AT&T Wireless Reports Strong Third Quarter Services Revenue Growth of More than 16 Percent; Nationwide Advanced Network Rolled Out Ahead of Schedule.

Business Editors

REDMOND, Wash.--(BUSINESS WIRE)--Oct. 23, 2002

AT&T Wireless (NYSE: AWE) today reported a strong third quarter with services revenue for the mobility business increasing 16 percent to $3.765 billion compared to $3.239 billion for the year-ago quarter.

Earnings/(loss) per share (EPS), excluding non-cash impairment charges, was $0.04 for the third quarter. These non-cash charges include wireless licensing costs impairments, charges related to the company's investments in unconsolidated subsidiaries and a valuation reserve on deferred taxes. The company's reported loss per share was ($0.76) in the third quarter, including a net impact of ($0.80) from these non-cash charges. In the year-ago quarter, the company had EPS of $0.03 per share.

In accordance with accounting principles (SFAS 142) the company no longer amortizes goodwill and other intangible assets, which are primarily wireless licenses, with indefinite useful lives. The company will now evaluate these assets for impairment annually in the third quarter using a fair value approach. As a result, the company recorded a pre-tax impairment of licensing costs of $1.3 billion. Additionally, the company recorded a pre-tax charge of $1.0 billion related to its unconsolidated subsidiaries. The charge includes $631 million based on the company's assessment of the value of its unconsolidated subsidiaries and $369 million representing the company's proportionate share of the SFAS 142 charges recorded by its unconsolidated subsidiaries. Finally, in line with SFAS 109, the company recorded $740 million as a valuation reserve against its deferred tax assets.

Third quarter mobility EBITDA (defined as operating income excluding depreciation and amortization), excluding the pre-tax impairment of licensing costs:

-- grew 34 percent to a record $1.075 billion compared to $803 million for the year-ago quarter, primarily the result of a rise in services revenue coupled with cost reduction efforts;

-- surpassed the $1 billion mark for mobility EBITDA for the second consecutive quarter; and,

-- increased EBITDA margin (as a percent of services revenue) for the mobility business, to a single-quarter record of 28.6 percent for the third quarter, a 380-basis point increase from the 24.8 percent margin for the year-ago quarter.

"AT&T Wireless again delivered solid quarterly financial results by almost every operational measure," said AT&T Wireless Chairman and CEO John D. Zeglis. "Faced with the challenges of WorldCom's bankruptcy and a tough economy, we reported strong services revenue growth coupled with the company's best ever EBITDA of $1.075 billion, excluding the non-cash impairment charges. We continue to do an excellent job of retaining our customers although churn was up due to the impact of WorldCom's exit from the wireless business.

"Neither the impact from WorldCom, which is largely behind us, nor the impairment charges announced today affect the continued profitable growth of our company," he added. "The impairment charges are non-cash and reflect a lower value in our investments in other wireless carriers and in spectrum licenses.

"Most important, our focus and commitment to deliver solid results is steadfast," Zeglis said. "We're balancing growth with profitability. While we work to expand revenues, we expect our EBITDA, excluding any impairment charges, to grow faster than revenues. And that's exactly what we did last quarter with EBITDA growing at 34 percent, without impairment charges, and services revenues growing at 16 percent."

Services revenue for the mobility business increased 16.2 percent to $3.765 billion compared to $3.239 billion for the year-ago quarter. The increase includes revenue associated with TeleCorp subsequent to its acquisition on February 15, 2002 and represents the company's eighteenth consecutive quarter of services revenue growth. Services revenue was also impacted positively by growth in the consolidated net subscriber base while being offset by a year-over-year decline in average revenue per user (ARPU). Equipment revenue was $298 million in the third quarter, an increase of 15.9 percent compared with the prior year's quarter of $257 million. The growth is primarily due to a rise in handset volume, higher average unit prices and an increase in accessory sales.

Total revenue for the third quarter rose to $4.063 billion, an increase of 16.2 percent compared to the year-ago quarter.

Minutes of use per subscriber climbed to a record level of 484 average minutes per subscriber per month in the third quarter, an increase from 389 minutes in the year-ago quarter.

ARPU was $61.60 in the third quarter, a 2.0 percent increase from the $60.40 reported for the second quarter. For the second consecutive quarter this year, ARPU increased sequentially. The company said the increase in ARPU was primarily the result of seasonally higher roaming revenue as well as fewer lower-ARPU reseller subscribers in the subscriber base, pricing actions, increased data revenues from SMS and the introduction of new revenue sources such as international roaming. Compared to the year-ago quarter, ARPU decreased 3.1 percent primarily due to continuing competitive pricing but also reflecting the company's success in moving customers to more optimal calling plans based on their needs.

Churn for the third quarter was 2.9 percent, a 20-basis point reduction from the year-ago quarter and a 50-basis point increase from the second quarter of 2002. The decrease from the year-ago quarter resulted from the movement of customers onto calling plans that better fit their needs as well as an increased number of customers extending service contracts. The increase from the second quarter is the result of the continuing impact of the WorldCom customer migration. Deactivations of WorldCom customers negatively impacted our third quarter churn by 40 basis points. Churn relating to post-paid programs was the same as the prior-year quarter at 2.6 percent.

Consolidated subscriber net additions for the mobility business totaled 201,000. Total consolidated subscribers were 20.154 million at the end of the third quarter, representing a 17.7 percent increase from the prior year quarter, including the subscribers associated with the acquisition of TeleCorp. Total subscribers including affiliates were 22.1 million, a 12.2 percent increase from the 19.7 million recorded at the end of the third quarter last year.

Capital expenditures for the quarter, excluding internal use software, were $1.210 billion. The sequential increase from the second quarter was primarily due to the launch of several key markets of AT&T Wireless' new advanced GSM/GPRS network, which was built out in 100 percent of the company's pre-TeleCorp footprint months ahead of schedule. AT&T Wireless now has the largest GSM/GPRS network in North America. Recent cities launched include New York City, Los Angeles, San Francisco, Philadelphia and Boston.

The company said it's now installing GSM/GPRS equipment in 12 of the 15 TeleCorp markets in the fourth quarter so they can be launched in 2003.

2002 Financial Expectations

AT&T Wireless today reiterated its 2002 financial expectations for services revenue, EBITDA, customer additions and capital expenditures.

Services revenue is expected to increase in the mid-teens percentage rate for 2002 compared with the company's 2001 services revenue of $12.532 billion.

The company once again said it expected 2002 mobility EBITDA, excluding the impairment charges, to grow in the low- to mid-20s percentage range compared to last year. Given the current economic climate and competitive environment, AT&T Wireless said it continues to expect mobility EBITDA to come in at the lower end of that range.

Net subscriber additions for 2002 are expected to be in the range of 2.0 to 2.2 million, in addition to the 839,000 subscribers the company added when it acquired TeleCorp earlier this year. AT&T Wireless again said it expects to come in at the low end of that range. Total subscriber growth for 2002 is expected to be between 2.8 and 3.0 million, a 16 percent increase from the company's 2001 year-end subscriber total of 18.0 million subscribers.

The company said the 2002 year-end subscriber total as well as full-year services revenue and EBITDA, could be impacted by the final resolution of the WorldCom situation, the strength of the economy, consumer confidence or the competitive environment.

Capital expenditures for 2002, excluding internal use software, are expected to total approximately $5.1 billion. Once again, AT&T Wireless said that it expects total 2003 capital expenditures not to exceed $4 billion.

About AT&T Wireless

AT&T Wireless (NYSE: AWE) is the largest independently traded wireless carrier in the United States, following our split from AT&T on July 9, 2001. We operate one of the largest digital wireless networks in North America. With 20.2 million subscribers, and full-year 2001 revenues exceeding $13.6 billion, AT&T Wireless is committed to being among the first to deliver the next generation of wireless products and services. Today, we offer customers high-quality mobile wireless communications services, voice or data, to businesses or consumers, in the U.S. and internationally. AT&T Wireless Customer Advantage is our commitment to ensure that customers have the right equipment, the right calling plan, and the right customer services options -- today and tomorrow. For more information, please visit us at www.attwireless.com.

This press release contains "forward-looking statements'' which are based on management's beliefs as well as on a number of assumptions concerning future events made by management with information that is currently available to management. Forward-looking statements include, without limitation, management's expectations regarding: our future financial and operating performance and financial condition, including specific projections and guidance for the fourth quarter and full fiscal year 2002 and 2003; subscriber growth; industry conditions; the strength of our balance sheet; and our liquidity and needs for additional financing.

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 Wireless' control, that could cause actual results to differ materially from such statements. Without limitation these factors include: the risks associated with the implementation of our technology migration strategy, the effects of vigorous competition in the markets in which we operate, the risk of decreased consumer spending due to softening economic conditions, the outbreak of war or acts of terrorism, and consumer response to new service offerings.

For a more detailed description of the factors that could cause such a difference, please see AT&T Wireless' filings with the Securities and Exchange Commission, including the information under the heading "Additional Factors That May Affect Our Business, Future Operating Results and Financial Condition" and "Forward Looking Statements" in its quarterly report of Form 10-Q filed on August 13, 2002.

NOTE TO FINANCIAL MEDIA:

AT&T Wireless executives will discuss the company's performance during a meeting today with financial analysts beginning at 5:00 p.m. - EDT. Reporters are invited to listen to the call. To access the call, U.S. callers should dial 888/276-0005. International callers should dial 612/332-0107. Beginning at 8:30 p.m. EDT today, a replay of the presentation will be available until midnight October 26 by dialing 320/365-3844. The access code is 655127.

The conference call will also be webcast on the AT&T Wireless Investor Relations website at www.attws.com/wirelessir.

             AT&T Wireless Services, Inc. and Subsidiaries
            Consolidated Condensed Statements of Operations
           In millions, except per share amounts - Unaudited

                                         For the three months ended
                                           September 30,
                                         2002        2001     Change
REVENUE
Services                             $  3,765    $  3,239        16.2%
Equipment                                 298         257        15.9%
Total revenue                           4,063       3,496        16.2%

OPERATING EXPENSES
Costs of services                       1,173       1,079         8.6%
Costs of equipment sales                  620         501        24.0%
Selling, general and
 administrative                         1,200       1,115         7.6%
Depreciation and amortization             703         658         6.9%
Impairment of licensing costs           1,329           -         n/m
Total operating expenses                5,025       3,353        49.9%

OPERATING (LOSS) INCOME                  (962)        143     (776.1%)

Other (expense) income                   (164)        114     (243.8%)
Interest expense                          180         105        71.1%

(LOSS) INCOME FROM CONTINUING
 OPERATIONS BEFORE INCOME TAXES
 AND NET EQUITY (LOSSES) EARNINGS
 FROM INVESTMENTS IN UNCONSOLIDATED
 SUBSIDIARIES                          (1,306)        152     (961.5%)

(Benefit) provision for income
 taxes                                   (139)         52     (368.8%)
Net equity (losses) earnings
 from investments in unconsolidated
 subsidiaries, net of tax                (882)         56   (1,673.7%)

(LOSS) INCOME FROM CONTINUING
    OPERATIONS                         (2,049)        156   (1,414.5%)

Loss from operations of
 discontinued business,
 net of tax                                 -         (79)        n/m
Gain on disposal of
 discontinued business,
 net of tax                                 8           -         n/m
INCOME (LOSS) FROM DISCONTINUED
   OPERATIONS                               8         (79)    (110.0%)

(LOSS) INCOME BEFORE CUMULATIVE
 EFFECT OF CHANGE IN ACCOUNTING
    PRINCIPLE                          (2,041)         77   (2,757.0%)
CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE, NET OF
   TAX                                      -           -           -

NET (LOSS) INCOME                      (2,041)         77   (2,757.0%)
Accretion of mandatorily
 redeemable preferred stock                 6           -         n/m
Dividend requirements on
 preferred stock held
 by AT&T, net                               -           -           -
NET (LOSS) INCOME AVAILABLE TO
  COMMON SHAREHOLDERS                $ (2,047)   $     77   (2,763.9%)

(LOSS) INCOME  PER BASIC AND
 DILUTED SHARE:
     (Loss) income from
      continuing operations
      available to common
      shareholders                   $  (0.76)   $   0.06
     Income (loss) from
      discontinued operations        $      -    $  (0.03)
     Cumulative effect of
      change in accounting
      principle                             -           -
     Net (loss) income
      available to common
      shareholders                   $  (0.76)   $   0.03

WEIGHTED AVERAGE SHARES USED TO
 COMPUTE (LOSS) INCOME PER SHARE:
     Basic                              2,708       2,530
     Diluted                            2,708       2,532


                                         For the nine months ended
                                           September 30,
                                          2002       2001     Change
REVENUE
Services                             $  10,745   $  9,291        15.6%
Equipment                                  839        791         6.0%
Total revenue                           11,584     10,082        14.9%

OPERATING EXPENSES
Costs of services                        3,387      2,898        16.9%
Costs of equipment sales                 1,702      1,468        15.9%
Selling, general and
 administrative                          3,586      3,275         9.5%
Depreciation and amortization            2,029      1,806        12.4%
Impairment of licensing costs            1,329          -         n/m
Total operating expenses                12,033      9,447        27.4%

OPERATING (LOSS) INCOME                   (449)       635     (170.9%)

Other (expense) income                    (188)       326     (157.5%)
Interest expense                           490        287        71.0%

(LOSS) INCOME FROM CONTINUING
 OPERATIONS BEFORE INCOME TAXES
 AND NET EQUITY (LOSSES) EARNINGS
 FROM INVESTMENTS IN UNCONSOLIDATED
 SUBSIDIARIES                           (1,127)       674     (267.4%)

(Benefit) provision for income
 taxes                                     (70)       293     (124.2%)
Net equity (losses) earnings
 from investments in unconsolidated
 subsidiaries, net of tax               (1,017)       174     (683.7%)

(LOSS) INCOME FROM CONTINUING
    OPERATIONS                          (2,074)       555     (473.4%)

Loss from operations of
 discontinued business,
 net of tax                                  -       (215)        n/m
Gain on disposal of
 discontinued business,
 net of tax                                 47          -         n/m
INCOME (LOSS) FROM DISCONTINUED
   OPERATIONS                               47       (215)    (122.0%)

(LOSS) INCOME BEFORE CUMULATIVE
 EFFECT OF CHANGE IN ACCOUNTING
    PRINCIPLE                           (2,027)       340     (695.7%)
CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE, NET OF
   TAX                                    (166)         -         n/m

NET (LOSS) INCOME                       (2,193)       340     (744.4%)
Accretion of mandatorily
 redeemable preferred stock                 13          -         n/m
Dividend requirements on
 preferred stock held
 by AT&T, net                                -         76         n/m
NET (LOSS) INCOME AVAILABLE TO
  COMMON SHAREHOLDERS                $  (2,206)  $    264     (936.0%)

(LOSS) INCOME  PER BASIC AND
 DILUTED SHARE:
     (Loss) income from
      continuing operations
      available to common
      shareholders                   $   (0.77)  $   0.19
     Income (loss) from
      discontinued operations        $    0.01   $  (0.09)
     Cumulative effect of
      change in accounting
      principle                      $   (0.06)         -
     Net (loss) income
      available to common
      shareholders                   $   (0.82)  $   0.10

WEIGHTED AVERAGE SHARES USED TO
 COMPUTE (LOSS) INCOME PER SHARE:
     Basic                               2,678      2,530
     Diluted                             2,678      2,532


             AT&T Wireless Services, Inc. and Subsidiaries
                 Consolidated Condensed Balance Sheets
           In millions, except per share amounts - Unaudited


                                             Sept. 30, Dec. 31,
                                               2002     2001   Change
ASSETS
Cash and cash equivalents                    $ 3,751  $ 3,352    11.9%
Accounts receivable, less allowances
    of $275 and $239                           2,194    2,026     8.3%
Inventories                                      210      307  (31.6%)
Income tax receivable                             44      210  (79.1%)
Deferred income taxes                              -      222     n/m
Prepaid expenses and other current
   assets                                        305      180    69.0%
TOTAL CURRENT ASSETS                           6,504    6,297     3.3%

Property, plant and equipment, net
  of accumulated depreciation of
  $6,784 and $5,232                           14,329   12,496    14.7%
Licensing costs                               13,994   13,100     6.8%
Investments in and advances to
    unconsolidated subsidiaries                2,411    3,672  (34.3%)
Goodwill                                       7,177    4,712    52.3%
Other assets, net of accumulated
     amortization of $729 and $493             1,369    1,357     0.9%
Assets of discontinued operations                  -       88     n/m
TOTAL ASSETS                                 $45,784  $41,722     9.7%

LIABILITIES
Accounts payable                             $   754  $ 1,035  (27.2%)
Payroll and benefit-related liabilities          427      409     4.4%
Due on demand notes payable                        -       88     n/m
Other current liabilities                      1,927    1,900     1.5%
TOTAL CURRENT LIABILITIES                      3,108    3,432   (9.4%)

Long-term debt due to others                  11,033    6,617    66.7%
Deferred income taxes                          3,667    4,352  (15.7%)
Other long-term liabilities                      287      330  (13.1%)
TOTAL LIABILITIES                             18,095   14,731    22.8%

MINORITY INTEREST                                 51       46    11.3%
MANDATORILY REDEEMABLE PREFERRED STOCK
   (.233 shares issued and outstanding)          146        -     n/m
MANDATORILY REDEEMABLE COMMON STOCK
   ($0.01 par value, 406 shares issued and
    outstanding)                               7,664    7,664       -

SHAREHOLDERS' EQUITY
Common stock ($0.01 par value, 2,302 and
 2,125 shares issued and outstanding)             23       21     8.3%
Additional paid-in capital                    23,204   20,515    13.1%
Accumulated deficit                           (3,343)  (1,150)  190.6%
Accumulated other comprehensive loss             (56)    (105) (47.0%)
TOTAL SHAREHOLDERS' EQUITY                    19,828   19,281     2.8%
TOTAL LIABILITIES AND SHAREHOLDERS'
   EQUITY                                    $45,784  $41,722     9.7%