NEW YORK – AT&T said today third quarter earnings for AT&T Common Stock Group were $0.35 per diluted share on a reported basis, or $1.319 billion, compared to $0.50 per diluted share, for the year-ago quarter. AT&T Common Stock Group’s operational earnings, which exclude certain gains and charges as well as the impact of certain ownership interests, were $0.38 per diluted share, or $1.440 billion, a decrease of 24.0 percent compared to the $0.50 per diluted share from the year-ago quarter.

Pro forma revenue for the third quarter increased 3.7 percent year-over-year and was led by Wireless Services, Broadband, and Business Services but partially offset by declines in Consumer Services. On a reported basis, third quarter revenue was $16.975 billion compared to $16.333 billion for the year-ago quarter.

The company’s Wireless and Broadband segments both reported solid revenue gains for the quarter. Wireless revenue grew 36.6 percent due to an increase in the number of subscribers. AT&T Broadband revenue grew 10.8 percent on a pro forma basis. In addition, nearly 600,000 new digital video, telephony and high-speed data service units were added this quarter.

Business Services’ data and Internet protocol (data/IP) services revenue now accounts for almost a third of revenue from the company’s business services and grew more than 20.0 percent and its outsourcing business grew 20.2 percent on a pro forma basis. However, this was largely offset by an accelerated decline in Business Services voice revenue, resulting in an overall pro forma revenue increase of 2.5 percent for the third quarter.

Consumer Services’ revenue continued to decline given increased competition in the long distance market, movement of customers to optional calling plans and increased use of wireless services as a substitute for calling card and direct-dial wireline services.

"For the past three years, AT&T’s strategy has been all about building our growth businesses and reducing our dependence on a mature long distance voice business," said Chairman and CEO C. Michael Armstrong. " In 1997, our growth businesses accounted for only about 20 percent of AT&T’s revenue. This year, they will represent about half. At the same time we see an accelerated industry-wide decline in consumer and business long distance voice.

"AT&T is showing strong results in our wireless, broadband and growth units of business services, which produced more than $22 billion in pro forma revenue and grew about 20 percent in the past nine months.

"In fact," Armstrong said, "this quarter we added an additional 126,000 cable-telephony customers and we’re on target to meet our year-end goal of 500,000-650,000. And today AT&T Broadband is leading the industry in digital video, cable telephony and high-speed data customers."

• Reported earnings for the AT&T Common Stock Group were $0.35 per diluted share, a decrease of 30.0 percent compared to $0.50 per diluted share in the third quarter of 1999. The decrease was primarily due to the acquisition of MediaOne, including the impact of shares issued and additional interest expense. The decrease was partially offset by an increase in other income primarily associated with higher interest and dividend income and gains on sales of businesses and investments.

• Operational earnings for AT&T Common Stock Group, which excludes certain gains, charges and ownership interests, were $0.38 per diluted share, a decrease of 24.0 percent from $0.50 per diluted share for the year-ago quarter, primarily due to the acquisition of MediaOne, including the impact of shares issued and additional interest expense. The decrease was partially offset by an increase in other income primarily associated with higher gains on sales of businesses and investments and interest and dividend income.

• Operational cash earnings for AT&T Common Stock Group per diluted share, which excludes the amortization of franchise costs, goodwill associated with acquisitions and equity investments, and other purchased intangibles, were $0.53 for the third quarter.

• Total operating expenses for the third quarter were $14.021 billion compared to $12.944 billion for the third quarter of 1999. These expenses increased in support of our growing broadband and wireless businesses, and the acquisition of MediaOne. The increase was partially offset by ongoing cost reduction efforts and lower access costs, as well as a higher pension credit in 2000.

• Total assets at September 30, 2000 were $213.243 billion, an increase from the $130.973 billion reported at December 31, 1999. The increase was primarily driven by the impact of the MediaOne acquisition and the consolidation of Excite@Home.

• Total debt at September 30, 2000 was $61.785 billion, an increase from the $35.850 billion reported at December 31, 1999, primarily due to the MediaOne acquisition.

• Business Services’ third quarter revenue of $7.108 billion represents an increase of 2.5 percent compared to pro forma revenue of $6.937 billion for the third quarter of 1999. The increase was primarily driven by strength in data/IP and outsourcing services. The shift in Business Services revenue to higher growth products and services, coupled with pricing pressures has caused long distance voice to decline as a percent of total revenue. Business Services achieved a high single-digit long distance volume growth, although the increase was offset by accelerating pricing pressure within the industry, resulting in a long distance voice revenue decline at a mid-single digit rate. However, local voice revenue grew at a mid-teen rate compared to the year-ago quarter.

• Consumer Services had $4.672 billion in revenue for the third quarter, a decline of 10.9 percent compared to $5.242 billion of pro forma revenue for the year-ago quarter. The decline reflects an industry-wide trend, including increased competition in the long distance market, movement of customers to optional calling plans and an increased use of wireless services as substitute for calling card and direct-dial wireline services.

• Wireless Services, which includes mobility and fixed wireless services, grew third quarter revenue 36.6 percent to $2.799 billion compared with the year-ago quarter. The increase is primarily due to consolidated subscriber growth of 38.4 percent, including subscribers associated with acquisitions in 2000. Excluding the acquisition of properties in the San Francisco Bay area, revenue increased 27.3 percent.

• Broadband third quarter revenue was $2.417 billion, an increase from pro forma revenue of $2.181 billion for the third quarter of 1999. The 10.8 percent increase was primarily driven by an increase in video operations and revenue from the growth areas of cable telephony and high-speed data. Average revenue per basic cable customer was $50.15 per month, an increase of 10.6 percent from the prior year.

• Corporate and Other revenue primarily includes corporate staff functions and eliminations, results of international operations and ventures, as well as the consolidated results of Excite@Home. Corporate and Other revenue was negative $21 million in the third quarter, an increase of 53.3 percent, compared with pro forma revenue of negative $47 million in the prior year quarter. 1999 pro forma revenue is adjusted for the divestments of international businesses and the impact of Concert and Excite@Home. The improvement was primarily due to higher revenue from Excite@Home.

Today’s earnings announcement refers to AT&T Group, which does not include the results of Liberty Media Group, which reports its results separately. A detailed explanation of third quarter business unit performance can be found on the Internet at http://www.att.com/ir/.

• EBIT refers to earnings before interest and taxes.  
• EBITDA refers to earnings before interest, taxes, depreciation and amortization, and minority interest.

• Operational Cash Earnings: Refers to operational earnings excluding the amortization of franchise costs, goodwill associated with acquisitions and equity investments, and other purchased intangibles.

• Operational Earnings: These results exclude certain gains and charges as well as the impact of AT&T’s ownership interests in Cablevision and TWE.  
• Reported Earnings: The attached income statement reflects Reported Earnings in accordance with generally accepted accounting principles. 
• Pro forma Revenue: Revenue is adjusted for the acquisitions of MediaOne and the IBM Global Network, the impact of Concert, the elimination of per-line charges by the Federal Communications Commission (FCC), the consolidation of Excite@Home, international divestments and closed cable partnerships.

• AT&T Group does not include the results of Liberty Media Group (LMG), which is tracked as a separate class of stock. Earnings of the AT&T Group are attributed to either the AT&T Common Stock Group or AT&T Wireless Group.

• AT&T Wireless Group became a tracking stock of AT&T following an initial public offering on April 27, 2000. It now trades on the New York Stock Exchange under the symbol AWE. The results of AT&T Wireless Group are included in the attached AT&T Group income statement.

**Earnings for the nine months ended September 30, 2000, represent earnings since April 27, 2000, the effective date of the Initial Public Offering of AT&T Wireless Group tracking stock.