Cingular Cites Strong 3rd Quarter Numbers

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Cingular Wireless reported solid third-quarter momentum in what it expects will be its final full quarter of operations before it acquires AT&T Wireless. Results were driven by accelerated subscriber growth and the expanding popularity of data services such as text and photo messaging.

For the three months ended Sept. 30, 2004, Cingular achieved record gross
subscriber additions of 2.8 million. This marked the fifth consecutive
quarter in which Cingular has posted gross customer additions of more than
2.4 million.

Cingular achieved a net subscriber gain during the quarter of 657,000, up
54 percent from its gain in the second quarter of this year, to bring its
nationwide customer base to 25.7 million. This was Cingular's strongest net-
add quarter since the third quarter of 2003, when it posted a gain of 745,000.
Average monthly subscriber churn was 2.8 percent, flat with the year-ago third quarter and up slightly from the second quarter of 2004 churn of 2.7%.

Financial Results

Cingular's third-quarter financial results were driven by solid revenue
growth and record gross adds, though offset to a degree by a number of items that increased operating expenses.

- Total third-quarter revenue grew to $4.3 billion, up 4.9 percent versus
the third quarter of 2003 and up 2.5 percent versus the second quarter
of 2004. Service revenues were up 4.4 percent.
- Cellular/PCS data revenue increased 116 percent versus the year-ago
third quarter, driven by the popularity of text messaging, mobile
instant messaging, mobile e-mail, downloadable ringtones, games and
photo messaging. Cingular delivered more than 1.4 billion text messages
during the quarter, up over 60 percent from the third quarter of 2003.
- Cingular's cellular/PCS ARPU (average monthly service revenue per user)
was $49.78 in the third quarter, down 1.1 percent from results in the
second quarter of this year and 5.1 percent from the same quarter a
year ago.
- Cingular's third-quarter operating expenses reflect increased costs to
drive record gross customer additions. Operating expenses also included
two items totaling $74 million; $43 million for integration planning
costs ahead of the AT&T Wireless acquisition and a $31 million charge
reflecting a fair value adjustment of Cingular Interactive assets,
which the company agreed to sell in September.
- On a reported basis, Cingular's third-quarter operating expenses
totaled $3.8 billion in the quarter, up 6.3 percent from the year-ago
period, and Cingular's third-quarter operating margin was 10.8 percent.
(Operating margin is the percentage of operating income to operating
revenue)
- Excluding the $74 million identified above, operating expenses would
have been $3.7 billion, up 4.2 percent versus the year-ago third
quarter, and Cingular's operating margin would have been 12.6 percent,
up from 12.0 percent in the third-quarter of 2003.

Accelerated Data Initiatives

Cingular also announced that it has made further progress on deployment of
next-generation network technologies that deliver advanced, high-speed
wireless data services:

- During the third quarter, Cingular accelerated its deployment of EDGE
(Enhanced Data rates for GSM Evolution) high-speed data technology,
which gives customers faster speeds and more options in data services,
and now has substantially all of its markets EDGE-enabled.
- Cingular currently has a UMTS (Universal Mobile Telecommunications
System) trial under way, and will soon be testing High Speed Downlink
Packet Access (HSDPA), a technology that will ultimately support peak
data speeds in excess of 7 Megabits per second (Mbps) for high-speed
data and multimedia services.

New Products, Service Innovations

In addition to accelerated deployment of EDGE technology and the UMTS (3G)
testing, Cingular continues to innovate with new services and customer service initiatives. In the third quarter, Cingular:

- completed roll-out of "The Cingular Service Summary," an innovation
that provides new customers a clear, personalized summary of their
service plan within minutes of signing up for service. The document
gives new customers easy-to-understand information about their service
plan, a simulated first bill with expected charges, an example of an
ongoing bill, color-coded coverage maps specific to their calling plan,
and other details about the terms of service.
- added to its leadership in mobile content, by joining forces with
several of the wireless industry's leading content providers to launch
a new suite of travel-related applications including traffic reports,
weather updates, maps and directions, and expense tracking.
- announced the launch of Cingular's Mobile Instant Messaging application
using Yahoo! Messenger. This lets customers access their Yahoo!
Messenger accounts and send or receive instant messages on their
wireless phones through a full-color, graphical interface.
- introduced a new enterprise-class wireless e-mail solution - Xpress
Mail Enterprise Edition - that provides secure, real-time wireless
access to e-mail, personal information management and other company
information. The service provides push-based data access, multiple
inboxes, global access and enterprise-class security.

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