The deal is done:

AT&T, BellSouth to Merge
Combination Will Speed Innovation, Competition and Convergence

Note: AT&T Inc. will hold an analyst conference call to discuss the merger that 
will be broadcast live via the Internet at 10 a.m. EST on Monday, March 6, 
2006, at or

-- Natural combination of two leading wireline providers and joint owners of 
Cingular speeds progress in integrated wireless/wireline services
-- Substantial financial benefits for stockholders of both companies; an 
expected net present value of $18 billion in synergies resulting from a more 
than $2 billion annual run rate in synergies expected in 2008, growing to $3 
billion in 2010
-- Expect merger to be accretive to AT&T adjusted earnings per share in 2008, 
double-digit adjusted EPS growth in each of next three years (earnings adjusted 
for merger integration costs and amortization of intangibles) and significant 
growth in free cash flow after dividends in 2007 and 2008
-- AT&T’s board authorizes share repurchase of 400 million shares by end of 
2008; buy back of at least $10 billion in shares over next 22 months planned, 
with the majority in 2007
-- Merger will benefit customers and promote competition

SAN ANTONIO and ATLANTA (March 5, 2006)—AT&T Inc. (NYSE:T) and BellSouth 
Corporation (NYSE:BLS) announced today an agreement to merge the two companies, 
a combination that will create a more effective and efficient provider in the 
wireless, broadband, video, voice and data markets.

The merger will streamline the ownership and operations of Cingular Wireless, 
which is jointly owned by AT&T and BellSouth. The new company will be more 
innovative, nimble and efficient, providing benefits to customers by combining 
the Cingular, BellSouth and AT&T networks into a single fully integrated 
wireless and wireline Internet Protocol network offering a full range of 
advanced solutions.

As a result, the combined company will be better able to speed the convergence 
of new and improved services for consumers and businesses, and embrace the 
industry’s shift to Internet Protocol network-based technologies.

“Logical Next Step That Creates Substantial Value”

“This merger is a logical next step that creates substantial value for 
customers and stockholders of both AT&T and BellSouth,” said AT&T Chairman 
and CEO Edward E. Whitacre Jr. “It will benefit customers through new 
services and expanded service capabilities. It will strengthen Cingular through 
unified ownership and a single brand. And we are confident that this is a 
merger we can execute, based on our track record with previous integrations and 
our experience working closely with BellSouth to create and build Cingular 
Wireless, and operate

“This transaction combines two solid, very well-run companies,” Whitacre 
added. “BellSouth operates in an attractive region with a growing economy. It 
has great employees and an outstanding network, with fiber optics deeply 
deployed in its service area. It has a strong record in terms of customer 
service and a sound, conservative balance sheet. These strengths, added to 
those of AT&T, will improve our ability to provide innovative services to more 
customers while returning substantial value to our owners and improving our 
growth profile.”

“Technology changes and convergence are shaping a new competitive dynamic and 
creating tremendous opportunity,” said Duane Ackerman, chairman and CEO of 
BellSouth. “We’re creating a company with much better capabilities to seize 
these opportunities while maintaining its strong focus on customer service and 
community involvement.

“This was the right time for this merger,” said Ackerman. “This 
combination is good for our employees, our customers and our stockholders.”

AT&T has committed to continue BellSouth’s historic levels of charitable 
contributions and community activities, including the continued funding of 
charitable activities and economic development and education initiatives 
throughout BellSouth’s nine state area.

“Our focus is on providing great service and innovative, competitively priced 
products for consumers and businesses throughout the Southeast, the nation and 
the world,” said Whitacre. “Together, we will lead the way into a new era 
of converged and bundled communications, video and entertainment services while 
also improving our ability to manage complex networks.”

Customer Benefits

Consumers seeking a real alternative to cable monopolies should see faster and 
more economical deployment of next-generation IP television networks and 
similar services as a result of AT&T’s groundbreaking entry into IPTV and the 
unparalleled research and development work at AT&T Labs, coupled with 
BellSouth’s extensive deployment of fiber networks for DSL and other 
broadband services.

Business customers in the southeastern United States and the rest of the 
country stand to benefit from the expertise and innovation of AT&T Labs, as 
well as the combination of AT&T’s state-of-the-art national and international 
networks and advanced services with BellSouth’s local exchange and broadband 
distribution platforms and expertise.

The combined company will have greater financial, technical, research and 
development, network and marketing resources to better serve consumers and 
large-business customers, and will accelerate the introduction of new and 
improved product and service sets for those customers.

The merger would also give business and government customers, including 
military and national security agencies, a reliable U.S.-based provider of 
integrated, secure, high-quality and competitively priced services to meet 
their needs anywhere in the world.

Since AT&T and BellSouth are not actual competitors in the local, long distance 
and video markets, and because BellSouth is not a significant competitor with 
AT&T in the enterprise market, the merger will not reduce competition in any of 
those markets.

Terms and Conditions

Under terms of the agreement, approved by the boards of directors of both 
companies, shareholders of BellSouth will receive 1.325 shares of AT&T common 
stock for each common share of BellSouth. Based on AT&T’s closing stock price 
on March 3, 2006, this exchange ratio equals $37.09 per BellSouth common share. 
This represents a 17.9 percent premium over BellSouth’s closing stock price 
on March 3, 2006, and a total equity consideration currently valued at 
approximately $67 billion.

The merger, which is subject to approval by shareholders of both companies, as 
well as regulatory authorities and to other customary closing conditions, is 
expected to close within approximately 12 months.

Making the Most of Wireless

One of the most immediate benefits of the transaction will be to streamline and 
enhance management and operations at Cingular.

“The Cingular partnership and the company itself are performing extremely 
well, particularly after the AT&T Wireless acquisition,” said Whitacre. 
“But no partnership between two independent companies, no matter how well 
run, can match the speed, effectiveness, responsiveness and efficiency of a 
solely owned company.”

While the majority of Cingular’s operations will remain unchanged, 
simplifying the ownership structure will lead to more efficient marketing and 
service provisioning, which will come under a single AT&T brand, generating 
further financial synergies and customer benefits.

The merger will also allow for closer integration of the company’s wireless, 
wireline, and IP products and services over a single global IP network. This is 
critical as the industry moves forward with convergence of the “three 
screens” that many consumers rely on most today – televisions, computers 
and wireless devices. It is an area in which AT&T is a leader through its 
strategic partnerships with Yahoo!® and others.

“We are excited about the potential for bringing a robust set of integrated 
products and services to our customers in a faster and more effective manner 
under one brand,” said Ackerman.

Financial Expectations

In addition to the numerous customer benefits, AT&T and BellSouth expect the 
proposed transaction to yield substantial benefits for stockholders of both 

The merger combines three companies that currently operate separately and 
independently: AT&T, BellSouth and Cingular Wireless. AT&T and BellSouth 
estimate that synergies from the combination will ramp quickly to reach an 
annual run rate exceeding $2 billion in the second year after closing, and 
estimate the net present value of expected synergies at nearly $18 billion.

A substantial portion of synergies are expected to come from reduced costs in 
the operations of unregulated and interstate services, and corporate staff, and 
the synergies are over and above expected productivity improvements from the 
companies' ongoing initiatives. Approximately half of the total cost savings 
are expected to come from network operations and IT, as facilities and 
operations are consolidated and traffic is moved to a single IP network. 
Additional savings are expected to come from combining staff functions and from 
reduced ongoing advertising and branding expenses. Currently, the three 
companies support three distinct brands with three separate advertising 
campaigns. Following the merger, they expect to move to a single brand: AT&T.

AT&T expects the transaction to be adjusted earnings-per-share neutral in 2007 
and have a positive impact on its adjusted earnings per share thereafter 
(adjusted earnings per share exclude all merger integration costs and non-cash 
expenses for amortization of intangibles). AT&T expects that the merger will 
reinforce the guidance it provided at its Jan. 31, 2006, analyst conference.
-- There is no change to AT&T’s 2006 outlook.
-- AT&T continues to expect double-digit adjusted EPS growth in each of the 
next three years with significant growth in free cash flow after dividends. 
Free cash flow after dividends is expected to exceed $4 billion in 2007 and 
exceed $6 billion in 2008.
-- Total revenues, including Cingular, are expected to return to growth in 
2007, a year earlier than previous guidance.
-- Capital expenditures, including Cingular, are expected to be in the mid 
teens as a percentage of revenues in 2007 and 2008.
-- The transaction also is expected to improve AT&T’s overall growth profile 
– driven by wireless, which will represent about one-third of the combined 
company’s expected revenues in 2007, and by expanded opportunities in 
business markets.
-- AT&T expects free cash flow after dividends from the combined company to 
provide the flexibility to continue reducing debt levels over the next five 
years while providing excellent cash returns to stockholders.

AT&T and BellSouth expect that the combined company will have a strong balance 
sheet with solid credit metrics. Both companies have single A credit ratings.

Expanded Share Repurchase

AT&T’s board of directors has approved an expanded share repurchase 
authorization of 400 million shares through 2008, replacing the existing 
program. Under this authorization, the company expects to buy back at least $10 
billion of its common shares over the next 22 months. It expects at least $2 
billion in repurchases during 2006, consistent with its previous guidance, and 
an additional $8 billion in repurchases in 2007. This repurchase authorization 
is intended to approximate the share premium paid to BellSouth stockholders as 
part of this merger transaction. The timing and nature of these repurchases 
will depend on market conditions and applicable securities laws.

New Company Leadership

Mr. Whitacre will serve as chairman, CEO and a member of the board of
directors of the combined company. Mr. Ackerman will serve as chairman and CEO 
of BellSouth operations for a transition period following the merger. 
Additionally, three members of BellSouth's board of directors will join the 
AT&T board.
The corporate headquarters for the combined company will remain in San Antonio. 
Cingular’s headquarters will remain in Atlanta, as will the combined 
company’s Southeast regional telephone company headquarters.

About AT&T
AT&T Inc. is one of the world's largest telecommunications holding companies 
and is the largest in the United States. Operating globally under the AT&T 
brand, AT&T companies are recognized as the leading worldwide providers of 
IP-based communications services to business and as leading U.S. providers of 
high-speed DSL Internet, local and long distance voice, and directory 
publishing and advertising services. AT&T Inc. holds a 60 percent ownership 
interest in Cingular Wireless, which is the No. 1 U.S. wireless services 
provider with more than 54 million wireless customers. Additional information 
about AT&T Inc. and AT&T products and services is available at

About BellSouth
BellSouth Corporation is a Fortune 100 communications company headquartered in 
Atlanta, Georgia. BellSouth has joint control and 40 percent ownership of 
Cingular Wireless, the nation's largest wireless voice and data provider with 
54.1 million customers. Backed by award-winning customer service, BellSouth 
offers the most comprehensive and innovative package of voice and data services 
available in the market. Through BellSouth Answers®, residential and small 
business customers can bundle their local and long distance service with 
dial-up and high-speed DSL Internet access, satellite television and Cingular® 
Wireless service. For businesses, BellSouth provides secure, reliable local and 
long distance voice and data networking solutions. BellSouth also offers print 
and online directory advertising through The Real Yellow Pages® and 
YELLOWPAGES.COMâ„¢ from BellSouth. BellSouth believes that diversity and 
fostering an inclusive environment are critical in maintaining a competitive 
advantage in today's global marketplace. More information about BellSouth can 
be found at And investor information can be found at

Cautionary Language Concerning Forward-Looking Statements

We have included or incorporated by reference in this document financial 
estimates and other forward-looking statements within the meaning of the 
Private Securities Litigation Reform Act of 1995. These estimates and 
statements are subject to risks and uncertainties, and actual results might 
differ materially from these estimates and statements. Such estimates and 
statements include, but are not limited to, statements about the benefits of 
the merger, including future financial and operating results, the combined 
company’s plans, objectives, expectations and intentions, and other 
statements that are not historical facts. Such statements are based upon the 
current beliefs and expectations of the management of AT&T Inc. and BellSouth 
Corporation and are subject to significant risks and uncertainties and outside 
of our control.

The following factors, among others, could cause actual results to differ from 
those described in the forward-looking statements in this document: the ability 
to obtain governmental approvals of the merger on the proposed terms and 
schedule; the failure of AT&T shareholders to approve the issuance of AT&T 
common shares or the failure of BellSouth shareholders to approve the merger; 
the risk that the businesses of AT&T and BellSouth will not be integrated 
successfully or as quickly as expected; the risk that the cost savings and any 
other synergies from the merger, including any savings and other synergies 
relating to the resulting sole ownership of Cingular Wireless LLC may not be 
fully realized or may take longer to realize than expected; disruption from the 
merger making it more difficult to maintain relationships with customers, 
employees or suppliers; and competition and its effect on pricing, spending, 
third-party relationships and revenues. Additional factors that may affect 
future results are contained in AT&T’s, BellSouth’s, and Cingular Wireless 
LLC’s filings with the Securities and Exchange Commission (“SEC”), which 
are available at the SEC’s Web site ( Neither AT&T nor 
BellSouth is under any obligation, and expressly disclaim any obligation, to 
update, alter or otherwise revise any forward-looking statement, whether 
written or oral, that may be made from time to time, whether as a result of new 
information, future events or otherwise.

NOTE: In connection with the proposed merger, AT&T intends to file a 
registration statement on Form S-4, including a joint proxy 
statement/prospectus of AT&T and BellSouth, and AT&T and BellSouth will file 
other materials with the Securities and Exchange Commission (the “SEC”). 
Investors are urged to read the registration statement, including the joint 
proxy statement (and all amendments and supplements to it) and other materials 
when they become available because they contain important information. 
Investors will be able to obtain free copies of the registration statement and 
joint proxy statement, when they become available, as well as other filings 
containing information about AT&T and BellSouth, without charge, at the SEC’s 
Web site ( Copies of AT&T’s filings may also be obtained without 
charge from AT&T at AT&T's Web site ( or by directing a request to 
AT&T Inc. Stockholder Services, 175 E. Houston, San Antonio, Texas 78258. 
Copies of BellSouth’s filings may be obtained without charge from BellSouth 
at BellSouth’s Web site ( or by directing a request to 
BellSouth at Investor Relations, 1155 Peachtree Street, N.E., Atlanta, Georgia 

AT&T, BellSouth and their respective directors and executive officers and other 
members of management and employees are potential participants in the 
solicitation of proxies in respect of the proposed merger. Information 
regarding AT&T’s directors and executive officers is available in AT&T’s 
2005 Annual Report on Form 10-K filed with the SEC on March 1, 2006 and 
AT&T’s preliminary proxy statement for its 2006 annual meeting of 
stockholders, filed with the SEC on February 10, 2006, and information 
regarding BellSouth’s directors and executive officers is available in 
BellSouth's 2005 Annual Report on Form 10-K filed with the SEC on February 28, 
2006 and BellSouth’s proxy statement for its 2006 annual meeting of 
shareholders, filed with the SEC on March 3, 2006. Additional information 
regarding the interests of such potential participants will be included in the 
registration statement and joint proxy statement, and the other relevant 
documents filed with the SEC when they become available.

-----Original Message-----
From: FISPA Members List [mailto:[EMAIL PROTECTED] On Behalf Of [EMAIL 
Sent: Sunday, March 05, 2006 3:45 PM
To: FISPA Members List
Subject: [fispa-members] Bellsouth Merger?

I believe the author of this is the Wall Street Journal reporter, I lifted if 
off the isp-clec list.... This is a well written overview, I thought. Paul

AT&T Inc. is reportedly near a deal to but BellSouth Corporation  for $65 
billion in a transaction that would give it sole control over the company's 
largest wireless operator, Cingular. A report in the online version of The 
Wall Street Journal stated AT&T is nearing a deal to pay at least $36 per 
BellSouth share, up from BellSouth's trading price Friday of $31.46. That 
would push the total equity value of the deal to at least $65 billion, plus 
the assumption of an additional $17 billion of BellSouth debt, the report in 
the Journal said, citing people familiar with the deal. A deal may be 
announced Monday, the report added.

WSJ Report:

AT&T Inc. is nearing the acquisition of BellSouth Corp. for roughly $65 
billion, people familiar with the situation said Saturday evening. A deal 
could be announced as early as Monday, these people said.

Final terms of the deal could not be learned Saturday evening, but these 
people said AT&T Inc. would pay a premium for BellSouth shares of at least 
15%, valuing the company at $36 per share at least, up from its trading 
price Friday of $31.46. That would push the total equity value of the deal 
to at least $65 billion, plus the assumption of an additional $17 billion of 
BellSouth debt.

Spokespeople for BellSouth and AT&T declined to comment.

An AT&T-BellSouth deal would effectively cleave the nation's telecom 
services in two, each vertically integrated with a local phone operation, 
business services, and wireless unit. And it would effectively validate the 
vision of competition laid out by the government -- one in which traditional 
telecom firms compete directly against cable operators rather than against 
each other. The move would give AT&T Inc. sole control over Cingular, the 
nation's largest wireless operator.

A combination between AT&T and BellSouth could have combined market 
capitalization of nearly $160 billion, making AT&T far larger than rival 
Verizon. The deal would nonetheless set a showdown between AT&T and Verizon, 
as the two fight to control wireless, the growth portion of the telecom 

 It was the steep growth of Cingular -- joint owned by BellSouth and the 
former SBC -- that helped push the two firms together, say telecom bankers 
familiar with the space. As the importance of the wireless business grew, 
they say, it became inevitable that SBC (which adopted the AT&T name just 
months ago) would consolidate its position in the South.

Put together, the SBC territory would extend from California to Florida, 
north to Illinois and south to Texas. Combining the two companies' current 
market capitalizations, AT&T would have a market value approaching $150 
billion, over 50% greater than Verizon.

AT&T Chairman and Chief Executive Edward Whitacre has made a name for 
himself in the telecommunications industry as a serial acquirer.
Mr. Whitacre is able to boast of a string of acquisitions including Pacific 
Telesis Corp., Ameritech Corp. and Southern New England Telecommunications 
Corp. But as he nears retirement the market had been anticipating one last 
hurrah from him; a BellSouth acquisition by AT&T has long been the subject 
of speculation from analysts, investors and the two companies' rivals.

Still the speedy move to acquire BellSouth came as a surprise so soon after 
Mr. Whitacre's takeover of AT&T Corp. last fall. His company is just 
starting to digest the $16 billion acquisition. The former SBC 
Communications Inc. took over AT&T Corp. and adopted the AT&T moniker. The 
new company dominates nearly every aspect of the industry, from high-speed 
Internet connections to long-distance phone service, as well as wireless. 
And Mr. Whitacre now has access to the old
AT&T's enterprise business and world-wide network.

Such a deal would likely prompt howls of protest in some quarters as it 
comes on the heels not only of the AT&T-SBC deal but also after Verizon 
Communications Inc.'s acquisition of MCI. Those deals were approved with 
only a few minor conditions despite concerns they would lead to higher 
prices for business customers.
The wave of mergers has dramatically reshaped the telecom industry, and a 
purchase of BellSouth would further cement the recreation of the old Ma 
Bell, which the
government pushed to break up in 1984.

The management of AT&T, which has apparently briefed key senior government 
officials late last week, appears to be betting that the Bush administration 
and a Bell-friendly Federal Communications Commission won't raise too many 
obstacles for such a deal, arguing that the companies serve different 
geographic regions and do not currently compete with one another in a 
significant way.

Although AT&T and Verizon's last mergers passed both FCC and Justice 
Department review with little major problems, the latest proposed merger may 
face more hurdles. Recent comments by AT&T and BellSouth executives about 
their intentions to explore new revenue streams from their high-speed 
Internet services by introducing two-tier or "premium" service for Internet 
content providers. Concerns about those plans and the concept of "net 
neutrality," or ensuring that consumers have open access to all Internet 
sites and services and businesses do not find their content slowed, has 
become a major problems for the Bells in Washington.

Meanwhile, the FCC that will be reviewing the AT&T/BellSouth deal will 
likely be a much different body soon with the addition of Robert McDowell, a 
veteran telecom lawyer who currently serves as assistant general counsel at 
Comptel, which represents smaller telephone companies and was a vocal 
opponent of the AT&T and Verizon mergers last year.

Mr. McDowell is scheduled to appear before a Senate committee on Thursday 
for his confirmation and is likely to be asked about the merger. Although 
Mr. McDowell is a Republican, his nomination to the FCC was met with 
noticeable unease by the Bell companies, which have privately expressed some 
concern his experience working with smaller competitors may make him less 
than sympathetic to their concerns. 

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