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•NaturalcombinationoftwoleadingwirelineprovidersandjointownersofCingularspeedsprogressinintegratedwireless/wirelineservices•Substantialfinancialbenefitsforstockholdersofbothcompanies;anexpectednetpresentvalueof$18billioninsynergiesresultingfromamorethan$2billionannualrunrateinsynergiesexpectedin2008,growingto$3billionin2010•ExpectmergertobeaccretivetoAT&Tadjustedearningspersharein2008,double-digitadjustedEPSgrowthineachofnextthreeyears(earningsadjustedformergerintegrationcostsandamortizationofintangibles)andsignificantgrowthinfreecashflowafterdividendsin2007and2008•AT&T'sboardauthorizessharerepurchaseof400millionsharesbyendof2008;buybackofatleast$10billioninsharesovernext22monthsplanned,withthemajorityin2007•MergerwillbenefitcustomersandpromotecompetitionSanAntonio,Texas,Atlanta,Georgia,March5,2006AT&TInc.(NYSE:T)andBellSouthCorporation(NYSE:BLS)announcedtodayanagreementtomergethetwocompanies,acombinationthatwillcreateamoreeffectiveandefficientproviderinthewireless,broadband,video,voiceanddatamarkets.ThemergerwillstreamlinetheownershipandoperationsofCingularWireless,whichisjointlyownedbyAT&TandBellSouth.Thenewcompanywillbemoreinnovative,nimbleandefficient,providingbenefitstocustomersbycombiningtheCingular,BellSouthandAT&TnetworksintoasinglefullyintegratedwirelessandwirelineInternetProtocolnetworkofferingafullrangeofadvancedsolutions.Asaresult,thecombinedcompanywillbebetterabletospeedtheconvergenceofnewandimprovedservicesforconsumersandbusinesses,andembracetheindustry'sshifttoInternetProtocolnetwork-basedtechnologies.LogicalNextStepThatCreatesSubstantialValueThismergerisalogicalnextstepthatcreatessubstantialvalueforcustomersandstockholdersofbothAT&TandBellSouth,saidAT&TChairmanandCEOEdwardE.WhitacreJr.Itwillbenefitcustomersthroughnewservicesandexpandedservicecapabilities.ItwillstrengthenCingularthroughunifiedownershipandasinglebrand.Andweareconfidentthatthisisamergerwecanexecute,basedonourtrackrecordwithpreviousintegrationsandourexperienceworkingcloselywithBellSouthtocreateandbuildCingularWireless,andoperateYellowpages.com.Thistransactioncombinestwosolid,verywell-runcompanies,Whitacreadded.BellSouthoperatesinanattractiveregionwithagrowingeconomy.Ithasgreatemployeesandanoutstandingnetwork,withfiberopticsdeeplydeployedinitsservicearea.Ithasastrongrecordintermsofcustomerserviceandasound,conservativebalancesheet.Thesestrengths,addedtothoseofAT&T,willimproveourabilitytoprovideinnovativeservicestomorecustomerswhilereturningsubstantialvaluetoourownersandimprovingourgrowthprofile.Technologychangesandconvergenceareshapinganewcompetitivedynamicandcreatingtremendousopportunity,saidDuaneAckerman,chairmanandCEOofBellSouth.We'recreatingacompanywith1–statearea.Ourfocusisonprovidinggreatserviceandinnovative,competitivelypricedproductsforconsumersandbusinessesthroughouttheSoutheast,thenationandtheworld,saidWhitacre.Together,wewillleadthewayintoaneweraofconvergedandbundledcommunications,videoandentertainmentserviceswhilealsoimprovingourabilitytomanagecomplexnetworks.CustomerBenefitsConsumersseekingarealalternativetocablemonopoliesshouldseefasterandmoreeconomicaldeploymentofnext-generationIPtelevisionnetworksandsimilarservicesasaresultofAT&T'sgroundbreakingentryintoIPTVandtheunparalleledresearchanddevelopmentworkatAT&TLabs,coupledwithBellSouth'sextensivedeploymentoffibernetworksforDSLandotherbroadbandservices.BusinesscustomersinthesoutheasternUnitedStatesandtherestofthecountrystandtobenefitfromtheexpertiseandinnovationofAT&TLabs,aswellasthecombinationofAT&T'sstate-of-the-artnationalandinternationalnetworksandadvancedserviceswithBellSouth'slocalexchangeandbroadbanddistributionplatformsandexpertise.Thecombinedcompanywillhavegreaterfinancial,technical,researchanddevelopment,networkandmarketingresourcestobetterserveconsumersandlarge-businesscustomers,andwillacceleratetheintroductionofnewandimprovedproductandservicesetsforthosecustomers.Themergerwouldalsogivebusinessandgovernmentcustomers,includingmilitaryandnationalsecurityagencies,areliableU.S.-basedproviderofintegrated,secure,high-qualityandcompetitivelypricedservicestomeettheirneedsanywhereintheworld.SinceAT&TandBellSoutharenotactualcompetitorsinthelocal,longdistanceandvideomarkets,andbecauseBellSouthisnotasignificantcompetitorwithAT&Tintheenterprisemarket,themergerwillnotreducecompetitioninanyofthosemarkets.TermsandConditionsUndertermsoftheagreement,approvedbytheboardsofdirectorsofbothcompanies,shareholdersofBellSouthwillreceive1