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) April 22, 2008

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 announced on April 22, 2008, its results of operations for the first quarter of 2008. The text of the press release and accompanying financial information are attached as exhibits and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

The following exhibits are furnished as part of this report:

(c)          Exhibits

99.1 Press release dated April 22, 2008 reporting financial results for the first quarter ended March 31, 2008.

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: April 21, 2008	By: /s/ John J. Stephens        John J. Stephens  Senior Vice President and Controller

EX-99.1

      

For more information, contact:

McCall Butler

Office: 212-453-2354

Mobile: 917-209-5792

mbutler@attnews.us

AT&T Ramps Revenue Growth, Delivers

Strong First-Quarter Results

Growth Highlighted by Gains in Wireless,

Broadband and Enterprise Services

§   $0.57 reported earnings per diluted share, up 26.7 percent versus $0.45 in the year-earlier first quarter

§   $0.74 adjusted earnings per diluted share, up 13.8 percent from $0.65 in the first quarter of 2007

§   $30.7 billion in consolidated revenues, up 6.1 percent versus reported results for the year-earlier first quarter and up 4.6 percent versus first-quarter 2007 revenues adjusted for directory accounting impacts

§   18.3 percent increase in wireless revenues; wireless data revenues from areas such as Internet access, messaging and media bundles up 57.3 percent

§   41.7 percent wireless OIBDA service margin, up from an adjusted 38.9 percent in the year-earlier first quarter

§   13.2 percent growth in broadband revenues; 491,000 net gain in broadband connections in the quarter to reach 14.6 million in service

§   Further step up in enterprise customer growth, with total enterprise revenues up 1.2 percent and enterprise service revenues up 2.1 percent, led by a 22.9 percent increase in revenues from Internet Protocol (IP)-based data services

§   Continued ramp in AT&T U-verseSM TV subscriber totals, with a first-quarter net gain of 148,000 to reach 379,000 in service; on track to reach target of more than 1 million subscribers by year-end 2008

Note: AT&T's first-quarter earnings conference call will be broadcast live via the Internet at 10 a.m. ET on Tuesday, April 22, 2008, at www.att.com/investor.relations.

SAN ANTONIO, April 22, 2008 — AT&T Inc. (NYSE:T) today reported strong first-quarter results, highlighted by a significant ramp in consolidated revenue growth, led by improved results in wireless and enterprise, and further expansion of wireless and consolidated margins. This marked AT&T’s 12th consecutive quarter of double-digit growth in adjusted earnings per share.

“We delivered an excellent first quarter and a solid start to the year,” said Randall Stephenson, AT&T chairman and chief executive officer. “Revenue growth continues to ramp, we have good momentum across key growth areas, major cost initiatives are on track, and our operational results reinforce the confidence we have in our outlook.

“AT&T’s goal is to innovate and lead in a communications world driven by mobility and interactivity,” Stephenson said. “To that end, as we deliver strong earnings and return substantial value to shareowners, we are also taking important steps to expand our networks and product sets to drive continued growth in wireless, broadband and IP-based services.

“AT&T is moving quickly to create the next generation of wireless,” Stephenson said. “The future of wireless has never been more promising, and I am very pleased that through our transaction with Aloha Partners and our successful bids in the recently completed auction, we have assembled the industry’s premier, high-quality wireless spectrum position. This spectrum will provide a terrific foundation for new wireless and integrated services, and it significantly advances AT&T’s long-term growth potential.”

Reported Results: Ramp in Revenue Growth, Net Income Growth

For the quarter ended March 31, 2008, AT&T’s revenues totaled $30.7 billion, up 6.1 percent versus reported results in the year-earlier quarter and up 4.6 percent compared with first-quarter 2007 pro forma revenues, which exclude merger-related accounting impacts on directory revenues. This marks a substantial step up from year-over-year pro forma revenue growth of 2.9 percent in the fourth quarter of 2007 and 1.7 percent in the first quarter of 2007.

Compared with results for the year-earlier first quarter, AT&T’s reported operating expenses for the first quarter of 2008 were $24.8 billion, up from $24.3 billion; reported operating income was $6.0 billion, up from $4.7 billion; and AT&T's reported operating income margin was 19.5 percent, up from 16.1 percent.

AT&T's reported first-quarter 2008 net income totaled $3.5 billion, up 21.5 percent from $2.8 billion in the year-earlier first quarter, and reported earnings per diluted share totaled $0.57, up 26.7 percent from $0.45 in the first quarter of 2007.

2

Double-Digit Growth in Adjusted EPS

AT&T's adjusted results for the first quarter of 2008 exclude merger-related amortization expenses and costs associated with a workforce reduction. Adjusted results for the first quarter of 2007 excluded merger-related costs and accounting effects as well as gains from wireless transactions.

Compared with results for the year-earlier first quarter, AT&T's adjusted operating expenses for the first quarter of 2008 totaled $23.2 billion, versus $22.4 billion; adjusted operating income was $7.6 billion, up from $7.0 billion; and AT&T’s adjusted operating income margin was 24.6 percent, up from 23.7 percent.

AT&T's adjusted first-quarter 2008 net income totaled $4.5 billion, up 10.3 percent from $4.1 billion in the year-earlier first quarter, and adjusted earnings per diluted share totaled $0.74, up 13.8 percent from $0.65 in the first quarter of 2007.

AT&T's merger integration and operational cost initiatives continue on schedule. For the full year 2007, operating expense savings from BellSouth and AT&T Corp. merger integration efforts and previously outlined operational initiatives totaled approximately $3.9 billion. AT&T expects these expense savings to grow in 2008 by more than $2 billion dollars.

Cash From Operations, Share Repurchases

Compared with results in the year-earlier first quarter, AT&T's cash from operating activities for the first quarter of 2008 totaled $5.0 billion, up from $4.6 billion; capital expenditures totaled $4.2 billion, versus $3.3 billion; and free cash flow (cash from operations minus capital expenditures) totaled $0.7 billion, compared with $1.3 billion.

As it invests in the future of its business, AT&T continues to return substantial value to shareowners through dividends and share repurchases. In the first quarter, dividends paid totaled $2.4 billion and shares repurchased totaled 111.6 million for $4.1 billion. AT&T ended the quarter with 5.9 billion shares outstanding.

3

First-Quarter Operational Highlights

Wireless

AT&T delivered strong wireless growth in the first quarter, reflecting the company's high-quality network, innovative services, attractive handset selection, extensive sales reach and continued improvements in operations. First-quarter 2008 results included:

§   Accelerated Wireless Revenue Growth. Total wireless revenues increased 18.3 percent versus the year-earlier first quarter to $11.8 billion. Wireless service revenues, which exclude handset and accessory sales, grew 17.1 percent to $10.6 billion. Revenue growth was driven by strong subscriber gains and continued improvement in ARPU (average monthly revenues per subscriber). AT&T has now posted seven consecutive quarters of year-over-year growth in wireless service ARPU, which was $50.18 in the first quarter, up 2.0 percent versus the year-earlier first quarter. Retail postpaid subscriber ARPU growth was even stronger, up approximately 5 percent.

§   Robust Growth in Wireless Data Services. Wireless data revenues grew 57.3 percent versus results in the year-earlier first quarter to $2.3 billion, reflecting robust increases in Internet access, e-mail, messaging, data access and media bundles. Data now represents 21.5 percent of AT&T’s total wireless service revenues, up from 16.0 percent in the first quarter of 2007 and 10.9 percent in the first quarter of 2006. During the first quarter, AT&T’s wireless customers sent more than 620 million multimedia messages and 44 billion text messages, both volumes more than double totals in the year-earlier first quarter.

§   Improved Wireless Subscriber Gains. AT&T’s first-quarter net gain in wireless subscribers totaled 1.3 million, up 104,000, or 8.7 percent, versus net adds in the year-earlier first quarter. AT&T ended the quarter with 71.4 million subscribers in service. Total net adds in the first quarter were reduced by approximately 330,000 because of the shutdown of AT&T’s TDMA wireless network in late February. Retail postpaid net adds totaled 705,000 in the first quarter, up 3.7 percent versus net adds in the year-earlier first quarter.

§   Strong Gross Adds. AT&T continued its strong record of wireless subscriber flow share with 5.0 million first-quarter gross subscriber additions, up from 4.3 million in the year-earlier first quarter. Total average monthly subscriber churn, which includes postpaid, prepaid and reseller subscribers, was 1.7 percent, flat with the year-earlier first quarter and with the fourth quarter of 2007. Retail postpaid churn was 1.2 percent, down from 1.3 percent in the year-earlier first quarter and flat with the fourth quarter of 2007.

4

§   Strong Wireless Operating Income Growth. On a reported basis, AT&T's first-quarter wireless operating expenses totaled $8.9 billion, and operating income was $3.0 billion, up 94.1 percent from $1.5 billion in the first quarter of 2007. On an adjusted basis, wireless operating expenses, which exclude merger-related costs, totaled $8.3 billion, and operating income was $3.5 billion, up 38.5 percent from $2.5 billion in the first quarter of 2007.

§   Wireless Margin Expansion. AT&T's reported wireless operating income margin was 25.0 percent, up from 15.2 percent in the year-earlier first quarter, and its adjusted wireless operating income margin was 29.8 percent, up from 25.5 percent in the year-earlier first quarter. AT&T's first-quarter wireless OIBDA service margin was 41.7 percent, the highest ever achieved by the company’s wireless segment, up from an unadjusted 37.5 percent and an adjusted 38.9 percent in the year-earlier first quarter. (OIBDA service margin is operating income before depreciation and amortization, divided by total service revenues.)

Wireline

AT&T's first-quarter wireline results were highlighted by further improvement in enterprise revenue growth, a solid double-digit increase in broadband revenues and a continued strong ramp in AT&T U-verse TV subscribers. Results included:

§   Further Step Up in Enterprise Growth. Driven by solid demand and a strong record of contract wins, AT&T delivered further improvement in enterprise revenue growth in the first quarter, led by a 22.9 percent increase in enterprise IP data revenues, including areas such as virtual private networks, managed Internet services and hosting. Total enterprise revenues continued their ramp and were up 1.2 percent versus results for the first quarter of 2007. This compares with year-over-year pro forma declines of 2.0 percent in the fourth quarter of 2007 and 3.9 percent in the first quarter of 2007. Enterprise service revenues, which exclude effects from acquisitions and CPE sales, grew 2.1 percent, following a 1.5 percent increase in the preceding quarter and a decline of 3.0 percent in the first quarter of 2007. AT&T is the premier provider for enterprise customers, delivering networking services and solutions to multinational corporations, U.S. governmental agencies and regionally based domestic companies.

5

§   Continued Solid Regional Business Growth. AT&T’s total regional business revenues increased 2.6 percent in the first quarter to $3.2 billion, with continued growth in both voice and data services. Regional business service revenues, which exclude CPE sales, grew 3.4 percent. Regional business data revenues, which make up 30.5 percent of the category, grew 6.3 percent, led by strong growth in Ethernet services and 15.2 percent growth in IP data services, including gains in broadband, managed Internet and VPN services. Regional business revenues from small and midsize firms increased approximately 5 percent.

§   Double-Digit Broadband Growth.AT&T's broadband revenues grew 13.2 percent in the first quarter to $1.4 billion. Total high speed Internet connections, which include DSL, U-verse enabled AT&T High Speed Internet and satellite broadband services, increased by 491,000, and AT&T ended the quarter with 14.6 million consumer and business high speed Internet connections, up 1.8 million, or 13.9 percent, over the past year.

§   Accelerated Ramp in AT&T U-verse TV Services. Growth in AT&T U-verse TV service, the company's next-generation IP-based video service, continued its strong ramp during the first quarter, achieving a net subscriber gain of 148,000 to reach 379,000 in service. AT&T expects a further ramp in the quarters ahead and is on track to reach its target of more than 1 million subscribers by the end of 2008. Total video connections, which include AT&T U-verse service and bundled satellite television service, increased by 264,000 in the quarter to reach 2.6 million.

§   Stable Regional Consumer Trends. First-quarter regional consumer results continued trends of recent quarters, with improved growth in broadband and Advanced TV services offsetting traditional voice access line pressures, resulting in stable revenues. Regional consumer revenues totaled $5.5 billion, down 0.4 percent versus results for the year-earlier first quarter. Regional consumer revenue connections (retail voice, high speed Internet and video) totaled 49.3 million at the end of the quarter. This compares with 49.3 million at the end of the first quarter of 2007 and 49.4 million at the end of the fourth quarter of 2007. Gains in broadband and TV connections over the past year totaled 2.6 million, and consumer IP data revenues, which include revenues from broadband and AT&T U-verse services, increased 18.5 percent versus results for the year-earlier quarter.

6

§   Stable Wireline Expense Trends. On a reported basis, wireline operating expenses totaled $14.8 billion in the first quarter of 2008, versus $15.1 billion for the year-earlier first quarter.  On an adjusted basis, wireline operating expenses totaled $14.4 billion, unchanged from the year-earlier first quarter.

Additional Background on Adjusted and Pro Forma Results

AT&T's adjusted earnings for the first quarter of 2008 exclude: (1) noncash, pretax amortization costs related to acquisitions totaling $1.2 billion, or $0.13 per diluted share, and (2) a charge of $374 million, or $0.04 per diluted share, associated with a workforce reduction previously disclosed in a Form 8-K filing.Adjusted results for the first quarter of 2007 excluded: (1) pretax merger-related integration costs totaling $245 million, or $0.02 per diluted share; (2) noncash, pretax merger-related costs totaling $1.8 billion, or $0.18 per diluted share; (3) a merger-related directory accounting impact of $301 million, or $0.03 per diluted share; and (4) a gain of $409 million, or $0.04 per share, from wireless transactions.

Advertising & Publishing results for 2007 were affected by accounting adjustments following AT&T’s late 2006 acquisition of BellSouth. In accordance with purchase accounting rules, deferred revenues and expenses for all BellSouth directories delivered prior to the close of the merger were eliminated from 2007 consolidated results. This elimination of amortizations reduced first-quarter 2007 consolidated revenues by $409 million and consolidated operating expenses by $108 million.

AT&T manages its print directory business using amortized results. As a result, 2007 amortized results are shown in the Advertising & Publishing segment on AT&T's Statement of Segment Income. In 2008, both consolidated and segment results reflect amortization accounting.

Find More Information Online:

Web Site Links:	Related Media Kits:
AT&T Web Site AT&T Investment Relations	2007 Annual Report
Related Releases:	Related Fact Sheets:

7

Technorati Tags:  AT&T, First-Quarter Earnings

About AT&T

AT&T Inc. (NYSE:T) 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.

© 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.

Note: This AT&T news release and other announcements are available as part of an RSS feed at www.att.com/rss. 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.

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 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.

8

EX-99.2

Financial Data
AT&T Inc.
Consolidated Statements of Income
Dollars in millions except per share amounts
Unaudited	Three Months Ended
	3/31/2008		3/31/2007		% Chg
Operating Revenues
Voice	$	9,693	$	10,455		-7.3	%
Data		5,972		5,655		5.6	%
Wireless service		10,605		9,070		16.9	%
Directory		1,398		1,022		36.8	%
Other		3,076		2,767		11.2	%
Total Operating Revenues		30,744		28,969		6.1	%
Operating Expenses
Cost of services and sales (exclusive of
depreciation and amortization shown separately below)		11,775		11,252		4.6	%
Selling, general and administrative		8,086		7,437		8.7	%
Depreciation and amortization		4,903		5,616		-12.7	%
Total Operating Expenses		24,764		24,305		1.9	%
Operating Income		5,980		4,664		28.2	%
Interest Expense		865		873		-0.9	%
Equity in Net Income of Affiliates		243		173		40.5	%
Other Income (Expense) - Net		33		504		-93.5	%
Income Before Income Taxes		5,391		4,468		20.7	%
Income Taxes		1,930		1,620		19.1	%
Net Income	$	3,461	$	2,848		21.5	%
Basic Earnings Per Share	$	0.58	$	0.46		26.1	%
Weighted Average Common
Shares Outstanding (000,000)		5,997		6,224		-3.6	%
Diluted Earnings Per Share	$	0.57	$	0.45		26.7	%
Weighted Average Common
Shares Outstanding with Dilution (000,000)		6,033		6,266		-3.7	%

Financial Data
AT&T Inc.
Statements of Segment Income
Dollars in millions
Unaudited
	Three Months Ended
Wireless	3/31/2008			3/31/2007			% Chg
Segment Operating Revenues
Service	$	10,645		$	9,092			17.1	%
Equipment		1,180			905			30.4	%
Total Segment Operating Revenues		11,825			9,997			18.3	%
Segment Operating Expenses
Cost of services and equipment sales		4,110			3,670			12.0	%
Selling, general and administrative		3,279			2,913			12.6	%
Depreciation and amortization		1,480			1,891			-21.7	%
Total Segment Operating Expenses		8,869			8,474			4.7	%
Segment Operating Income		2,956			1,523			94.1	%
Equity in Net Income of Affiliates		2			7			-71.4	%
Minority Interest		(60	)		(48	)		-25.0	%
Segment Income	$	2,898		$	1,482			95.5	%
Wireline
Segment Operating Revenues
Voice	$	9,919		$	10,677			-7.1	%
Data		6,205			5,862			5.9	%
Other		1,500			1,447			3.7	%
Total Segment Operating Revenues		17,624			17,986			-2.0	%
Segment Operating Expenses
Cost of sales		7,616			7,558			0.8	%
Selling, general and administrative		4,005			4,093			-2.2	%
Depreciation and amortization		3,170			3,440			-7.8	%
Total Segment Operating Expenses		14,791			15,091			-2.0	%
Segment Income	$	2,833		$	2,895			-2.1	%
Advertising & Publishing
Segment Operating Revenues	$	1,417		$	1,443			-1.8	%
Segment Operating Expenses
Cost of sales		444			455			-2.4	%
Selling, general and administrative		343			279			22.9	%
Depreciation and amortization		212			242			-12.4	%
Total Segment Operating Expenses		999			976			2.4	%
Segment Income	$	418		$	467			-10.5	%
Other
Segment Operating Revenues	$	544		$	544			-
Segment Operating Expenses		770			464			65.9	%
Segment Operating Income(Loss)		(226	)		80			-
Equity in Net Income of Affiliates		241			172			40.1	%
Segment Income	$	15		$	252			-94.0	%

Financial Data
AT&T Inc.
Consolidated Balance Sheets
Dollars in millions except per share amounts
	3/31/08			12/31/07
	Unaudited
Assets
Current Assets
Cash and cash equivalents	$	1,963		$	1,970
Accounts receivable - net of allowances for
uncollectibles of $1,361 and $1,364		15,697			16,185
Prepaid expenses		1,610			1,524
Deferred income taxes		1,934			2,044
Other current assets		2,742			2,963
Total current assets		23,946			24,686
Property, Plant and Equipment - Net		96,238			95,890
Goodwill		70,815			70,713
Licenses		40,711			37,985
Customer Lists and Relationships - Net		13,692			14,505
Other Intangible Assets - Net		5,877			5,912
Investments in Equity Affiliates		2,578			2,270
Postemployment Benefit		17,645			17,291
Other Assets		6,697			6,392
Total Assets	$	278,199		$	275,644
Liabilities and Stockholders' Equity
Current Liabilities
Debt maturing within one year	$	13,301		$	6,860
Accounts payable and accrued liabilities		18,590			21,399
Advanced billing and customer deposits		3,677			3,571
Accrued taxes		4,186			5,027
Dividends payable		2,375			2,417
Total current liabilities		42,129			39,274
Long-Term Debt		60,189			57,255
Deferred Credits and Other Noncurrent Liabilities
Deferred income taxes		25,203			24,939
Postemployment benefit obligation		24,510			24,011
Unamortized investment tax credits		144			150
Other noncurrent liabilities		13,766			14,648
Total deferred credits and other noncurrent liabilities		63,623			63,748
Stockholders' Equity
Common shares issued ($1 par value)		6,495			6,495
Capital in excess of par value		91,598			91,638
Retained earnings		34,311			33,297
Treasury shares (at cost)		(19,590	)		(15,683	)
Accumulated other comprehensive loss		(556	)		(380	)
Total stockholders' equity		112,258			115,367
Total Liabilities and Stockholders' Equity	$	278,199		$	275,644

Financial Data
AT&T Inc.
Consolidated Statements of Cash Flows
Dollars in millions, increase (decrease) in cash and cash equivalents
Unaudited	Three Months Ended
	3/31/08			3/31/07
Operating Activities
Net income	$	3,461		$	2,848
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization		4,903			5,616
Undistributed earnings from investments in equity affiliates		(225	)		(156	)
Provision for uncollectible accounts		480			376
Amortization of investment tax credits		(6	)		(8	)
Deferred income tax expense		569			65
Net gain on sales of investments		(46	)		-
Gain on license exchange		-			(409	)
Changes in operating assets and liabilities:
Accounts receivable		(150	)		237
Other current assets		142			(748	)
Accounts payable and accrued liabilities		(4,654	)		(3,232	)
Stock-based compensation tax benefit		(7	)		(47	)
Other - net		490			71
Total adjustments		1,496			1,765
Net Cash Provided by Operating Activities		4,957			4,613
Investing Activities
Construction and capital expenditures		(4,247	)		(3,338	)
Acquisitions, net of cash acquired		(3,662	)		(198	)
Dispositions		47			209
Proceeds from sale of securities, net of investments		131			518
Other		32			7
Net Cash Used in Investing Activities		(7,699	)		(2,802	)
Financing Activities
Net change in short-term borrowings with
original maturities of three months or less		5,786			(2,989	)
Issuance of long-term debt		3,972			5,924
Repayment of long-term debt		(613	)		(227	)
Purchase of treasury shares		(4,071	)		(3,005	)
Issuance of treasury shares		103			687
Dividends paid		(2,422	)		(2,218	)
Stock-based compensation tax benefit		7			47
Other		(27	)		(84	)
Net Cash Provided by (Used in) Financing Activities		2,735			(1,865	)
Net decrease in cash and cash equivalents		(7	)		(54	)
Cash and cash equivalents beginning of year		1,970			2,418
Cash and Cash Equivalents End of Period	$	1,963		$	2,364

Financial Data
AT&T Inc.
Supplementary Operating and Financial Data
Dollars in millions except per share amounts
Unaudited	Three Months Ended
	3/31/2008			3/31/2007			% Chg
Wireless
Wireless Customers (000)		71,367			62,217			14.7	%
Net Customer Additions (000)		1,295			1,191			8.7	%
M&A Activity, Partitioned Customers and Other Adjs. (000)		20			64			-68.8	%
Postpaid Customers (000)		56,016			50,588			10.7	%
Net Postpaid Customer Additions (000)		705			680			3.7	%
Postpaid Churn		1.2	%		1.3	%	-10 B		P
Licensed POPs (000,000)		304			296			2.7	%
In-Region Wireline 1
Total Consumer Revenue Connections (000) 8
Retail Consumer Primary Switched/VoIP connections 2		30,316			32,315			-6.2	%
Retail Consumer Additional Switched/VoIP connections 2		3,866			4,345			-11.0	%
Consumer Broadband Connections 3		12,547			10,908			15.0	%
Video Connections: 4
Satellite Connections		2,232			1,684			32.5	%
U-verse Video Connections		379			13			-
Total Consumer Revenue Connections (000)		49,340			49,265			0.2	%
Net Consumer Revenue Connections Changes (000)		(98	)		404			-
Switched Access Lines (000) 8
Retail Consumer - Primary		30,312			32,315			-6.2	%
Retail Consumer - Additional		3,866			4,345			-11.0	%
Retail Business		22,647			23,318			-2.9	%
Retail		56,825			59,978			-5.3	%
Wholesale 5		3,407			5,136			-33.7	%
Coin 6		183			315			-41.9	%
Total Switched Access Lines (000)		60,415			65,429			-7.7	%
Net Switched Access Line Changes (000)		(1,167	)		(1,040	)		12.2	%
Total Broadband Connections (000) 3, 8		14,647			12,861			13.9	%
Net Broadband Connections Changes (000) 3, 8		491			691			-28.9	%
Video Connections (000) 4		2,611			1,697			53.9	%
Net Video Connections Changes (000) 4		264			187			41.2	%
AT&T Inc.
Capital Expenditures	$	4,247		$	3,338			27.2	%
Dividends Declared per Share	$	0.4000		$	0.3550			12.7	%
End of Period Common Shares Outstanding (000,000)		5,939			6,186			-4.0	%
Debt Ratio 7		39.6	%		35.4	%	420 B		P
Total Employees		310,070			301,760			2.8	%

1	In-region wireline represents access lines served by AT&T's incumbent local exchange companies.
2	Primarily switched access lines.  Also includes VoIP.
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 03/31/08 and 1.1 million at 03/31/07.
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 March 31, 2008					Adjusting Items
	GAAP				Intangible Amortization			Adjusted
Service Revenues	$	10,645						$	10,645
Equipment Revenues		1,180							1,180
Total Operating Revenues	$	11,825			$	-		$	11,825
Operating Expenses
Cost of Services and Equipment Sales		4,110				-			4,110
Selling, General and Administrative		3,279				-			3,279
Depreciation and Amortization		1,480				(568	)		912
Total Operating Expenses		8,869				(568	)		8,301
Operating Income		2,956							3,524
Plus: Depreciation and Amortization		1,480							912
OIBDA		4,436							4,436
OIBDA as a % of Service Revenue		41.7	%						41.7	%
Quarter Ended March 31, 2007				Adjusting Items
	GAAP				Integration Costs			Intangible Amortization			Adjusted
Service Revenues	$	9,092									$	9,092
Equipment Revenues		905										905
Total Operating Revenues	$	9,997			$	-		$	-		$	9,997
Operating Expenses
Cost of Services and Equipment Sales		3,670				(20	)		-			3,650
Selling, General and Administrative		2,913				(104	)		-			2,809
Depreciation and Amortization		1,891				(85	)		(813	)		993
Total Operating Expenses		8,474				(209	)		(813	)		7,452
Operating Income		1,523										2,545
Plus: Depreciation and Amortization		1,891										993
OIBDA		3,414										3,538
OIBDA as a % of Service Revenue		37.5	%									38.9	%

 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, Except for Share Price
unaudited
March 31, 2008	Trailing Twelve Months
Net cash provided by operating activities	$	34,416
Less: Construction and capital expenditures		18,626
Free Cash Flow	$	15,790
End of Period Share Price	$	38.30
End of Period Shares Outstanding (Ms)		5,939
Market Capitalization	$	227,464
Free Cash Flow Yield		6.9	%

Free cash flow yield is based upon cash from continuing operations less capital expenditures as a percentage of market capitalization computed on 03/31/08.  Market capitalization is computed by multiplying the end of period share price by the end of period shares outstanding as of 03/31/08.

Financial Data
AT&T Inc.
Non-GAAP Consolidated Reconciliations
Adjusted and Reported Wireline Operating Expenses
Dollars in Millions
Unaudited
	Three Months Ended
	3/31/08		3/31/07		YoY % Change
Reported Wireline Operating Expenses	$	14,791	$	15,091		-2.0	%
Operating Adjustments
Cash Integration Costs		-		86		-100.0	%
Intangible Amortization		421		630		-33.2	%
Total Adjusting Items		421		716		-41.2	%
Adjusted Wireline Operating Expenses	$	14,370	$	14,375		0.0	%

Adjusted Wireline operating expenses differs from reported operating expenses in that it excludes the merger-related expenses shown above and provides additional comparability to prior periods.

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.