8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of report (Date of earliest event reported) January 24, 2007

AT&T INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	1-8610	43-1301883
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

175 E. Houston,  San Antonio, Texas	78205
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code (210) 821-4105

__________________________________

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b))

o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Items 2.02 Results of Operations and Financial Condition.

The registrant AT&T Inc. (AT&T) announced on January 24, 2008, its results of operations for the fourth quarter of 2007.  The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

To assist investors, pro forma revenues reflecting current customer and segment classifications may be found at www.att.com/gen/investor-relations. These classifications will continue to be adjusted to reflect current management of customer relationships.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(c)          Exhibits

99.1 Press release dated January 24, 2008 reporting financial results for the fourth quarter ended December 31, 2007.

99.2	AT&T Inc. selected financial statements and operating data.
99.3	Discussion of OIBDA,  Free Cash Flow, Free Cash Flow Yield, and Free Cash Flow after Dividends

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	AT&T INC.
Date: January 24, 2008	By: /s/ John J. Stephens        John J. Stephens  Senior Vice President and Controller

EX-99.1

For more information, contact:

McCall Butler

917-209-5792

mbutler@attnews.us

AT&T Delivers Strong Fourth Quarter,

Reaffirms 2008 and Multi-Year Outlook

Results Highlighted by Record Wireless Gains,

Significant Step Up in Enterprise Services Growth

§   $0.51 reported earnings per diluted share compared with $0.50 in the year-earlier fourth quarter

§   $0.71 adjusted earnings per diluted share, up 16.4 percent from $0.61 in the fourth quarter of 2006

§   2.7 million net gain in wireless subscribers, best-ever quarterly increase by any U.S. wireless company, 70.1 million wireless subscribers at year’s end

§   16.3 percent increase in total wireless revenues with wireless data revenues up a robust 57.5 percent

§   Further ramp in enterprise customer trends with recurring service revenues up 1.8 percent, driven by a 20.9 percent increase in revenues from IP-based data services such as virtual private networking, hosting and managed Internet services

§   Stable regional revenue trends with double-digit broadband growth and a further ramp in AT&T U-verseSM TV subscribers: 231,000 in service at year’s end, up from 126,000 three months earlier

Note: AT&T's fourth-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. EST on Thursday, Jan. 24, 2008 at www.att.com/investor.relations.

SAN ANTONIO, Jan. 24, 2008 — AT&T Inc. (NYSE:T) today reported strong fourth-quarter results and reaffirmed its positive outlook for 2008 and beyond. This marked AT&T’s 11th consecutive quarter and third straight year of double-digit growth in adjusted earnings per share.

Fourth-quarter results were highlighted by record wireless gains, a significant step up in recurring enterprise services growth, continued double-digit growth in broadband revenues, and accelerated expansion of the company’s advanced TV service.

Solid trends in these areas and progress in productivity initiatives reinforce AT&T’s expectation for continued strong results as outlined at its December 2007 analyst conference. AT&T’s 2008 outlook includes mid-teens percentage growth in wireless service revenues, mid-single-digit percentage growth in consolidated revenues and continued double-digit growth in adjusted earnings per share.

“We had an excellent fourth quarter, which affirms our outlook for 2008,” said Randall Stephenson, AT&T chairman, chief executive officer and president.

“Our wireless business delivered outstanding results, with the largest quarterly subscriber gain ever posted by a U.S. provider,” Stephenson said. “Enterprise service revenue growth continues to improve. Broadband subscribers and revenues continue to grow at a solid double-digit pace. The ramp in our AT&T U-verse TV service accelerated, and we are on track to reach more than 1 million subscribers by the end of 2008.

“These growth trends, combined with the significant opportunities we have for continuous cost improvements, reinforce the positive outlook we have for our business,” Stephenson said. “AT&T has a terrific set of assets and an impressive record in terms of executing and delivering on targets, and I am very confident in our ability to drive strong results in 2008.”

Revenue Growth

For the quarter ended Dec. 31, 2007, AT&T’s reported fourth-quarter revenues totaled $30.3 billion, up from $15.9 billion in the year-earlier quarter. AT&T’s 2007 reported results reflect the Dec. 29, 2006 acquisition of BellSouth Corporation and the accompanying consolidation of wireless results.

As a further basis for comparison, AT&T also provides pro forma results, which combine revenues from AT&T, BellSouth and Cingular Wireless consistently in all periods. On this basis, AT&T's fourth-quarter 2007 revenues totaled $30.4 billion, up 2.9 percent versus results for the year-earlier quarter. Excluding revenues from enterprise CPE (customer premises equipment) sales, which AT&T began de-emphasizing after the fourth quarter of 2006, consolidated pro forma revenue growth was 3.5 percent.

AT&T’s fourth-quarter revenue growth was driven by a solid mid-teens increase in wireless revenues, improved growth in recurring enterprise services, continued growth in regional business and stable regional consumer revenues. Growth across these areas more than offset anticipated declines in revenues from wholesale and national mass market customers.

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Reported Earnings

AT&T’s reported net income for the fourth quarter totaled $3.1 billion, or $0.51 per diluted share, compared with $1.9 billion, or $0.50 per diluted share, in the year-earlier quarter.

Compared with results in the fourth quarter of 2006, reported operating expenses were $24.9 billion, up from $13.3 billion; reported operating income was $5.5 billion, up from $2.6 billion; and AT&T’s reported operating income margin was 18.1 percent versus 16.2 percent.

Double-Digit Growth in Adjusted Earnings Per Share

AT&T’s adjusted earnings, which exclude costs and accounting effects associated with acquisitions, totaled $4.3 billion, up from $2.4 billion in the year-earlier fourth quarter. Adjusted earnings per diluted share increased 16.4 percent to $0.71, up from $0.61 in the year-earlier quarter.

AT&T’s adjusted operating income for the fourth quarter of 2007 was $7.3 billion, versus $2.9 billion in the year-earlier quarter. AT&T’s adjusted operating income margin was 24.0 percent, up from 18.2 percent in the fourth quarter of 2006.

AT&T’s merger integration initiatives continue on schedule, and merger synergies continue to run ahead of the company’s original outlook. For the full year 2007, cost savings from BellSouth and AT&T Corp. merger integration initiatives totaled approximately $4.0 billion, approximately 75 percent expense and 25 percent capital.

Increased Cash From Operations

AT&T’s cash from operating activities totaled $9.9 billion in the fourth quarter of 2007, up from $5.0 billion in the year-earlier fourth quarter, and $34.1 billion for the full year 2007, up from $15.6 billion for the full year 2006. In addition to operational progress, increased cash from operating activities reflects the inclusion of results from former BellSouth operations and the accompanying consolidation of wireless results.

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Full-year 2007 capital expenditures totaled $17.7 billion, free cash flow totaled $16.4 billion, and free cash flow after dividends totaled $7.6 billion, significantly above AT&T’s original outlook of $5 billion to $6 billion. (Free cash flow is cash from operations minus capital expenditures; free cash flow after dividends also subtracts dividends paid.)

Dividend Growth and Share Repurchases

AT&T continues to return substantial value to shareowners through dividends and share repurchases.

Dividends paid totaled $2.2 billion in the fourth quarter and $8.7 billion for the full year 2007. Shares repurchased totaled $1.5 billion for 37.0 million shares in the fourth quarter, and for the full year 2007 they totaled $10.4 billion for 266.6 million shares. AT&T ended the year with 6.0 billion shares outstanding.

Combining dividends and share repurchases, AT&T returned $19.1 billion of value to shareowners in 2007.

On Dec. 11, 2007, AT&T announced that its board of directors had approved a 12.7 percent increase in the company's quarterly dividend, from $0.355 to $0.40 a share on a quarterly basis and from $1.42 to $1.60 a share on an annualized basis, the largest annual increase in the company’s history. The dividend will be payable on Feb. 1, 2008, to common shareowners of record on Jan. 10, 2008.

The board also approved a new authorization for the repurchase of 400 million shares, which represents approximately 6.6 percent of AT&T’s shares outstanding as of Dec. 31, 2007. Based on current market conditions and the company's outlook, AT&T expects to complete the repurchases available in the new authorization by the end of 2009. The timing and nature of repurchases are subject to market conditions and applicable securities laws.

Fourth-Quarter Operational Highlights

Wireless

In the fourth quarter, AT&T delivered strong wireless growth with record gross subscriber additions, reduced subscriber churn, solid mid-teens percentage growth in revenues and robust growth in operating income. These results reflect the company’s broad high-quality network, attractive handset selection, extensive sales reach and continued improvements in operations.

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In the fourth quarter, AT&T achieved:

§   Record Wireless Subscriber Gains. AT&T's net gain of 2.7 million wireless subscribers was the highest quarterly subscriber increase ever for any U.S. wireless provider, up 13.5 percent from 2.4 million net adds in the year-earlier fourth quarter. This year-over year improvement in quarterly net adds was almost entirely driven by stronger growth in retail postpaid net adds, which totaled 1.2 million, up 36.8 percent versus results in the year-earlier quarter. In addition, AT&T's acquisition of Dobson Communications, which was completed on Nov. 15, 2007, added 1.7 million subscribers, bringing AT&T's wireless subscriber base at year end to 70.1 million.

§   Strong Gross Adds, Reduced Churn. AT&T also delivered the industry’s best-ever quarterly gross wireless subscriber additions, which totaled 6.0 million, up 9.6 percent versus the year-earlier fourth quarter. Total average monthly subscriber churn was 1.7 percent, down 10 basis points versus the year-earlier quarter, and postpaid churn was 1.2 percent, down 30 basis points from the fourth quarter of 2006.

§   Accelerated Wireless Revenue Growth. AT&T’s total wireless revenues were $11.4 billion, up 16.3 percent versus the year-earlier quarter. This marked AT&T’s sixth consecutive quarter of improved wireless revenue growth. Wireless service revenues, which exclude handset and accessory sales, grew 15.7 percent to $10.2 billion. AT&T also posted its sixth consecutive quarter of year-over-year growth in wireless service ARPU (average monthly revenues per subscriber), which was $50.28 in the fourth quarter, up 1.9 percent versus the year-earlier quarter. Retail postpaid ARPU growth was even stronger, up more than 5 percent.

§   Robust Growth in Wireless Data Services. Wireless data revenues increased 57.5 percent versus results in the year-earlier quarter, driven by increased adoption of smart phones and 3G wireless devices. Data growth reflects increases in messaging, media bundles, laptop connectivity, smart phone connectivity and enterprise vertical market solutions.

§   Strong Wireless Operating Income Growth. On a reported basis, AT&T’s fourth-quarter wireless operating expenses totaled $9.4 billion, and operating income was $1.9 billion, up 45.0 percent from $1.3 billion in the fourth quarter of 2006. Before merger-related costs, wireless operating expenses totaled $8.4 billion, and operating income was $2.9 billion, up 58.2 percent from $1.8 billion in the fourth quarter of 2006.

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§   Wireless Margin Expansion. AT&T's reported wireless operating income margin was 17.0 percent, up from 13.6 percent in the year-earlier quarter. Before merger-related costs, AT&T's fourth-quarter adjusted wireless operating income margin was 25.7 percent, up from 18.9 percent in the year-earlier quarter. AT&T's unadjusted fourth-quarter wireless OIBDA service margin was 35.3 percent, up from 33.1 percent in the year-earlier quarter. Before merger-related costs, AT&T's wireless OIBDA service margin was 38.2 percent, up from 34.4 percent for the year-earlier quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline

AT&T's fourth-quarter wireline results were highlighted by improved growth in enterprise service revenues, solid double-digit growth in broadband revenues and an accelerated ramp in AT&T U-verse video service.

The following wireline highlights are based on pro forma revenue and volume comparisons that combine results from AT&T and BellSouth in all periods and include ongoing shifts in customer categories to reflect AT&T's management of customer relationships. In the fourth quarter, AT&T delivered:

§   Further Step Up in Enterprise Services Growth. Recurring enterprise service revenues, which exclude revenues from CPE and from assets acquired during the past year, increased 1.8 percent, up from 0.3 percent year-over-year growth in the third quarter of 2007 and a 3.5 percent decline in the fourth quarter of 2006. Fourth-quarter enterprise services growth was led by a 20.9 percent increase in revenues from IP-based data services such as virtual private networking (VPN), hosting and managed Internet services. Total enterprise revenues declined 1.9 percent year over year, reflecting a decreased emphasis on CPE sales following the fourth quarter of 2006.

§   Accelerated Ramp in AT&T U-verse Video Services. At the end of the fourth quarter, subscribers to AT&T U-verse, the company’s next-generation IP-based video service, totaled 231,000, up from 126,000 three months earlier. AT&T’s U-verse TV weekly install rate in mid-December was approximately 12,000, above the company’s year end target of 10,000. In December, AT&T announced a major expansion of its AT&T-U-verse services to include the company's Southeast region, with deployment expected to reach approximately 30 million living units across 22 states by the end of 2010. Growth in total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 235,000 in the quarter to 2.3 million. Over the past year, total video connections increased 55.4 percent, and at the end of 2007, 7.6 percent of AT&T's primary consumer lines had a video solution from AT&T, up from 4.6 percent one year earlier.

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§   Double-Digit Broadband Growth.AT&T's broadband revenues grew 13.7 percent in the fourth quarter to $1.4 billion. Total high speed Internet connections, which include DSL, AT&T U-verse high speed Internet and satellite broadband services, increased by 396,000 in the quarter to reach 14.2 million, up 2.0 million, or 16.3 percent, over the past year.

§   Year-Over-Year Growth in Consumer Connections. AT&T regional consumer revenue connections (retail access lines, high speed Internet plus video connections) totaled 49.5 million at the end of the fourth quarter, up 568,000, or 1.2 percent, over the past year, as gains in high speed Internet and video more than offset declines in voice access lines. Regional consumer revenues were up 0.2 percent year over year.

§   Solid Regional Business Growth. Total regional business revenues increased 2.8 percent versus the year-earlier quarter to $3.1 billion. Regional business data revenues, which make up 29.4 percent of the category, delivered 4.2 percent growth, led by gains in broadband connectivity, managed Internet and VPN services.

2008 and Multi-Year Outlook

As outlined at its Dec. 11, 2007, analyst conference, AT&T is confident in its outlook for sustained double-digit growth in adjusted earnings per share driven by advances in wireless, broadband, enterprise, IP data and a new generation of converged services. This outlook takes into account current consumer access line and broadband market conditions and resulting impacts on consumer volumes. AT&T expects to deliver:

§   Further ramp in consolidated revenue growth into the mid-single-digit range in 2008 with growth at mid-single-digit or better in the years following.

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§   Continued mid-teens wireless service revenue growth in 2008, including results from the acquisition of Dobson Communications, reflecting strong subscriber growth and continued robust growth in wireless data services.

§   Positive growth in enterprise revenues throughout 2008 with line of sight to mid-single-digit enterprise revenue growth by 2010.

§   Positive regional consumer revenue growth in 2008 and beyond driven by video, broadband and converged services, and continued mid-single-digit growth in regional business revenues.

§   A 2008 adjusted consolidated operating income margin in the 25 percent to 26 percent range, up from 23.8 percent for the full year 2007, reflecting continued wireless progress and increased expense savings from merger synergies and operational initiatives, which are expected to offset expected increased expense for deployment of AT&T U-verse services.

§   An adjusted wireless OIBDA service margin for the full year 2008 in the low-40 percent range, trending toward the mid-40 percent range by year's end.

§   Continued double-digit growth in adjusted earnings per share in 2008. AT&T is confident that its ramping revenue growth combined with continuous cost improvements and share repurchases give it the ability to deliver sustained double-digit growth in adjusted earnings per share and strong growth in free cash flow in 2008 and on an ongoing basis.

§   2008 free cash flow in the $16 billion to $17 billion range. (Free cash flow is cash from operations minus capital expenditures.)

§   Continued capital expenditures in the mid-teens as a percentage of total revenues as the company expands its advanced wireless and wired network capabilities.

§   Significant progress in AT&T U-verse deployment with total AT&T U-verse video subscribers expected to exceed 1 million by the end of 2008. For the full year 2008, AT&T's outlook anticipates additional dilution from its U-verse deployment of approximately $0.12 to $0.14 per share.

§   Substantial opportunities to reduce costs over the next few years. AT&T expects its annual operating expense savings run rate from AT&T Corp. and BellSouth merger synergies and from operational initiatives to increase by approximately $2 billion from 2007 levels to approximately $5.9 billion in 2008 and more than $7.0 billion in 2010.

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Additional Background on Adjusted and Pro Forma Results

AT&T’s reported revenues, expenses and operating income for the fourth quarter of 2006 do not include revenues and expenses from BellSouth Corporation prior to Dec. 29, 2006, when AT&T acquired the company. Nor do they include results from Cingular Wireless, whose results before the BellSouth transaction were accounted for as part of a joint venture. To give investors further basis for comparison, in addition to historical reported results, AT&T has provided supplementary pro forma results for 2005 and 2006, which combine revenues from AT&T, BellSouth and Cingular Wireless in all periods. These pro forma results are available at www.att.com/investor.relations.

AT&T's adjusted earnings for the fourth quarter of 2007 exclude (1) pretax integration and amortization costs totaling $1.8 billion related to acquisitions and (2) a reduction to operating income of $36 million due to the merger-related purchase accounting treatment of deferred Advertising & Publishing revenues and associated expenses. Combined, these adjustments reduced fourth-quarter 2007 reported earnings per share by $0.19. Adjusted results for the fourth quarter of 2006 excluded pretax merger-related costs totaling $624 million, or $0.11 per diluted share.

AT&T's 2007 Advertising & Publishing results are affected by the BellSouth acquisition. Prior to its acquisition by AT&T, BellSouth amortized the revenues and expenses of printed directory advertising books over the lives of the directories, typically 12 months. In accordance with purchase accounting rules, BellSouth's deferred revenues and expenses for all directories delivered prior to the close of the merger have been eliminated in consolidated results. In 2007, eliminating this amortization resulted in reductions to consolidated revenues, expenses and net income from the pre-acquisition BellSouth directory operations, but the adjustment did not affect cash from operations. These adjustments reduced fourth-quarter 2007 consolidated revenues by $53 million and consolidated operating expenses by $17 million.

AT&T continues to manage its print directory business using amortized results. As a result, amortized results are shown in the Advertising & Publishing segment on AT&T's Statement of Segment Income. In 2008, consolidated and segment results will both reflect amortization accounting.

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As shown in AT&T's Statement of Segment Income, AT&T's Advertising & Publishing revenues totaled $1.5 billion in the fourth quarter, operating expenses were $1.0 billion and operating income was $507 million.

Also excluding merger-related intangible amortization and integration costs, fourth-quarter Advertising & Publishing operating expenses were $790 million and operating income was $683 million.

###

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Find More Information Online:

Web Site Links:	Related Media Kits:
AT&T Web Site AT&T Investor Relations Site AT&T 4Q 2007 Earnings AT&T 2006 Annual Report AT&T Investor Relations Analyst Contacts	AT&T 2006 Annual Report Media Kit
Related Releases:	Related Fact Sheets:
AT&T Delivers Strong Third-Quarter Results; Growth Highlighted by Robust Wireless Gains, Advances in Enterprise Services, Accelerated TV Ramp AT&T Posts Strong Second-Quarter Results Led by Accelerated Wireless Growth, Solid Regional Results and a Significant Improvement in Enterprise Trends AT&T Delivers Strong First Quarter: Merger Integration on Track; Advances in Wireless, Business and Broadband Drive Results	Investor Brief 4Q 2007 Financial and Operational Results

Technorati Tags:  AT&T , quarterly earnings, investor relations

About AT&T

AT&T Inc. is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services in the United States and around the world. Among their offerings are the world's most advanced IP-based business communications services and the nation's leading wireless, high speed Internet access and voice services. In domestic markets, AT&T is known for the directory publishing and advertising sales leadership of its Yellow Pages and YELLOWPAGES.COM organizations, and the AT&T brand is licensed to innovators in such fields as communications equipment. As part of its three-screen integration strategy, AT&T is expanding its TV entertainment offerings. Additional information about AT&T Inc. and the products and services provided by AT&T subsidiaries and affiliates is available at http://www.att.com.

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© 2008 AT&T Intellectual Property. All rights reserved. AT&T, the AT&T logo and all other marks contained herein are trademarks of AT&T Intellectual Property and/or AT&T affiliated companies. For more information, please review this announcement in the AT&T newsroom at http://www.att.com/newsroom.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results may differ materially. A discussion of factors that may affect future results is contained in AT&T's filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update or revise statements contained in this news release based on new information or otherwise. This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company's Web site at www.att.com/investor.relations. Accompanying financial statements follow. Previously released pro forma comparisons are available on AT&T's Investor Relations Web site at www.att.com/investor.relations.

NOTE: OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA differs from Segment operating Income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

NOTE: Free cash flow is defined as cash from operations minus capital expenditures. Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Free cash flow yield is defined as cash from continuing operations less capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter. Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding. We believe these metrics provide useful information to our investors because management monthly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it. Management also views it as a measure of cash available to pay debt and return cash to shareowners.

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EX-99.2

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended						Twelve Months Ended
	12/31/2007		12/31/2006		% Chg		12/31/2007		12/31/2006		% Chg
Operating Revenues
Voice	$	9,801	$	8,190		19.7%	$	40,798	$	33,714		21.0%
Data		5,925		4,684		26.5%		23,206		18,317		26.7%
Wireless service		10,151		199		-		38,568		223		-
Directory		1,389		918		51.3%		4,806		3,634		32.3%
Other		3,083		1,900		62.3%		11,550		7,167		61.2%
Total Operating Revenues		30,349		15,891		91.0%		118,928		63,055		88.6%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		11,734		7,092		65.5%		46,055		28,542		61.4%
Selling, general and administrative		7,900		3,731		-		30,892		14,318		-
Depreciation and amortization		5,223		2,492		-		21,577		9,907		-
Total Operating Expenses		24,857		13,315		86.7%		98,524		52,767		86.7%
Operating Income		5,492		2,576		-		20,404		10,288		98.3%
Interest Expense		868		465		86.7%		3,507		1,843		90.3%
Equity in Net Income of Affiliates		147		605		-75.7%		692		2,043		-66.1%
Other Income (Expense) - Net		1		78		-98.7%		615		393		56.5%
Income Before Income Taxes		4,772		2,794		70.8%		18,204		10,881		67.3%
Income Taxes		1,636		856		91.1%		6,253		3,525		77.4%
Net Income	$	3,136	$	1,938		61.8%	$	11,951	$	7,356		62.5%
Basic Earnings Per Share	$	0.52	$	0.50		4.0%	$	1.95	$	1.89		3.2%
Weighted Average Common
Shares Outstanding (000,000)		6,054		3,888		55.7%		6,127		3,882		57.8%
Diluted Earnings Per Share	$	0.51	$	0.50		2.0%	$	1.94	$	1.89		2.6%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		6,095		3,911		55.8%		6,170		3,902		58.1%

AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended									Twelve Months Ended
Wireless *	12/31/2007			12/31/2006			% Ch		g	12/31/2007			12/31/2006			% Ch		g
Segment Operating Revenues
Service revenues	$	10,186		$	8,803			15.7	%	$	38,678		$	33,788			14.5	%
Equipment sales		1,169			960			21.8	%		4,006			3,749			6.9	%
Total Segment Operating Revenues		11,355			9,763			16.3	%		42,684			37,537			13.7	%
Segment Operating Expenses
Cost of services and equipment sales		4,301			3,839			12.0	%		15,991			15,057			6.2	%
Selling, general and administrative		3,458			3,007			15.0	%		12,594			11,446			10.0	%
Depreciation and amortization		1,669			1,588			5.1	%		7,079			6,462			9.5	%
Total Segment Operating Expenses		9,428			8,434			11.8	%		35,664			32,965			8.2	%
Segment Operating Income		1,927			1,329			45.0	%		7,020			4,572			53.5	%
Equity in Net Income of Affiliates		4			10			-60.0	%		16			40			-60.0	%
Minority Interest		(55	)		(40	)		-37.5	%		(198	)		(169	)		-17.2	%
Segment Income	$	1,876		$	1,299			44.4	%	$	6,838		$	4,443			53.9	%

* Results include 100% of AT&T's actual wireless results.

Wireline
Segment Operating Revenues
Voice	$	10,011	$	8,190		22.2	%	$	41,630	$	33,714		23.5	%
Data		6,157		4,684		31.4	%		24,075		18,317		31.4	%
Other		1,490		1,441		3.4	%		5,872		5,447		7.8	%
Total Segment Operating Revenues		17,658		14,315		23.4	%		71,577		57,478		24.5	%
Segment Operating Expenses
Cost of sales		7,413		6,621		12.0	%		30,214		26,693		13.2	%
Selling, general and administrative		4,023		3,369		19.4	%		16,180		13,185		22.7	%
Depreciation and amortization		3,338		2,410		38.5	%		13,411		9,676		38.6	%
Total Segment Operating Expenses		14,774		12,400		19.1	%		59,805		49,554		20.7	%
Segment Income	$	2,884	$	1,915		50.6	%	$	11,772	$	7,924		48.6	%
Advertising & Publishing
Segment Operating Revenues	$	1,473	$	939		56.9	%	$	5,851	$	3,685		58.8	%
Segment Operating Expenses
Cost of sales		452		268		68.7	%		1,733		1,121		54.6	%
Selling, general and administrative		333		171		94.7	%		1,333		616		-
Depreciation and amortization		181		1		-			924		3		-
Total Segment Operating Expenses		966		440		-			3,990		1,740		-
Segment Operating Income		507		499		1.6	%		1,861		1,945		-4.3	%
Equity in Net Income (Loss) of Affiliates		-		(4	)	-			-		(17	)	-
Segment Income	$	507	$	495		2.4	%	$	1,861	$	1,928		-3.5	%
Other **
Segment Operating Revenues	$	570	$	488		16.8	%	$	2,234	$	1,878		19.0	%
Segment Operating Expenses		359		348		3.2	%		1,827		1,485		23.0	%
Segment Operating Income		211		140		50.7	%		407		393		3.6	%
Equity in Net Income of Affiliates		143		599		-76.1	%		676		2,020		-66.5	%
Segment Income	$	354	$	739		-52.1	%	$	1,083	$	2,413		-55.1	%

** Equity in Net Income of Affiliates includes our 60% proportionate share of wireless results in 2006.

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	12/31/07			12/31/06
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	1,970		$	2,418
Accounts receivable - net of allowances for
uncollectibles of $1,364 and $1,276		16,678			16,194
Prepaid expenses		1,524			1,477
Deferred income taxes		2,099			3,034
Other current assets		2,470			2,430
Total current assets		24,741			25,553
Property, Plant and Equipment - Net		95,890			94,596
Goodwill		70,713			67,657
Licenses		37,985			34,252
Customer Lists and Relationships - Net		14,505			18,922
Other Intangible Assets - Net		5,912			6,566
Investments in Equity Affiliates		2,270			1,995
Postemployment Benefit		18,146			14,228
Other Assets		6,392			6,865
Total Assets	$	276,554		$	270,634
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	6,860		$	9,733
Accounts payable and accrued liabilities		21,399			22,106
Advanced billing and customer deposits		3,571			3,402
Accrued taxes		5,027			3,026
Dividends payable		2,417			2,215
Total current liabilities		39,274			40,482
Long-Term Debt		57,255			50,063
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		24,994			27,406
Postemployment benefit obligation		24,866			28,901
Unamortized investment tax credits		150			181
Other noncurrent liabilities		14,648			8,061
Total deferred credits and other noncurrent liabilities		64,658			64,549
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Capital in excess of par value		91,638			91,352
Retained earnings		33,297			30,375
Treasury shares (at cost)		(15,683	)		(7,368	)
Accumulated other comprehensive income		(380	)		(5,314	)
Total stockholders' equity		115,367			115,540
Total Liabilities and Stockholders' Equity	$	276,554		$	270,634

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited	Twelve Months Ended
	12/31/07			12/31/06			12/31/05
Operating Activities
Net income	$	11,951		$	7,356		$	4,786
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		21,577			9,907			7,643
Undistributed earnings from investments in equity affiliates		(297	)		(1,946	)		(451	)
Provision for uncollectible accounts		1,617			586			744
Amortization of investment tax credits		(31	)		(28	)		(21	)
Deferred income tax benefit		(240	)		(87	)		(658	)
Net gain on sales of investments		(11	)		(10	)		(135	)
Gain on license exchange		(409	)		-			-
Changes in operating assets and liabilities:
Accounts receivable		(1,984	)		519			(94	)
Other current assets		(527	)		30			34
Accounts payable and accrued liabilities		672			(2,213	)		74
Stock-based compensation tax benefit		(173	)		(18	)		(3	)
Other - net		1,927			1,519			1,055
Total adjustments		22,121			8,259			8,188
Net Cash Provided by Operating Activities		34,072			15,615			12,974
Investing Activities
Construction and capital expenditures		(17,717	)		(8,320	)		(5,576	)
Net investments in affiliates		-			(1,104	)		2,436
Dispositions		1,594			756			526
Acquisitions, net of cash acquired		(2,873	)		368			1,504
Proceeds from sale of marketable securities		471			-			-
Proceeds from sale of debt and equity securities		562			-			-
Investments in debt and equity securities		(579	)		-			-
Maturities of held-to-maturity securities		-			-			99
Proceeds from note repayment		-			-			37
Other		36			7			-
Net Cash Used in Investing Activities		(18,506	)		(8,293	)		(974	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		(3,411	)		3,649			(4,119	)
Issuance of long-term debt		11,367			1,491			1,973
Repayment of long-term debt		(6,772	)		(4,242	)		(2,682	)
Purchase of treasury shares		(10,390	)		(2,678	)		(1,843	)
Issuance of treasury shares		1,986			589			432
Repurchase of preferred shares of subsidiaries		-			-			(728	)
Dividends paid		(8,743	)		(5,153	)		(4,256	)
Stock-based compensation tax benefit		173			18			3
Other		(224	)		198			(6	)
Net Cash Used in Financing Activities		(16,014	)		(6,128	)		(11,226	)
Net increase (decrease) in cash and cash equivalents
from continuing operations		(448	)		1,194			774
Net Cash Used in Operating Activities from Discontinued Operations		-			-			(310	)
Net increase (decrease) in cash and cash equivalents		(448	)		1,194			464
Cash and cash equivalents beginning of year		2,418			1,224			760
Cash and Cash Equivalents End of Year	$	1,970		$	2,418		$	1,224

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended									Year to Date
	12/31/2007			12/31/2006			% Ch		g	12/31/2007			12/31/2006			% Ch		g
Wireless
Wireless Customers (000)											70,052			60,962			14.9	%
Net Customer Additions (000)		2,675			2,357			13.5	%		7,315			6,892			6.1	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		1,711			(61	)		-			1,775			(74	)		-
Postpaid Customers (000)											55,310			49,877			10.9	%
Net Postpaid Customer Additions (000)		1,178			861			36.8	%		3,982			3,730			6.8	%
Postpaid Churn		1.2%			1.5%		-30 B		P		1.3%			1.5%		-20 B		P
Licensed POPs (000,000) 1											299			296			1.0	%
In-Region Wireline 2
Total Consumer Revenue Connections (000)
Retail Consumer Access Lines											35,047			37,120			-5.6	%
Consumer Broadband Connections 3											12,082			10,278			17.6	%
Video Connections: 4
Satellite Connections											2,116			1,507			40.4	%
U-verse Video Connections											231			3			-
Total Consumer Revenue Connections (000)											49,476			48,908			1.2	%
Net Consumer Revenue Connections Changes (000)		(163	)		15,711			-			568			15,905			-96.4	%
Switched Access Lines (000)8
Retail Consumer - Primary											31,035			32,636			-4.9	%
Retail Consumer - Additional											4,012			4,484			-10.5	%
Retail Business											22,754			23,295			-2.3	%
Retail											57,801			60,415			-4.3	%
Wholesale 5											3,530			5,724			-38.3	%
Coin 6											251			330			-23.9	%
Total Switched Access Lines (000)											61,582			66,469			-7.4	%
Net Switched Access Line Changes (000)		(1,289	)		19,382			-			(4,887	)		17,056			-
Total Broadband Connections (000) 3, 8											14,156			12,170			16.3	%
Net Broadband Connections Changes (000) 3		396			4,015			-90.1	%		1,986			5,249			-62.2	%
Video Connections (000) 4, 8											2,347			1,510			55.4	%
Net Video Connections Changes (000) 4		235			867			-72.9	%		837			997			-16.0	%
AT&T Inc.
Capital Expenditures	$	5,593		$	2,162			-		$	17,717		$	8,320			-
Dividends Declared per Share	$	0.4000		$	0.3550			12.7	%	$	1.4650		$	1.3525			8.3	%
End of Period Common Shares Outstanding (000,000)											6,044			6,239			-3.1	%
Debt Ratio 7											35.7%			34.1%		160 B		P
Total Employees											309,050			304,180			1.6	%

1	Licensed POPs numbers do not include Dobson.
2	In-region Wireline represents access lines served by AT&T's incumbent local exchange companies.
3	Broadband connections include DSL lines, U-verse high speed Internet access and satellite broadband.
4	Video connections include sales under agency agreements with EchoStar and DirecTV customers and U-verse connections.
5	Wholesale lines include 0.2 million lines purchased by AT&T Corp. at 12/31/07 and 1.3 million at 12/31/06.
6	Coin includes both retail and wholesale access lines.
7	Total long-term debt plus debt maturing within one year divided by total debt plus total stockholders' equity.
8	Prior year amounts restated to conform to current period reporting methodology.

Financial Data
AT&T Inc.
Non-GAAP Wireless Reconciliations
Wireless Segment AdjustedOIBDA
Dollars in Millions
unaudited
Quarter Ended December 31, 2007			Adjusting Items
	GAAP			Integration Costs			Intangible Amortization			Adjusted
Service Revenues	$	10,186								$	10,186
Equipment Revenues		1,169									1,169
Total Operating Revenues	$	11,355		$	-		$	-		$	11,355
Operating Expenses
Cost of Services and Equipment Sales		4,301			(147	)		-			4,154
Selling, General and Administrative		3,458			(148	)		-			3,310
Depreciation and Amortization		1,669			(68	)		(628	)		973
Total Operating Expenses		9,428			(363	)		(628	)		8,437
Operating Income		1,927									2,918
Plus: Depreciation and Amortization		1,669									973
OIBDA		3,596									3,891
OIBDA as a % of Service Revenue		35.3%									38.2%
Quarter Ended December 31, 2006			Adjusting Items
	GAAP			Integration Costs			Intangible Amortization			Adjusted
Service Revenues	$	8,803								$	8,803
Equipment Revenues		960									960
Total Operating Revenues	$	9,763		$	-		$	-		$	9,763
Operating Expenses
Cost of Services and Equipment Sales		3,839			(79	)		-			3,760
Selling, General and Administrative		3,007			(36	)		-			2,971
Depreciation and Amortization		1,588			(109	)		(292	)		1,187
Total Operating Expenses		8,434			(224	)		(292	)		7,918
Operating Income		1,329									1,845
Plus: Depreciation and Amortization		1,588									1,187
OIBDA		2,917									3,032
OIBDA as a % of Service Revenue		33.1%									34.4%

OIBDA is defined as operating income (loss) before depreciation and amortization.  OIBDA differs from segment operating income (loss), as calculated in accordance with generally accepted accounting principles (GAAP), in that it excludes depreciation and amortization.  OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment, or other discretionary uses.  OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with GAAP.  Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliations
Reconciliation of Free Cash Flow and Free Cash Flow Yield
Dollars in Millions
unaudited
December 31, 2007	Twelve Months Ended
Net cash provided by operating activities	$	34,072
Less: Construction and capital expenditures		17,717
Free Cash Flow	$	16,355
End of Period Share Price	$	41.56
End of Period Shares Outstanding (Ms)		6,044
Market Capitalization	$	251,189
Free Cash Flow Yield		6.5%

Free cash flow yield is based upon cash from continuing operations less capital expenditures as a percentage of market capitalization computed on 12/31/07.  Market capitalization is computed by mulitplying the end of period share price by the end of period shares outstanding as of 12/31/07.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliations
Reconciliation of Free Cash Flow after Dividends
Dollars in Millions
unaudited
December 31, 2007	Three Months Ended		Twelve Months Ended
Net cash provided by operating activities	$	9,852	$	34,072
Less: Construction and capital expenditures		5,593		17,717
Less: Dividends paid		2,159		8,743
Free Cash Flow after Dividends	$	2,100	$	7,612

Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends. Management reviews free cash flow monthly as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes business decisions based on this measure. Management also views free cash flow as a measure of cash available to pay debt and return value to shareowners.

EX-99.3

EXHIBIT 99.3

OIBDA DISCUSSION

OIBDA is defined as operating income (loss) before depreciation and amortization. OIBDA margin is calculated as OIBDA divided by service revenues. OIBDA differs from Segment Operating Income (Loss), as calculated in accordance with GAAP, in that it excludes depreciation and amortization. OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with generally accepted accounting principles. Our calculation of OIBDA, as presented, may differ from similarly titled measures reported by other companies.

We believe these measures are relevant and useful information to our investors as they are part of AT&T Mobility’s internal management reporting and planning processes and are important metrics that AT&T Mobility’s management uses to evaluate the operating performance of its regional operations. These measures are used by management as a gauge of AT&T Mobility’s success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T Mobility’s ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing AT&T Mobility’s performance with that of many of its competitors. The financial and operating metrics which affect OIBDA include the key revenue and expense drivers for which AT&T Mobility’s operating managers are responsible and upon which we evaluate their performance.

OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA excludes other, net, minority interest in earnings of consolidated entities and equity in net income (loss) of affiliates, as these do not reflect the operating results of AT&T Mobility’s subscriber base and its national footprint that AT&T Mobility utilizes to obtain and service its customers. Equity in net income (loss) of affiliates represents AT&T Mobility’s proportionate share of the net income (loss) of affiliates in which it exercises significant influence, but does not control. As AT&T Mobility does not control these entities, our management excludes these results when evaluating the performance of our primary operations. OIBDA excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with its capitalization and tax structures. Finally, OIBDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.

We believe OIBDA as a percentage of service revenues to be a more relevant measure of AT&T Mobility’s operating margin than OIBDA as a percentage of total revenue. AT&T Mobility generally subsidizes a portion of its handset sales, all of which are recognized in the period in which AT&T Mobility sells the handset. This results in a disproportionate impact on its margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the subscriber. AT&T Mobility also uses service revenues to calculate margin to facilitate comparison, both internally and externally with its competitors, as they calculate their margins using services revenue as well.

There are material limitations to using these non-GAAP financial measures. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates, which directly affect AT&T Mobility’s net income. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to OIBDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

FREE CASH FLOW DISCUSSION

Free cash flow is defined as cash from operations minus capital expenditures.  Free cash flow after dividends is defined as cash from operations minus capital expenditures and dividends.  Free cash flow yield is defined as cash from continuing operations less capital expenditures as a percentage of market capitalization computed on the last trading day of the quarter.  Market capitalization is computed by multiplying the end of period stock price by the end of period shares outstanding.  We believe these metrics provide useful information to our investors because management monthly reviews free cash flow as an important indicator of how much cash is generated by normal business operations, including capital expenditures, and makes decisions based on it.  Management also views it as a measure of cash available to pay debt and return cash to shareowners.