AT&T Wireless Services Reports Strong First Quarter Services Revenue Increase of Nearly 15 Percent.

Business Editors & Technology Writers

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

EPS From Continuing Operations of ($0.01) Net Mobility Subscriber Additions Exceed Expectations To Total 650,000

Mobility EBITDA Increases 4.4 Percent

1Q Churn At 2.6 Percent

AT&T Wireless (NYSE:AWE) today reported strong first quarter financial results with services revenue for the mobility business increasing 14.6 percent to $3.355 billion compared to $2.929 billion for the year-ago quarter.

The company also said it had 650,000 net subscriber additions for the first quarter, exceeding expectations.

The first quarter loss per share from continuing operations of $0.01 also exceeded expectations. In the year-ago quarter, the company had income of $0.01 per share. AT&T Wireless' EBITDA (defined as operating income excluding depreciation and amortization) continued to grow in the first quarter, and losses in net equity from investments in unconsolidated subsidiaries, as well as the provision for income taxes, decreased. These factors were offset by increases in depreciation and interest expense, as well as a reduction in other income.

The company had a net loss of $0.07 per share including one-time items compared with a net loss of $0.02 per share in the prior-year quarter. The increase in the loss per share from prior year was due primarily to the cumulative effect of a change in accounting principle (SFAS No. 142) recorded in the first quarter due to transitional impairment losses recorded by AT&T Wireless' investment in unconsolidated subsidiaries. (Under this principle, goodwill and other intangible assets with indefinite useful lives will no longer be amortized, but will be evaluated for impairment at least once a year.)

"AT&T Wireless continued its track record of growth with one of our best quarters of execution ever," said AT&T Wireless Chairman and CEO John D. Zeglis. "We delivered solid gains for the first three months of the year, despite an increasingly competitive market.

"In the first quarter, we gave 650,000 more people an mLife, ending the period with 19.5 million customers, a 24 percent increase over the prior year's quarter, and 2.4 million more customers than we had just six months ago. At the same time, our aggressive programs to retain customers paid off in significant improvements, lowering churn yet again," said Zeglis. "We also increased our services revenue by nearly 15 percent. And we did it all while continuing a fast-paced deployment of our leading next generation network, which is progressing on schedule and on budget. As of today, we've built our new GSM network in about 60 percent of our footprint, covering a population of nearly 100 million people. We have launched new GSM/GPRS services in 26 major markets with more around the corner.

"In short, AT&T Wireless is more competitive and is offering our customers more valuable services than we did a year ago," Zeglis added. "Our network delivers a higher quality of service, our calling plans better meet customers needs, our offers include new advanced services, our target marketing is attracting additional, profitable customers from new segments, and our brand is increasingly trusted to take loyal customers to the next generation of wireless applications and devices."

"While we're pleased with hitting our operating objectives in a tough competitive market, we recognize there's room for improvement," said Mohan Gyani, president of Mobility Services. "AT&T Wireless is locked and focused on pulling all the right levers to help us achieve our 2002 financial commitments. We're implementing revenue enhancement programs and cost reduction initiatives that take effect over the course of the next several months to ensure that we continue to deliver on our promises."

The first quarter year-over-year increase of 14.6 percent in services revenue for the mobility business included approximately six weeks of revenue associated with TeleCorp PCS Inc. (following the company's acquisition of TeleCorp PCS which closed on February 15, 2002). Additionally, services revenue increased as a result of the growth in the customer base while being partially offset by a decrease in average revenue per user (ARPU). Equipment revenue was $256 million in the first quarter, a decline of 8.9 percent compared with the prior year quarter. The decline was primarily due to a decrease in the average revenue per item and slightly offset by an increase in the quantities shipped compared to the first quarter of 2001.

Total revenue for the first quarter grew to $3.611 billion, an increase of 12.5 percent compared to the year-ago quarter.

Minutes of use per subscriber climbed to a record level of 430 average minutes per subscriber per month in the first quarter, an increase from 353 minutes in the year-ago quarter. ARPU was $58.60, a decrease of 5.8 percent from the year-ago quarter. The decline from the prior year quarter was due primarily to continuing competitive pricing, attracting a broader base of new customers, and our concerted efforts to encourage existing customers to move to more optimal calling plans based on their needs.

"Our philosophy is simple, what's good for our customers is good business," Gyani said. "We've adopted a "customer friendly" approach that improves customer loyalty, and this is reflected in our lower customer churn. We proactively work with existing customers well before their contracts expire to identify calling plans that fit best with their particular needs and help them upgrade their equipment. While customers' new monthly calling plans may be lower priced than their previous plans, we've retained valuable customers who have extended their contracts with us, and often they are multi-year contracts. That's a win-win for AT&T Wireless and for our customers."

Churn for the quarter was 2.6 percent, a 40-basis point improvement from the year-ago quarter and a 10-basis point improvement from the fourth quarter of 2001. The decrease can be primarily attributed to the company's efforts to encourage customers to attractive new plans before their original contract runs out. Churn relating to post-paid programs was 2.4 percent in the first quarter, a decrease from 2.8 percent in the prior year quarter and comparable to the fourth quarter of 2001.

Consolidated subscriber net additions for the mobility business totaled 650,000, an 11.0 percent increase compared to the year-ago quarter. Total consolidated subscribers were 19.5 million at the end of the first quarter, representing a 24.1 percent increase from the prior year quarter, including the subscribers associated with the acquisition of TeleCorp PCS Inc. Net subscriber additions in the first quarter, including affiliates, totaled 769,000. At the end of the first quarter, total subscribers, including affiliates, were 21.4 million.

AT&T Wireless mobility EBITDA for the first quarter was $822 million, an increase of 4.4 percent from the comparable year-ago quarter. Strong growth in subscriber revenue was partially offset by higher network costs driven by the increased usage, as well as higher customer acquisition and retention costs.

EBITDA margin (as a percent of services revenue) for the mobility business decreased to 24.5 percent for the first quarter, a 240-basis point decrease from the 26.9 percent margin for the year-ago quarter.

Capital expenditures for the quarter were $662 million. The company said capital spending is typically lower in the first quarter and will increase throughout the year. AT&T Wireless still expects full-year 2002 expenditures to total approximately $5.3 billion with most spending toward the GSM build out and a smaller portion directed to enhancing TDMA network capacity.

2002 Guidance Reiterated

As indicated on March 1, AT&T Wireless said it expects to grow its year-end subscriber base of 18 million by around 20 percent. For the first quarter, the company said its plan to front-end load customer additions was successful due to customer retention programs, continuing promotions, and its new mLife advertising campaign. As a result, the company said it expects to slow its net add growth for second quarter to about 550,000.

The company also today reaffirmed the full-year 2002 guidance it provided on March 1 for mobility EBITDA and revenue, and capital expenditures. AT&T Wireless said it expects mobility EBITDA growth in the low to mid-20s, on a reported basis. Mobility revenues, on a reported basis, is expected to grow in the mid-teens. And capital expenditures for 2002 are expected to total $5.3 billion.

TeleCorp PCS Acquisition Completed

On February 15, 2002, AT&T Wireless completed its acquisition of its largest affiliate, TeleCorp PCS Inc. The closing took place approximately four months ahead of schedule and will allow the company to integrate TeleCorp's network and service offerings sooner than expected.

GSM/GPRS Network Expansion Continues

On January 28, 2002 AT&T Wireless announced a joint venture with Cingular Wireless designed to bring advanced wireless services to nine states. This venture is expected to provide significant cost savings while making advanced voice and data services available along approximately 3,000 miles of highways in Midwestern and Western United States. The network build-out is expected to begin in 2003.

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 more than 19.5 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 fiscal year 2002; 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 a third-generation network and business technology, and the effects of vigorous competition in the markets in which we operate.

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 "Risk Factors" and "Special Note Regarding Forward Looking Statements" in its annual report of Form 10-K filed on March 28, 2002. AT&T Wireless disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

NOTE TO FINANCIAL MEDIA:

AT&T Wireless executives will discuss the company's performance during a meeting today with financial analysts beginning at 8:30 a.m. - EDT. Reporters are invited to listen to the call. To access the call, U.S. callers should dial 800/230-1085. International callers should dial 612/332-0632. A replay of the presentation will be available until midnight April 26 by dialing 320/365-3844. The access code is 634786.

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

The 1Q Earnings Commentary will be available at www.att.com/wirelessir at approximately 6:00 a.m. EDT on April 23, 2002.

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

                             For the three months ended
                                      March 31,
                                   2002       2001         Change
                                   ----       ----         ------
REVENUE
Services                         $3,355     $ 2,929         14.6%
Equipment                           256         281         (8.9%)
Total revenue                     3,611       3,210         12.5%

OPERATING EXPENSES
Costs of services                 1,048         887         18.2%
Costs of equipment sales            553         490         13.0%
Selling, general and
 administrative                   1,190       1,048         13.5%
Depreciation and amortization       642         553         16.3%
Total operating expenses          3,433       2,978         15.3%

OPERATING INCOME                    178         232        (23.4%)
Other (expense) income              (21)         83       (125.4%)
Interest expense                    115          47        142.8%

INCOME FROM CONTINUING OPERATIONS
 BEFORE INCOME TAXES AND NET EQUITY
 LOSSES FROM INVESTMENTS IN
 UNCONSOLIDATED SUBSIDIARIES         42         268        (84.5%)

Provision for income taxes           16         113        (86.2%)
Net equity losses from
 investments in unconsolidated
 subsidiaries, net of tax           (42)        (99)       (57.3%)

(LOSS) INCOME FROM
 CONTINUING OPERATIONS              (16)         56       (129.2%)

Loss from operations of
 discontinued business, net of tax    -         (56)            -
Gain (loss) on disposal of
 discontinued business, net of tax   12           -             -
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS             12         (56)      (121.8%)

LOSS BEFORE EXTRAORDINARY ITEM AND
   CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE              (4)          -             -

EXTRAORDINARY LOSS ON EARLY
   EXTINGUISHMENT OF DEBT,
   NET OF TAX                        (6)          -             -

CUMULATIVE EFFECT OF CHANGE IN
   ACCOUNTING PRINCIPLE,
   NET OF TAX                      (166)          -             -

NET LOSS                           (176)          -             -

Dividend requirements on
 preferred stock held by AT&T, net    -          42             -
Accretion of mandatorily
 redeemable preferred stock           2           -             -

NET LOSS AVAILABLE TO
 COMMON SHAREHOLDERS              $(178)   $    (42)       324.8%

(LOSS) INCOME PER BASIC AND
 DILUTED SHARE:
  (Loss) income from continuing
   operations available
   to common shareholders        $(0.01)      $0.01
  Income (loss) from
   discontinued operations            -      $(0.03)
  Extraordinary loss on early
   extinguishment of debt             -           -
  Cumulative effect of change
   in accounting principle       $(0.06)          -
  Net loss available to
   common shareholders           $(0.07)     $(0.02)

WEIGHTED AVERAGE SHARES
 USED TO COMPUTE (LOSS)
 INCOME PER SHARE:
     Basic                        2,618       2,530
     Diluted                      2,618       2,532