AT&T, BellSouth End The Year As One

Telecom Policy Report, Jan 8, 2007

AT&T and BellSouth got the FCC's nod to merger, creating a global communications company the two say will be "committed to driving convergence, continued innovation, and competition in the communications and entertainment market."

The transaction consolidates ownership and management of Cingular Wireless, the nation's leading provider of wireless voice and data services, and Yellowpages.com, a leading Internet Yellow Pages and local search site.

"AT&T will be an engine for innovation, competition, and growth for our customers at home and abroad," said AT&T Chairman and CEO Edward E. Whitacre Jr. "In the Southeast, we will build on BellSouth's excellent record of serving customers and communities. And we are ready to lead the way in a new era of integrated wireless services nationwide."

AT&T will immediately start to implement a carefully planned integration process to converge the AT&T, BellSouth, and Cingular wireless and wireline Internet Protocol (IP) networks, combine product portfolios and integrate customer care capabilities. The new company will be able to accelerate the introduction of innovative broadband services, such as IP-based services, while expanding the reach of broadband access in remote and rural locations in the traditional BellSouth region.

"AT&T, BellSouth, and Cingular have led in developing and deploying many of the communications services that customers depend on today, including broadband DSL and wireless technologies," said Whitacre. "Moving forward, AT&T will work to integrate these services for customers in the Southeast, across the country and around the world."

Whitacre will continue to serve as chairman and CEO and as a member of the board of directors. Duane Ackerman will serve as chairman emeritus of BellSouth for the transition period following the merger. Three members of the former BellSouth's board of directors have joined the AT&T board -- Reuben V. Anderson, James H. Blanchard and James P. Kelly.

Reporting to Whitacre will be: Jim Cicconi, senior executive vice president - external and legislative affairs; Jim Ellis, senior executive vice president and general counsel; Karen Jennings, senior executive vice president - advertising and corporate communications; Jim Kahan, senior executive vice president - corporate development; Rick Lindner, senior executive vice president and chief financial officer; Forrest Miller, group president - strategic initiatives and human resources; Randall Stephenson, chief operating officer; and Ray Wilkins, group president.

Reporting to Chief Operating Officer Randall Stephenson will be: Dick Anderson, group president - global business services, replacing Forrest Miller; Stan Sigman, president & CEO - wireless; John Stankey, senior executive vice president and chief technology officer; and Ralph de la Vega, group president - regional wireline operations.

AT&T's corporate headquarters will remain in San Antonio. The new AT&T Southeast (formerly BellSouth Corporation) and Cingular will continue to be based in Atlanta.

In the coming days, AT&T will launch extensive new advertising, which will begin the transition of the BellSouth brand name to AT&T. AT&T will re- brand Cingular through a co-branded transition, which is scheduled to start in 2007. Details regarding the Cingular branding will be announced at a later date. YELLOWPAGES.COM will not undergo a name or Web site address change.

Stockholders of the former BellSouth received 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T's closing stock price on Thursday, Dec. 28, 2006, this exchange ratio equaled $47.04 per BellSouth common share. Since the merger was announced, the market price of AT&T shares has risen 26.83 percent and BellSouth shares have increased 48.76 percent.

In connection with the completion of the acquisition, BellSouth's common stock and debt securities will be immediately delisted from the New York Stock Exchange.

In order to receive bipartisan FCC approval, AT&T volunteered a number of commitments, including making broadband access increasingly affordable and available to consumers and supporting public safety.

AT&T has committed to making broadband services available through a combination of technologies to 100 percent of residential living units in its 22-state local- phone-service territory by the end of 2007. Additionally, AT&T will offer a stand-alone broadband service for $19.95, as well as other offers to encourage broadband adoption by those who do not currently subscribe.

AT&T plans to repatriate 3,000 jobs currently outsourced by BellSouth outside the United States, as well as to make its disaster-recovery capabilities available in order to facilitate the restoration of services in the former BellSouth region, in the event of a hurricane or other natural disaster.

"These commitments reflect our long history of providing consumers and businesses with the most advanced and affordable communications services," said Whitacre. "We can't wait to show people what the new AT&T can do."