SBC, Cisco Forge Strategic Marketing Alliance To Speed Deployment of Open-Standard, New World Data and IP Services Gains Cisco Powered Network Distinction - Company Business and Marketing

Cambridge Telcom Report, April 24, 2000

SBC Communications Inc. (NYSE:SBC), one of the nation's premier providers of data communications and network integration, and Cisco Systems, Inc. (NASDAQ:CSCO), the worldwide leader in networking for the Internet, Wednesday announced a strategic marketing and sales alliance to accelerate delivery of open-standard New World broadband services to customers.

Through the multi-billion-dollar agreement, Cisco becomes SBC's preferred provider of data networking equipment for five key platforms - Digital Subscriber Line (DSL), Enterprise Virtual Private Network (EVPN), Virtual Point of Presence-Dial Access Service (VPOP-DAS), Broadband Capabilities Gateway (BCG) and Asynchronous Transfer Mode (ATM) services. With this agreement, Cisco gains the opportunity for its equipment to achieve high availability and reliability status across SBC's network, which serves 60 million access lines in 36 million customer locations nationwide.

Through joint marketing and sales efforts, SBC expects to enhance revenue streams by packaging Cisco equipment along with its own advanced voice, broadband data and network integration services. The ability to package both products and services gives SBC and Cisco a significant advantage with customers who are demanding complete, end-to-end network solutions.

By installing Cisco's hardware and equipment in its world-class network, SBC also gains the prestigious Cisco Powered Network designation, becomes a Cisco preferred provider of network services and further bolsters its ability to deliver next-generation IP services to customers.

The SBC/Cisco alliance also consists of a series of joint research and product development activities that will help both companies continue to meet growing customer demand for emerging data and Internet Protocol (IP) services.

Financial terms of the alliance were not disclosed. The deal is non-exclusive and applies to SBC's service offerings in the continental United States.

"Our goal is to provide customers with end-to-end, customized packages of advanced voice, broadband data and network integration services on a global scale through one of the most efficient, flexible, scalable and future-proof networks in the world," said Edward E. Whitacre Jr., chairman and CEO of SBC. "Joining with a premier data and Internet leader like Cisco brings us closer to becoming the only communications company our customers will ever need and allows us to deliver top-line revenue growth."

"In today's Internet economy, companies are combining their individual strengths to create joint value for their mutual customers," said John T. Chambers, CEO and president of Cisco Systems, Inc. "Cisco and SBC's combined expertise in data communications and networking will give our customers access to an ecosystem of infrastructure and service partners, allowing them to compete more effectively. SBC is a world-class organization, and we look forward to working together in the future."

Cisco is the leading provider of open, standards-based networking and Internet solutions, serving enterprise, service provider, small/medium-sized business and consumer markets. SBC is the leading DSL provider in the nation and a major provider of Frame Relay and cell relay services, operating more than 1,500 switches over its fiber-optic network (100,000 route fiber miles) in its operating area.

Growth Opportunities

The SBC/Cisco alliance is a natural progression in the already strong relationship between the two companies. It more closely unites SBC's broadband data capabilities and huge service area with Cisco's data networking, IP and carrier-grade networking infrastructure expertise. It also builds on SBC's position, through SBC DataComm, as one of Cisco's top premier value-added resellers and one of the leading employers of Cisco-certified experts, with more than 700 professional certifications today and a commitment to grow to almost 2,000 certifications this year. The alliance helps both companies to achieve their growth objectives in the fast-growing data, Internet and e-commerce space.

Over the next three years, SBC targets its data revenues to double, growing at a compound annual growth rate of more than 30 percent. SBC already serves more than 100,000 customers with broadband networking services and more than 60,000 customers with e-commerce and Web-hosting applications.

The Cisco alliance also creates synergies with other recent SBC alliances, giving SBC an outstanding portfolio of data and Internet assets. Additionally, the alliance complements SBC's Project Pronto, a $6 billion initiative to make DSL and other broadband-powered services available to 80 percent of SBC's wireline customers by 2002 and to accelerate the convergence of SBC's voice and data backbone systems into a next-generation, packet-switched platform.

In working with Cisco, SBC takes yet another step in re-architecting its network to support IP-based services. Cisco is the worldwide leader in networking for the Internet, selling $17 billion of equipment and services to enterprise, service provider and small/medium businesses, as well as consumers, across the world.