[AT&T logo omitted]

News Release
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                  AT&T SETTLES SHAREHOLDER CLASS ACTION LAWSUIT

FOR IMMEDIATE RELEASE:

BEDMINSTER,  N.J. - AT&T today  reached an  agreement  -- subject to final court
approval  -- to settle a  shareholder  class  action  lawsuit  underway  in U.S.
District  Court for the  District  of New  Jersey,  three  weeks after the trial
began.

     The lawsuit sought damages of approximately  $2.4 billion for purchasers of
AT&T common stock from  December 6, 1999 to May 1, 2000.  Under the  settlement,
AT&T has agreed to pay the class $100 million,  about four percent of the amount
being sought at trial. The payment will be shared equally by AT&T and its former
broadband  subsidiary,  which  was  spun  off in 2002,  under  the  terms of the
separation agreement between those entities.  In addition,  AT&T intends to seek
reimbursement from its insurers for the amounts to be paid.

     "As we have said all along, we categorically deny any wrongdoing by AT&T or
any of its officers and remain  confident that we would have been  vindicated at
the  end of  this  trial,"  said  Edward  R.  Barillari,  vice  president-Law  &
Government  Affairs.  "But,  given  the  size  of  the  claims  compared  to the
relatively low amount of the  settlement,  the inherent risk and  uncertainty of
legal proceedings,  and the very substantial expense of those proceedings,  this
settlement is the prudent course for the company."

     AT&T will take the steps  necessary to determine and disclose the effect of
this settlement on its recently announced third-quarter earnings.

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About AT&T
AT&T  (www.att.com)  For more than 125 years, AT&T (NYSE "T") has been known for
unparalleled  quality and reliability in communications.  Backed by the research
and  development  capabilities  of AT&T Labs,  the company is a global leader in
local, long distance, Internet and transaction-based voice and data services.

AT&T 'Safe Harbor'
The  foregoing  contains   "forward-looking   statements"  which  are  based  on
management's  beliefs as well as on a number of  assumptions  concerning  future
events made by and information  currently  available to management.  Readers are
cautioned not to put undue reliance on such  forward-looking  statements,  which
are not a guarantee of performance and are subject to a number of  uncertainties
and other factors,  many of which are outside AT&T's  control,  that could cause
actual results to differ  materially  from such  statements.  These risk factors
include  whether any party will file  objections to the settlement and the level
of  appellate  review,  as well  as the  risks  inherent  in the  collection  of
insurance  proceeds  , among  other  risks.  AT&T  disclaims  any  intention  or
obligation  to update or revise  any  forward-looking  statements,  whether as a
result of new  information,  future events or  otherwise.  This  information  is
presented  solely to provide  additional  information to further  understand the
results of AT&T.