31/03 06/30/03 09/30/03 12/31/03 (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) 03/31/04 06/30/04 09/30/04 12/31/04 (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) 03/31/05 06/30/05 09/30/05 Operating revenues: Service revenues $7,419 $7,719 $7,721 Equipment sales 810 890 1,025 Total operating revenues 8,229 8,609 8,746 Operating expenses: Cost of services 2,144 2,293 2,464 Cost of equipment sales 1,295 1,230 1,203 Selling, general and administrative 3,001 2,953 2,881 Depreciation and amortization 1,675 1,629 1,541 Total operating expenses 8,115 8,105 8,089 Operating income (loss) 114 504 657 Interest expense 338 326 304 Minority interest expense 16 41 38 Equity in net income (loss) of affiliates 2 1 1 Other income (expense), net 20 33 10 Income (loss) before income tax and cum. effect of acctng. chg. (218) 171 326 Provision (benefit) for income taxes 22 24 104 Income (loss) before cumulative effect of accounting change (240) 147 222 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Full Year 2002 03/31/03 06/30/03 09/30/03 12/31/03 (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 and Hurricane 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) 0 (14) 0 0 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) 0 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 03/31/04 06/30/04 09/30/04 12/31/04 (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 and Hurricane 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 49,132 Net Customer Additions - Cellular/PCS 554 428 657 1,699 M&A Activity, Partitioned Customers and/or Other Adjs. 37 (2) (29) 21,761 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) 240 243 243 291 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 03/31/05 06/30/05 09/30/05 OIBDA(1) $1,789 $2,133 $2,198 OIBDA margin(2) 24.1% 27.6% 28.5% Integration and Hurricane Costs $105 $204 $337 OIBDA - normalized $1,894 $2,228 $2,443 OIBDA margin - normalized 25.5% 28.9% 31.6% Total Cellular/PCS Customers(3) 50,350 51,442 52,292 Net Customer Additions - Cellular/PCS 1,367 952 867 M&A Activity, Partitioned Customers and/or Other Adjs. (149) 140 (17) Churn - Cellular/PCS(4) 2.2% 2.2% 2.3% ARPU - Cellular/PCS(5) $49.60 $50.51 $49.65 Minutes Of Use Per Cellular/PCS Subscriber(6) 643 705 727 Licensed POPs - Cellular/PCS(7) 293 294 294 Penetration - Cellular/PCS(8) 17.7% 18.0% 18.3% Total Cingular Interactive Customers NA NA NA Net Customer Additions - Cingular Interactive NA NA NA Capital Expenditures(9) 971 2,188 1,346 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Full Year 2002 03/31/03 06/30/03 09/30/03 12/31/03 (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 (excluding depreciation and amortization) 0 0 0 0 0 Plus: Hurricane costs (excluding depreciation and amortization) 0 0 0 0 0 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) 03/31/04 06/30/04 09/30/04 12/31/04 (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) 0 (11) Plus: Provision (benefit) for income taxes 6 (2) 0 (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 (excluding depreciation and amortization) 0 0 43 245 Plus: Hurricane costs (excluding depreciation and amortization) 0 0 0 0 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) 03/31/05 06/30/05 09/30/05 Income (loss) before cumulative effect of accounting change (240) 147 222 Plus: Interest expense 338 326 304 Plus: Minority interest expense 16 41 38 Plus: Equity in net loss of affiliates (2) (1) (1) Plus: Other, net (20) (33) (10) Plus: Provision (benefit) for income taxes 22 24 104 Operating income (loss) 114 504 657 Plus: Depreciation and amortization 1,675 1,629 1,541 OIBDA 1 $1,789 $2,133 $2,198 Plus: Integration costs (excluding depreciation and amortization) 105 95 149 Plus: Hurricane costs (excluding depreciation and amortization) 0 0 96 OIBDA - normalized 1 $1,894 $2,228 $2,443 Service revenues 7,419 7,719 7,721 Less: Mobitex data revenues 18 20 18 Service revenues used to calculate ARPU $7,401 $7,699 $7,703 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 re 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. Licensed POPs have been restated in periods 4Q04 through 2Q05 due to a reconciliation of respective licenses. Licensed POPs are based on estimated 2005 total US POPs of 297 million. (8) Penetration calculation for 3Q05 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 that 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 and third quarters of 2005. 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 12/31/04 03/31/05 06/30/05 09/30/25 Operating revenues: (Revised) Service revenues $6,313 $7,419 $7,719 $7,721 Equipment sales 806 810 890 1,025 Total operating revenues 7,119 8,229 8,609 8,746 Operating expenses: Cost of services 1,685 2,141 2,274 2,285 Cost of equipment sales 1,244 1,295 1,230 1,203 Selling, general and administrative 2,712 2,899 2,877 2,815 Depreciation and amortization 1,386 1,675 1,520 1,449 Total operating expenses 7,027 8,010 7,901 7,752 Operating income 92 219 708 994 Interest expense 303 338 326 304 Minority interest expense (2) 16 41 38 Equity in net income (loss) of affiliates (114) 2 1 1 Other income (expense), net 11 20 33 10 Income (loss) before income tax and cum. effect of acctng. chg. (312) (113) 375 663 Provision for income taxes (27) 39 58 159 Income (loss) before cumulative effect of accounting change (285) (152) 317 504 Selected Financial and Operating Data for Cingular Wireless - amounts in millions, except customer data in 000s Normalized 12/31/04 03/31/05 06/30/05 09/30/25 (Revised) OIBDA(1) (in millions) $1,478 $1,894 $2,228 $2,443 OIBDA margin(2) 23.4% 25.5% 28.9% 31.6% Total Cellular/PCS Customers(3) (000's) 49,132 50,350 51,442 52,292 Net Customer Additions - Cellular/PCS (000's) 1,699 1,367 952 867 M&A Activity, Partitioned Customers and/or Other Adjs. (000's) 21,761 (149) 140 (17) Churn - Cellular/PCS(4) 2.6% 2.2% 2.2% 2.3% ARPU - Cellular/PCS(5) $49.51 $49.60 $50.51 $49.65 Reconciliations of Non-GAAP Financial Measures to GAAP Financial Measures - amounts in millions (unaudited) Normalized 12/31/04 03/31/05 06/30/05 09/30/25 (Revised) Income (loss) before cumulative effect of accounting change (285) (152) 317 504 Plus: Interest expense 303 338 326 304 Plus: Minority interest expense (2) 16 41 38 Plus: Equity in net (income) loss of affiliates 114 (2) (1) (1) Plus: Other, net (11) (20) (33) (10) Plus: Provision for income taxes (27) 39 58 159 Operating income 92 219 708 994 Plus: Depreciation and amortization 1,386 1,675 1,520 1,449 OIBDA(1) 1,478 1,894 2,228 2,443 Service revenues 6,313 7,419 7,719 7,721 Less: Mobitex data revenues 36 18 20 18 Service revenues used to calculate ARPU $6,277 $7,401 $7,699 $7,703 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) 09/30/05 12/31/04 Incr(Decr) % + / - (audited) Assets Current assets: Cash and cash equivalents 288 352 (64) (18.2%) Accounts receivable - net of allowance for doubtful accounts 3,486 3,448 38 1.1% Inventories 537 690 (153) (22.2%) Prepaid expenses and other current assets 717 1,080 (363) (33.6%) Total current assets 5,028 5,570 (542) (9.7%) Property, plant and equipment - net 20,226 21,958 (1,732) (7.9%) Intangible assets - net 51,754 51,338 416 0.8% Other assets 931 3,372 (2,441) (72.4%) Total assets 77,939 82,238 (4,299) (5.2%) Liabilities and members' capital Current liabilities: Debt maturing within one year 1,034 2,158 (1,124) (52.1%) Accounts payable and accrued liabilities 7,139 5,825 1,314 22.6% Total current liabilities 8,173 7,983 190 2.4% Long-term debt to affiliates 6,953 9,628 (2,675) (27.8%) Long-term debt to external parties 13,151 14,229 (1,078) (7.6%) Total long-term debt 20,104 23,857 (3,753) (15.7%) Other noncurrent liabilities 4,350 5,253 (903) (17.2%) Minority interests in consolidated entities 534 609 (75) (12.3%) Members' capital 44,778 44,536 242 0.5% Total liabilities and members' capital 77,939 82,238 (4,299) (5.2%) DATASOURCE: Cingular Wireless CONTACT: Mark Siegel, +1-404-236-6312, or , or Clay Owen, +1-404-236-6153, or , or Investors Kent Evans, +1-404-236-6203, or , or Jeff Cannon, +1-404-236-5486, or , all of Cingular Wireless Web site: http://www.cingular.com/

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