Pamela Bennett                              Eileen M. Connolly
SmarTalk                                    AT&T
Manager Investor Relations                  Director Financial Communications
614-789-8650                                908-221-6731



SMARTALK SIGNS DEFINITIVE SALE AGREEMENT WITH AT&T


FOR RELEASE: January 19, 1999

     DUBLIN,  Ohio  & NEW  YORK  -  SmarTalk  TeleServices,  Inc.  (NASDAQ:SMTK)
announced today that it has signed a definitive  agreement to sell substantially
all of its assets to AT&T for up to $192.5 million in cash,  subject to downward
adjustment  at closing.  Separately  today,  SmarTalk has commenced a Chapter 11
reorganization case in the United States Bankruptcy Court, District of Delaware.

     AT&T said  SmarTalk's  assets  will  enable it to expand its  prepaid  card
retail distribution capability.

     The  boards  of  directors  of both AT&T and  SmarTalk  have  approved  the
transaction.  The companies expect the transaction to close in the first quarter
of 1999, prior to the conclusion of the bankruptcy proceedings.  The transaction
is subject  to  bankruptcy  court and  regulatory  approval  and  certain  other
conditions.

     At  signing,  AT&T  has  made  debtor-in-possession  financing  immediately
available to SmarTalk.

     SmarTalk's  Chief  Executive  Officer Erich  Spangenberg  said,  "The Board
determined  that  this   transaction   provides  the  best  means  for  insuring
uninterrupted  prepaid  calling card  service to its  customers,  retailers  and
distributors and maximizes the value of its corporate assets."

     SmarTalk was advised on the  transaction  by Salomon Smith  Barney,  Credit
Suisse  First  Boston and  Hennigan,  Mercer & Bennett.  AT&T was  advised by TD
Securities, a subsidiary of Toronto Dominion Bank, and Wachtell, Lipton, Rosen &
Katz.


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     SmarTalk  is a leading  provider  of  prepaid  calling  cards  and  prepaid
wireless  services.   Based  in  Dublin,  OH,  SmarTalk  maintains  distribution
agreements with the U.S. Postal Service and leading mass merchandisers, consumer
electronics  retailers,   supermarkets,  hotels,  home  office  superstores  and
convenience stores throughout North America and the U.K.

     AT&T  is  the  world's  premier  communications  and  information  services
company, serving more than 90 million customers, including consumers, businesses
and  government.  The company  has annual  revenues of more than $52 billion and
119,000   employees.   It  runs  the   world's   largest,   most   sophisticated
communications network and is the leading provider of long-distance and wireless
services.  AT&T operates in more than 200 countries and  territories  around the
world.


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