AT&T (T) 8-K Rapid Wireless Data Growth

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2008			9/30/2007			% Ch		g	9/30/2008			9/30/2007		% Ch		g
Operating Revenues
Wireless service	$	11,227		$	9,834			14.2	%	$	32,726		$	28,417		15.2	%
Voice		9,313			10,164			-8.4	%		28,525			30,997		-8.0	%
Data		6,144			5,880			4.5	%		18,170			17,281		5.1	%
Directory		1,333			1,240			7.5	%		4,114			3,417		20.4	%
Other		3,325			3,014			10.3	%		9,417			8,467		11.2	%
Total Operating Revenues		31,342			30,132			4.0	%		92,952			88,579		4.9	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		13,070			11,736			11.4	%		36,972			34,816		6.2	%
Selling, general and administrative		7,676			7,770			-1.2	%		22,976			22,497		2.1	%
Depreciation and amortization		4,978			5,322			-6.5	%		14,839			16,354		-9.3	%
Total Operating Expenses		25,724			24,828			3.6	%		74,787			73,667		1.5	%
Operating Income		5,618			5,304			5.9	%		18,165			14,912		21.8	%
Interest Expense		858			887			-3.3	%		2,577			2,639		-2.3	%
Equity in Net Income of Affiliates		257			162			58.6	%		712			545		30.6	%
Other Income (Expense) - Net		(81	)		(17	)		-			(91	)		614		-
Income Before Income Taxes		4,936			4,562			8.2	%		16,209			13,432		20.7	%
Income Taxes		1,706			1,499			13.8	%		5,746			4,617		24.5	%
Net Income	$	3,230		$	3,063			5.5	%	$	10,463		$	8,815		18.7	%
Basic Earnings Per Share	$	0.55		$	0.50			10.0	%	$	1.76		$	1.43		23.1	%
Weighted Average Common
Shares Outstanding (000,000)		5,893			6,088			-3.2	%		5,938			6,152		-3.5	%
Diluted Earnings Per Share	$	0.55		$	0.50			10.0	%	$	1.75		$	1.42		23.2	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		5,921			6,129			-3.4	%		5,971			6,196		-3.6	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Nine Months Ended
Wireless	9/30/2008			9/30/2007			% Ch		g	9/30/2008			9/30/2007			% Ch		g
Segment Operating Revenues
Service	$	11,273		$	9,860			14.3	%	$	32,869		$	28,492			15.4	%
Equipment		1,345			1,077			24.9	%		3,607			2,837			27.1	%
Total Segment Operating Revenues		12,618			10,937			15.4	%		36,476			31,329			16.4	%
Segment Operating Expenses
Cost of services and equipment sales		4,989			4,079			22.3	%		13,261			11,690			13.4	%
Selling, general and administrative		3,849			3,183			20.9	%		10,489			9,136			14.8	%
Depreciation and amortization		1,401			1,709			-18.0	%		4,327			5,410			-20.0	%
Total Segment Operating Expenses		10,239			8,971			14.1	%		28,077			26,236			7.0	%
Segment Operating Income		2,379			1,966			21.0	%		8,399			5,093			64.9	%
Equity in Net Income of Affiliates		-			3			-100.0	%		5			12			-58.3	%
Minority Interest		(57	)		(43	)		-32.6	%		(186	)		(143	)		-30.1	%
Segment Income	$	2,322		$	1,926			20.6	%	$	8,218		$	4,962			65.6	%
Wireline
Segment Operating Revenues
Voice	$	9,515		$	10,356			-8.1	%	$	29,191		$	31,619			-7.7	%
Data		6,401			6,076			5.3	%		18,893			17,918			5.4	%
Other		1,634			1,509			8.3	%		4,698			4,389			7.0	%
Total Segment Operating Revenues		17,550			17,941			-2.2	%		52,782			53,926			-2.1	%
Segment Operating Expenses
Cost of sales		8,128			7,778			4.5	%		23,908			23,396			2.2	%
Selling, general and administrative		3,354			3,868			-13.3	%		10,305			11,354			-9.2	%
Depreciation and amortization		3,331			3,334			-0.1	%		9,770			10,076			-3.0	%
Total Segment Operating Expenses		14,813			14,980			-1.1	%		43,983			44,826			-1.9	%
Segment Income	$	2,737		$	2,961			-7.6	%	$	8,799		$	9,100			-3.3	%
Advertising & Publishing
Segment Operating Revenues	$	1,350		$	1,457			-7.3	%	$	4,174		$	4,378			-4.7	%
Segment Operating Expenses
Cost of sales		461			417			10.6	%		1,321			1,214			8.8	%
Selling, general and administrative		274			338			-18.9	%		972			1,067			-8.9	%
Depreciation and amortization		194			238			-18.5	%		609			743			-18.0	%
Total Segment Operating Expenses		929			993			-6.4	%		2,902			3,024			-4.0	%
Segment Income	$	421		$	464			-9.3	%	$	1,272		$	1,354			-6.1	%
Other
Segment Operating Revenues	$	501		$	562			-10.9	%	$	1,557		$	1,658			-6.1	%
Segment Operating Expenses		420			518			-18.9	%		1,862			1,673			11.3	%
Segment Operating Income(Loss)		81			44			84.1	%		(305	)		(15	)		-
Equity in Net Income of Affiliates		257			159			61.6	%		707			533			32.6	%
Segment Income	$	338		$	203			66.5	%	$	402		$	518			-22.4	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	9/30/08			12/31/07
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	1,594		$	1,970
Accounts receivable - net of allowances for
uncollectibles of $1,328 and $1,364		16,395			16,185
Prepaid expenses		1,657			1,524
Deferred income taxes		1,560			2,044
Other current assets		2,239			2,963
Total current assets		23,445			24,686
Property, Plant and Equipment - Net		97,771			95,890
Goodwill		71,537			70,713
Licenses		46,931			37,985
Customer Lists and Relationships - Net		11,495			14,505
Other Intangible Assets - Net		5,816			5,912
Investments in Equity Affiliates		2,839			2,270
Postemployment Benefit		18,164			17,291
Other Assets		6,530			6,392
Total Assets	$	284,528		$	275,644
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	17,419		$	6,860
Accounts payable and accrued liabilities		18,690			21,399
Advanced billing and customer deposits		3,896			3,571
Accrued taxes		2,976			5,027
Dividends payable		2,357			2,417
Total current liabilities		45,338			39,274
Long-Term Debt		59,355			57,255
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		27,776			24,939
Postemployment benefit obligation		25,493			24,011
Other noncurrent liabilities		14,048			14,798
Total deferred credits and other noncurrent liabilities		67,317			63,748
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Capital in excess of par value		91,684			91,638
Retained earnings		36,613			33,297
Treasury shares (at cost)		(21,412	)		(15,683	)
Accumulated other comprehensive income(loss)		(862	)		(380	)
Total stockholders' equity		112,518			115,367
Total Liabilities and Stockholders' Equity	$	284,528		$	275,644

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions increase (decrease) in cash and cash equivalents
Unaudited	Nine Months Ended
		9/30/08		9/30/07
Operating Activities
Net income	$	10,463		$	8,815
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		14,839			16,354
Undistributed earnings from investments in equity affiliates		(572	)		(434	)
Provision for uncollectible accounts		1,297			1,142
Deferred income tax expense		4,063			486
Net gain on sales of investments		(2	)		(29	)
Gain on license exchange		-			(409	)
Changes in operating assets and liabilities:
Accounts receivable		(1,597	)		(1,253	)
Other current assets		616			(661	)
Accounts payable and accrued liabilities		(5,958	)		(46	)
Stock-based compensation tax benefit		(15	)		(149	)
Other - net		(361	)		529
Total adjustments		12,310			15,530
Net Cash Provided by Operating Activities		22,773			24,345
Investing Activities
Construction and capital expenditures
Capital expenditures		(14,388	)		(12,124	)
Interest during construction		(455	)		(125	)
Acquisitions, net of cash acquired		(10,086	)		(233	)
Dispositions		1,444			993
Proceeds from sale of securities, net of investments		(103	)		584
Sale of other investments		436			-
Other		33			28
Net Cash Used in Investing Activities		(23,119	)		(10,877	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		5,188			(4,279	)
Issuance of long-term debt		10,924			7,898
Repayment of long-term debt		(3,143	)		(3,008	)
Purchase of treasury shares		(6,077	)		(8,912	)
Issuance of treasury shares		317			1,736
Dividends paid		(7,150	)		(6,584	)
Stock-based compensation tax benefit		15			149
Other		(104	)		(172	)
Net Cash Used in Financing Activities		(30	)		(13,172	)
Net increase (decrease) in cash and cash equivalents		(376	)		296
Cash and cash equivalents beginning of year		1,970			2,418
Cash and Cash Equivalents End of Period	$	1,594		$	2,714

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Nine Months Ended
	9/30/2008			9/30/2007			% Ch		g	9/30/2008			9/30/2007			% Ch		g
Wireless
Wireless Customers (000)											74,871			65,666			14.0	%
Net Customer Additions (000)		1,976			1,993			-0.9	%		4,604			4,640			-0.8	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		13			-			-			215			64			-
Postpaid Customers (000)											58,735			52,689			11.5	%
Net Postpaid Customer Additions (000)		1,693			1,212			39.7	%		3,292			2,804			17.4	%
Postpaid Churn		1.2	%		1.3	%	-10 B		P		1.2	%		1.3	%	-10 B		P
Licensed POPs (000,000)											304			299			1.7	%
In-Region Wireline 1
Total Consumer Revenue Connections (000) 6
Retail Consumer Voice Connections 2											28,329			31,658			-10.5	%
Retail Consumer Additional Voice Connections 2											3,526			4,112			-14.3	%
Consumer Broadband Connections 3											12,730			11,716			8.7	%
Video Connections: 4
Satellite Connections											2,182			1,986			9.9	%
U-verse Video Connections											781			126			-
Total Consumer Revenue Connections (000)											47,548			49,598			-4.1	%
Net Consumer Revenue Connection Changes (000)		(869	)		85			-			(1,890	)		737			-
Total Broadband Connections (000) 3, 6											14,841			13,760			7.9	%
Net Broadband Connection Changes (000) 3, 6		148			499			-70.3	%		685			1,590			-56.9	%
Total Video Connections (000) 4											2,963			2,112			40.3	%
Net Video Connection Changes (000) 4		179			215			-16.7	%		616			602			2.3	%
AT&T Inc.
Construction and capital expenditures
Capital expenditures	$	5,068		$	4,664			8.7	%	$	14,388		$	12,124			18.7	%
Interest during construction	$	198		$	47			-		$	455		$	125			-
Dividends Declared Per Share	$	0.4000		$	0.3550			12.7	%	$	1.2000		$	1.0650			12.7	%
End of Period Common Shares Outstanding (000,000)											5,893			6,072			-2.9	%
Debt Ratio 5											40.6	%		35.3	%	530 B		P
Total Employees											303,530			303,670			-

1	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2	Includes consumer U-verse voice over IP connections.
3	Broadband connections include DSL lines, U-verse high speed Internet access and satellite broadband.
4	Video connections include sales under agency agreements with EchoStar and DirecTV customers and U-verse connections.
5	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
6	Prior year amounts restated to conform to current period reporting methodology.
Note: For the end of 3Q08, total switched access lines were 57,191, business switched access lines totaled 22,159, and wholesale and coin switched access lines totaled 3,281.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliations
Wireless Segment AdjustedOIBDA
Dollars in Millions
Unaudited
Quarter Ended September 30, 2008
	Adjusting Items
	GAAP			Intangible Amortization			Adjusted
Service Revenues	$	11,273					$	11,273
Equipment Revenues		1,345						1,345
Total Operating Revenues	$	12,618		$	-		$	12,618
Operating Expenses
Cost of Services and Equipment Sales		4,989			-			4,989
Selling, General and Administrative		3,849			-			3,849
Depreciation and Amortization		1,401			(499	)		902
Total Operating Expenses		10,239			(499	)		9,740
Operating Income		2,379						2,878
Plus: Depreciation and Amortization		1,401						902
OIBDA		3,780						3,780
OIBDA as a % of Service Revenue		33.5	%					33.5	%
Quarter Ended September 30, 2007
	Adjusting Items
	GAAP			Integration Costs			Intangible Amortization			Adjusted
Service Revenues	$	9,860								$	9,860
Equipment Revenues		1,077									1,077
Total Operating Revenues	$	10,937		$	-		$	-		$	10,937
Operating Expenses
Cost of Services and Equipment Sales		4,079			(60	)		-			4,019
Selling, General and Administrative		3,183			(117	)		-			3,066
Depreciation and Amortization		1,709			(83	)		(658	)		968
Total Operating Expenses		8,971			(260	)		(658	)		8,053
Operating Income		1,966									2,884
Plus: Depreciation and Amortization		1,709									968
OIBDA		3,675									3,852
OIBDA as a % of Service Revenue		37.3	%								39.1	%

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from segment operating income (loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. 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 GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliations
Reconciliation of Free Cash Flow
Dollars in Millions
Unaudited
September 30, 2008	Three Months Ended			Nine Months Ended
Net cash provided by operating activities	$	9,268		$	22,773
Less: Construction and capital expenditures		(5,266	)		(14,843	)
Free Cash Flow	$	4,002		$	7,930

Free cash flow is defined as cash from operations minus capital expenditures. We believe these metrics provide useful information to our investors because management regularly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliations
Adjusted and Reported Wireline Operating Expenses
Dollars in Millions
Unaudited
	Three Months Ended
	9/30/08		9/30/07		YoY % Change
Reported Wireline Operating Expenses	$	14,813	$	14,980		-1.1	%
Operating Adjustments
Cash Integration Costs		-		139		-
Intangible Amortization		396		473		-16.3	%
Total Adjusting Items		396		612		-35.3	%
Adjusted Wireline Operating Expenses	$	14,417	$	14,368		0.3	%

Adjusted Wireline operating expenses differs from reported operating expenses in that it excludes the merger-related expenses shown above and provides additional comparability to prior periods.