AT&T CORP, S-3/A, 2000-03-28

AT&T CORP
S-3/A, 2000-03-28
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 28, 2000

REGISTRATION NO. 333-96037

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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

AMENDMENT NO. 1

FORM S-3

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

AT&T CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
NEW YORK 4811 13-4924710
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>

32 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10013-2412
(212) 387-5400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

MARILYN J. WASSER
VICE PRESIDENT -- LAW AND SECRETARY
AT&T CORP.
295 NORTH MAPLE AVENUE
BASKING RIDGE, NJ 07920
(908) 221-2000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------

<TABLE>
<S> <C>
COPIES TO:
STEVEN A. ROSENBLUM CHARLES S. WHITMAN, III
WACHTELL, LIPTON, ROSEN & KATZ DAVIS POLK & WARDWELL
51 WEST 52ND STREET 450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10017
(212) 403-1000 (212) 450-4000
</TABLE>

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered in connection with dividend or interest
reinvestment plans, check the following box. []

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. []

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. []

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. []

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. []
------------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE(1) REGISTRATION FEE(2)
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<S> <C> <C>
Wireless Group Common Stock, par value $1.00 per share...... $13,248,000,000 $3,497,472
- ---------------------------------------------------------------------------------------------------------------
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</TABLE>

(1) Estimated solely for purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933.

(2) Previously paid $26,400 on February 2, 2000.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2

EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus: one to be
used in connection with an offering in the United States and Canada (the "U.S.
prospectus") and one to be used in a concurrent international offering outside
the United States and Canada (the "international prospectus"). The two
prospectuses are identical except for the front cover page and the
"Underwriting" section. Each of these pages for the U.S. prospectus is followed
by the alternate page to be used in the international prospectus. Each of the
alternate pages for the international prospectus is labeled "Alternate Page for
International Prospectus." Final forms of each prospectus will be filed with the
Securities and Exchange Commission under Rule 424(b).

<PAGE> 3

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED.

PROSPECTUS

SUBJECT TO COMPLETION, DATED MARCH 28, 2000

306,000,000 SHARES

[AT&T LOGO]

AT&T WIRELESS GROUP TRACKING STOCK

-------------------------

AT&T Corp. is offering shares of a new class of its common stock, which we
refer to as "AT&T Wireless Group tracking stock." This stock is designed to
track AT&T's wireless services businesses. No public market currently exists for
AT&T Wireless Group tracking stock. We anticipate that the price to the public
will be between $26.00 and $32.00 per share.

Immediately after the offering to the public, AT&T will own all of the
remaining interest in the AT&T Wireless Group. This prospectus relates to an
offering of 306,000,000 shares in the United States and Canada. In addition,
54,000,000 shares are being offered outside the United States and Canada in an
international offering.

We intend to list AT&T Wireless Group tracking stock on the New York Stock
Exchange, under the symbol "AWE."

INVESTING IN THE AT&T WIRELESS GROUP TRACKING STOCK INVOLVES RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 13.

-------------------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER SECURITIES
REGULATOR HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------

<TABLE>
<CAPTION>
PER SHARE TOTAL
--------- -----
<S> <C> <C>
Public offering price....................................... $ $
Underwriting discount....................................... $ $
Proceeds, before expenses................................... $ $
</TABLE>

AT&T has granted the U.S. and international underwriters options to
purchase up to an additional 54,000,000 shares of AT&T Wireless Group tracking
stock solely to cover over-allotments.

The underwriters expect that the shares of AT&T Wireless Group tracking
stock will be ready for delivery in New York, New York on , 2000.

-------------------------

Global Coordinators and Joint Book-Running Managers

GOLDMAN, SACHS & CO. MERRILL LYNCH & CO. SALOMON SMITH BARNEY

-------------------------

CREDIT SUISSE FIRST BOSTON LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER

-------------------------

BANC OF AMERICA SECURITIES LLC M.R. BEAL & CO. BEAR, STEARNS & CO. INC.

CHASE H&Q DEUTSCHE BANC ALEX. BROWN DONALDSON, LUFKIN & JENRETTE

J.P. MORGAN & CO. PAINEWEBBER INCORPORATED PRUDENTIAL VOLPE TECHNOLOGY
A UNIT OF PRUDENTIAL SECURITIES

SANFORD C. BERNSTEIN & CO., INC. THOMAS WEISEL PARTNERS LLC

, 2000
<PAGE> 4

[Inside Front Cover Page]

[Photographs of people using wireless services]

<PAGE> 5

PROSPECTUS

SUBJECT TO COMPLETION, DATED MARCH 28, 2000

54,000,000 SHARES

[AT&T LOGO]

AT&T WIRELESS GROUP TRACKING STOCK

-------------------------

Immediately after the offering to the public, AT&T will own all of the
remaining interest in the AT&T Wireless Group. This prospectus relates to an
offering of 54,000,000 shares outside the United States and Canada. In addition,
306,000,000 shares are being offered in the United States and Canada.

We intend to list AT&T Wireless Group tracking stock on the New York Stock
Exchange, under the symbol "AWE."

INVESTING IN THE AT&T WIRELESS GROUP TRACKING STOCK INVOLVES RISKS. SEE
"RISK FACTORS" BEGINNING ON PAGE 13.

-------------------------

AT&T has granted the U.S. and international underwriters options to
purchase up to an additional 54,000,000 shares of AT&T Wireless Group tracking
stock solely to cover over-allotments.

The underwriters expect that the shares of AT&T Wireless Group tracking
stock will be ready for delivery in New York, New York on , 2000.

-------------------------

Global Coordinators and Joint Book-Running Managers

<TABLE>
<S> <C> <C>
GOLDMAN SACHS MERRILL LYNCH SALOMON SMITH BARNEY
INTERNATIONAL INTERNATIONAL INTERNATIONAL
</TABLE>

-------------------------

<TABLE>
<S> <C> <C>
ABN AMRO ROTHSCHILD CREDIT SUISSE FIRST BOSTON
DEUTSCHE BANK WARBURG DILLON READ
</TABLE>

-------------------------

<TABLE>
<S> <C> <C>
BANCA IMI BNP PARIBAS GROUP CAZENOVE & CO.
DAIWA SBCM EUROPE HSBC ING BARINGS
</TABLE>

, 2000
<PAGE> 6

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary.................. 1
Risk Factors -- AT&T Wireless Group
Tracking Stock.................... 13
Risk Factors -- The AT&T Wireless
Group............................. 21
Use of Proceeds..................... 26
Dividend Policy..................... 26
Capitalization of the AT&T Wireless
Group............................. 27
Selected Historical Financial Data
of the AT&T Wireless Group........ 28
AT&T Wireless Group Management's
Discussion and Analysis of
Financial Condition and Results of
Operations........................ 30
Description of Business............. 43
Management of the AT&T Wireless
Group............................. 73
Description of AT&T Capital Stock... 76
Relationship Between the AT&T Common
Stock Group and the AT&T Wireless
Group............................. 88
The Incentive Plan.................. 97
Certain Material U.S. Federal Tax
Considerations.................... 99
Underwriting........................ 103
Legal Matters....................... 105
Other Information................... 106
Index to Financial Statements....... F-1
</TABLE>

------------------------

In making any investment decision relating to AT&T Wireless Group tracking
stock, you should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We are offering to sell shares of AT&T Wireless
Group tracking stock and seeking offers to buy shares of AT&T Wireless Group
tracking stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus or other date stated in this prospectus, regardless of the time of
delivery of this prospectus or any sale of AT&T Wireless Group tracking stock.
You should be aware that information contained in AT&T's website, www.att.com,
is not part of this prospectus.

i
<PAGE> 7

PROSPECTUS SUMMARY

This summary highlights selected information from this prospectus and may
not contain all of the information that is important to you in making an
investment decision. To better understand the offering, you should read this
entire prospectus carefully, as well as those additional documents to which we
refer you. See "Other Information -- Where You Can Find More Information" on
page 107. All references to "we," "our," or "us" in this prospectus are to AT&T
Corp.

THE AT&T WIRELESS GROUP

GENERAL

The AT&T Wireless Group is one of the largest wireless service providers in
the United States based on $7.6 billion in revenues for the year ended December
31, 1999. Including its partnership markets, the AT&T Wireless Group had over 12
million total subscribers as of December 31, 1999. The AT&T Wireless Group
focuses on revenue growth through the retention and expansion of its subscriber
base. The AT&T Wireless Group seeks to do this by providing new and innovative
services that distinguish it from its competitors. Examples include pricing
plans that simplify customer choice, such as AT&T Digital One Rate service, and
bundled offerings of communications products and services that target specific
customer groups.

The AT&T Wireless Group operates one of the largest U.S. digital wireless
networks. The AT&T Wireless Group, including its partnership and affiliate
markets, currently holds 850 megahertz and 1900 megahertz licenses to provide
wireless services covering 94% of the U.S. population, with approximately 81% of
the U.S. population covered by at least 30 megahertz of wireless spectrum as of
December 31, 1999. As of December 31, 1999, the AT&T Wireless Group's built
network, including partnership and affiliate markets, covered 65% of the U.S.
population. This includes operations in 42 of the 50 largest U.S. metropolitan
areas. By the end of 2000, the AT&T Wireless Group expects that its built
network, including partnership and affiliate markets, will cover over 70% of the
U.S. population. The AT&T Wireless Group supplements its own operations with
roaming agreements that allow its subscribers to use other providers' wireless
services in regions where the AT&T Wireless Group does not have operations.
Through these roaming agreements, the AT&T Wireless Group is able to offer its
customers wireless services covering over 95% of the U.S. population. The AT&T
Wireless Group plans to continue to increase its coverage and the quality of its
services by expanding the footprint and capacity of its network at an increased
pace and by acquiring or partnering with other wireless providers.

The AT&T Wireless Group provides its wireless voice and data services using
time division multiple access (TDMA), analog and cellular digital packet data
(CDPD) technologies. The AT&T Wireless Group has focused on building out its
digital network, including upgrading its analog systems to digital in its 850
megahertz markets, and on migrating its customers from analog to digital
service. The AT&T Wireless Group believes that digitalization improves capital
efficiency, lowers network operating costs and allows it to offer higher quality
services. As of December 31, 1999, the AT&T Wireless Group had upgraded 98% of
its 850 megahertz markets to digital based systems and all of its 1900 megahertz
markets are digital based. As of December 31, 1999, over 79% of the AT&T
Wireless Group's consolidated subscribers use digital services, accounting for
over 85% of its traffic. The AT&T Wireless Group believes that these percentages
are substantially greater than the industry average, excluding the AT&T Wireless
Group.

1
<PAGE> 8

products and services together in bundled offerings, which may combine wireless
services with long distance and local communications services, broadband
services and Internet services. In addition, each group will be able to take
advantage of the other group's marketing and sales efforts and network
capabilities.

The AT&T Wireless Group has targeted two growth areas for near term
expansion: wireless data and fixed wireless. The AT&T Wireless Group is an
industry leader in wireless data services, possessing a CDPD network covering
markets with a total population of 89 million. The AT&T Wireless Group expects
new applications for corporate and consumer use to further drive wireless data
growth. These data applications may include access to email, Internet content,
e-commerce, shopping services and services that are enhanced by information
about the user's location. In addition, the AT&T Wireless Group has begun to
deploy a fixed wireless technology. The AT&T Wireless Group believes there is a
significant business opportunity to use wireless technology to provide
residential and small business customers with high speed, "always on" broadband
access coupled with wireline quality voice access.

AT&T Wireless Group tracking stock is designed to reflect the separate
economic performance of the AT&T Wireless Group. Except as described below, we
attribute all of AT&T's current wireless operations to the AT&T Wireless Group,
including:

- all mobile and fixed wireless licenses,

- all wireless networks, operations, cell sites, retail operations,
wireless customer care facilities and customer location assets, and

- interests in partnerships and affiliates providing wireless mobile
communications in the United States and internationally.

AT&T retains:

- existing and future wireless activities that stem from country-specific
joint venture relationships that are predominantly non-wireless, and

- incidental wireless capabilities or links in any backbone or other
communications network that is predominantly non-wireless.

We currently intend to include all future wireless activities in the AT&T
Wireless Group. Our board of directors may, however, in its discretion, but
subject to the AT&T Wireless Group policy statement, direct new businesses and
assets to the AT&T Wireless Group or to the rest of AT&T or dispose of or
transfer businesses or assets of either group.

The principal executive offices of the AT&T Wireless Group are located at
7277 164th Avenue NE, Building 1, Redmond, Washington 98052. The telephone
number is (425) 580-6000.

INDUSTRY OVERVIEW

The growth in the wireless communications industry has been shaped by a
number of trends that are likely to continue in the near future. Key trends
include:

- increased penetration, which is improving network efficiency,

- single rate pricing, which is simplifying customer choice, increasing
penetration and leading to industry consolidation,

- declining costs of service, which is leading to mass market availability
of wireless communications,
2
<PAGE> 9

- increased use of digital service, as opposed to analog service, which is
increasing the range of wireless service capabilities for subscribers,
and

- the development of wireless data applications, which the AT&T Wireless
Group believes will increase wireless usage.

STRATEGY

The AT&T Wireless Group's goal is to be the premier provider of
high-quality wireless communications services, whether mobile or fixed, voice or
data, to businesses or consumers, in the United States or internationally. The
AT&T Wireless Group believes that the following are key elements to enable it to
meet its goal:

- continue the aggressive build out and expansion of its TDMA network to
provide coverage throughout the nation, with improved quality and
consistent features regardless of location,

- continue to lower its operating costs and improve capital efficiency by
expanding its TDMA network and increasing the use of more efficient
channels of distribution,

- target distinct consumer and business customer segments with wireless
offers that match their needs for voice and data services, in order to
increase its subscriber base and revenues,

- take advantage of its relationship with and use of the resources of AT&T,
including the use of the AT&T brand and AT&T's distribution channels,
cross marketing opportunities and bundled offers with AT&T's traditional
products, and

- take advantage of its existing wireless spectrum, digital network,
customer base and the AT&T brand with new growth initiatives, including
wireless data and fixed wireless opportunities.

The AT&T Wireless Group believes the following key strengths and assets
differentiate it from other wireless service providers:

- Spectrum -- licenses, including partnership and affiliate markets,
covering 94% of the U.S. population, with approximately 81% of the U.S.
population covered by at least 30 megahertz of wireless spectrum,

- Network -- operations in 42 of the 50 largest U.S. metropolitan areas,

- Subscriber base -- over 12 million, including partnership markets,

- Brand -- benefits from AT&T's widely recognized brand,

- Digital migration -- majority of subscribers migrated from analog to
digital services,

- Relationship with AT&T -- competitive advantage from ability to work
closely with AT&T, and

- Management team -- experienced senior executives.

THE AT&T COMMON STOCK GROUP AND LIBERTY MEDIA GROUP

Following the issuance of AT&T Wireless Group tracking stock, AT&T will
have outstanding the following classes of common stock: AT&T common stock, AT&T
Wireless Group tracking stock and Liberty Media Group tracking stock, which is
divided into class A and class B. The Liberty Media Group tracking stock
reflects the economic performance of the Liberty Media Group. The AT&T common
stock will reflect the economic performance of all of AT&T's assets and
businesses other than the Liberty Media Group and the AT&T Wireless Group,
except that the AT&T common stock will also reflect any inter-group interest
that AT&T retains in the AT&T Wireless Group. We refer to the assets and
businesses whose economic performance is reflected by the AT&T common stock as
the AT&T Common Stock Group.
3
<PAGE> 10

The principal activities of the AT&T Common Stock Group initially will
include all of AT&T's domestic long distance, international long distance,
regional and local telecommunications services and broadband and Internet
communications services. The AT&T Common Stock Group also will include all of
AT&T's billing, directory and calling card services to support these
communications services.

The primary lines of business that will comprise the AT&T Common Stock
Group are business services, including AT&T Solutions, consumer services,
broadband and Internet services and our international operations and ventures
(other than international wireless interests included in the AT&T Wireless
Group).

The principal executive offices of AT&T are located at 32 Avenue of the
Americas, New York, New York 10013-2412. The telephone number is (212) 387-5400.

THE DISPOSITION

AT&T Wireless Group tracking stock issued in the initial public offering
will reflect only a portion of the economic performance of the AT&T Wireless
Group. AT&T will retain the remaining interest in the economic performance of
the AT&T Wireless Group in the form of an inter-group interest. We currently
intend to dispose of the AT&T Common Stock Group's interest in the AT&T Wireless
Group following the initial public offering in the form of additional AT&T
Wireless Group tracking stock. Such disposition will include a distribution in
the form of a dividend to holders of AT&T Common Stock Group shares for at least
a portion of such interest, but may also include an exchange offer, a further
sale of AT&T Wireless Group tracking stock or a combination thereof. We
currently intend to dispose of the retained interest at some time after the
offering and after we complete our pending merger with MediaOne Group, Inc. The
exact method and timing of this disposition, however, has not yet been
determined. We expect to base our decision with regard to the method and timing
of the disposition on market conditions and the target of maximizing value for
all AT&T shareholder groups. The disposition may occur in several stages,
following which we expect that the outstanding shares of AT&T Wireless Group
tracking stock will reflect 100% of the economic performance of the AT&T
Wireless Group. There is no guarantee, however, that any disposition will follow
this initial public offering.

SELECTED RIGHTS AND TERMS OF AT&T WIRELESS GROUP TRACKING STOCK

VOTING RIGHTS

Except as we describe below, each outstanding share of AT&T Wireless Group
tracking stock will initially have a number of votes, or a fraction of a vote,
rounded to the nearest tenth, equal to:

- the initial public offering price per share of AT&T Wireless Group
tracking stock, divided by

- the average daily market value per share of AT&T common stock for the
10-trading day period ending on the 20th trading day prior to the
effective date of the registration statement for the initial public
offering of which this prospectus forms a part.

If the fraction resulting from this formula is greater than 0.8 and less than
1.2, we will set the initial vote at one vote per share of AT&T Wireless Group
tracking stock, even if this is not the nearest tenth. Similarly, if the
resulting fraction is greater than 0.4 and less than 0.6, we will set the
initial vote at one-half vote per share of AT&T Wireless Group tracking stock,
even if this is not the nearest tenth. After the initial vote is set, the voting
rights of the AT&T Wireless Group tracking stock will be subject to adjustments
to reflect stock splits, reverse stock splits, stock dividends or certain stock
distributions with respect to AT&T common stock, AT&T Wireless Group tracking
stock or Liberty Media Group tracking stock.
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<PAGE> 11

DIVIDENDS

REDEMPTION

Redemption in exchange for shares of AT&T common stock at option of our
board of directors. At any time following either the second anniversary of the
date of the initial issuance of the AT&T Wireless Group tracking stock or the
occurrence of certain tax-related events, our board of directors, in its sole
discretion, may redeem all outstanding shares of AT&T Wireless Group tracking
stock for shares of AT&T common stock at a 10% premium.

Redemption in exchange for stock of qualifying subsidiaries at option of
our board of directors. AT&T may, at any time, redeem all outstanding shares of
AT&T Wireless Group tracking stock in exchange for a specified number of
outstanding shares of common stock of a subsidiary of AT&T that holds all of the
assets and liabilities of the AT&T Wireless Group. This type of redemption may
only be made on a pro rata basis, and must be tax free to the holders of the
AT&T Wireless Group tracking stock, except with respect to any cash that holders
receive in place of fractional shares.

Redemption in connection with significant transactions. In the event of a
disposition by AT&T of at least 80% of the fair value of the properties and
assets attributed to the AT&T Wireless Group, AT&T is generally required to:

- convert each outstanding share of AT&T Wireless Group tracking stock into
a number of shares per AT&T common stock equal to 110% of the ratio of
the average market price per share of AT&T Wireless Group tracking stock
to the average market price per share of AT&T common stock, or

- distribute cash and/or securities (other than AT&T common stock) or other
property equal to the fair value of the net proceeds from that
disposition allocable to AT&T Wireless Group tracking stock, either by
special dividend or by redemption of all or part of the outstanding
shares of AT&T Wireless Group tracking stock, or

- take a combination of the actions described in the preceding bullets
whereby AT&T would convert some shares of AT&T Wireless Group tracking
stock into AT&T common stock at a 10% premium and pay a dividend on the
remaining shares of AT&T Wireless Group tracking stock or redeem all or
part of the remaining shares of AT&T Wireless Group tracking stock for
cash and/or property equal to the fair value of a portion of the net
proceeds of the disposition allocable to AT&T Wireless Group tracking
stock.

RISK FACTORS

See "Risk Factors -- AT&T Wireless Group Tracking Stock" and "Risk
Factors -- The AT&T Wireless Group," beginning on pages 13 and 21 for a
discussion of risk factors relating to an investment in the AT&T Wireless Group
tracking stock offered through this prospectus and the business of the AT&T
Wireless Group.

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<PAGE> 12

THE OFFERING

Unless we specifically state otherwise, the information in this prospectus
does not take into account the possible issuance of up to 54,000,000 additional
shares of AT&T Wireless Group tracking stock, which the underwriters have the
option to purchase from us solely to cover over-allotments. If the underwriters
exercise this option in full, there will be 414,000,000 shares of AT&T Wireless
Group tracking stock outstanding following this offering.

AT&T Wireless Group tracking
stock offered:

U.S. offering............ 306,000,000 shares

International offering... 54,000,000 shares

Total............... 360,000,000 shares

AT&T Wireless Group tracking
stock to be outstanding
after this offering......... 360,000,000 shares

Equivalent shares of AT&T
Wireless Group tracking stock
represented by inter-group
interest.................... 1,950,000,000 shares

Shares and equivalent shares
of AT&T Wireless Group
tracking stock to be
outstanding after this
offering.................... 2,310,000,000 shares

Proposed New York Stock
Exchange symbol............... "AWE"

Use of proceeds............... The first $7.0 billion of the total net
proceeds from this offering, estimated to be
$10.13 billion, will be used by the AT&T
Wireless Group to expand its network, to pursue
acquisition opportunities as they arise, for
capital expenditures and for general corporate
purposes. The remaining net proceeds will be
used by the AT&T Common Stock Group for general
corporate purposes. See "Use of Proceeds" for
additional information relating to the use of
the net proceeds from this offering.

The number of shares of AT&T Wireless Group tracking stock to be
outstanding after this offering does not include shares of AT&T Wireless Group
tracking stock underlying stock-based awards that we expect to issue to AT&T
senior executives, non-employee directors and selected eligible employees upon
completion of this offering. It also does not include shares of AT&T Wireless
Group tracking stock underlying stock-based awards that we expect to issue to
holders of AT&T common stock-based awards on the date of the distribution of
AT&T Wireless Group tracking stock to holders of AT&T Common Stock Group shares,
as determined by our board of directors subsequent to the offering. See "The
Incentive Plan" for additional information on the issuance of AT&T Wireless
Group tracking stock for stock-based awards under the amendments to our
incentive plan. Such issuance will cause the AT&T Wireless Group tracking stock
to be diluted.

Following the initial public offering and before the distribution (if any),
the remaining interest not represented by the AT&T Wireless Group tracking stock
issued in the offering will be reflected in the financial statements of the AT&T
Common Stock Group as an "inter-group interest" in the AT&T Wireless Group.
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<PAGE> 13

SELECTED HISTORICAL FINANCIAL DATA

This information is only a summary and you should read it together with the
financial information we include elsewhere in this prospectus or incorporate by
reference in this prospectus. For copies of the financial information we
incorporate by reference, see "Other Information -- Where You Can Find More
Information" on page 107.

AT&T CORP.

In the table below, we provide you with selected historical consolidated
financial data of AT&T. We prepared this information using our consolidated
financial statements at and for each of the fiscal years in the five-year period
ended December 31, 1999. We derived the consolidated income statement data below
for each of the three years ended December 31, 1999, and the consolidated
balance sheet data at December 31, 1999 and 1998, from consolidated financial
statements audited by PricewaterhouseCoopers LLP, independent accountants. We
derived the remaining data from unaudited consolidated financial statements.

Income from continuing operations for the year ended December 31, 1999
includes $1.5 billion of a net expense consisting primarily of an in-process
research and development charge associated with our merger with
Tele-Communications, Inc., equity losses associated with investments in At Home
Corporation and Cablevision Systems Corporation, an asset impairment charge
associated with the planned disposal of certain wireless network equipment,
other restructuring charges and gains on the sale of businesses. Income from
continuing operations for the year ended December 31, 1998 includes $1.1 billion
of a net expense consisting of restructuring and other charges as well as
benefits from gains on the sales of businesses. Income from continuing
operations for 1995 includes $2.0 billion of a net expense consisting of
restructuring and other charges. The number of shares of AT&T common stock
outstanding and per share data have been adjusted to reflect our three-for-two
stock split paid on April 15, 1999. The number of shares of Liberty Media Group
tracking stock outstanding and per share data reflect a two-for-one stock split
paid on June 11, 1999.

7
<PAGE> 14

SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------
1999(1) 1998 1997 1996 1995
-------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues............................................. $ 62,391 $53,223 $51,577 $50,688 $48,449
Operating income..................................... 10,859 7,487 6,836 8,709 5,169
Income from continuing operations.................... 3,428 5,235 4,249 5,458 2,981
Income from continuing operations -- attributable to
AT&T common shareowners............................ 5,450 5,235 4,249 5,458 2,981
Weighted average AT&T common shares and potential
common shares...................................... 3,152 2,700 2,683 2,651 2,612
Per AT&T common share -- basic:
Income from continuing operations(2)............... $ 1.77 $ 1.96 $ 1.59 $ 2.07 $ 1.15
Per AT&T common share -- diluted:
Income from continuing operations(3)............... 1.74 1.94 1.59 2.07 1.14
Cash dividends declared per AT&T common share........ .88 .88 .88 .88 .88
Loss from continuing operations available to Liberty
Media Group shareowners............................ 2,022
Weighted average Liberty Media Group
shares............................................. 1,259
Liberty Media Group loss per share -- basic.......... 1.61
Liberty Media Group loss per share -- diluted........ 1.61
Cash dividends declared per Liberty Media Group
share.............................................. --
BALANCE SHEET DATA:
Total assets......................................... $169,406 $59,550 $61,095 $57,348 $62,864
Long-term debt....................................... 21,591 5,556 7,857 8,878 8,913
Shareowners' equity.................................. 78,927 25,522 23,678 21,092 17,400
</TABLE>

- -------------------------

(1) On March 9, 1999, the TCI merger closed. The TCI merger was recorded as a
purchase. In conjunction with the TCI merger, AT&T issued Liberty Media
Group tracking stock to reflect the separate economic performance of the
Liberty Media Group. AT&T does not have a "controlling financial interest"
for financial accounting purposes in the Liberty Media Group, therefore we
account for the Liberty Media Group as an equity investment. Because the
Liberty Media Group is reflected by a separate tracking stock, the earnings
available to the holders of AT&T common stock exclude all of the earnings or
losses related to the Liberty Media Group.

(2) Basic earnings per share from continuing operations of AT&T common stock
prior to the three-for-two stock split for the four years ended December 31,
1998 through December 31, 1995 were $2.93, $2.39, $3.10 and $1.72,
respectively.

(3) Diluted earnings per share from continuing operations of AT&T common stock
prior to the three-for-two stock split for the four years ended December 31,
1998 through December 31, 1995 were $2.91, $2.38, $3.09 and $1.71,
respectively.

8
<PAGE> 15

AT&T WIRELESS GROUP

In the table below, we provide you with selected historical combined
financial data of the AT&T Wireless Group. We prepared this information using
our combined financial statements at and for each of the fiscal years in the
three-year period ended December 31, 1999. We derived the combined income
statement data and cash flow data below for each of the three years ended
December 31, 1999, and the combined balance sheet data at December 31, 1999 and
1998, from combined financial statements audited by PricewaterhouseCoopers LLP,
independent accountants. We derived the remaining data from unaudited combined
financial statements for the periods presented.

The table below also provides you with unaudited selected pro forma
condensed combined financial information for the AT&T Wireless Group as if the
acquisition of Vanguard Cellular Systems, Inc. was completed on January 1, 1999
for purposes of the 1999 information provided and on January 1, 1998 for
purposes of the 1998 information provided. You should not rely on the unaudited
selected pro forma financial information as an indication of the results of
operations that would have been achieved had the merger taken place earlier.

SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT FOR OTHER OPERATING DATA)

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED DECEMBER 31,
----------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Services revenues......................................... $ 6,823 $ 4,779 $ 4,249
Equipment revenues........................................ 804 627 419
-------- ------- -------
Total revenues.............................................. 7,627 5,406 4,668

Operating Expenses:
Network and other costs of services....................... 3,846 2,428 1,770
Depreciation and amortization............................. 1,253 1,079 826
Selling, general and administrative....................... 2,663 2,122 1,982
Asset impairment and restructuring charges................ 531 120 160
-------- ------- -------
Total operating expenses.................................... 8,293 5,749 4,738

Operating loss.............................................. (666) (343) (70)
Other income, net........................................... 176 764 288
Interest expense............................................ 136 120 --
-------- ------- -------
(Loss) income before income taxes........................... (626) 301 218
(Benefit) provision for income taxes........................ (221) 137 93
-------- ------- -------
Net (loss) income........................................... (405) 164 125
Dividend requirements on preferred stock held by AT&T,
net....................................................... 56 56 56
-------- ------- -------
Net (loss) income attributable to AT&T's residual
interest.................................................. $ (461) $ 108 $ 69

CASH FLOW DATA:
Net cash provided by operating activities................... $ 1,024 $ 414 $ 1,338
Capital expenditures and other additions.................... (2,429) (1,219) (1,931)
Net acquisitions of licenses................................ (47) (65) (443)
Net dispositions of businesses.............................. 244 324 --
Equity investment contributions and purchases............... (284) (156) (84)

BALANCE SHEET DATA:
Property, plant and equipment, net.......................... $ 6,349 $ 5,182 $ 5,073
Licensing costs, net........................................ 8,571 7,928 8,403
Investments................................................. 4,502 3,795 3,233
</TABLE>

9
<PAGE> 16

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED DECEMBER 31,
----------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Total assets................................................ $ 23,512 $19,460 $19,040
Total debt(1)............................................... 3,558 2,589 2,447
Preferred stock held by AT&T................................ 1,000 1,000 1,000
Total shareowner's equity................................... 13,997 11,532 11,187

OTHER:
EBITDA(2)................................................... $ 587 $ 736 $ 756
EBITDA (excluding asset impairment and restructuring
charges).................................................. 1,118 856 916
Proportionate EBITDA from partnerships and affiliates....... 350 354 n/a

OTHER OPERATING DATA:
(in thousands, except ($) are actual)
Consolidated subscribers.................................... 9,569 7,174 5,964
Consolidated digital subscribers............................ 7,580 4,354 1,746
Total subscribers(3)........................................ 12,192 9,649 8,133
Total digital subscribers................................... 9,397 5,299 n/a
Covered population(4)....................................... 120,994 n/a n/a
Licensed population(4)...................................... 180,198 n/a n/a
850 megahertz markets..................................... 75,312 n/a n/a
1900 megahertz markets.................................... 104,886 n/a n/a
Subscriber churn............................................ 2.6% 2.7% 2.5%
Total cost per gross subscriber addition.................... $ 367 $ 392 $ 432

AT&T WIRELESS GROUP PRO FORMA FOR VANGUARD ACQUISITION:
Revenues.................................................... $ 7,784 $ 5,868
EBITDA(2)................................................... 596 883
EBITDA (excluding asset impairment and restructuring
charges).................................................. 1,127 1,003
Net (loss) income........................................... (435) 254
Capital expenditures and other additions.................... (2,492) (1,223)
</TABLE>

- ------------------------

(1) Includes $4 million of long-term debt that is included in other long-term
liabilities at December 31, 1999.

(2) EBITDA is defined as earnings before interest and taxes, excluding other
income, net, plus depreciation and amortization.

(3) Includes 100% of the subscribers in the partnership markets of AB Cellular
and CMT Partners, but excludes affiliate markets.

(4) Covered and licensed population (POPs) represents the AT&T Wireless Group's
consolidated operations and does not include partnership or affiliate
markets. POPs are counted once whether a POP is covered/licensed only by
wireless licenses at the 850 megahertz frequency or wireless licenses at the
1900 megahertz frequency or by both. The amount of wireless spectrum
licensed varies by geographic territory.

10
<PAGE> 17

SELECTED PRO FORMA FINANCIAL DATA

AT&T WIRELESS GROUP

In the table below, we provide you with unaudited selected pro forma
condensed combined financial information of the AT&T Wireless Group assuming the
AT&T Wireless Group was a separate group as of January 1, 1999 for income
statement purposes, and as of December 31, 1999 for balance sheet purposes. The
unaudited pro forma information gives effect to the conversion of $2.0 billion
of intercompany debt into $2.0 billion of preferred stock at the time of the
initial public offering and the allocation by AT&T of a portion of AT&T's
interest in Japan Telecom Co. Ltd. to the AT&T Wireless Group.

We have included detailed unaudited pro forma financial statements starting
on page F-25 of this prospectus.

AT&T WIRELESS GROUP

SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(UNAUDITED)
(IN MILLIONS)

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED
DECEMBER 31,
1999
-------------
<S> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $ 7,627
Operating loss.............................................. (666)
Net loss.................................................... (321)

BALANCE SHEET DATA:
Total assets................................................ $23,663
Long-term debt due to AT&T.................................. 1,400
Preferred stock held by AT&T................................ 3,000
Total shareowner's equity................................... 16,148
</TABLE>

11
<PAGE> 18

AT&T COMMON STOCK GROUP

In the table below, we provide you with unaudited selected pro forma
condensed financial information of the AT&T Common Stock Group assuming the AT&T
Wireless Group was a separate group as of January 1, 1999 for income statement
purposes, and as of December 31, 1999 for balance sheet purposes. The unaudited
pro forma information gives effect to the MediaOne and TCI mergers as if they
had been completed on January 1, 1999 for income statement purposes and, as if
the MediaOne merger had been completed on December 31, 1999 for balance sheet
purposes. The unaudited pro forma information excludes the results of Liberty
Media Group.

You should not rely on the unaudited selected pro forma financial
information as an indication of the results of operations or financial position
that would have been achieved had the mergers taken place earlier or of the
results of operations or financial position of the AT&T Common Stock Group after
the completion of the MediaOne merger.

Income from continuing operations attributable to holders of AT&T common
stock excludes the dividend requirements on TCI preferred stock.

We have included detailed unaudited pro forma financial statements starting
on page F-29 of this prospectus.

AT&T COMMON STOCK GROUP

SELECTED PRO FORMA CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED
DECEMBER 31,
1999
-------------
<S> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $ 58,627
Operating income............................................ 10,219
Income from continuing operations -- attributable to AT&T
common shareowners........................................ 8,766
Weighted average AT&T common shares diluted................. 3,789
Per AT&T common share -- basic.............................. $ 2.31
Per AT&T common share -- diluted............................ 2.25
Cash dividends declared per AT&T common share............... .88

BALANCE SHEET DATA:
Total assets................................................ $202,179
Long-term debt.............................................. 30,470
Total shareowners' equity................................... 62,968
</TABLE>

12
<PAGE> 19

RISK FACTORS -- AT&T WIRELESS GROUP TRACKING STOCK

You should carefully consider the following risks and the other information
contained in this prospectus before investing in AT&T Wireless Group tracking
stock.

HOLDERS OF AT&T COMMON STOCK, AT&T WIRELESS GROUP TRACKING STOCK AND LIBERTY
MEDIA GROUP TRACKING STOCK ARE SHAREHOLDERS OF ONE COMPANY AND, THEREFORE,
FINANCIAL IMPACTS ON ONE GROUP COULD AFFECT THE OTHER GROUPS

For the purposes of preparing the respective financial statements of the
AT&T Common Stock Group, the AT&T Wireless Group and the Liberty Media Group, we
attribute assets, liabilities and shareholders' equity to these groups. However,
the change in the capital structure of AT&T that would result from the issuance
of AT&T Wireless Group tracking stock will not affect the legal title to those
assets or the legal responsibility for those liabilities of AT&T or any of its
subsidiaries.

Holders of AT&T common stock, AT&T Wireless Group tracking stock and
Liberty Media Group tracking stock will all be common shareholders of AT&T, and
will be subject to risks associated with an investment in a single company and
all of AT&T's businesses, assets and liabilities. Financial effects arising from
one group that affect AT&T's consolidated results of operations or financial
condition could, if significant, affect the combined results of operations or
financial position of the other groups or the market price of the class of
common shares relating to the other groups. In addition, if AT&T or any of its
subsidiaries were to incur significant indebtedness on behalf of a group,
including indebtedness incurred or assumed in connection with an acquisition or
investment, it could affect the credit rating of AT&T and its subsidiaries.
This, in turn, could increase the borrowing costs of the other groups and AT&T
as a whole. Net losses of any group and dividends or distributions on shares of
any class of common or preferred stock will reduce the funds of AT&T legally
available for payment of future dividends on each of the AT&T common stock, AT&T
Wireless Group tracking stock and Liberty Media Group tracking stock. For these
reasons, you should read AT&T's consolidated financial information together with
the financial information of the AT&T Common Stock Group, the AT&T Wireless
Group and the Liberty Media Group.

THE STOCK PRICE OF AT&T WIRELESS GROUP TRACKING STOCK MAY BE VOLATILE BECAUSE
SHARES OF AT&T WIRELESS GROUP TRACKING STOCK HAVE NOT BEEN PUBLICLY TRADED
BEFORE THIS OFFERING

Prior to this offering, you could not buy or sell shares of AT&T Wireless
Group tracking stock publicly. Accordingly, we cannot assure you that an active
public trading market for shares of AT&T Wireless Group tracking stock will
develop or be sustained after this offering. The market price after this
offering may vary significantly from the initial offering price in response to
any of the following factors, some of which are beyond the control of the AT&T
Wireless Group:

- variations in AT&T Wireless Group's quarterly operating results,

- changes in financial estimates or investment recommendations by
securities analysts relating to AT&T Wireless Group tracking stock,

- changes in market valuations of other wireless providers,

- announcements by the AT&T Wireless Group or its competitors of
significant contracts, acquisitions, strategic partnerships, joint
ventures or capital commitments,

- additions or departures of key personnel,

- the potential for future sales or distributions of AT&T Wireless Group
tracking stock, and

- fluctuations in the stock market price and volume of traded shares
generally.

13
<PAGE> 20

WE GIVE NO ASSURANCE AS TO THE MARKET IMPACT OF SOME OF THE TERMS OF THE AT&T
WIRELESS GROUP TRACKING STOCK

AT&T cannot predict the market impact of some of the terms of AT&T Wireless
Group tracking stock, such as:

- redemption and conversion rights in the event AT&T disposes of
substantially all the assets attributed to the AT&T Wireless Group,

- the ability of AT&T to convert shares of AT&T Wireless Group tracking
stock into shares of AT&T common stock,

- the voting rights of AT&T Wireless Group tracking stock and AT&T common
stock, or

- the discretion of our board of directors to make determinations affecting
AT&T Wireless Group tracking stock.

There can be no assurance that the market value of AT&T common stock
following the offering but before any disposition of AT&T Wireless Group
tracking stock, or the combined market values of AT&T common stock and AT&T
Wireless Group tracking stock after the disposition, will equal or exceed the
market value of AT&T common stock held prior to the initial public offering or
any disposition, as applicable. In addition, during the period following the
initial public offering and before any disposition, the market value of AT&T
Wireless Group tracking stock could be adversely affected by the anticipated
disposition. This in turn may adversely impact the market value of AT&T Wireless
Group tracking stock or AT&T common stock. Until an orderly market develops for
AT&T Wireless Group tracking stock, trading prices of AT&T common stock and AT&T
Wireless Group tracking stock may fluctuate significantly. In addition,
investors may discount the value of AT&T common stock and AT&T Wireless Group
tracking stock because they are part of a common enterprise rather than
stand-alone entities.

HOLDERS OF AT&T WIRELESS GROUP TRACKING STOCK WILL HAVE LIMITED SEPARATE
SHAREHOLDER RIGHTS AND WILL HAVE NO ADDITIONAL RIGHTS WITH RESPECT TO THEIR
GROUP, INCLUDING DIRECT VOTING RIGHTS

Holders of AT&T Wireless Group tracking stock do not have any direct voting
rights in the AT&T Wireless Group, except to the extent required under our
charter or New York law. Separate meetings for holders of AT&T Wireless Group
tracking stock will not be held. When a vote is taken on any matter as to which
all of our common shares are voting together as one class, any class or series
of our common shares that is entitled to more than the number of votes required
to approve the matter being voted upon will be in a position to control the
outcome of the vote on that matter. Currently, each share of AT&T common stock
has one vote, each share of Class B Liberty Media Group tracking stock has 0.75
of a vote and each share of Class A Liberty Media Group tracking stock has 0.075
of a vote. We will set the per share voting rights of AT&T Wireless Group
tracking stock based on the ratio of the initial public offering price of AT&T
Wireless Group tracking stock to the trading price of the AT&T common stock. The
voting power of each class will be subject to adjustment for stock splits, stock
dividends and combinations, including any disposition of AT&T Wireless Group
tracking stock to holders of AT&T common stock.

HOLDERS OF AT&T WIRELESS GROUP TRACKING STOCK MAY HAVE POTENTIALLY DIVERGING
INTERESTS FROM HOLDERS OF OTHER CLASSES OF AT&T CAPITAL STOCK

GENERAL

The existence of separate classes of our common stock could give rise to
occasions when the interests of the holders of AT&T common stock, AT&T Wireless
Group tracking stock and/or

14
<PAGE> 21

Liberty Media Group tracking stock diverge, conflict or appear to diverge or
conflict. Examples include determinations by our board of directors to:

- pay or omit the payment of dividends on AT&T common stock, AT&T Wireless
Group tracking stock or Liberty Media Group tracking stock, except where
such dividends are required,

- redeem shares of AT&T Wireless Group tracking stock for shares of AT&T
common stock or stock of qualifying subsidiaries of AT&T,

- approve dispositions of assets attributed to any group,

- if and to the extent there is an inter-group interest, allocate the
proceeds of issuances of AT&T Wireless Group tracking stock either to the
AT&T Common Stock Group with a corresponding reduction in the inter-group
interest or to the equity of the AT&T Wireless Group,

- formulate public policy positions for AT&T,

- establish material commercial relationships between groups, and

- make operational and financial decisions with respect to one group that
could be considered to be detrimental to another group.

In addition, decisions regarding distribution and other commercial
arrangements between the groups may affect costs, service alternatives and
marketing approaches for each group. When making decisions with regard to
matters that create potential diverging interests, our board will act in
accordance with:

- the terms of our charter, the AT&T Wireless Group policy statement
described under "Relationship Between the AT&T Common Stock Group and the
AT&T Wireless Group," the Liberty Media Group policy statement and the
inter-group agreement between AT&T and Liberty Media Group, which governs
the relationship between the AT&T Common Stock Group and the Liberty
Media Group, to the extent applicable, and

- its fiduciary duties, which require our board of directors to consider
the impact of these decisions on all shareholders of AT&T.

Our board of directors also could, from time to time, refer to the Liberty Media
Group capital stock committee and the AT&T Wireless Group capital stock
committee matters involving any conflict, and have those committees report to
our board of directors on those matters or decide those matters to the extent
permitted by our by-laws and applicable law.

CHANGES IN THE TAX LAW OR IN THE INTERPRETATION OF CURRENT TAX LAW MAY
RESULT IN REDEMPTION OF AT&T WIRELESS GROUP TRACKING STOCK OR CESSATION OF
THE ISSUANCE OF FURTHER SHARES

A proposal last year by the Clinton Administration would impose a
corporate-level tax on the issuance of stock similar to AT&T Wireless Group
tracking stock. In contrast, a Clinton Administration 2001 budget proposal
would, among other things, tax shareholders on the receipt of tracking stock as
a stock dividend or as a recapitalization. As proposed, these provisions would
be effective on the date of their enactment by the U.S. Congress. If these or
similar proposals are enacted, AT&T or its shareholders could be subject to tax
on an issuance of AT&T Wireless Group tracking stock after the date of
enactment. We cannot predict, however, whether any of these proposals will be
enacted by the U.S. Congress and, if enacted, whether they will be in the form
proposed.

15
<PAGE> 22

If there are adverse tax consequences to the issuance of AT&T Wireless
Group tracking stock, it is possible that we would cease issuing additional
shares of AT&T Wireless Group tracking stock. This could affect the value of
AT&T Wireless Group tracking stock then outstanding.

Furthermore, we are entitled to convert AT&T Wireless Group tracking stock
into AT&T common stock at a premium of 10% if, based upon the opinion of tax
counsel, there are adverse U.S. federal income tax law developments related to
AT&T Wireless Group tracking stock that occur after the issuance of AT&T
Wireless Group tracking stock.

OPTIONAL REDEMPTION OF AT&T WIRELESS GROUP TRACKING STOCK, INCLUDING AS A
RESULT OF AN ADVERSE TAX LAW CHANGE

Our board of directors may, at any time after either the occurrence of
tax-related events such as the proposals described above or the second
anniversary of the date we initially issue shares of AT&T Wireless Group
tracking stock, redeem all outstanding shares of AT&T Wireless Group tracking
stock for shares of AT&T common stock at a rate per share of AT&T Wireless Group
tracking stock equal to 110% of the ratio of the average market price per share
of AT&T Wireless Group tracking stock to the average market price per share of
AT&T common stock computed for the 40 consecutive trading days ending on the
15th trading day prior to the date that the notice of redemption is sent to
holders of AT&T Wireless Group tracking stock. A decision to redeem the tracking
shares could be made at a time when either or both of the AT&T common stock and
the AT&T Wireless Group tracking stock may be considered to be overvalued or
undervalued. In addition, a redemption at any premium would preclude holders of
AT&T Wireless Group tracking stock from retaining their investment in a security
intended to reflect separately the economic performance of that group. It would
also give holders of shares of converted AT&T Wireless Group tracking stock an
amount of consideration that may differ from the amount of consideration a
third-party buyer pays or would pay for all or substantially all of the assets
of the AT&T Wireless Group. For further details, see "Description of AT&T
Capital Stock -- AT&T Wireless Group Tracking Stock."

DISPOSITIONS OF GROUP ASSETS

Assuming the assets attributed to any group represent less than
substantially all of the properties and assets of AT&T as a whole, our board of
directors could, in its sole discretion and without shareholder approval,
approve sales and other dispositions of any amount of the properties and assets
attributed to a group because the New York Business Corporation Law requires
shareholder approval only for a sale or other disposition of all or
substantially all of the properties and assets of the entire company.

In the event of a disposition of all or substantially all of the properties
and assets attributed to the AT&T Wireless Group, generally defined as 80% or
more of the fair value of that group, AT&T will be required to:

- convert each outstanding share of AT&T Wireless Group tracking stock into
a number of shares of AT&T common stock equal to 110% of the ratio of the
average market price per share of AT&T Wireless Group tracking stock to
the average market price per share of AT&T common stock, or

- take a combination of the actions described in the preceding bullets
whereby AT&T would convert some shares of AT&T Wireless Group tracking
stock into AT&T common stock at a

16
<PAGE> 23

10% premium and pay a dividend on the remaining shares of AT&T Wireless
Group tracking stock or redeem all or part of the remaining shares of
AT&T Wireless Group tracking stock for cash and/or property equal to the
fair value of a portion of the net proceeds of the disposition allocable
to AT&T Wireless Group tracking stock.

For this purpose, the "average market price per share" of AT&T common stock or
AT&T Wireless Group tracking stock, as the case may be, means the average of the
daily market value per share for such AT&T common stock or AT&T Wireless Group
tracking stock during the 10-trading day period beginning on the 15th trading
day following completion of that transaction.

Our board of directors is not required to select the option that would
result in the distribution with the highest value to the holders of AT&T
Wireless Group tracking stock. See "-- The fiduciary duties of our board of
directors to more than one class of common stock are not clear under New York
law" for a discussion of our board's fiduciary duties to the holders of the
different classes of our common shares.

In addition, under New York law, our board of directors could decline to
dispose of assets of a group despite the request of a majority of the holders of
the tracking stock designed to track the assets and businesses of that group.

PUBLIC POLICY DETERMINATIONS

Because of the nature of the businesses of the AT&T Common Stock Group, the
AT&T Wireless Group and the Liberty Media Group, the groups may have diverging
interests as to the position AT&T should take with respect to various regulatory
issues. For example, Federal Communications Commission (FCC) regulations that
may advance the interests of one group may not advance the interests of the
other groups. Under the AT&T Wireless Group policy statement, we will resolve
material matters involving potentially divergent interests in a manner that our
board of directors, or the AT&T Wireless Group capital stock committee,
determines to be in the best interests of AT&T and all of our common
shareholders after giving fair consideration to the potentially divergent
interests and all other relevant interests of the holders of the separate
classes of our common shares. Nevertheless, our board of directors could take
positions on any given issue that may benefit one group more than another.

OPERATIONAL AND FINANCIAL DECISIONS

Our board of directors could, in its sole discretion, from time to time,
but subject to:

- its fiduciary duties,

- the AT&T Wireless Group policy statement,

- the Liberty Media Group policy statement, and

- the terms of the inter-group agreement between AT&T and Liberty Media
Group,

make operational and financial decisions or implement policies that affect
disproportionately the businesses of a group. These decisions could include:

- allocation of financing opportunities in the public markets,

- allocation of business opportunities, resources and personnel, and

- transfers of services, including sales agency, resale and other
arrangements, funds or assets between groups and other inter-group
transactions

that, in each case, may be suitable for one or more groups. Any such decision
may benefit one group more than the other groups. For example, the decision to
obtain funds for one group may adversely affect the ability of the other groups
to obtain funds sufficient to implement their respective growth strategies or
may increase the cost of those funds.

In addition, the AT&T Wireless Group is subject to AT&T's existing
agreements or arrangements with third parties. These agreements or arrangements
currently may benefit the AT&T

17
<PAGE> 24

Wireless Group, as in the case of purchasing arrangements, or may have the
effect of limiting or impairing its business opportunities. For example, AT&T
and British Telecommunications plc have entered into a joint venture agreement
for the provision of global communications services. As part of that agreement,
among other things, AT&T has agreed to various restrictions on its businesses
and activities, including non-competition provisions and exclusive purchasing
requirements, all of which will apply to the AT&T Wireless Group.

Any decisions by our board of directors to renew, extend, modify or
terminate its current agreements or arrangements, or enter into similar
agreements or arrangements in the future, may benefit one group more than the
other group or limit or impair the ability of either group to pursue business
opportunities. Furthermore, overlap between the businesses of the two groups may
increase as a result of regulatory changes, technological advancements or other
factors that will make those operational and financial decisions more difficult.

All of these decisions will be made by our board of directors in its good
faith business judgment and in accordance with procedures and policies adopted
by our board of directors from time to time, including the AT&T Wireless Group
policy statement described under "Relationship Between the AT&T Common Stock
Group and the AT&T Wireless Group -- AT&T Wireless Group Policy Statement."

THE FIDUCIARY DUTIES OF OUR BOARD OF DIRECTORS TO MORE THAN ONE CLASS OF COMMON
STOCK ARE NOT CLEAR UNDER NEW YORK LAW

Although we are not aware of any legal precedent under New York law
involving the fiduciary duties of directors of corporations having two or more
classes of common stock, or separate classes or series of capital stock,
principles of Delaware law established in cases involving differing treatment of
two classes of capital stock or two groups of holders of the same class of
capital stock provide that a board of directors owes an equal duty to all
stockholders regardless of class or series, and does not have separate or
additional duties to either group of stockholders. Under these principles of
Delaware law and the related principle known as the "business judgment rule,"
absent abuse of discretion, a good faith business decision made by a
disinterested and adequately informed board of directors, or a committee of the
board of directors, with respect to any matter having disparate impacts upon
holders of AT&T common stock, AT&T Wireless Group tracking stock or Liberty
Media Group tracking stock would be a defense to any challenge to such
determination made by or on behalf of the holders of any class of our common
shares. Nevertheless, a New York court hearing a case involving such a challenge
may decide to apply principles of New York law different from the principles of
Delaware law discussed above, or may develop new principles of law, in order to
decide such a case.

OUR BOARD OF DIRECTORS WILL HAVE THE ABILITY TO CONTROL INTER-GROUP TRANSACTIONS
BETWEEN THE AT&T COMMON STOCK GROUP AND THE AT&T WIRELESS GROUP

Our board of directors may decide to transfer funds between groups, which
may result in either a corresponding change in the size of the AT&T Common Stock
Group's inter-group interest in the AT&T Wireless Group, the issuance of an
additional preferred security in the AT&T Wireless Group or a loan, or repayment
of a loan, from one group to the other group, subject to the terms of the AT&T
Wireless Group policy statement. Transfers of assets from the AT&T Common Stock
Group to the AT&T Wireless Group that our board of directors designates as an
equity contribution by the AT&T Common Stock Group to the AT&T Wireless Group
will result in an increase in the inter-group interest of the AT&T Common Stock
Group in the AT&T Wireless Group.

Under the AT&T Wireless Group policy statement, the AT&T Common Stock Group
may make loans to the AT&T Wireless Group at interest rates and on terms and
conditions substantially equivalent to the interest rates and terms and
conditions that the AT&T Wireless Group would be

18
<PAGE> 25

able to obtain from third parties, including the public markets, as a
non-affiliate of AT&T without the benefit of any guaranty by AT&T or any member
of the AT&T Common Stock Group. The AT&T Wireless Group policy statement
contemplates that these terms will apply regardless of the interest rates and
terms and conditions on which AT&T or members of the AT&T Common Stock Group may
have acquired the subject funds. We anticipate that interest rates payable by
the AT&T Wireless Group initially will be higher than those payable by AT&T or
the AT&T Common Stock Group.

Any increase in the inter-group interest resulting from an equity
contribution by the AT&T Common Stock Group to the AT&T Wireless Group, or any
decrease in the inter-group interest resulting from a transfer of funds from the
AT&T Wireless Group to the AT&T Common Stock Group, would be determined by
reference to the then-current market value of AT&T Wireless Group tracking
stock. Such an increase, however, could occur at a time when such shares are
considered under- or over-valued and such a decrease could occur at a time when
such shares are considered under- or over-valued. Under the AT&T Wireless Group
policy statement, there will be no inter-group interest of the AT&T Wireless
Group in the AT&T Common Stock Group. Transfers from the AT&T Wireless Group to
the AT&T Common Stock Group will require other types of consideration when there
is no inter-group interest to offset.

OUR BOARD OF DIRECTORS MAY CHANGE THE AT&T WIRELESS GROUP POLICY STATEMENT OR
OUR BY-LAWS WITHOUT SHAREHOLDER APPROVAL

In connection with the issuance of AT&T Wireless Group tracking stock, our
board of directors intends to adopt the AT&T Wireless Group policy statement
that we describe in this prospectus to govern the relationship between the AT&T
Common Stock Group and the AT&T Wireless Group and to amend our by-laws to
create a capital stock committee that will oversee the interaction between the
two groups. Our board of directors may modify, suspend or rescind the policies
set forth in the policy statement or make additions or exceptions to them, in
the sole discretion of our board of directors, without approval of our
shareholders, although there is no present intention to do so. Our board of
directors may also adopt additional policies, depending upon the circumstances.
The AT&T by-laws may similarly be modified, suspended or rescinded. Our board
would make any determination to modify, suspend or rescind these policies or our
by-laws, or to make exceptions to them or adopt additional policies or by-laws,
including any decision that would have disparate impacts upon holders of AT&T
common stock and AT&T Wireless Group tracking stock, in a manner consistent with
its fiduciary duties to AT&T and all of our common shareholders after giving
fair consideration to the potentially divergent interests and all other relevant
interests of the holders of the separate classes of our common shares, including
the holders of AT&T common stock, AT&T Wireless Group tracking stock and Liberty
Media Group tracking stock. See "-- The fiduciary duties of our board of
directors to more than one class of common stock are not clear under New York
law" for more information regarding our board of directors' fiduciary duties to
our shareholders and "Relationship Between the AT&T Common Stock Group and the
AT&T Wireless Group" for a description of the AT&T Wireless Group policy
statement and our by-laws.

IT WILL BE DIFFICULT FOR A THIRD PARTY TO ACQUIRE THE AT&T WIRELESS GROUP
WITHOUT AT&T'S CONSENT

If the AT&T Wireless Group were a stand-alone entity, any person interested
in acquiring it without negotiation with our management could seek control of
the outstanding stock of that entity by means of a tender offer or proxy
contest. Although AT&T Wireless Group tracking stock is a new class of our
common shares that is intended to reflect the separate economic performance of
the AT&T Wireless Group, a person interested in acquiring only that group
without negotiation with our management still would be required to seek control
of the voting power represented by all of the outstanding capital stock of AT&T
entitled to vote on that acquisition, including the classes of

19
<PAGE> 26

common shares related to the other groups. As a result, this may discourage
potential interested bidders from seeking to acquire the AT&T Wireless Group.
See "-- Holders of AT&T Wireless Group tracking stock will have limited separate
shareholder rights and will have no additional rights with respect to their
group, including direct voting rights" for more information on the rights of
holders of tracking stocks.

IN THE FUTURE, AT&T MAY CAUSE A MANDATORY EXCHANGE OF AT&T WIRELESS GROUP
TRACKING STOCK

AT&T may effect a recapitalization of AT&T by declaring that all
outstanding shares of AT&T Wireless Group tracking stock will be exchanged for
shares of one or more qualifying subsidiaries of AT&T provided that specified
criteria are satisfied. Such an exchange would result in the qualifying
subsidiary becoming independent of AT&T and the holders of AT&T Wireless Group
tracking stock owning shares directly in that subsidiary. If AT&T chooses to
exchange shares of AT&T Wireless Group tracking stock, the market value of the
common stock received in that exchange could be less than the market value of
AT&T Wireless Group tracking stock exchanged.

FUTURE SALES OF AT&T WIRELESS GROUP TRACKING STOCK AND AT&T COMMON STOCK COULD
ADVERSELY AFFECT THEIR RESPECTIVE MARKET PRICES AND THE ABILITY TO RAISE CAPITAL
IN THE FUTURE

Sales of substantial amounts of AT&T Wireless Group tracking stock and AT&T
common stock in the public market could hurt the market price of AT&T Wireless
Group tracking stock. This could also hurt AT&T's ability to raise capital in
the future. The shares that we sell to the public in the initial public offering
and distribute to holders of AT&T common stock will be freely tradable without
restriction under the Securities Act of 1933 by persons other than "affiliates"
of AT&T, as defined under the Securities Act. Any sales of substantial amounts
of AT&T Wireless Group tracking stock or AT&T common stock in the public market
after this offering, or the perception that such sales might occur, whether as a
result of the initial public offering, any future disposition or otherwise,
could materially adversely affect the market price of the AT&T Wireless Group
tracking stock.

The approval of the shareholders of AT&T and AT&T Wireless Group will not
be solicited by AT&T for the issuance of authorized but unissued shares of AT&T
Wireless Group tracking stock, unless such approval is deemed advisable by our
board of directors or is required by applicable law, regulation or stock
exchange listing requirements. The issuance of such shares could dilute the
value of shares of AT&T Wireless Group tracking stock.

WE DO NOT EXPECT TO PAY DIVIDENDS ON AT&T WIRELESS GROUP TRACKING STOCK

Determinations as to the future dividends on AT&T Wireless Group tracking
stock primarily will be based upon the financial condition, results of
operations and business requirements of the AT&T Wireless Group and AT&T as a
whole. We currently do not expect to pay any dividends on AT&T Wireless Group
tracking stock.

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<PAGE> 27

RISK FACTORS -- THE AT&T WIRELESS GROUP

THE AT&T WIRELESS GROUP HAS SIGNIFICANT NETWORK BUILD OUT THAT NEEDS TO BE
COMPLETED

The AT&T Wireless Group needs to complete significant remaining build out
activities, including completion of build out activities in some of its existing
wireless markets. As the AT&T Wireless Group continues to build out its network,
it must continue to:

- lease, acquire or otherwise obtain rights to a large number of cell and
switch sites,

- obtain zoning variances or other local governmental or third-party
approvals or permits for network construction,

- complete the radio frequency design, including cell site design,
frequency planning and network optimization, for each of its remaining
markets,

- complete the fixed network implementation, which includes designing and
installing network switching systems, radio systems, interconnecting
facilities and systems, and operating support systems, and

- expand and maintain customer care, network management, billing and other
financial and management systems.

In addition, in the next several years, the AT&T Wireless Group will start to
implement upgrades to its network to access the next generation of digital
technology.

There can be no assurance that these events will occur in the time frame
the AT&T Wireless Group assumes or that the FCC requires, or at the cost the
AT&T Wireless Group assumes, or at all. Additionally, problems in vendor
equipment availability, technical resources or system performance could delay
the launch of operations in new markets or result in increased costs in all
markets. Failure or delay to complete the build out of the network and launch
operations, or increased costs of such build out and launch of operations, could
have a material adverse effect on the operations and financial condition of the
AT&T Wireless Group. The AT&T Wireless Group intends to rely on the services of
various companies who are experienced in design and build out of wireless
networks in order to accomplish its build out schedule. There can be no
assurance, however, that the AT&T Wireless Group will be able to obtain
satisfactory contractors on economically attractive terms or that the
contractors obtained will perform as expected.

THE AT&T WIRELESS GROUP HAS SUBSTANTIAL CAPITAL REQUIREMENTS AND NEEDS FOR
SUBSTANTIAL CAPITAL EXPENDITURES

The operation and expansion of the AT&T Wireless Group's network and the
marketing and distribution of its related products and services will continue to
require substantial capital. The AT&T Wireless Group currently estimates that
its capital expenditures for build out of its networks, including expenditures
related to its fixed wireless operations, during 2000 will total approximately
$4.1 billion. The AT&T Wireless Group also expects to incur substantial capital
expenditures in the future. The actual amount of the funds required to finance
the AT&T Wireless Group's network build out may vary materially from this
estimate. The AT&T Wireless Group could also require additional funds in the
event of significant departures from its current business plan, unforeseen
delays, cost overruns, unanticipated expenses, regulatory changes, engineering
design changes, and technological and other risks.

The AT&T Wireless Group also may require substantial additional capital
for, among other uses, acquisitions of providers of wireless services, spectrum
license or system acquisitions, system development and network capacity
expansion. Technological developments or issues also may require additional
capital expenditures. As a result, the AT&T Wireless Group may incur significant
indebtedness. In addition, we may not be able to arrange additional financing to
fund the AT&T Wireless Group's capital requirements on terms acceptable to us or
the AT&T Wireless Group.

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<PAGE> 28

Failure to obtain any such financing could result in the delay or abandonment of
the AT&T Wireless Group's development or expansion plans or the failure to meet
regulatory build out requirements. For more information relating to the AT&T
Wireless Group's access to capital, see "AT&T Wireless Group Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."

POTENTIAL ACQUISITIONS MAY REQUIRE THE AT&T WIRELESS GROUP TO INCUR SUBSTANTIAL
ADDITIONAL DEBT AND INTEGRATE NEW TECHNOLOGIES, OPERATIONS AND SERVICES, WHICH
MAY BE COSTLY AND TIME CONSUMING

An element of the AT&T Wireless Group's strategy is to expand its network,
which the AT&T Wireless Group may do through the acquisition of licenses,
systems and wireless providers. These acquisitions may cause the AT&T Wireless
Group to incur substantial additional indebtedness to finance the acquisitions
or to assume indebtedness of the entities that are acquired. In addition, the
AT&T Wireless Group may encounter difficulties in integrating those acquired
operations into its own operations, including as a result of different
technologies, services or service offerings. These actions could prove costly or
time consuming or divert management's attention from other business matters.

FAILURE TO DEVELOP FUTURE BUSINESS OPPORTUNITIES MAY HAVE AN ADVERSE EFFECT ON
THE AT&T WIRELESS GROUP'S GROWTH POTENTIAL

The AT&T Wireless Group intends to pursue a number of new growth
opportunities, including wireless data and fixed wireless services. These
opportunities involve new services for which there are no proven markets. In
addition, the ability to deploy and deliver these services relies, in many
instances, on new and unproven technology. There can be no assurance that the
AT&T Wireless Group's existing technology will perform as expected or that the
AT&T Wireless Group will be able to successfully develop new technology to
effectively and economically deliver these services. In addition, these
opportunities require substantial capital outlays and spectrum availability to
deploy on a large scale. There can be no assurance that such capital or spectrum
will be available to support these services. Furthermore, each of these
opportunities entails additional specific risks. For example, the delivery of
fixed wireless services requires the AT&T Wireless Group to provide installation
and maintenance services, which the group has never provided previously. This
will require the group to hire, employ, train and equip technicians to provide
installation and repair in each market served or rely on subcontractors to
perform these services. There can be no assurance that the AT&T Wireless Group
will be able to hire and train sufficient numbers of qualified employees or
subcontract these services or do so on economically attractive terms. The
success of wireless data services, on the other hand, is substantially dependent
on the ability of others to develop applications for wireless devices and to
develop and manufacture devices that support wireless applications. There can be
no assurance that these applications or devices will be developed or developed
in sufficient quantities to support the deployment of wireless data services.

The AT&T Wireless Group cannot guarantee when or that these services will
be widely introduced and fully implemented, that they will be successful when
they are in place or that customers will purchase the services offered. If these
services are not successful or costs associated with implementation and
completion of the roll out of these services materially exceed those currently
estimated by the AT&T Wireless Group, the AT&T Wireless Group's financial
condition and prospects could be materially adversely affected.

THE AT&T WIRELESS GROUP FACES SUBSTANTIAL COMPETITION

There is substantial competition in the wireless telecommunications
industry. The AT&T Wireless Group expects competition to intensify as a result
of the entrance of new competitors and the development of new technologies,
products and services. Other two-way wireless providers, including other
cellular and personal communications services (PCS) operators and resellers,
serve

22
<PAGE> 29

each of the markets in which the AT&T Wireless Group competes. A majority of
markets will have five or more commercial mobile radio service providers, and
all of the top 50 metropolitan markets have at least one other cellular
competitor in addition to one or two PCS competitors. Competition also may
increase to the extent that smaller, stand-alone wireless providers transfer
licenses to larger, better capitalized and more experienced wireless providers.

The AT&T Wireless Group anticipates that market prices for two-way wireless
services generally will decline in the future due to increased competition. We
expect significant competition among wireless providers, including from new
entrants, to continue to drive service and equipment prices lower. The AT&T
Wireless Group also expects that there will be increases in advertising and
promotional spending, along with increased demands on access to distribution
channels. All of this may lead to greater choices for customers, possible
consumer confusion and increasing movement of customers between competitors
(referred to as churn). The AT&T Wireless Group's ability to compete
successfully also will depend on marketing and on its ability to anticipate and
respond to various competitive factors affecting the industry, including new
services, changes in consumer preferences, demographic trends, economic
conditions and discount pricing strategies by competitors.

The wireless communications industry has been experiencing significant
consolidation and the AT&T Wireless Group expects that this consolidation will
continue. The previously announced mergers or joint ventures of Bell Atlantic
Corporation/GTE Corporation/Vodafone/AirTouch plc, MCI WorldCom, Inc./Sprint
Corporation and SBC Communications Inc./Ameritech Corporation will create large,
well-capitalized competitors with substantial financial, technical, marketing
and other resources to respond to the AT&T Wireless Group's offerings. In
addition, assuming these mergers or ventures were completed today, the AT&T
Wireless Group estimates that its ranking would decline to second in U.S.
revenue, third in U.S. subscriber share and fourth in U.S. population covered by
licenses, or POPs. As a result, these competitors may be able to offer
nationwide services and plans more quickly and more economically than the AT&T
Wireless Group and to obtain roaming rates that are more favorable than those
obtained by the AT&T Wireless Group, and may be better able to respond to offers
of the AT&T Wireless Group.

THE AT&T WIRELESS GROUP EXPECTS TO EXPERIENCE SIGNIFICANT CHANGE IN THE WIRELESS
INDUSTRY

The wireless communications industry is experiencing significant
technological change. This includes the increasing pace of digital upgrades in
existing analog wireless systems, evolving industry standards, ongoing
improvements in the capacity and quality of digital technology, shorter
development cycles for new products, and enhancements and changes in end-user
needs and preferences. There is also uncertainty as to the pace and extent that
customer demand will continue to increase, as well as the extent to which
airtime and monthly recurring charges may continue to decline. As a result, the
future prospects of the industry and the AT&T Wireless Group and the success of
its competitive services remain uncertain. Also, alternative technologies may
develop for the provision of services to customers that may provide wireless
communications service or alternative service superior to that available from
the AT&T Wireless Group. Thus, the AT&T Wireless Group cannot give assurance
that technological developments will not materially adversely affect it.

TERMINATION OR IMPAIRMENT OF THE AT&T WIRELESS GROUP'S RELATIONSHIP WITH A SMALL
NUMBER OF KEY SUPPLIERS COULD ADVERSELY AFFECT THE AT&T WIRELESS GROUP'S
REVENUES AND RESULTS OF OPERATIONS

The AT&T Wireless Group has developed relationships with a small number of
key vendors, including Nokia Corporation, Telefonaktiebolaget LM Ericsson,
Mitsubishi Corporation and Motorola, Inc. for its supply of wireless handsets,
Lucent Technologies, Inc., Nortel Inversora S.A. and Ericsson for its supply of
telecommunications equipment and Convergys Corporation for its billing services.
The AT&T Wireless Group does not have operational or financial control over its
key

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<PAGE> 30

suppliers, and has limited influence with respect to the manner in which they
conduct their businesses. If these key suppliers were unable to honor their
obligations to the AT&T Wireless Group, it could disrupt the business of the
AT&T Wireless Group and hurt its revenues and results of operations.

THERE IS NO GUARANTEE THAT THE AT&T WIRELESS GROUP'S TECHNOLOGY WILL BE
COMPETITIVE WITH OTHER TECHNOLOGIES OR COMPATIBLE WITH THE NEXT GENERATION
TECHNOLOGY

There are three existing digital technologies, none of which are compatible
with the others. The AT&T Wireless Group has selected TDMA technology for its
network because it believes that this technology offers several advantages over
the other technologies. However, a number of other wireless service providers
have chosen code division multiple access (CDMA) or global system for mobile
communications (GSM) as their digital wireless technology. There is no guarantee
that TDMA will provide the advantages the AT&T Wireless Group expects. In
addition, the AT&T Wireless Group cannot guarantee that the next generation
technology will be compatible with TDMA. The AT&T Wireless Group has chosen
Enhanced Data Rates from GSM Evolution, or EDGE, also known as GSM++, as its
next or third generation wireless technology. EDGE represents a merger of TDMA
and GSM. However, other wireless providers may choose a third generation
wireless technology that combines CDMA and GSM. If the next generation
technology that gains widespread acceptance is not compatible with TDMA, it
would materially adversely affect the business, financial condition and
prospects of the AT&T Wireless Group.

THE AT&T WIRELESS GROUP RELIES ON FAVORABLE ROAMING ARRANGEMENTS, WHICH IT MAY
BE UNABLE TO CONTINUE TO OBTAIN

The AT&T Wireless Group's customers automatically can access another
provider's analog cellular or digital system or PCS system only if the other
provider allows the AT&T Wireless Group's customers to roam on its network. The
AT&T Wireless Group relies on agreements to provide roaming capability to its
customers in many areas of the United States that the AT&T Wireless Group's
network does not serve. Some competitors, because of their call volumes or their
affiliations with, or ownership of, wireless providers, however, may be able to
obtain roaming rates that are lower than those rates obtained by the AT&T
Wireless Group.

There can be no assurance that the AT&T Wireless Group will continue to be
able to obtain or maintain roaming agreements with other providers on terms that
are acceptable to it. In addition, the quality of service that a wireless
provider delivers during a roaming call may be inferior to the quality of
service the AT&T Wireless Group or an affiliated company provides, the price of
a roaming call may not be competitive with prices of other wireless providers
for such call, and the AT&T Wireless Group's customer may not be able to use any
of the advanced features, e.g., voicemail notification, that the customer enjoys
when making calls within the AT&T Wireless Group's network.

THE AT&T WIRELESS GROUP DEPENDS ON FOURTH QUARTER RESULTS

The wireless industry, including the AT&T Wireless Group, has experienced a
trend of generating a significantly higher number of customer additions and
handset sales in the fourth quarter of each year as compared to the other three
fiscal quarters. A number of factors contribute to this trend, including the
increasing use of retail distribution, which is dependent upon the year-end
holiday shopping season, the timing of new product and service announcements and
introductions, competitive pricing pressures and aggressive marketing and
promotions. There can be no assurance that strong fourth quarter results for
customer additions and handset sales will continue for the wireless industry or
the AT&T Wireless Group. In the future, the number of customer additions and
handset sales for the AT&T Wireless Group in the fourth quarter could decline
for a variety of reasons, including the AT&T Wireless Group's inability to match
or beat pricing plans offered by competitors, the failure to adequately promote
the AT&T Wireless Group's products, services and

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<PAGE> 31

pricing plans, or the failure to have an adequate supply or selection of
handsets. If in any year fourth quarter results fail to significantly improve
upon customer additions and handset sales from the year's previous quarters,
this could hurt the AT&T Wireless Group's results for the following year.

MEDIA REPORTS HAVE SUGGESTED RADIO FREQUENCY EMISSIONS MAY BE LINKED TO VARIOUS
HEALTH CONCERNS AND INTERFERE WITH VARIOUS MEDICAL DEVICES

Media and other reports have linked radio frequency emissions from wireless
handsets to various health concerns, including cancer, and to interference with
various electronic medical devices, including hearing aids and pacemakers.
Although management does not know of any definitive studies showing that radio
frequency emissions raise health concerns, concerns over radio frequency
emissions may discourage the use of wireless handsets or expose the AT&T
Wireless Group to potential litigation, which could have a material adverse
effect on the AT&T Wireless Group's results of operations. Additionally,
research and studies are ongoing, and there can be no assurance that further
research and studies will not demonstrate a link between radio frequency
emissions and health concerns.

THE OPERATIONS OF THE AT&T WIRELESS GROUP ARE SUBJECT TO VARIOUS GOVERNMENT
REGULATIONS

The licensing, construction, operation, sale, resale and interconnection
arrangements of wireless communications systems are regulated to varying degrees
by the FCC, and, depending on the jurisdiction, state and local regulatory
agencies. In addition, the FCC, together with the Federal Aviation
Administration (FAA) regulates tower marking and lighting. Any of these agencies
having jurisdiction over the AT&T Wireless Group's business could adopt
regulations or take other actions that could adversely affect the business of
the AT&T Wireless Group.

FCC licenses to provide wireless services or PCS are subject to renewal and
revocation. There may be competition for the AT&T Wireless Group's licenses upon
their expiration and there can be no assurance that the FCC will renew them. FCC
rules require all wireless and PCS licensees to meet specified build out
requirements. There can be no assurance that the AT&T Wireless Group will be
able to meet these requirements in each market. Failure to comply with these
requirements in a given license area could result in revocation or forfeiture of
the AT&T Wireless Group's license for that license area or the imposition of
fines on the AT&T Wireless Group by the FCC. See "Description of
Business -- Regulatory Environment" for a more detailed description of the
regulatory environment affecting the AT&T Wireless Group.

STATE AND LOCAL LEGISLATIVE BODIES ARE CONSIDERING OR HAVE ENACTED LEGISLATION
TO RESTRICT OR PROHIBIT WIRELESS PHONE USE WHILE DRIVING

Legislation has been proposed in some state and local legislative bodies to
restrict or prohibit the use of wireless phones while driving motor vehicles.
Such laws have been enacted in other countries, and, to date, a small number of
communities in the United States have passed restrictive local ordinances. In
addition, some studies have indicated that some aspects of using wireless phones
while driving may impair drivers' attention in certain circumstances, making
accidents more likely. If laws are passed prohibiting or restricting the use of
wireless phones while driving, it could have the effect of reducing subscriber
usage, which could cause a material adverse effect on the AT&T Wireless Group's
results of operations. Additionally, concerns over the use of wireless phones
while driving could lead to potential litigation relating to accidents, deaths
or serious bodily injuries, which also could have material adverse effects on
the AT&T Wireless Group's results of operations.

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<PAGE> 32

USE OF PROCEEDS

Assuming an initial public offering price of $29.00 per share, which is the
midpoint of the initial public offering price range set forth on the cover of
this prospectus, and no exercise by the underwriters of their over-allotment
options, the net proceeds from this offering are estimated to be $10.13 billion,
after deducting underwriting discounts and commissions and estimated offering
expenses of approximately $310 million. The first $7.0 billion of the net
proceeds from the offering will be allocated to the AT&T Wireless Group, and any
remaining proceeds will be allocated to the AT&T Common Stock Group. The AT&T
Wireless Group will use the net proceeds it receives to expand its network, to
pursue acquisition opportunities as they arise, for capital expenditures and for
general corporate purposes. The AT&T Common Stock Group will use any net
proceeds it receives for general corporate purposes. This offering will create a
public market for AT&T Wireless Group tracking stock, which will facilitate our
future access to the public equity markets and enhance our ability to use the
AT&T Wireless Group tracking stock as consideration for possible acquisitions.

DIVIDEND POLICY

Provided that AT&T has sufficient assets to pay a dividend under applicable
law, after excluding the available dividend amount relating to the Liberty Media
Group, AT&T may declare and pay dividends on AT&T Wireless Group tracking stock
up to an "available dividend amount." This amount is designed to be equivalent
to the amount that would legally be available for dividends on that stock if the
AT&T Wireless Group were a stand-alone corporation. AT&T does not, however,
expect to pay dividends on AT&T Wireless Group tracking stock. Our board of
directors may modify, suspend, rescind or add to the dividend policy regarding
AT&T Wireless Group tracking stock (although there is no present intention to do
so). If this dividend policy were so altered, our board of directors could
declare dividends on AT&T Wireless Group tracking stock in excess of the
available dividend amount (although not in any case in excess of the funds of
AT&T legally available for the payment of dividends, after excluding the
available dividend amount relating to the Liberty Media Group).

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<PAGE> 33

CAPITALIZATION OF THE AT&T WIRELESS GROUP

The following table sets forth as of December 31, 1999: (a) the historical
combined cash and capitalization of the AT&T Wireless Group; (b) the combined
cash and capitalization of the AT&T Wireless Group on a pro forma basis to give
effect to the conversion of $2.0 billion of intercompany debt into $2.0 billion
of preferred stock and the allocation by AT&T of a portion of AT&T's interest in
Japan Telecom to the AT&T Wireless Group; and (c) the combined cash and
capitalization of the AT&T Wireless Group on a pro forma basis, as adjusted to
give effect to the portion of the net proceeds allocated to the AT&T Wireless
Group from the offering. This table should be read in conjunction with the
historical and pro forma financial information we include elsewhere in this
prospectus, and assumes no exercise of the underwriters' options to purchase
additional shares that are described under "Underwriting."

<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
(in millions)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 5 $ 5 $ 7,005
======= ======= =======
Debt maturing within one year (includes current maturities
of long term debt)........................................ $ 154 $ 154 $ 154
Long-term debt:
Long-term debt due to AT&T................................ 3,400 1,400 1,400
Other(1).................................................. 4 4 4
------- ------- -------
Total long-term debt................................... 3,404 1,404 1,404
Preferred stock held by AT&T................................ 1,000 3,000 3,000
AT&T's residual interest.................................... 12,971 13,122 20,122
Accumulated other comprehensive income...................... 26 26 26
------- ------- -------
Total capitalization................................... $17,555 $17,706 $24,706
======= ======= =======
</TABLE>

- -------------------------
(1) Included in other long-term liabilities.

27
<PAGE> 34

SELECTED HISTORICAL FINANCIAL DATA OF THE AT&T WIRELESS GROUP

This information is only a summary and you should read it together with the
financial information we include under Appendix F to this prospectus or
incorporate by reference in this prospectus. For copies of the financial
information we incorporate by reference, see "Other Information -- Where You Can
Find More Information."

SELECTED HISTORICAL FINANCIAL INFORMATION
(UNAUDITED)
(IN MILLIONS, EXCEPT FOR OTHER OPERATING DATA)

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Services revenues......................................... $ 6,823 $ 4,779 $ 4,249
Equipment revenues........................................ 804 627 419
------- ------- -------
Total revenues.............................................. 7,627 5,406 4,668

Operating Expenses:
Network and other costs of services....................... 3,846 2,428 1,770
Depreciation and amortization............................. 1,253 1,079 826
Selling, general and administrative....................... 2,663 2,122 1,982
Asset impairment and restructuring charges................ 531 120 160
------- ------- -------
Total operating expenses.................................... 8,293 5,749 4,738

Operating loss.............................................. (666) (343) (70)
Other income, net........................................... 176 764 288
Interest expense............................................ 136 120 --
------- ------- -------
(Loss) income before income taxes........................... (626) 301 218
(Benefit) provision for income taxes........................ (221) 137 93
------- ------- -------
Net (loss) income........................................... (405) 164 125
Dividend requirements on preferred stock held by AT&T,
net....................................................... 56 56 56
------- ------- -------
Net (loss) income attributable to AT&T's residual
interest.................................................. $ (461) $ 108 $ 69

28
<PAGE> 35

<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED DECEMBER 31,
---------------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................... $ 5 $ 27 $ 6
Working capital............................................. (669) (388) (506)
Property, plant and equipment, net.......................... 6,349 5,182 5,073
Licensing costs, net........................................ 8,571 7,928 8,403
Investments................................................. 4,502 3,795 3,233
Goodwill, net and other assets.............................. 2,462 1,317 1,355
Total assets................................................ 23,512 19,460 19,040
Total debt(1)............................................... 3,558 2,589 2,447
Preferred stock held by AT&T................................ 1,000 1,000 1,000
Total shareowner's equity................................... 13,997 11,532 11,187

- ------------------------

(1) Includes $4 million of long-term debt that is included in other long-term
liabilities at December 31, 1999.

(2) EBITDA is defined as earnings before interest and taxes, excluding other
income, net, plus depreciation and amortization.

(3) Includes 100% of the subscribers in the partnership markets of AB Cellular
and CMT Partners, but excludes affiliate markets.

29
<PAGE> 36

AT&T WIRELESS GROUP
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The AT&T Wireless Group is one of the largest wireless service providers in
the United States, based on $7.6 billion in revenues for the year ended December
31, 1999. Including its partnership markets, the AT&T Wireless Group had over 12
million total subscribers as of December 31, 1999. The AT&T Wireless Group
focuses on revenue growth through the retention and expansion of its subscriber
base. The AT&T Wireless Group seeks to do this by providing new and innovative
services that distinguish it from its competitors. Examples include pricing
plans that simplify customer choice, such as AT&T Digital One Rate service, and
bundled offerings of communications products and services that target specific
customer groups.

The AT&T Wireless Group provides its wireless voice and data services using
TDMA, analog and CDPD technologies. The AT&T Wireless Group has focused on
building out its digital network, including upgrading its analog systems to
digital in its 850 megahertz markets, and on migrating its customers from analog
to digital service. The AT&T Wireless Group believes that digitalization
improves capital efficiency, lowers network operating costs and allows it to
offer higher quality services. As of December 31, 1999, the AT&T Wireless Group
had upgraded 98% of its 850 megahertz markets to digital based systems and all
of its 1900 megahertz markets are digital based. As of December 31, 1999, over
79% of the AT&T Wireless Group's consolidated subscribers use digital services,
accounting for over 85% of its traffic. The AT&T Wireless Group believes that
these percentages are substantially greater than the industry average, excluding
the AT&T Wireless Group.

The AT&T Wireless Group markets its products and services primarily under
the AT&T brand name. The AT&T Wireless Group believes that AT&T's widely
recognized brand increases consumer awareness of, and confidence in, the AT&T
Wireless Group's products and services. The AT&T Wireless Group also believes
that its relationship with AT&T will provide it with other competitive
advantages. For example, the AT&T Wireless Group and the AT&T Common Stock Group
plan to offer their products and services together in bundled offerings, which
may combine wireless services with long distance and local communications
services, broadband services and Internet services. In addition, each group will
be able to take advantage of the other group's marketing and sales efforts and
network capabilities.

The digitalization of the network and subscriber base has had a significant
impact on the AT&T Wireless Group's financial results over the past several
years. Digital service has helped to increase

30
<PAGE> 37

growth in subscribers, especially from AT&T Digital One Rate service. The usage
patterns of AT&T Digital One Rate service and other digital customers, coupled
with the increase in enhanced service features, have contributed to an increase
in average monthly revenues per user (ARPU). Digital customers also have
demonstrated reduced churn compared with analog customers. While enhanced
network efficiency resulting from digitalization contributes to reducing costs,
upgrading the network to digital has caused an increase in capital expenditures
and network and other costs of services over the past several years. In
addition, the increase in the number of digital subscribers has resulted in
additional customer migration costs, including handset subsidies, and AT&T
Digital One Rate service and other similar expanded area plans have resulted in
increased roaming expenses.

The AT&T Wireless Group's results include domestic voice and data services,
their aviation communications business, earnings or losses associated with
equity interests in wireless communications ventures and partnerships both in
the United States and internationally, and the costs associated with the
development of fixed wireless technology. The results of the messaging services
business are included through October 2, 1998 (date of sale). The AT&T Wireless
Group provides its mobile voice services using both 850 megahertz cellular and
1900 megahertz PCS licenses. The AT&T Wireless Group does not manage its
business for these spectrums separately. Rather, the AT&T Wireless Group manages
its business to provide virtually seamless network coverage irrespective of the
spectrum. From a marketing and operational perspective, the AT&T Wireless Group
defines and manages its markets geographically, usually around an urban area or
other geographic region. These geographic markets may use either 850 megahertz
or 1900 megahertz spectrum or both. Geographic markets that use predominantly
850 megahertz spectrum have been in operation longer and therefore are more
mature than those markets that exclusively use 1900 megahertz spectrum. As a
result, the financial results of these two types of markets currently differ
significantly.

Since the AT&T Wireless Group does not manage the business along spectrum
divisions, it does not provide separate 850 megahertz and 1900 megahertz
financial statements in the normal course of operations. As supplemental
information, however, we have set out in the table below information on 850
megahertz markets and 1900 megahertz markets to demonstrate the estimated
financial performance of these different types of markets. The supplemental
financial information contains a number of allocations and attributions,
including corporate and general administrative expenses, between the markets,
based on management's judgment. There can be no assurance that the financial
results provided below would have been obtained were these markets actually
managed separately. In addition, mixed markets possessing both 850 megahertz and
1900 megahertz systems in operation are categorized as 850 megahertz markets. In
the discussion and analysis below, we draw assumed distinctions as to the
results of the 850 megahertz and 1900 megahertz markets where it may help to
better evaluate performance of these markets and the business as a whole. When
the 1900 megahertz markets mature to the point that the distinction between
these markets and the more mature 850 megahertz markets are no longer
meaningful, we will discontinue this supplemental reporting.

31
<PAGE> 38

The AT&T Wireless Group's results below do not include aviation
communications, earnings or losses associated with equity interests in wireless
communications ventures and partnerships both in the United States and
internationally, or costs associated with the development of fixed wireless
technology.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
------------------------
850 1900
MEGAHERTZ MEGAHERTZ
--------- ---------
(AMOUNTS IN MILLIONS,
EXCEPT WHERE NOTED)
<S> <C> <C>
Revenues:
Services...................................... $5,586 $1,151
Equipment..................................... 647 143
------ ------
Total Revenues.................................. 6,233 1,294
EBITDA*......................................... 847 (191)
EBITDA (excluding asset impairment and
restructuring charges)........................ 1,356 (171)
Capital Expenditures............................ 1,453 880
Subscribers..................................... 8.2 1.4
ARPU (in dollars)............................... $ 61.9 $ 94.1
Licensed POPs................................... 75.3 104.9
</TABLE>

- ---------------

* EBITDA is defined as earnings before interest and taxes, excluding other
income, net, plus depreciation and amortization.

The AT&T Wireless Group seeks to establish local market partnerships with
other wireless providers in order to accelerate the build out of its TDMA
systems. In addition to partnership arrangements for its 850 megahertz markets,
the AT&T Wireless Group has entered into a number of joint ventures and
affiliations to expand its 1900 megahertz digital coverage.

The AT&T Wireless Group's proportionate share of EBITDA for these key
domestic partnerships and affiliates was $350 million for the year ended
December 31, 1999 and $354 million for the year ended December 31, 1998.

The AT&T Wireless Group's proportionate share of debt for these key
domestic partnerships and affiliates was $339 million at December 31, 1999 and
$145 million at December 31, 1998.

In August 1999, the AT&T Wireless Group completed its acquisition of
Honolulu Cellular Telephone Company, adding approximately 125,000 subscribers
and providing the AT&T Wireless Group's mainland customers with wireless
services in Oahu, Hawaii. In May 1999, the AT&T Wireless Group completed its
acquisition of Vanguard Cellular Systems, Inc., adding approximately 700,000
subscribers and increasing the AT&T Wireless Group's coverage in suburban and
rural markets in the Ohio Valley and Northeastern United States. In April 1999,
the AT&T Wireless Group completed its acquisition of Bakersfield Cellular
Telephone Company, adding approximately 45,000 subscribers.

OPERATING RESULTS

YEAR ENDED DECEMBER 31, 1999 COMPARED WITH YEAR ENDED DECEMBER 31, 1998

Revenues. Total revenues include wireless voice and data services, the
sale of handsets and accessories, messaging and aviation communications. The
AT&T Wireless Group records revenues as

32
<PAGE> 39

services are provided. These services revenues include monthly recurring
charges, airtime and toll usage charges, and roaming charges billed to
subscribers for usage outside of the AT&T Wireless Group network as well as
charges billed to other wireless providers for roaming on the AT&T Wireless
Group network.

Total revenues for the year ended December 31, 1999 were $7,627 million, an
increase of $2,221 million, or 41.1%, compared with 1998. The AT&T Wireless
Group's 1999 results include Vanguard since its acquisition on May 3, 1999, and
1998 results include its messaging business until its sale on October 2, 1998.
Adjusted to exclude both Vanguard and its messaging business, total revenues for
the AT&T Wireless Group increased by 39.0% compared with 1998.

Total revenues for the year ended December 31, 1999 within the 850
megahertz markets were $6,233 million, an increase of $1,486 million, or 31.3%,
compared with 1998. Total revenues for the year ended December 31, 1999 within
the 1900 megahertz markets were $1,294 million, an increase of $910 million, or
237.0%, compared with 1998.

The revenue increases in both the 850 megahertz and 1900 megahertz markets
were driven primarily by consolidated subscriber growth and rising ARPU. As of
December 31, 1999, ending subscribers within the 850 megahertz markets increased
by 24.4% compared with 1998, while ending subscribers within 1900 megahertz
markets increased by 128.4% compared with 1998. AT&T Digital One Rate service
significantly contributed to the increase in ARPU and subscribers by acquiring
and retaining high value customers, who have a significantly higher ARPU than an
average subscriber. As of December 31, 1999, the number of subscribers using
AT&T Digital One Rate service was 1.8 million, an increase of 1.0 million, or
114.6%, compared with December 31, 1998, of which over 80% were new subscribers
to the AT&T Wireless Group.

Services revenues for the year ended December 31, 1999 were $6,823 million,
an increase of $2,044 million, or 42.8%, compared with 1998. Services revenues
within the 850 megahertz markets were $5,586 million in 1999, an increase of
$1,346 million, or 31.7%, compared with 1998. Services revenues within the 1900
megahertz markets were $1,151 million in 1999 compared with $284 million in
1998. These increases were driven primarily by consolidated subscriber growth
and rising ARPU.

As of December 31, 1999, the AT&T Wireless Group had 9.6 million
consolidated subscribers, an increase of 33.4% compared with the prior year, of
which 79.2% were digital subscribers, up from 60.7% as of December 31, 1998.
Included in these figures were approximately 700,000 subscribers from our
acquisition of Vanguard in May 1999, approximately 125,000 subscribers from our
acquisition of Honolulu Cellular in August 1999 and approximately 45,000
subscribers from our acquisition of Bakersfield Cellular in April 1999.
Including the AT&T Wireless Group's partnership markets, approximately 9.4
million of the 12.2 million total subscribers were digital subscribers as of
December 31, 1999. Segmented by market, as of December 31, 1999, 8.2 million of
the consolidated subscribers were within the 850 megahertz markets, of which
75.6% were digital subscribers, and 1.4 million of the consolidated subscribers
were within the 1900 megahertz markets. As of December 31, 1999, penetration in
the 850 megahertz markets was 10.8% compared with 9.7% as of December 31, 1998,
based on licensed POPs. As of December 31, 1999, penetration in the 1900
megahertz markets was 2.0% compared with 0.9% as of December 31, 1998, based on
licensed POPs.

The AT&T Wireless Group's ARPU in the 850 megahertz markets for the year
ended December 31, 1999 was $61.9, an increase of $5.2, or 9.2%, compared with
1998. The AT&T Wireless Group's ARPU in the 1900 megahertz markets for the year
ended December 31, 1999 was $94.1, an increase of $18.0, or 23.7%, compared with
1998. These increases were primarily due to increased minutes of use per
subscriber, driven in part by the success of AT&T Digital One Rate service. The
AT&T Wireless Group's ARPU remained significantly higher than the wireless
industry average during 1999, excluding the AT&T Wireless Group.

33
<PAGE> 40

Equipment revenues for the year ended December 31, 1999 were $804 million,
an increase of $177 million, or 28.2%, compared with 1998. Equipment revenues
within the 850 megahertz markets were $647 million for the year ended December
31, 1999, an increase of $140 million, or 27.6%, compared with 1998. Equipment
revenues within the 1900 megahertz markets were $143 million compared with $100
million in 1998. These increases were primarily due to a 25.1% increase in gross
consolidated subscriber additions in 1999 compared with 1998. As an integral
part of the wireless service offering, the AT&T Wireless Group supplies to its
new subscribers a selection of handsets at competitive prices, which are
generally offered at or below cost.

Network and other costs of services. Network and other costs of services
expenses include the costs to place calls over the network (including the costs
to operate and maintain the AT&T Wireless Group's network as well as roaming
costs paid to other wireless providers), the costs of handsets and accessories
provided to the AT&T Wireless Group's customers and the charges paid to connect
calls on other networks, including those of the AT&T Common Stock Group.

Network and other costs of services expenses for the year ended December
31, 1999 were $3,846 million. This was an increase of $1,418 million, or 58.4%,
compared with 1998. The increase was due primarily to roaming expenses
associated with the success of AT&T Digital One Rate service as off-network
roaming minutes of use increased by 194.7% for the year ended December 31, 1999,
compared with 1998, coupled with the increased costs of handsets provided to
subscribers.

Although roaming expenses continued to impact results for the year ended
December 31, 1999, the rate of roaming expense growth declined significantly
during the latter half of 1999, as the AT&T Wireless Group introduced
initiatives to aggressively migrate more minutes onto the AT&T Wireless Group
network as well as reduce intercarrier roaming rates. The AT&T Wireless Group
continues to seek to decrease roaming expenses through capital spending for
network expansion, acquisitions and affiliate launches. Roaming rates also have
declined significantly as a result of renegotiated roaming agreements and the
deployment of IRDB technology, which assists in identifying favorable roaming
partners in areas not included in the AT&T Wireless Group's network. All of
these efforts have resulted in a reduction of approximately 18% in the average
roaming rate per minute paid to other carriers for the year ended December 31,
1999, compared with 1998.

Depreciation and amortization. Depreciation and amortization expenses for
the year ended December 31, 1999 were $1,253 million, an increase of $174
million, or 16.1%. This increase primarily resulted from a larger asset base and
additional amortization of goodwill and other purchased intangibles associated
with the acquisition of Vanguard.

Selling, general and administrative. Selling, general and administrative
(SG&A) expenses for the year ended December 31, 1999 were $2,663 million
compared with $2,122 million for the year ended December 31, 1998. This increase
was due to higher marketing and selling costs associated with the increase in
consolidated gross subscriber additions in 1999 compared with 1998, as well as
the growth in customer care expenses associated with the larger consolidated
subscriber base.

For the year ended December 31, 1999, SG&A expenses as a percent of total
revenues were 34.9%, a 4.4 point improvement compared with the same period in
the prior year. This improvement was due to expense leveraging primarily within
general and administrative expenses.

Asset impairment and restructuring charges. During the fourth quarter of
1999, the AT&T Wireless Group recorded a $531 million asset impairment charge
primarily associated with the planned disposal of wireless communications
equipment resulting from a program to increase capacity and operating efficiency
of the wireless network. Asset impairment and restructuring charges for the year
ended December 31, 1998 were $120 million, which represented the write-down of
unrecoverable assets associated with nonstrategic businesses.

34
<PAGE> 41

Other income, net. Other income, net includes gains or losses on sales or
exchanges of assets, net equity earnings of investments, minority interests in
earnings or losses of subsidiaries, and other miscellaneous items. Other income,
net for the year ended December 31, 1999 was $176 million. Other income, net for
the year ended December 31, 1998 was $764 million. The decrease was due
primarily to the pretax gains on sales in 1998 of LIN Television Corporation of
$342 million, SmarTone Telecommunications Holdings Limited of $128 million and
PriceCellular of $67 million. Net equity earnings decreased in 1999 primarily as
a result of increased losses associated with affiliate investments.
Additionally, equity losses increased in 1999 compared with 1998 by $82 million
for losses associated with financial commitments related to certain investments.

Interest expense. Interest expense consists primarily of interest on
intercompany debt due to the AT&T Common Stock Group. Interest was charged at
7.25% per annum for the year ended December 31, 1999 and 7.75% per annum for the
year ended December 31, 1998. Interest expense for the year ended December 31,
1999 was $136 million, an increase of $16 million, or 13.3%, compared with 1998.
The increase was due to a higher level of average debt outstanding, partially
offset by the impact of the lower rate charged by the AT&T Common Stock Group in
1999.

(Benefit) provision for income taxes. The benefit for income taxes for the
year ended December 31, 1999 was $221 million, compared with a tax provision of
$137 million for the year ended December 31, 1998. The benefit for income taxes
in 1999 was primarily due to the loss for the period coupled with changes in the
valuation allowance and other estimates. The effective income tax rates for the
years ended December 31, 1999 and 1998, were 35.3% and 45.5%, respectively. The
effective income tax rate for 1999 approximated the federal statutory rate due
to the benefit from the change in the valuation allowance and other estimates,
offset by unutilized foreign equity losses and amortization of intangibles. The
effective income tax rate for 1998 was higher than the federal statutory rate
primarily due to the effects of state taxes, net of federal benefit, unutilized
foreign equity losses, and the amortization of intangibles, partially offset by
the effects of changes in valuation allowance and other estimates.

Dividend requirements on preferred stock. The AT&T Wireless Group has $1.0
billion of preferred stock held by the AT&T Common Stock Group that pays
dividends at 9% per annum. Dividend requirements on this preferred stock for the
years ended December 31, 1999 and 1998 were $56 million, net of amounts recorded
in accordance with the tax sharing agreement described in Note 1 to the
historical combined financial statements.

YEAR ENDED DECEMBER 31, 1998 COMPARED WITH YEAR ENDED DECEMBER 31, 1997

Revenues. Total revenues for the year ended December 31, 1998 were $5,406
million, an increase of $738 million, or 15.8%, compared with 1997. Adjusting
for the October 2, 1998 sale of the messaging business, total revenues for the
year ended December 31, 1998 increased 17.2% compared with 1997. Total revenues
for the year ended December 31, 1998 within the 850 megahertz markets were
$4,747 million, an increase of $373 million, or 8.5%, compared with 1997. The
rate of growth slowed in the 850 megahertz markets due to increased competition
from new PCS competitors. This was somewhat offset by the success of the AT&T
Digital One Rate service launched in May 1998. Total revenues for the year ended
December 31, 1998 within the 1900 megahertz markets were $384 million, an
increase of $367 million compared with 1997. The year-over-year growth in 1900
megahertz market revenues was primarily due to revenues generated from the 1900
megahertz markets launched by the AT&T Wireless Group during 1997, many in the
latter part of that year.

Services revenues for the year ended December 31, 1998 were $4,779 million,
an increase of $530 million, or 12.5%, compared with 1997. The increase in
services revenues was driven primarily by an increase in consolidated
subscribers of 20.3%, due in large part to the success of AT&T Digital

35
<PAGE> 42

One Rate service and the full-year impact in 1998 of the nine 1900 megahertz
markets that were launched in 1997. This was partially offset by a decline in
ARPU. AT&T Digital One Rate service, was first introduced in May 1998. In 1998,
856,000 customers signed on to AT&T Digital One Rate service, 74% of which were
new customers to the AT&T Wireless Group. Services revenues within the 850
megahertz markets were $4,240 million in 1998, an increase of $246 million, or
6.2%, compared with 1997. Services revenues within the 1900 megahertz markets
were $284 million in 1998 compared with $5 million in 1997.

As of December 31, 1998, the AT&T Wireless Group had 7.2 million
consolidated subscribers, of which 60.7% were digital subscribers, up from 29.3%
in 1997. Including AT&T Wireless Group's partnership markets, 5.3 million of the
total 9.6 million subscribers were digital subscribers as of December 31, 1998.
Segmented by market as of December 31, 1998, 6.6 million of the consolidated
subscribers were within the 850 megahertz markets, of which 57.0% were digital
subscribers, and 0.6 million of the consolidated subscribers were within the
1900 megahertz markets. As of December 31, 1998, penetration was 9.7% and 0.9%
in the 850 megahertz and 1900 megahertz markets, respectively, based on licensed
POPs. This compares with a penetration of 8.9% in the 850 megahertz markets as
of December 31, 1997, based on licensed POPs. Penetration statistics for the
1900 megahertz markets as of December 31, 1997 are not meaningful due to the
launch of these markets in the latter half of that year.

The AT&T Wireless Group's ARPU in the 850 megahertz markets for the year
ended December 31, 1998 was $56.7, a decrease of $3.0, or 5.0%, compared with
1997. In the fourth quarter of 1998, however, ARPU increased 1.6% over the prior
year's quarter compared with quarter-over-quarter declines of 10.8%, 7.4% and
3.7% in the first, second, and third quarters of 1998, respectively. AT&T
Digital One Rate service was responsible primarily for the increase in ARPU in
the fourth quarter, and the slowdown in the ARPU decline in the second and third
quarters of 1998. ARPU in the 1900 megahertz markets was $76.1 in 1998. The AT&T
Wireless Group's ARPU remained significantly higher than the wireless industry
average during 1998, excluding the AT&T Wireless Group.

Equipment revenues for the year ended December 31, 1998 were $627 million,
an increase of $208 million, or 49.6%, compared with 1997. This increase was
primarily due to the increase in gross consolidated subscriber additions
substantially attributable to the success of AT&T Digital One Rate service, as
well as increased migration of subscribers from analog to digital service.
Equipment revenues within the 850 megahertz markets were $507 million in 1998,
an increase of $127 million, or 33.4%, compared with 1997. Equipment revenues
within the 1900 megahertz markets were $100 million in 1998 compared with $12
million in 1997.

Network and other costs of services. Network and other costs of services
expenses for the year ended December 31, 1998 were $2,428 million, an increase
of $658 million, or 37.2%, compared with 1997. This increase was due primarily
to higher roaming costs paid to other wireless providers reflecting increased
calling volumes due in part to the introduction of AT&T Digital One Rate
service, and the costs associated with increased handset sales.

The AT&T Wireless Group has taken a number of steps to control increases in
roaming expenses, including expansion of its network coverage, acceleration of
digital build outs and acquisitions of and partnering with other wireless
providers. In addition, the AT&T Wireless Group has been aggressively
negotiating lower roaming rates with other wireless providers and maximizing
roaming activity with its partners. The AT&T Wireless Group expects that
technological developments, including handsets that can more easily be
programmed with preferred roaming providers and tri-mode handsets that will
allow roaming between its networks, will help to manage its roaming costs.

36
<PAGE> 43

Depreciation and amortization. Depreciation and amortization expenses for
the year ended December 31, 1998 were $1,079 million, an increase of $253
million, or 30.6%, compared with 1997. This increase reflects a full year of
depreciation expense on assets related to the launch of the new 1900 megahertz
markets during the latter half of 1997.

During 1998, the AT&T Wireless Group completed a review of the estimated
service lives of some of its wireless communications equipment. As a result,
effective January 1, 1998, the estimated service lives of this equipment were
changed from 12 years to varying periods primarily ranging from seven to 10
years, with certain assets being changed to 15 years, depending on the nature of
the equipment. These changes resulted in an annual increase in depreciation
expense of $42 million in 1998.

Selling, general and administrative. SG&A expenses for the year ended
December 31, 1998 were $2,122 million, an increase of $140 million, or 7.1%,
compared with 1997. This increase resulted primarily from increased advertising
and other marketing costs to aggressively launch and support the new 1900
megahertz market launches. SG&A remained essentially flat in the 850 megahertz
markets despite increases in revenues and subscribers, reflecting a decrease in
selling and marketing costs associated with customer acquisitions in these
markets and a reduction in headcount in other general and administrative
functions. SG&A associated with the 1900 megahertz markets increased $141
million, or 82.0%, compared with 1997, driven by subscriber growth within those
markets.

For the year ended December 31, 1998, SG&A expenses as a percent of total
revenue were 39.3%, a 3.2 point reduction compared with 1997, due to expense
leveraging, primarily within general and administrative expenses.

Asset impairment and restructuring charges. During 1998, the AT&T Wireless
Group recorded a pretax asset impairment charge of $120 million, which
represented the write-down of unrecoverable assets associated with nonstrategic
businesses. During 1997, the AT&T Wireless Group recorded a pretax charge of
$160 million related to the decision to no longer pursue a two-way messaging
business. This charge included costs associated with the write-down of
unrecoverable assets, as well as costs related to contractual obligations and
termination penalties.

Other income, net. Other income, net includes gains or losses on sales or
exchanges of assets, net equity earnings of investments, minority interests in
earnings or losses of subsidiaries, and other miscellaneous items. Other income,
net for the year ended December 31, 1998 was $764 million, an increase of $476
million, or 165.3%, compared with 1997. The increase primarily was due to 1998
pretax gains on the sales of LIN-TV of $342 million, SmarTone of $128 million
and PriceCellular of $67 million. These gains were slightly offset by a decline
in net equity earnings resulting primarily from international investments
compared with 1997.

Interest expense. Interest expense consists primarily of interest on the
intercompany debt due to the AT&T Common Stock Group. Interest was charged at
7.75% per annum. Interest expense for the year ended December 31, 1998 was $120
million, compared with no interest expense in 1997. In 1997, all of the interest
expense was capitalized as the AT&T Wireless Group continued to build out its
network. In 1998, its build out was complete in certain markets and therefore,
it was no longer appropriate to capitalize interest associated with certain of
these assets.

(Benefit) provision for income taxes. The provision for income taxes for
the year ended December 31, 1998 was $137 million, an increase of $44 million,
or 47.3%, compared with 1997 due to higher levels of pretax income in 1998. The
effective tax rate was 45.5% and 42.7% for the years ended December 31, 1998 and
1997, respectively. The increase in the effective tax rate was driven primarily
by increased unutilized foreign equity losses in 1998 compared with 1997.

Dividend requirements on preferred stock. The AT&T Wireless Group has $1.0
billion of preferred stock held by the AT&T Common Stock Group that pays
dividends at 9% per annum.

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<PAGE> 44

Dividend requirements on this preferred stock for the year ended December 31,
1998 and 1997 were $56 million in each year, net of amounts recorded in
accordance with the methodology of the tax sharing agreement described in Note 1
to the historical combined financial statements.

LIQUIDITY AND CAPITAL RESOURCES

The continued expansion of the AT&T Wireless Group's network and the
marketing and distribution of its products and services will continue to require
substantial capital. The AT&T Wireless Group has funded its operations by
internally generated funds, intercompany borrowings from the AT&T Common Stock
Group and capital contributions from the AT&T Common Stock Group. Capital
contributions from the AT&T Common Stock Group include acquisitions made by the
AT&T Common Stock Group that have been attributed to the AT&T Wireless Group.
Noncash capital contributions from the AT&T Common Stock Group to the AT&T
Wireless Group totaled $2,553 million, $982 million, and $26 million, in 1999,
1998 and 1997, respectively, related to the level of acquisitions and initial
investments funded by the AT&T Common Stock Group. The AT&T Common Stock Group
has provided financing at interest rates and on terms and conditions that are
consistent with those the AT&T Wireless Group would receive as a stand-alone
entity. Sources for the AT&T Wireless Group's future financing requirements may
include the issuance of additional AT&T Wireless Group tracking stock and the
borrowing of funds.

Net cash provided by operating activities for the year ended December 31,
1999 was $1,024 million compared with $414 million of cash provided by operating
activities in 1998 primarily due to increased EBITDA excluding asset impairment
and restructuring charges and larger increases in operating accruals and
accounts payable. These increases were offset by a higher increase in accounts
receivable driven by strong revenue growth. Net cash used in investing
activities for the year ended December 31, 1999 was $2,280 million, compared
with $238 million of cash provided by investing activities in 1998. The
difference was due primarily to higher capital expenditures to upgrade and
increase capacity in existing markets as well as to expand the national
footprint, and lower cash proceeds associated with the sales of equity
investments. Net cash provided by financing activities for the year ended
December 31, 1999 was $1,234 million compared with $631 million of cash used in
financing activities in 1998 due to increased transfers and debt financing from
the AT&T Common Stock Group to fund the higher capital expenditures during 1999.

Net cash provided by operating activities for the year ended December 31,
1998 was $414 million, a decrease of $924 million compared with $1,338 million
of cash provided by operating activities in 1997 primarily due to decreased
EBITDA excluding asset impairment and restructuring charges, increased accounts
receivable largely driven by higher revenues, as well as a net increase in other
operating assets and liabilities. Net cash provided by investing activities for
the year ended December 31, 1998 was $238 million, compared with a $2,164
million use of cash in 1997 for investing activities primarily due to higher
sales of equity investments and consolidated business and lower capital
expenditures in 1998. The net use of cash in 1997 was due primarily to spending
associated with the new 1900 megahertz market launches. Net cash used in
financing activities for the year ended December 31, 1998 was $631 million
compared with net cash provided by financing activities of $742 million in 1997
primarily due to higher transfers to the AT&T Common Stock Group resulting from
the additional sales of equity investments and consolidated businesses in 1998
as stated above. The net cash provided by financing activities in 1997 was due
primarily to transfers from the AT&T Common Stock Group in order to fund the
investing activities for that year.

EBITDA is a measure used by the chief operating decision-makers to measure
our ability to generate cash flow. EBITDA may or may not be consistent with the
calculation of EBITDA for other public companies and should not be viewed by
investors as an alternative to generally accepted

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<PAGE> 45

accounting principles, measures of performance or to cash flows from operating,
investing and financing activities as a measure of liquidity. EBITDA margins
(defined as EBITDA as a percentage of total revenues) as calculated by the AT&T
Wireless Group may not be comparable to similar measures reported by other
wireless providers. The AT&T Wireless Group records within services revenue
roaming activity which is billed to subscribers for usage outside of the AT&T
Wireless Group network. Concurrently, the AT&T Wireless Group records roaming
charges paid to other providers as network and other costs of services.

In each of the periods presented, EBITDA and EBITDA margins were favorably
impacted by revenue growth. In particular, AT&T Digital One Rate contributed to
revenue growth in 1999 and 1998. EBITDA and EBITDA margins were also favorably
impacted for the year ended December 31, 1999 as fixed and variable operating
expenses were covered over a growing subscriber base, particularly for the 1900
megahertz markets. The build out and launch of services in new 1900 megahertz
markets, sales and marketing costs (including handset subsidies) of acquiring
new customers, aggressive migration of customers to digital service, the higher
roaming expenses associated with the increasing number of AT&T Digital One Rate
and other expanded area plan subscribers, along with subsequent operational
growth, all negatively impacted EBITDA and EBITDA margins during these periods.

EBITDA for the year ended December 31, 1999 was $587 million compared with
$736 million for the year ended December 31, 1998. Excluding pretax asset
impairment and restructuring charges of $531 million in 1999 and $120 million in
1998, EBITDA was $1,118 million for 1999, which represents an increase of $262
million, or 30.6%, compared with 1998. This increase was attributable to
increases in total revenues and an improving margin as SG&A expenses declined as
a percentage of revenues.

Within the 850 megahertz markets, EBITDA for the year ended December 31,
1999 was $847 million compared with $1,261 million in 1998. Excluding the 1999
pretax asset impairment and restructuring charges, EBITDA within the 850
megahertz markets was $1,356 million in 1999, an increase of $95 million, or
7.5%, compared with 1998.

Within the 1900 megahertz markets, EBITDA for the year ended December 31,
1999 was $(191) million compared with $(373) million in 1998. Excluding the 1999
pretax asset impairment and restructuring charge, EBITDA within the 1900
megahertz markets was $(171) million, an increase of $202 million compared with
1998.

Excluding the aforementioned pretax asset impairment and restructuring
charges in 1999 and 1998, EBITDA margins were 14.7% for the year ended December
31, 1999, compared with 15.8% in 1998. The decline in EBITDA margins in 1999
compared with 1998 was driven primarily by increased roaming expenses, as well
as increased sales and marketing expenses associated with a 25.1% increase in
gross consolidated subscriber additions in 1999 compared with 1998. EBITDA
margins excluding the 1999 asset impairment and restructuring charges within the
850 megahertz markets were 21.7% for the year ended December 31, 1999, compared
with 26.6% for the year ended December 31, 1998. EBITDA margins within the 1900
megahertz markets are not considered meaningful due to the immaturity of the
markets.

EBITDA for the year ended December 31, 1998 was $856 million compared with
$916 million in 1997, excluding the pretax asset impairment and restructuring
charges of $120 million in 1998 and $160 million in 1997.

EBITDA for the year ended December 31, 1998 within the 850 megahertz
markets was $1,261 million, an increase of $82 million, or 7.0%, compared with
1997. Within the 1900 megahertz markets, EBITDA was ($373) million in 1998,
compared with ($212) million in 1997.

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<PAGE> 46

Excluding the pretax asset impairment and restructuring charge of $120
million in 1998 and $160 million in 1997, EBITDA margins were 15.8% in 1998,
compared with 19.6% in 1997. EBITDA margins within the 850 megahertz markets
were 26.6% in 1998, compared with 27.0% in 1997.

Capital expenditures for the year ended December 31, 1999 were $2,476
million. This represented an increase of $1,340 million, or 118.0%, compared
with 1998. Capital expenditures within the 850 megahertz markets, including
spending associated with administrative functions, totaled $1,453 million, an
increase of 125.3%, compared with 1998. Network capital expenditures within the
1900 megahertz markets totaled $880 million for the year ended December 31,
1999, an increase of 129.2%, compared with 1998.

Capital expenditures for the year ended December 31, 1998 were $1,136
million, a decrease of $514 million, or 31.2%, compared with 1997. This decrease
resulted from significant spending in 1997 associated with the 1900 megahertz
market launches. Capital expenditures were $645 million in the 850 megahertz
markets, including spending associated with administrative functions, a decrease
of $57 million, or 8.1%, compared with 1997. Network capital expenditures were
$384 million in the 1900 megahertz markets during 1998, a reduction of $428
million, or 52.7%, compared with 1997.

Financing activities for the AT&T Wireless Group will be managed by AT&T on
a centralized basis and subject to the review of the AT&T Wireless Group capital
stock committee. Loans from AT&T or any member of the AT&T Common Stock Group to
any member of the AT&T Wireless Group will be made at interest rates and on
other terms and conditions designed to be substantially equivalent to the
interest rates and other terms and conditions that the AT&T Wireless Group would
be able to obtain from third parties, including the public markets, as a
nonaffiliate of AT&T without the benefit of any guaranty by AT&T or any member
of the AT&T Common Stock Group. This policy contemplates that these loans will
be made on the basis set forth above regardless of the interest rates and other
terms and conditions on which AT&T or members of the AT&T Common Stock Group may
have acquired the funds. If, however, AT&T incurs any fees or charges in order
to keep available funds for use by the AT&T Wireless Group, those fees or
charges will be allocated to the AT&T Wireless Group. In addition, any
difference between AT&T's borrowing rates and the rates charged to the AT&T
Wireless Group, which we expect will be higher, will be reflected in the
financial statements of the AT&T Common Stock Group.

In determining the initial capitalization of the AT&T Wireless Group, a
number of factors were considered. These factors included the prospective
financing requirements, the desired stand-alone credit rating, working capital
and capital expenditure requirements, and the initial ratio of total debt and
preferred stock to EBITDA as compared to other companies in its industry.

FINANCIAL CONDITION

Total assets were $23,512 million as of December 31, 1999, an increase of
$4,052 million, or 20.8%, compared with December 31, 1998. The increase was due
to increases in goodwill and licenses associated with the acquisitions of
Vanguard, Honolulu Cellular and Bakersfield Cellular and increased property,
plant and equipment as a result of significant capital spending in 1999.
Additionally, nonconsolidated investments increased as a result of the
investment in Rogers Cantel during 1999.

Total liabilities were $9,495 million as of December 31, 1999, an increase
of $1,672 million, or 21.4%, compared with December 31, 1998 primarily as a
result of increased intercompany debt due to the AT&T Common Stock Group, and
increases in accounts payable and other operating accruals.

Total preferred stock held by AT&T was $1.0 billion at both December 31,
1999, and December 31, 1998. Dividends payable on the preferred stock were paid
at 9% per annum.

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<PAGE> 47

Total shareowner's equity was $13,997 million as of December 31, 1999, an
increase of $2,465 million, or 21.4%, compared with December 31, 1998, due
primarily to increased transfers from the AT&T Common Stock Group.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements," which must be adopted by the AT&T Wireless Group by June 30, 2000.
SAB 101 provides additional guidance on revenue recognition as well as criteria
for when revenue is generally realized and earned, and also requires the
deferral of incremental direct customer acquisition costs. Management is
currently assessing the impact of SAB 101 on the results of operations and
financial position of the AT&T Wireless Group.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." Among other provisions, it requires that
entities recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. Gains and losses
resulting from changes in the fair values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. The effective date of this standard was delayed via the
issuance of SFAS No. 137. The effective date for SFAS No. 133 is now for fiscal
years beginning after June 15, 2000, though earlier adoption is encouraged and
retroactive application is prohibited. For the AT&T Wireless Group this means
that the standard must be adopted no later than January 1, 2001. Management does
not expect the adoption of this standard will have a material impact on the AT&T
Wireless Group's results of operations, financial position or cash flows.

YEAR 2000

The AT&T Wireless Group prepared its systems and applications for the year
2000 (Y2K) through its involvement and participation in AT&T's company wide Y2K
program which addressed the use of the two-digit instead of four-digit year
fields in computer systems. If computer systems could not distinguish between
the year 1900 and the year 2000, system failures or other computer errors could
have resulted. The potential for failures and errors spanned all aspects of our
business, including computer systems, voice and data networks, and building
infrastructures. We also needed to address our interdependencies with our
suppliers and connecting carriers and our major customers, all of who faced the
same concern. All computer systems were tested and repaired as of December 31,
1999 and no major Y2K-related problems were reported as the calendars rolled to
January 1, 2000. The cost of AT&T's Y2K program was $725 million since inception
in 1997, of which $67 million represented the AT&T Wireless Group's portion of
those costs. This figure includes $275 million of costs for all of AT&T incurred
during 1999, of which $41 million pertained to the AT&T Wireless Group. Of the
total AT&T 1999 costs, approximately $45 million represented capital spending
for upgrading and replacing noncompliant computer systems. Less than half of the
1999 costs represent internal information technology resources that were
redeployed from other projects and are expected to return to these projects in
2000.

SUBSEQUENT EVENTS

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<PAGE> 48

approximately $400 million from each of the two partners. Dobson will be
responsible for day-to-day management of the joint venture, which will be
equally owned and jointly controlled by Dobson and the AT&T Wireless Group.

In February 2000, certain Dobson securities held by the AT&T Wireless Group
were redeemed, resulting in a net pretax gain of approximately $21 million.

In February 2000, TeleCorp PCS, Inc. announced that it will acquire Tritel,
Inc. for approximately $5.3 billion in stock. The AT&T Wireless Group currently
holds equity interests in each of these affiliates. Upon completion of the
transaction, including the contribution by the AT&T Wireless Group of certain
wireless rights and commitments, cash and brand license extension in exchange
for stock, the AT&T Wireless Group will own approximately 23% of the combined
entity. Additionally, in a separate transaction, the AT&T Wireless Group agreed
to exchange certain wireless licenses, rights to acquire additional licenses and
cash, for licenses owned by TeleCorp in several New England markets. The boards
of directors of AT&T and TeleCorp have approved the transactions. The
transactions are subject to certain federal regulatory approvals and are
expected to close in the fourth quarter of 2000.

In February 2000, AT&T announced the signing of an agreement to purchase
the assets of Wireless One Network, L.P., for cash of approximately $850
million. AT&T will attribute its interest in Wireless One to the AT&T Wireless
Group as of the acquisition date. The transaction has been approved by the
boards of directors of AT&T and Wireless One, however, the transaction is
subject to the approval of certain federal regulatory agencies. The transaction
is anticipated to close in June of 2000.

The AT&T Wireless Group signed an agreement to sell one of its equity
investments for approximately $75 million. The transaction is expected to close
by the end of the first quarter of 2000.

In the first quarter of 2000, the AT&T Wireless Group was allocated one
half of AT&T's interest in Japan Telecom, which provides local, long distance,
Internet and mobile wireless communications to businesses and consumers in
Japan. AT&T's interest in Japan Telecom is held through a 50% owned joint
venture with British Telecommunications. The joint venture owns 30% of Japan
Telecom.

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DESCRIPTION OF BUSINESS

OVERVIEW

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<PAGE> 50

THE AT&T WIRELESS GROUP

- all mobile and fixed wireless licenses,

- all wireless networks, operations, cell sites, retail operations,
wireless customer care facilities and customer location assets, and

- interests in partnerships and affiliates providing wireless mobile
communications in the United States and internationally.

The AT&T Common Stock Group retains:

- existing and future wireless activities that stem from country-specific
joint venture relationships that are predominantly non-wireless, and

- incidental wireless capabilities or links in any backbone or other
communications network that is predominantly non-wireless.

We currently intend to include all future wireless activities in the AT&T
Wireless Group. Our board of directors may, however, in its discretion, but
subject to the AT&T Wireless Group policy statement, direct new businesses and
assets to the AT&T Wireless Group or the AT&T Common Stock Group or dispose of
or transfer businesses or assets of either group.

The AT&T Common Stock Group will be able to offer wireless services under
sales agency or other arrangements with the AT&T Wireless Group. These
transactions are described in more detail below and will be implemented under
the AT&T Wireless Group policy statement.

ARRANGEMENTS BETWEEN THE AT&T COMMON STOCK GROUP AND THE AT&T WIRELESS GROUP

AT&T will seek to manage the AT&T Common Stock Group and the AT&T Wireless
Group in a manner designed to maximize the operations, unique assets and value
of both groups. Following the issuance of AT&T Wireless Group tracking stock,
the AT&T Wireless Group will be able to:

- use the powerful AT&T brand name on the same basis as any other AT&T
business,

- leverage AT&T's sales force through cross marketing arrangements and
through bundled offers of wireless with long distance and local
telephony, broadband and Internet services,

- use AT&T's intellectual property and technology, and

- benefit from AT&T's favorable purchasing contracts with major network and
equipment suppliers.

In addition, we currently intend to borrow funds and provide the AT&T
Wireless Group with the proceeds at interest rates that are comparable to the
rates the AT&T Wireless Group would have received in the open market as a
nonaffiliate of AT&T and without the benefit of any guaranty by AT&T or any
member of the AT&T Common Stock Group.

The relationship between the two groups will be governed by the AT&T
Wireless Group policy statement, including the process of fair dealing described
under "Relationship Between the AT&T Common Stock Group and the AT&T Wireless
Group -- AT&T Wireless Group Policy Statement -- General policy." Although our
board of directors has no present intention to do so, it may modify,

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<PAGE> 51

suspend or rescind the policies set forth in the AT&T Wireless Group policy
statement, adopt additional policies or make exceptions to existing policies, at
any time, without the approval of our shareholders, subject to limitations we
describe under "Relationship Between the AT&T Common Stock Group and the AT&T
Wireless Group -- AT&T Wireless Group Policy Statement" and our board of
directors' fiduciary duties.

INDUSTRY OVERVIEW

GENERAL

Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as cellular telephone, enhanced specialized
mobile radio services, PCS and fixed wireless services. The FCC licenses the
radio frequency used to provide each of these applications.

Since its introduction in 1983, wireless service has grown dramatically. As
illustrated by the following chart, domestic cellular, enhanced specialized
mobile radio and PCS providers experienced compound rates of growth of 25% and
33% in revenues and subscribers, respectively, over the five-year period from
1993 to 1998.

WIRELESS INDUSTRY STATISTICS*

<TABLE>
<CAPTION>
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total service revenues (in billions)...... $10.9 $14.2 $19.1 $23.6 $27.5 $ 33.1
Ending subscribers (in millions).......... 16.0 24.1 33.8 44.0 55.3 69.2
Subscriber growth......................... 45.1% 50.8% 40.0% 30.4% 25.6% 25.1%
Average monthly service revenue per
subscriber, including roaming revenue... $67.13 $59.08 $54.91 $50.61 $46.11 $ 44.35
Average monthly service revenue per
subscriber, excluding roaming revenue... $58.74 $51.48 $47.59 $44.66 $41.12 $ 39.66
Ending penetration........................ 6.2% 9.4% 13.0% 16.3% 20.2% 25.1%
</TABLE>

- -------------------------
* Source: Cellular Telecommunications Industry Association and Paul Kagan
Associates.

RECENT INDUSTRY TRENDS

The growth in the wireless communications industry has been shaped by a
number of industry trends that are likely to continue in the near future.

Expanding penetration fuels network optimization. The U.S. wireless
industry has experienced an increase in absolute subscriber additions and
wireless penetration levels. For example, the number of ending subscribers
increased by 5.0 million in 1993 and by 13.9 million in 1998 at the same time as
penetration grew from 6.2% to 25.1%, respectively. Increased penetration allows
wireless providers to distribute the fixed costs of a wireless network over
greater numbers of users, thereby optimizing network usage. Wireless penetration
in other developed nations, particularly in Western Europe, is currently
substantially higher than in the United States. The experience of wireless
providers in these developed nations has shown that the market for wireless
services has an inflection point with regard to subscriber penetration whereby
the number of subscribers and penetration accelerates as wireless

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<PAGE> 52

service usage becomes more ubiquitous. In addition, those same international
wireless providers have experienced EBITDA growth at a greater rate than
subscriber growth as network usage increases. The AT&T Wireless Group believes
that the U.S. wireless industry is approaching a similar inflection point in
subscriber penetration and is likely to develop along the same path as
international wireless industries have developed.

Single rate pricing simplifies customer choice and drives
consolidation. The AT&T Wireless Group has led the industry in simplifying
customer choice through pricing plans. In May 1998, the AT&T Wireless Group
revolutionized the industry by offering AT&T Digital One Rate service, which,
for the first time, charged a single rate with no roaming or long distance fees
for a specified number of minutes for calls within the United States. AT&T
Digital One Rate and similar plans by other service providers have increased
wireless penetration in the United States. The AT&T Wireless Group believes that
the introduction of other simplified, targeted rate plans will continue to
increase wireless penetration. In addition, because roaming costs to the
wireless provider can exceed the amount charged to the subscriber under these
single rate plans, wireless providers have been attempting to establish national
coverage through acquisitions, thus driving consolidation.

Declining costs of service results in mass market availability. As the
cost of wireless service has declined, it has become, in an extremely short
period of time, a mass market product rather than a luxury good. The AT&T
Wireless Group expects that the increase in the number of competitors in each
wireless market will lead to further price declines, which should make wireless
service available to an even greater number of potential users. Experience
indicates that this widespread usage will in turn cause even more people to use
wireless services, especially as the price of wireless service declines relative
to the price of wireline service. The AT&T Wireless Group believes that these
developments are likely to drive continued and accelerated growth in the
wireless communications industry.

Digital service increases utility and functionality of wireless
services. Technological advancements, from longer battery life to improved
voice quality, have begun to make wireless service increasingly comparable to
wireline communications. Additionally, customers have begun to expect custom
calling features that are similar to those available on a wireline network.
Digital service, as opposed to analog service, permits wireless providers to
offer these types of enhanced services to users. Wireless providers will need to
continue to invest in network upgrades to offer advanced services in order to
attract and retain subscribers.

Wireless data applications will drive expanded wireless usage. Existing
and new wireless data technologies, coupled with the widespread use of the
Internet, have caused wireless providers to focus on wireless data services
offerings. These services predominantly have been used to date to carry
corporate data applications. The AT&T Wireless Group has been a leader in this
emerging market with its CDPD network. CDPD coverage is available in over 60% of
the AT&T Wireless Group's built network, which the AT&T Wireless Group believes
provides a critical advantage in the cost-effective provision of wireless data
services.

The introduction of new applications for corporate and eventually for
consumer users, such as access to email, news, sports, weather summaries, travel
services, financial information and services and comparison shopping
applications, will drive the growth for wireless data network services. To this
end, enabling technologies, such as Wireless Access Protocol, provide an
environment that encourages developers to create innovative data services for
wireless networks. In addition, applications, such as email, instant messages,
banking, wireless portals and web services, are being developed and marketed.
The AT&T Wireless Group believes that the development and deployment of third
generation wireless networks will drive further growth in wireless data services
and applications due to increased capacity, speed and lower costs.

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<PAGE> 53

BACKGROUND

The AT&T Wireless Group has licenses to use three portions of the radio
spectrum that the FCC has made available for the transmission of voice and data
signals: 850 megahertz, 1900 megahertz and 38 gigahertz. In addition, AT&T has
acquired and agreed to acquire additional portions of the radio spectrum in the
2.3 gigahertz range.

The AT&T Wireless Group provides its mobile voice services using both 850
megahertz cellular and 1900 megahertz PCS licenses. The AT&T Wireless Group does
not manage its business for these spectrums separately. Rather, the AT&T
Wireless Group manages its business to provide virtually seamless network
coverage irrespective of the spectrum. From a marketing and operational
perspective, the AT&T Wireless Group defines and manages its markets
geographically, usually around an urban area or other geographic region. These
geographic markets may use either 850 megahertz or 1900 megahertz spectrum or
both. Geographic markets that use predominantly 850 megahertz spectrum have been
in operation longer and therefore are more mature than those markets that
exclusively use 1900 megahertz spectrum.

The 850 megahertz wireless markets originally used analog based systems,
although digital technology has been introduced in most markets. As of December
31, 1999, the AT&T Wireless Group had upgraded 98% of its 850 megahertz markets
to digital based systems. The 1900 megahertz markets all are digital based.

The AT&T Wireless Group, including its partnership and affiliate markets,
currently holds 850 megahertz and 1900 megahertz licenses to provide wireless
services covering 94% of the U.S. population. As shown in the table below, as of
December 31, 1999, approximately 81% of the U.S. population were covered by at
least 30 megahertz of wireless spectrum:

<TABLE>
<CAPTION>
LICENSED NUMBER OF
POPS % OF TOTAL TOP 50
SPECTRUM (IN MILLIONS)* U.S. POPS** U.S. LICENSED MARKETS
-------- -------------- ----------- ---------------------
<S> <C> <C> <C>
10 megahertz................................... 24 8.9% 8
20-25 megahertz................................ 11 4.1% 2
30 megahertz or greater........................ 219 80.8% 40
--- ---- --
Total................................ 254 93.8% 50
</TABLE>

- ---------------
* Includes partnership and affiliate markets.
** Based on total U.S. population of 271 million.

Analog systems currently have several limitations, including lack of
privacy and limited capacity. However, analog handsets are compatible with all
analog systems in all markets within the United States.

Digital systems, whether in the 850 megahertz or 1900 megahertz spectrum,
convert voice or data signals into a stream of digits that is compressed before
transmission, enabling a single radio channel to carry multiple simultaneous
signal transmissions. The AT&T Wireless Group believes that digital technology
offers many advantages over analog technology, including substantially increased
network capacity, greater call privacy, enhanced services and features, lower
operating costs, reduced susceptibility to fraud and the opportunity to provide
improved data transmissions.

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<PAGE> 54

Digital systems operate under one of three principal signal transmission
technologies, or standards, none of which is compatible with the others:

- TDMA or time division multiple access,

- CDMA or code division multiple access, or

- GSM or global system for mobile communications.

The AT&T Wireless Group has selected TDMA as its digital wireless standard.
The AT&T Wireless Group offers its subscribers tri-mode handsets that permit the
user to access both its analog and digital TDMA systems, whether operating in
850 megahertz or 1900 megahertz spectrum.

The AT&T Wireless Group also has licenses to provide communications
services utilizing 38 gigahertz digital spectrum in 156 geographic areas
covering a total population of approximately 220 million and including more than
80 of the largest 100 metropolitan markets. These licenses were acquired through
AT&T's acquisition of Teleport Communications Group Inc.

The AT&T Wireless Group has also acquired and agreed to acquire licenses
for radio spectrum in the 2.3 gigahertz range. The AT&T Wireless Group expects
to use this spectrum for its fixed wireless operations.

STRATEGY

The AT&T Wireless Group's goal is to be the premier provider of
high-quality wireless communication services, whether mobile or fixed, voice or
data, to businesses or consumers, in the United States or internationally. The
AT&T Wireless Group believes that the following are key elements to enable it to
meet its goal:

- continue the aggressive build out and expansion of its TDMA network to
provide coverage throughout the nation, with improved quality and
consistent features regardless of location,

- continue to lower its operating costs and improve capital efficiency by
expanding its TDMA network and increasing the use of more efficient
channels of distribution,

- target distinct consumer and business customer segments with wireless
offers that match their needs for voice and data services in order to
increase its subscriber base and revenues,

- leverage the benefits of the AT&T Wireless Group's relationship with and
use of the resources of AT&T, including the use of the AT&T brand and
AT&T's distribution channels, cross marketing opportunities and bundled
offers with AT&T's traditional products, and

- take advantage of its existing wireless spectrum, digital network,
customer base and the AT&T brand with new growth initiatives, including
wireless data and fixed wireless opportunities.

CONTINUE THE AGGRESSIVE BUILD OUT AND EXPANSION OF ITS TDMA NETWORK

The AT&T Wireless Group believes it is competitively critical to expand its
TDMA footprint, as well as to increase capacity in existing markets, in order to
provide coverage throughout the nation, and offer consistent features regardless
of location. The AT&T Wireless Group regularly monitors quality and identifies
specific areas in existing markets where calls may be dropped or transmission
quality is sub-optimal. As a result, the AT&T Wireless Group has taken a number
of steps to increase its network coverage, including the purchase of 1900
megahertz PCS licenses, to accelerate digital build outs in 850 megahertz and
1900 megahertz markets, and to acquire or partner with other

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wireless providers. The AT&T Wireless Group, including its partnership and
affiliate markets, currently has licenses covering 94% of the U.S. population,
with approximately 81% of the U.S. population covered by at least 30 megahertz
of wireless spectrum as of December 31, 1999. In addition, in many of its
markets, the AT&T Wireless Group possesses licenses for both 850 megahertz and
1900 megahertz spectrum. In each market in which the AT&T Wireless Group is not
currently operating, the AT&T Wireless Group evaluates the benefits and costs of
building out its license versus acquiring or partnering with other experienced
wireless providers before it decides on the appropriate method of expanding into
that market. The timing of these decisions depends upon a variety of factors,
including the size of the prospective market, the location of the market
relative to other AT&T markets, the economics of existing roaming agreements and
anticipated industry developments.

Digital build out. The AT&T Wireless Group has aggressively pursued the
build out of its TDMA network. In the years ended December 31, 1997, 1998 and
1999, capital expenditures for build out of owned and operated 1900 megahertz
licenses totaled $812 million, $384 million and $880 million, respectively. In
addition, during those periods, capital expenditures to increase capacity,
improve quality and upgrade to digital in 850 megahertz markets totaled $702
million, $645 million and $1,453 million, respectively. As of December 31, 1999,
the AT&T Wireless Group had upgraded 98% of its 850 megahertz markets to digital
based systems. As of December 31, 1999, TDMA systems covering 51% of the AT&T
Wireless Group's 151 million 1900 megahertz licensed POPs, including affiliates,
were in service in those markets.

Acquisitions. The AT&T Wireless Group also will expand its TDMA network
through acquisitions when it is economic to do so. For example, on May 3, 1999,
the AT&T Wireless Group acquired Vanguard Cellular Systems, Inc., an independent
operator of wireless telephone systems in the United States with approximately
6.9 million POPs and over 700,000 subscribers as of the date of acquisition.
Vanguard served 26 markets in the Eastern United States, including the
Mid-Atlantic and Ohio Valley Super Systems and the Florida, Carolinas and New
England metro-clusters. The AT&T Wireless Group also recently completed its
acquisition of Honolulu Cellular Telephone Company, a provider of cellular
services covering Oahu, Hawaii with approximately 900,000 POPs and over 125,000
subscribers as of the date of its acquisition in August 1999. In addition, in
February 2000, AT&T announced the signing of an agreement to purchase the assets
of Wireless One Network, L.P., for cash of approximately $850 million. AT&T will
attribute its interest in Wireless One to the AT&T Wireless Group as of the
acquisition date. The transaction has been approved by the boards of directors
of AT&T and Wireless One, however, the transaction is subject to the approval of
certain federal regulatory agencies. The transaction is anticipated to close in
June 2000.

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<PAGE> 56

Establish partnerships and affiliates. The AT&T Wireless Group also will
continue to establish local market partnerships and affiliates with other
wireless operators in order to accelerate the build out of its TDMA systems. In
addition to existing partnership arrangements for its 850 megahertz markets, the
AT&T Wireless Group has entered into a number of joint ventures and affiliations
to expand its 1900 megahertz digital coverage. Key partnerships and affiliates
include the following:

<TABLE>
<CAPTION>
850 OR 1900 LICENSED
MEGAHERTZ POPS OWNERSHIP
ENTITY PARTNER OR AFFILIATE MARKETS COVERED* MARKET (IN MILLIONS)* PERCENTAGE*
- --------------------- --------------------- --------------------------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C>
PARTNERSHIPS
AB Cellular BellSouth Corporation Los Angeles, California; 850 19.6 55.6%
Houston and Galveston,
Texas
American Cellular Dobson Communications Rural service areas in 850 4.9 50.0%
Corporation Corporation Minnesota, New York,
Wisconsin, Kentucky, Ohio,
Michigan, Pennsylvania,
Tennessee and West
Virginia; metropolitan
service areas of Duluth,
Minnesota; Orange County
and Poughkeepsie, New York;
Eau Claire and Wausau,
Wisconsin; and Alton,
Illinois
CMT Partners Vodafone AirTouch Northern California, 850 7.3 50.0%
including the Bay area
AFFILIATES
Cincinnati Bell Cincinnati Bell Cincinnati and Dayton, Ohio 1900 3.1 19.9%
Wireless, LLC Wireless, LLC
TeleCorp PCS, Inc.** TeleCorp PCS, Inc. Markets in Puerto Rico and 1900 16.7 15.7%
the U.S. Virgin Islands,
Louisiana, Arkansas,
Tennessee, Massachusetts,
New Hampshire, Missouri and
Kentucky, including San
Juan, New Orleans, Baton
Rouge, Memphis, Little
Rock, Manchester, Concord,
Nashua, Worcester, Cape Cod
and Martha's Vineyard
Tritel, Inc.** Tritel, Inc. Markets in Mississippi, 1900 14.0 21.6%
Kentucky, Tennessee,
Alabama and Georgia,
including Jackson,
Vicksburg, Nashville,
Knoxville, Clarksville,
Chattanooga, Dalton,
Huntsville, Mobile,
Montgomery, Birmingham,
Louisville and Lexington
</TABLE>

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<PAGE> 57

- ------------------------

* As of December 31, 1999.

** In February 2000, TeleCorp PCS, Inc. announced that it will acquire Tritel,
Inc. in a transaction which is expected to close in the fourth quarter of
2000. Upon completion of the transaction, the AT&T Wireless Group will own
approximately 23% of the combined entity. See "AT&T Wireless Group
Management's Discussion and Analysis of Financial Condition and Results of
Operation -- Subsequent Events" for more details about this transaction.

CONTINUE TO LOWER ITS OPERATING COSTS AND IMPROVE CAPITAL EFFICIENCY BY
EXPANDING ITS TDMA NETWORK AND INCREASING THE USE OF MORE EFFICIENT
CHANNELS OF DISTRIBUTION

The AT&T Wireless Group believes that its success also will depend in large
part on its ability to continue to lower its operating costs in order to have
the flexibility to offer various pricing plans and to be cost competitive. The
AT&T Wireless Group already has taken a number of steps to lower its operating
costs associated with providing network service, and is taking a number of
initiatives to lower its marketing and sales costs.

Lower unit network costs and capital requirements. As described above, the
AT&T Wireless Group is aggressively expanding its footprint across the United
States. The AT&T Wireless Group pays other wireless providers negotiated roaming
rates when AT&T Wireless Group customers make or receive wireless calls when
located in other approved wireless providers' coverage areas. Because roaming
costs to the wireless provider can be significant or exceed the amount charged
to the subscriber, it is extremely advantageous to be able to provide services
on the AT&T Wireless Group's network. As it builds out its network to achieve
these roaming savings, the AT&T Wireless Group purchases equipment from multiple
vendors and aggressively negotiates with each vendor for volume discounts, in
order to reduce the cost per voice path built.

In the interim, the AT&T Wireless Group has been able to reduce roaming
charges significantly. The AT&T Wireless Group has been able to negotiate
favorable roaming rates with most wireless providers across the United States
based upon volume and growth. In addition, the AT&T Wireless Group's proprietary
Intelligent Roaming Data Base (IRDB) automatically ensures that wireless
subscribers have access to preferred service providers whenever they travel
outside their wireless home-coverage area. IRDB maintains a list of wireless
carriers and their frequency bands, ranked by priority. This is designed to
provide service in more areas and provides the AT&T Wireless Group with more
favorable roaming rates. The updated IRDB is downloaded over the air into each
digital multi-network phone monthly. During the IRDB process, the wireless phone
scans all bands to determine which service providers are available. The phone
registers, or "locks on," immediately if it finds sufficiently strong AT&T
Wireless Group service, the top priority. If the AT&T Wireless Group does not
offer service in the area, the IRDB instructs the phone to search for an
affiliate or a partner service provider. When an affiliate or a partner is not
available, the phone scans for a "favored" service provider, one that is
preferred over a carrier not categorized in the IRDB.

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Lower marketing and sales expense. The AT&T Wireless Group has begun a
number of initiatives designed to lower its customer acquisition cost, as well
as its customer care expenses. For example, the AT&T Wireless Group has been
actively seeking lower cost distribution channels for its products and services.
The AT&T Wireless Group is increasing the number of its company-owned stores,
which are one of the lowest cost channels for distributing and signing up
customers. As of December 31, 1999, there were approximately 390 company-owned
stores throughout the United States. In addition, in June 1999, the AT&T
Wireless Group began using the Internet as a vehicle for customer acquisition,
as well as for customer care. In addition to allowing customers to sign up for
wireless services over the Internet, resulting in a lower cost to add a new
subscriber to the AT&T Wireless Group than other channels, subscribers can
access their account and obtain answers to routine inquiries that would
otherwise require a customer care representative. Since its introduction, the
number of visits to the AT&T Wireless Group's Internet site has grown to
approximately 1.7 million per month as of December 31, 1999.

TARGET DISTINCT CONSUMER AND BUSINESS CUSTOMER SEGMENTS WITH WIRELESS OFFERS
THAT MATCH THEIR NEEDS FOR VOICE AND DATA SERVICES IN ORDER TO INCREASE ITS
SUBSCRIBER BASE AND REVENUES

The AT&T Wireless Group believes that one key to success in the wireless
industry is the ability to target customer segments and provide offers that
match the needs of those segments. Certain segments respond to pricing plans
tailored to their usage patterns while other segments are more attuned to
customized service features. The AT&T Wireless Group has been a leader in
differentiating its services through its use of targeted offerings and its
introduction of new features and services.

AT&T Digital One Rate service. In May 1998, the AT&T Wireless Group
introduced its AT&T Digital One Rate service, which targets high value customers
(i.e., customers that spend over $60 per month on wireless services) who travel
frequently and make frequent long distance calls. The introduction of AT&T
Digital One Rate service redefined the industry by charging a single rate with
no roaming or long distance fees for a specified number of minutes for calls
within the United States. Since the inception of AT&T Digital One Rate service
in May 1998, and through December 31, 1999, more than 1.8 million customers have
subscribed to the service. The AT&T Wireless Group believes that there are other
opportunities to segment the market with simplified pricing plans. For example,
the AT&T Wireless Group recently introduced service plans that target customers
who make frequent long distance calls but travel infrequently.

AT&T group plans. AT&T has developed offers for groups that are in
frequent contact with a predetermined number of other wireless subscribers. For
consumers, the AT&T Wireless Group developed the AT&T Family Plan, which allows
a family to establish an account with up to five family members within the same
calling area. Each family member has his or her own wireless number that allows
for unlimited calls between wireless numbers on the account, and to and from the
family's home number within the defined family calling area. All charges then
are provided on a single bill. For businesses, the AT&T Wireless Group offers
Group Calling, the wireless industry's first business offer with unlimited
calling among a wireless group of five to 50 subscribers and to as many as five
wireline numbers within a designated group calling area. Group Calling is
designed for local, mobile businesses, such as sales and service, delivery and
distribution, dispatch and contractors, that operate within a specific
geographic area.

Wireless Office Service. Wireless Office Service integrates wireless
phones into a company's office, campus or plant telephone network. Calls to and
from the wireless phone can be routed through a company's network as if the
calls were being made from or received on a desk phone. Users can receive calls
dialed to their desk phone on their wireless phone when the user is within the

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expanded AT&T Wireless Group's network. Wireless Office Service provides one
number call delivery, four-digit dialing, enhanced radio frequency coverage and
low flat-rate billing for airtime usage within a customer's office, campus or
plant.

National digital prepaid wireless. AT&T national digital prepaid wireless
service is a pay-in-advance wireless product that provides wireless
communications to customers with no contract, no credit check, no deposit and no
bill. AT&T prepaid wireless service is designed to meet the needs of customers
that want to manage their expenses, prefer to pay in cash, lack credit or have
difficulty obtaining credit.

Enhanced features. The AT&T Wireless Group has been an industry leader in
the migration of subscribers from analog to digital service. At the present
time, over 85% of AT&T Wireless Group's traffic is digital, which the AT&T
Wireless Group believes is substantially greater than the industry average,
excluding the AT&T Wireless Group. The ability to migrate customers to digital
service has permitted the AT&T Wireless Group to further differentiate its
wireless offerings through enhanced features. The AT&T Wireless Group offers
custom calling services, such as voice mail, call forwarding, call waiting,
caller ID, three-way calling, no-answer and busy transfer. It also offers a
variety of other enhanced features, including display messaging, which allows a
cellular phone to receive and store short alphanumeric messages and pages and to
provide subscribers with notification of voice mail messages, extended battery
life and enhanced directory assistance, which enables callers to be connected to
the party whose number is sought without hanging up and redialing.

LEVERAGE THE BENEFITS OF THE AT&T WIRELESS GROUP'S RELATIONSHIP WITH AND
USE OF THE RESOURCES OF AT&T

The AT&T Wireless Group believes that its relationship with AT&T provides
it with significant competitive advantages, including:

- use of the powerful AT&T brand name on the same basis as any other AT&T
business,

- an ability to leverage AT&T's sales force through cross marketing
arrangements and through bundled offers of wireless with long distance
and local telephony, broadband and Internet services,

- use of AT&T's intellectual property and technology,

- benefits from AT&T's favorable purchasing contracts with major network
and equipment suppliers, and

- an enhanced ability to access capital.

AT&T brand. The AT&T brand is one of the best known and respected brand
names in the United States. The AT&T Wireless Group believes that the AT&T brand
positively impacts consumer awareness of, and confidence in, the AT&T Wireless
Group's products and services. In addition, as competition in the wireless
communications industry intensifies, the AT&T Wireless Group believes that the
power of a strong national brand plays an increasingly important role in
consumers' purchasing decisions.

Marketing. The AT&T Wireless Group expects that its relationship with the
AT&T Common Stock Group will provide substantial marketing advantages. Through
its relationship with AT&T, the AT&T Wireless Group will have access to AT&T's
over 75 million business and consumer customers. The AT&T Wireless Group will be
able to enter into cross marketing relationships with the AT&T sales force
whereby AT&T's customers can be solicited for wireless services. In addition,
both the AT&T Common Stock Group and the AT&T Wireless Group will have the
opportunity to offer attractive and unique bundled offers of wireless with long
distance, local telephony, broadband and Internet services designed for targeted
markets.

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Technology. The AT&T Wireless Group will have the advantage of being able
to use not only its intellectual property and technology, but also AT&T's
proprietary intellectual property and technology as well as all intellectual
property that AT&T has the right to use through licensing or other arrangements.
In addition, the AT&T Wireless Group will be able to engage AT&T Labs to pursue
future wireless technologies and will have access to future technological
innovations from AT&T. The ability to coordinate with the AT&T Common Stock
Group on new technological developments will allow the AT&T Wireless Group to
ensure that new features, such as a common mailbox or email applications,
offered by either group are compatible over both networks. This may permit the
AT&T Wireless Group to introduce new features more quickly and more cost
efficiently than its competitors.

Purchasing power. AT&T is one of the largest communications carriers in
the world, and, as such, has substantial leverage in the industry with major
equipment suppliers. AT&T's ability to purchase large amounts of goods has
enabled it to obtain favorable pricing and other terms with those suppliers. As
an AT&T entity, the AT&T Wireless Group will be able to continue to rely on
AT&T's purchasing power in making its own purchasing arrangements.

Enhanced ability to access capital. The AT&T Wireless Group's access to
capital will benefit from its relationship with AT&T. AT&T's presence in the
capital markets will improve the market's awareness of the AT&T Wireless Group.
We currently intend to borrow funds and provide the AT&T Wireless Group with the
proceeds at interest rates that are comparable to the rates the AT&T Wireless
Group would have received in the open market as a non-affiliate of AT&T and
without the benefit of any guaranty by AT&T or any member of the AT&T Common
Stock Group.

TAKE ADVANTAGE OF WIRELESS SPECTRUM, DIGITAL NETWORKS, CUSTOMER BASE AND
BRAND WITH NEW GROWTH INITIATIVES, INCLUDING WIRELESS DATA AND FIXED
WIRELESS OPPORTUNITIES

The AT&T Wireless Group has been an industry leader in developing new
growth initiatives that take advantage of its existing wireless spectrum,
digital networks, customer base and brand. Working with AT&T Labs and outside
vendors, the AT&T Wireless Group has targeted two growth areas for near-term
expansion: wireless data and fixed wireless.

Wireless Data

The AT&T Wireless Group has been an industry leader in wireless data
services since it introduced the first CDPD network in March 1995. The AT&T
Wireless Group's CDPD network currently covers 89 million POPs. The AT&T
Wireless Group's CDPD customers can also roam on the CDPD networks of other
wireless providers. CDPD is an industry standard using Internet Protocol, which
allows most applications written for the Internet as well as many corporate
applications to run efficiently over the network without modification. Relative
to data services carried over circuit-switched analog or digital wireless
networks, the AT&T Wireless Group's packet-switched CDPD service is a
significantly more cost effective means of sending data for the majority of
applications because it allows a channel to be shared by many users. The AT&T
Wireless Group believes that its early introduction of packetized wireless data
services will give it a first mover advantage as this market grows with the
introduction of its third generation of networks, because applications are
easily migrated from CDPD to EDGE.

The development of compelling data applications will be critical to the
growth in usage of wireless data network services. The AT&T Wireless Group is
developing such applications as well as supporting applications developed by
third parties. To date, applications using the CDPD network have been
predominately targeted to corporations and public agencies. The AT&T Wireless
Group expends considerable effort to sign up corporate customers to carry its
applications because these customers exhibit lower churn and often provide
relatively high revenue per subscriber. Examples of these applications include
those for public safety, dispatch, wireless credit card validation and automated
vehicle location.

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New devices are now driving the development of applications targeted more
broadly to consumers. These include applications involving hand held devices,
like the Palm V and WindowsCE units, as well as those involving phones and
laptop computers. Applications that are currently available allow users to
access their personal information, including contact lists and calendars, as
well as email, Internet content and two-way messaging services. The AT&T
Wireless Group expects new applications may include e-commerce and shopping
services and services that are enhanced by information about the user's
location. By providing or facilitating these applications, the AT&T Wireless
Group believes it can generate new revenue streams and develop personalized
relationships with its customers.

The AT&T Wireless Group expects that the development and introduction of
third generation networks will drive wireless data usage growth by offering
greater bandwidth and network coverage at lower costs. For its third generation
strategy, the AT&T Wireless Group has decided to migrate its TDMA network to
EDGE. This entails installing a modest amount of new equipment in existing base
stations as the EDGE capability is rolled out. The AT&T Wireless Group expects
to first make EDGE service available in 2002.

Fixed Wireless

The AT&T Wireless Group believes there is a significant business
opportunity to use wireless technology to provide residential and small business
customers with high speed, "always on" broadband access coupled with wireline
quality voice access. Fixed wireless service provides customers with a
high-speed packet data channel that can be used by up to five data devices
simultaneously (for example, five personal computers simultaneously accessing
the Internet) at download speeds of up to 512 kilobits per second. The service
is expected to be capable of speeds of up to one megabit per second by mid 2000.
In addition, the offering provides up to four lines of wireline quality voice
telephony, including custom calling features currently available over wireline
networks (e.g., call waiting, caller ID, three-way calling). The AT&T Wireless
Group believes that it enjoys a time-to-market advantage with this fixed
wireless solution. The technology is already serving customers in Dallas, Texas.

One of the data devices supported by the data channel is the Enhanced
Personal Base Station (EPBS). The EPBS integrates wireless and fixed
communication capabilities for a customer. When a customer's AT&T wireless phone
is within range of the EPBS (i.e., inside the home or business), the wireless
phone operates as if it were a cordless phone operating on a wireline network.
That is, calls to the wireless phone number are directed through the home's or
business' fixed wireless connection, without incurring wireless airtime charges.
In addition, calls to the customer's wireless number can be answered on any of
the wired telephones connected to the fixed wireless system. Similarly, outgoing
calls from the wireless phone are directed through the fixed wireless connection
without incurring wireless airtime charges.

In addition to currently serving more than 200 customers in the Dallas,
Texas market, the AT&T Wireless Group will make fixed wireless service available
in the Ft. Worth, Texas market in the first quarter of 2000. The AT&T Wireless
Group expects to target at least two additional major markets and two smaller
markets for deployment in the third quarter of 2000 and, depending upon market
acceptance, may spend as much as $350 million of capital in 2000 ramping the
service toward full scale deployment for 2001. The AT&T Wireless Group will
focus its deployment of fixed wireless in markets not covered by AT&T's or its
affiliates' broadband properties.

BUSINESS OF THE AT&T WIRELESS GROUP

The AT&T Wireless Group offers wireless mobile and fixed voice and data
communications service to consumers and businesses in the United States,
provides air-to-ground wireless services and has interests in wireless providers
in the United States and internationally. The AT&T Wireless Group's wireless
voice services are capable of operating in virtually all of the United States
over its own network or its partners' networks or through roaming agreements.

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SERVICES AND PRODUCTS

Basic Services

The AT&T Wireless Group offers a variety of services for both voice and
data communications. Service can include wireless voice transmission as well as
custom calling services for digital services, such as voicemail, call
forwarding, call waiting, caller ID, three-way calling, no-answer and busy
transfer. The AT&T Wireless Group also offers a variety of other enhanced
features, including display messaging, which allows a cellular phone to receive
and store short alphanumeric messages and pages and to provide subscribers with
notification of voicemail messages, even if the handset is in use or switched
off, extended battery life and enhanced directory assistance, which enables
callers to be connected to the party whose number was sought without hanging up
and redialing.

Specialized Wireless Offers and Services

The AT&T Wireless Group has developed a number of specialized wireless
offers and services to target distinct customer segments:

- AT&T Digital One Rate
- AT&T group plans
- Wireless Office Service
- National Digital Prepaid Wireless
- AT&T CellCard(R)

The AT&T CellCard(R) program allows AT&T Wireless customers to make and
receive wireless calls for a basic rate plus long distance charges in over 100
countries throughout Europe, Australia, Asia and the Middle East, all while
using their existing wireless phone number. AT&T CellCard(R) enables customers
to enjoy the convenience and productivity of wireless service at rates less than
those charged by many international hotels. A customer using a wireless phone
with AT&T CellCard(R) and a laptop computer with a European GSM modem card is
able to send and receive email and faxes, check a calendar, browse the Internet
and carry out other online transactions. For simplicity, international and
domestic wireless charges are both included on the customer's regular monthly
AT&T wireless bill. We describe each of the other specialized wireless offers
and services under "-- Strategy."

Data Services

CDPD network service. As a packet-switched network, the AT&T Wireless
Group's CDPD network takes advantage of the fact that with many data
applications, data is sent in bursts with intermittent quiet periods, which
allows many users to share the network channel. As a result, relative to data
services carried over circuit-switched analog or digital wireless networks, the
AT&T Wireless Group's packet-switched CDPD service is a significantly more
cost-effective means of sending data for the majority of applications because it
allows a channel to be shared by many users. For example, for many applications,
the AT&T Wireless Group's packet-switched CDPD network allows it to offer its
customers unlimited, always-on usage, most often for a flat monthly fee. This
makes its CDPD network service attractive for a variety of new applications.

To date, corporations and public agencies have been the biggest users of
the AT&T Wireless Group's CDPD service, which they typically use to carry
industry-specific applications. Examples of such applications include:

- Public Safety Applications -- Across the country, many states and
municipalities have committed to CDPD as the primary means of data
communication to public safety vehicles. These vehicles, equipped with
wireless-based laptops, have real time access to bulletins, crime
databases, department of motor vehicles databases, as well as the ability
to file reports online. The result is significant improvement in both
productivity and safety.

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- Dispatch Applications -- Courier companies, delivery companies, and
companies with large field installation and repair groups are using this
technology to support their employees. Workers can be dispatched with
detailed work orders, can access customer databases from the field and
can close out work orders online. This has enabled many smaller companies
to substantially improve both their service and their efficiency.

- Wireless Credit Card Validation -- New terminal equipment, accessing the
AT&T Wireless Group's CDPD service, allows merchants to verify
credit/debit cards quickly and easily. With CDPD, the validation
terminals can remain online wirelessly, substantially reducing the time
required to process a validation and eliminating the need for a separate
phone line for the verification terminal. Not only does this save money
for existing merchants, it opens up a variety of new applications in
remote service industries, such as fast food and delivery, where speed,
lower costs and mobility are all advantages.

- Automated Vehicle Location -- A variety of new applications have opened
up around a small device that contains a CDPD modem and a global
positioning system, or GPS, device. With these devices in vehicles, users
can track their fleets on the Internet, allowing rapid, cost-effective
access to the information required to improve routing and dispatch as
well as to increase safety and efficiency.

New devices are driving the development of broader applications targeted to
consumers. Users may access these applications with hand held devices, like the
Palm V and WindowsCE, as well as phones and laptop computers.

Applications on hand held devices. For hand held devices, the AT&T
Wireless Group now has access to new CDPD modems that work with both Palm (Palm
III and Palm V) and WindowsCE devices. Users can access Internet-based
information from devices equipped with these modems. A leading example of this
is the OmniSky service available for the Palm V. With a Palm V equipped with a
modem that connects to the AT&T Wireless Group's CDPD network, an OmniSky
subscriber can access email, over 100 information services (including directory
services, financial services, news/sports/weather services, etc.) and the
Internet. This application is available for one flat rate monthly fee.

Applications on phones. The AT&T Wireless Group has been instrumental in
the formation of a worldwide standard called the Wireless Application Protocol.
This standard allows a micro "browser" in a wireless phone to link into a
gateway service in the AT&T Wireless Group's network in such a way that web
developers can easily develop new services available to wireless phone users.

The AT&T Wireless Group has announced the availability of two new phones
that combine its tri-mode voice capability with a CDPD modem and a micro browser
in a single package. These phones will be available in the first part of 2000
and are expected to help increase demand for wireless data applications. The
AT&T Wireless Group first developed its own wireless data applications for
phones two years ago with the introduction of AT&T PocketNet service. The AT&T
Wireless Group expects that the introduction of these new phones will accelerate
the adoption of AT&T PocketNet service as well as drive the introduction of new
applications. The AT&T PocketNet service is expected to be available both for
corporate and consumer users in 2000.

AT&T PocketNet service for businesses. In the first quarter of 2000, the
AT&T Wireless Group introduced AT&T PocketNet service for businesses. This
service allows corporations to build applications that provide access to
corporate intranet information to employees who are out of their offices. Two
key applications are already available. The first is Mobile Services for Domino,
which is available from International Business Machines Corporation/Lotus
Development Corporation. This application provides for real time access to Lotus
Notes email, calendar and contacts from AT&T Wireless Group phones via AT&T
PocketNet service. The second provides similar capabilities using Microsoft
Exchange email and Outlook calendar/contacts information. The AT&T Wireless
Group is offering this service in cooperation with Wireless Knowledge LLC. These
applications open up the

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ability for Lotus Notes and Microsoft Exchange users to have rapid and easy
control of their email and other corporate information when away from their
offices. All of these are expected to be available at flat monthly rates, and
can be bundled with AT&T Digital One Rate service and all of the AT&T Wireless
Group's other wireless voice rate plans.

AT&T PocketNet service for the consumer. In the first half of 2000, the
AT&T Wireless Group expects to introduce a version of AT&T PocketNet service for
the consumer. As with AT&T PocketNet service for businesses, all of these
services are expected to be provided at flat monthly rates for unlimited usage.
The AT&T Wireless Group expects a wide variety of consumer-oriented services
will become available and intends to work with owners of branded content and web
portal services to provide customized access to a variety of content on the web.
This content would include news, sports, financial information, directories,
directions, travel reservations and status information, weather and concierge
services. The AT&T Wireless Group has already announced relationships with
Infospace.com, Inc. and At Home Corporation that will facilitate the development
of these services. In addition, applications that allow consumer users to access
their personal information, including contact lists and calendars, are expected
to be made available.

In the future, the AT&T Wireless Group expects a number of additional
applications will be developed, including e-commerce and shopping services and
services that are enhanced by information about the user's location. By
providing or facilitating such applications, the AT&T Wireless Group believes it
can generate new revenue streams, as well as develop personalized relationships
with its customers.

Products

The AT&T Wireless Group offers a variety of products as complements to its
wireless service, including handsets and accessories, such as chargers,
headsets, belt clips, faceplates and batteries.

As part of its basic service offering, the AT&T Wireless Group provides
easy-to-use, interactive menu-driven handsets that can be activated over the
air. These handsets primarily feature word prompts and menus rather than numeric
codes to operate handset functions. Some handsets allow mobile access to the
Internet. In addition, the AT&T Wireless Group offers tri-mode handsets, which
are handsets compatible with PCS, digital cellular and analog cellular
frequencies and service modes. Tri-mode handsets permit customers to roam across
a variety of wireless networks and incorporates AT&T's IRDB system. The AT&T
Wireless Group offers its customers use of Nokia, Ericsson, Mitsubishi and
Motorola handsets.

Tri-mode handsets offer significantly extended battery life over earlier
technologies, providing up to 14 days of stand-by battery life. Handsets
operating on a digital system are capable of sleep-mode while turned on but not
in use, thus improving efficiency for incoming calls, as users will be able to
leave these phones on for significantly longer periods than they can with
wireless phones using an earlier technology. The use of tri-mode handsets
further extends battery life by using a digital system for roaming when in areas
covered by digital systems.

MARKETING

The AT&T Wireless Group develops customer awareness through its marketing
and promotion efforts and has been a leader in differentiating its products
through its use of targeted pricing plans and the introduction of new products
and services. The AT&T Wireless Group also uses the AT&T brand name, provides
superior customer care and is able to bundle its service with the communications
services offered by the AT&T Common Stock Group.

Target customer base. The AT&T Wireless Group targets groups of customers
who share common characteristics or have common needs. Common characteristics
may be usage (frequent travelers), social group (families), age (youth market)
or any other distinctive measure. The AT&T Wireless Group then attempts to
create a compelling offer that meets the particular needs of that targeted group
and that the AT&T Wireless Group can provide at a competitive advantage.

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The AT&T brand name. The AT&T Wireless Group prominently features the AT&T
brand name and logo on its products and services. The AT&T Wireless Group
benefits from AT&T's national advertising to build its brand awareness. The AT&T
Wireless Group believes that the use of the AT&T brand name, one of the most
well known in the United States, will continue to be a distinct marketing
advantage.

Customer care and support. The AT&T Wireless Group places a high priority
on providing its customers with the best customer care and support. J.D. Power
and Associates' 1999 U.S. Wireless Customer Satisfaction Survey rated AT&T
Wireless Group No. 1 in customer satisfaction in nine out of 13 markets studied.
The AT&T Wireless Group employs approximately 7,700 customer care
representatives located in 12 call centers and contracts for outsourced customer
care service with 3,000 additional representatives in six locations. In
addition, subscribers can access their account and obtain answers to routine
inquiries through its Internet site, ecare.attws.com. Customers can reach the
AT&T Wireless Group's customer care representatives or access its Internet site
on a 24 hour/ seven day a week basis for answers regarding their service,
activation, changing service plans and other service options. Customer care
representatives are accessible from any point within the network on an AT&T
Wireless Group handset at no charge or through any other telephone by calling a
toll-free number. In addition, large enterprise customers may utilize a
customized extranet for ease of customer service.

As part of its customer care program, the AT&T Wireless Group seeks to
identify higher value customers who are at risk of changing service providers.
In these cases, the AT&T Wireless Group makes contact with the customers to
address their concerns, adjust their service plans or take other actions in an
effort to minimize the likelihood of such a change.

Cross marketing and bundling of services with the AT&T Common Stock
Group. The AT&T Wireless Group plans to cross market with the AT&T Common Stock
Group's divisions and capitalize on the size and breadth of the AT&T Common
Stock Group's customer base in long distance and broadband service. The AT&T
Wireless Group also has the opportunity to take advantage of an array of
communications services offered by the AT&T Common Stock Group by bundling its
wireless service with other AT&T Common Stock Group products, such as long
distance. AT&T Wireless Group also will receive additional benefits from its
relationship with the AT&T Common Stock Group, including lower costs of adding
new subscribers through the AT&T Common Stock Group sales channels. In addition,
both groups are likely to benefit from the expected decrease in movement by
customers from AT&T service to a competitor's service as customers buy bundled
products.

SALES AND DISTRIBUTION

The AT&T Wireless Group markets its wireless services in its managed
markets under the AT&T brand name. It markets wireless services to business and
residential customers through a direct sales force of 2,100, through sales
points of presence in approximately 390 AT&T company-owned stores located in 36
states, and kiosks and other customer points of presence, including the Internet
and inbound call centers, and through local and national non-affiliated
retailers throughout the United States. The AT&T Common Stock Group sales force
also sells wireless services to business and residential customers as part of
bundled offerings with services of the AT&T Common Stock Group. The AT&T
Wireless Group and the AT&T Common Stock Group marketing organizations will
collaborate to bundle products of each into offers unique to AT&T customers.

The AT&T Wireless Group also relies upon dealers to market its services in
some locations. Dealers are independent contractors that solicit customers for
AT&T Wireless service, and, typically, include specialized wireless stores,
specialized electronics stores and department stores. The AT&T Wireless Group
generally pays its dealers a commission for each customer that uses its service
for a

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specified period, and may make residual or account management payments to the
dealer based on the customer's ongoing service charges.

The AT&T Wireless Group has begun a number of initiatives designed to lower
its costs of adding subscribers as well as its customer care expenses. For
example, in June 1999 the AT&T Wireless Group began using the Internet as a
vehicle for signing customers onto its service as well as for customer care.

RATES AND BILLING

The AT&T Wireless Group charges may include fees for service activation,
monthly access, per-minute airtime and customer-calling features, which may
include a fixed number of minutes or packets of data per month at a set price
and generally offers a variety of pricing options, most of which combine a fixed
monthly access fee for a fixed number of minutes or packets of data and
additional charges for usage in excess of those allotted. Customers may also
incur long distance and roaming fees.

OTHER ASSETS

The AT&T Wireless Group also possesses certain other assets not described
above. The most significant of these assets include a number of equity interests
in international wireless operations and an air-to-ground wireless operation.

International

The AT&T Wireless Group owns half of the 33.3% equity stake in Rogers
Cantel it holds jointly with British Telecommunications. AT&T and British
Telecommunications acquired this interest in August 1999 for an aggregate of
approximately Cdn$1.4 billion (US$934 million) in cash. This ownership position
is held through a subsidiary entity that is 50% owned by AT&T and 50% owned by
British Telecommunications. AT&T and British Telecommunications share four of
the 16 Rogers Cantel board seats and have been granted other governance rights
customary in a transaction of this nature.

The AT&T Wireless Group's long standing relationship with Rogers Cantel
allows two of North America's largest TDMA providers to offer virtually seamless
cross-border capabilities. Wireless customers throughout Canada can enjoy
wireless services under the Cantel AT&T name. This arrangement adds 30 million
POPs to the AT&T Wireless Group's North American coverage.

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The AT&T Wireless Group is the operating partner in wireless ventures in
Canada, Colombia, India and Taiwan. The following table provides information
regarding these ventures:

<TABLE>
<CAPTION>
POPs
COVERED OWNERSHIP
COUNTRY ENTITY DESCRIPTION (IN MILLIONS)* PERCENTAGE
- -------- --------------------------- ------------------------------------------ --------------- ----------
<S> <C> <C> <C> <C>
Canada Rogers Cantel TDMA network 30 17%
Mobile Communications, Inc.
Colombia Celumovil TDMA network 21 14%
India Birla Communications Ltd. GSM networks in Goa, Gujarat and
Maharashtra, India 58 49%
Taiwan Far EasTone Nationwide GSM 900 and 1800 networks 20 14%
Communications Ltd.
</TABLE>

- -------------------------

* As of December 31, 1999.

In addition, subject to existing agreements or commitments, to the extent
that AT&T acquires any international wireless investments in connection with its
merger with MediaOne, AT&T intends to allocate those investments to the AT&T
Wireless Group in exchange for fair and reasonable consideration.

Air-to-ground

The Aviation Communications Division (ACD) of the AT&T Wireless Group
provides air-to-ground communications services. A minority ownership interest in
ACD is held by Rogers Cantel.

ACD owns and operates a network of ground-based and airborne
telecommunications equipment and related assets that deliver digital telephone
service to commercial and private aircraft in North America. In the United
States and Canada, ACD currently contracts with Alaska Airlines, American
Airlines, Canadian Airlines, Delta Air Lines, Midwest Express, Northwest
Airlines, and Southwest Airlines. Currently, ACD's North American installed
customer base represents 1,502 commercial aircraft. Outside the United States,
ACD is one of the leading airborne telecommunications equipment and product
support suppliers to airlines and other service providers. In Europe and Asia,
ACD's current installed customer base represents 371 commercial aircraft.
Through its general aviation segment, ACD provides digital telephone service to
operators of private aircraft. ACD currently has its system installed on 379
general aviation aircraft.

ACD's North American Terrestrial System network of 152 ground stations in
the United States, Canada and Mexico provides coverage on all major routes flown
by U.S. and Canadian commercial airlines customers equipped with ACD telephony
equipment. ACD's primary role in its European airline relationships has been to
install, integrate and support in-cabin telephone equipment on the customer
aircraft.

The AT&T Wireless Group and Rogers Cantel currently are exploring strategic
options with respect to ACD. This exploration may lead to a sale of ACD in the
near future.

WIRELESS NETWORK

The AT&T Wireless Group's ownership position in U.S. markets was obtained
through FCC auctions and the FCC lottery and settlement process as well as
through acquisitions of, and purchases and exchanges of, licenses with other
cellular providers.

Mobile voice network

Coverage. As of December 31, 1999, the AT&T Wireless Group's built
network, including partnership and affiliate markets, covered 65% of the U.S.
population, including operations in 42 of the 50 largest U.S. metropolitan
areas. The AT&T Wireless Group provides virtually seamless services over its
wireless network, which operates using both 850 megahertz and 1900 megahertz
licenses. Where agreements are in place, the AT&T Wireless Group is able to
offer service to

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customers of other wireless providers when they travel through its service area,
and AT&T Wireless Group subscribers can roam through other wireless providers'
service areas.

Analog and digital technologies. The AT&T Wireless Group offers both
analog and digital service in its 850 megahertz markets and digital service in
its 1900 megahertz markets. The AT&T Wireless Group believes that digital
technology offers many advantages over analog technology, including
substantially increased network capacity, greater call privacy, enhanced
services and features, lower operating costs, reduced susceptibility to fraud
and the opportunity to provide improved data transmissions. Moving customers to
digital service has been a key component of the AT&T Wireless Group's overall
wireless strategy. Digital service enables the AT&T Wireless Group to provide
added benefits and services to its customers, including extended battery life,
caller ID, text messaging and voicemail with message waiting indicator.

The AT&T Wireless Group has pursued a strategy to convert its analog
networks and subscriber base to digital. The primary goals of this program are
capacity expansion, cost reduction, and product improvement. As of December 31,
1999, over 79% of the AT&T Wireless Group's consolidated subscribers use digital
service, accounting for over 85% of its traffic.

As the AT&T Wireless Group grows its customer base and revenues, it will
need to increase its capacity in order to support higher network traffic.
Digital voice paths require less radio frequency spectrum capacity than do
analog voice paths. Further capacity improvements are possible using other
digital techniques and the AT&T Wireless Group believes that it is currently
yielding from its TDMA systems as much as four times the capacity of an analog
system using equivalent spectrum. Further capacity improvements are possible
using other digital techniques that would yield as much as or more than six
times analog capacity. The AT&T Wireless Group and its suppliers currently are
developing and intend to deploy such additional capacity-enhancing technology
within its existing spectrum.

The spectrum efficiency of digital will allow the AT&T Wireless Group to
launch entirely new networks within its existing spectrum. The AT&T Wireless
Group intends to launch a nationwide GPRS/EDGE wireless Internet Protocol
network largely using its existing spectrum resources. The AT&T Wireless Group
believes that its competitors that have not converted to digital will not have
the same flexibility in deploying high-speed data services.

The AT&T Wireless Group believes that its continued success depends on
having a competitive cost structure. In addition to enhancing capacity, digital
technology allows the AT&T Wireless Group to produce network minutes with less
capital and operating expense than analog technology. Not only is the cost of
digital network equipment lower per voice path than analog network equipment,
but also fixed costs, such as towers, shelters and other common equipment, are
reduced by spreading them over a larger number of minutes. Digital has also
allowed the AT&T Wireless Group to improve its roaming costs substantially using
over-the-air programming, which enables phones to select the most cost-effective
roaming partners. The AT&T Wireless Group believes that its aggressive
implementation of digital technology gives it a cost advantage over its
competitors that are more dependent on analog.

Moving customers to digital service is a key component of the AT&T Wireless
Group's overall wireless strategy. Digital technology provides a host of feature
improvements to the AT&T Wireless Group's customers. To date, the AT&T Wireless
Group has delivered on its digital networks such features as extended battery
life, caller ID, voicemail with message waiting indicator, short alphanumeric
message service, and Wireless Office Service.

TDMA network. The AT&T Wireless Group has chosen TDMA technology for its
digital network. TDMA permits the use of advanced tri-mode handsets that allow
for roaming across analog and digital systems and across 850 megahertz and 1900
megahertz spectrums. TDMA digital technology allows for enhanced services and
features, such as short alphanumeric message service, extended battery life,
added call security and improved voice quality. TDMA's hierarchical cell

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structure enables the AT&T Wireless Group to enhance network coverage with lower
incremental investment through the deployment of micro and pico, as opposed to
macro, cell sites. This enables the AT&T Wireless Group to offer customized
billing options and to track billing information per individual cell site, which
is practical for advanced wireless applications such as fixed wireless and
wireless office applications. TDMA served an estimated 35 million subscribers
worldwide and 18 million subscribers in North America as of December 31, 1999,
according to the Universal Wireless Communications Consortium, an association of
TDMA service providers and manufacturers. TDMA equipment is available from
leading telecommunication vendors such as Lucent, Ericsson and Nortel Networks
Corporation. A number of other wireless service providers have chosen CDMA or
GSM as their digital wireless technology.

CDPD network

The AT&T Wireless Group's CDPD network currently covers 89 million POPs,
which represents over 60% of its built network, and its CDPD customers can roam
on the CDPD networks of other wireless providers, which, together, cover an
additional 72 million POPs. CDPD is an industry standard using Internet
Protocol, which allows most applications written for the Internet as well as
many corporate applications to run efficiently over the network without
modification. Using CDPD, data files and transactions are divided into small
packets and sent on a dedicated wireless channel. In many data applications,
data is sent in bursts with intermittent quiet periods. Packet transmission
technologies take advantage of this fact and allow user data to be efficiently
carried on the same network channel. As a result, relative to data services
carried over circuit-switched analog or digital wireless networks, the AT&T
Wireless Group's packet-switched CDPD service is a significantly more
cost-effective means of sending data for the majority of applications because it
allows many users to share the same channel.

Third generation development strategy

Third generation technologies will allow high-speed wireless packet data
services and ultimately voice services using Internet Protocol. In order to be
successful, any third generation strategy must allow the wireless provider to
achieve a pervasive footprint quickly and cost effectively. In addition, third
generation networks that achieve global economies of scale and allow for global
roaming will have a significant advantage. The AT&T Wireless Group has chosen
EDGE as its third generation wireless architecture which it believes
accomplishes all of these goals. EDGE development is already underway and the
AT&T Wireless Group expects to be able to offer initial services sometime in
2002, with substantial deployment continuing into 2003.

EDGE represents a convergence of the AT&T Wireless Group's existing TDMA
technology with GSM technology. AT&T has signed partnership memoranda of
understanding with Telecom Italia Mobile SpA, British Telecom and NTT Mobile
Communications Network, Inc. to work together on third generation standards
convergence. The AT&T Wireless Group expects that this convergence of GSM and
TDMA will yield global economies of scale in developing network equipment and
handsets, as well as seamless global roaming capabilities. EDGE can be deployed
in existing spectrum and coexist with the AT&T Wireless Group's current TDMA
voice services.

Like CDPD, EDGE is also Internet Protocol based. As a result, the AT&T
Wireless Group expects that its near term strategy of using its CDPD network to
drive innovative solutions will provide seamless migration for its data
customers. The AT&T Wireless Group expects that all the applications developed
and deployed today will migrate to EDGE network services as customers upgrade
their equipment to EDGE. With EDGE, these applications are expected to operate
at higher speeds and in more places. In addition, the backbone network in place
for CDPD today will be substantially reused in the future EDGE network,
furthering the economic advantages of this approach.

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FIXED WIRELESS

Fixed wireless service provides customers with a high speed packet data
channel which can be used by up to five data devices simultaneously (for
example, five personal computers simultaneously accessing the Internet) at
download speeds of up to 512 kilobits per second. The service is expected to be
capable of speeds of up to one megabit per second by mid 2000. In the future,
the fixed wireless technology may evolve to provide higher than one megabit of
bandwidth per second and additional voice lines. In addition, the offering would
provide up to four lines of wireline quality voice telephony, including custom
calling features (e.g., call waiting, caller ID, three-way calling) available
today over wireline networks.

Both the data and voice channels are delivered over the existing telephone
wiring within the residence or small business premises, allowing customers to
utilize their existing telephones. No separate modem is required in order to
connect a customer's personal computer to the data channel. Once connected to
the existing telephone wiring within the premises, the fixed wireless equipment
creates a local area network (LAN) within the premises, effectively creating an
intranet in the home or business. Data and telephone equipment is connected to
the LAN using the standard jacks that already exist on the premises. All data
and voice transmissions are encrypted for customer privacy and fraud protection.

One of the data devices that can connect to the LAN is the Enhanced
Personal Base Station. A customer will be able to register up to 10 AT&T
wireless phones on a single EPBS through a personal web page accessible on the
Internet. The AT&T Wireless Group plans to begin market tests of the EPBS in the
second half of 2000.

The data service has been designed to create an open environment in which
customers may select and easily change their third party Internet service
provider (ISP) or online service provider (OSP). Customers maintain a separate
billing relationship with their chosen ISP or OSP and may at any time register
online with a new or additional ISP or OSP through the fixed wireless data
service. The AT&T Wireless Group currently is in discussions with a number of
national and regional companies to include them as participating ISPs or OSPs on
its fixed wireless service.

In order to install fixed wireless service in a customer's premises, the
AT&T Wireless Group must mount a flat panel antenna on the outside of a
customer's premises and certain electronic equipment, including a backup battery
supply, inside the premises. Once installed, the antenna on the customer's
premises communicates with a neighborhood antenna and base station that, in the
majority of cases, shares its physical location with an antenna and base station
site used to serve the AT&T Wireless Group's mobile wireless service. Thus, in
many cases the mobile and fixed wireless networks will share a common
infrastructure for towers, base station sites and backhaul transmission to a
digital switching center.

The AT&T Wireless Group estimates the total capital cost to serve a
subscriber on the fixed wireless service currently is approximately $750 and
expects this cost to fall to about $500 within the next three to five years.
These estimates include the installed cost of all premises equipment as well as
the installed cost of any additional cell sites, antennas, base station
equipment, backhaul and switching equipment necessary to add the fixed wireless
capability to the AT&T Wireless Group's mobile wireless infrastructure. The
deployment of capital for fixed wireless is flexible and can be actively
managed. Approximately 70% of the estimated capital cost is associated with the
equipment installed on the customer's premises and is not incurred until
customers commit to purchase fixed wireless services. The remaining 30% will
only occur in targeted geographic areas that the AT&T Wireless Group believes
offer the potential to be profitable fixed wireless markets. Given this cost
profile and the set of voice and data capabilities provided by the fixed
wireless system, the AT&T Wireless Group believes that it can create highly
competitive market offers for the basic voice and growing broadband data needs
of residential and small business customers in any market in which it chooses to
deploy its fixed wireless solution. The AT&T Wireless Group believes that it can
leverage

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AT&T's consumer sales channels to promote its fixed wireless services to
residential and small business customers.

AT&T believes that the AT&T Wireless Group is the most appropriate group to
take advantage of the fixed wireless opportunity for a number of reasons. First,
the fixed wireless network will share equipment and facilities with the mobile
wireless network, lowering the level of capital required to roll out the fixed
wireless service. Second, the AT&T Wireless Group will take charge of the
management and sharing of wireless spectrum across business opportunities such
as the core mobility business, fixed wireless and the wireless data opportunity.
Finally, the AT&T Wireless Group's management team has more experience to take
advantage of the opportunity, given the technical expertise and knowledge it has
accumulated building the mobile wireless network.

COMPETITION

Competition for subscribers among wireless service providers is based
principally upon the services and features offered, call quality, customer
service, system coverage and price. The AT&T Wireless Group's ability to compete
successfully will depend, in part, on its ability to anticipate and respond to
various competitive factors affecting the industry, including new services that
may be introduced, changes in consumer preferences, demographic trends, economic
conditions and pricing strategies. The AT&T Wireless Group's primary competitors
are Vodafone AirTouch, BellSouth, Bell Atlantic, GTE, Nextel Communications,
Inc., SBC, VoiceStream Communications and Sprint.

In addition, the wireless communications industry has been experiencing
significant consolidation and the AT&T Wireless Group expects that this
consolidation will continue. The previously announced mergers or joint ventures
of Bell Atlantic/GTE/Vodafone/AirTouch, MCI WorldCom/Sprint and SBC/Ameritech
will create large, well-capitalized competitors with substantial financial,
technical, marketing and other resources to respond to the AT&T Wireless Group's
offerings. Assuming these mergers or ventures were completed today, the AT&T
Wireless Group estimates that its ranking would decline to second in U.S.
revenue, third in U.S. subscriber share and fourth in terms of U.S. population
covered by licenses, or POPs. As a result, these competitors may be able to
offer nationwide services and plans more quickly and more economically than the
AT&T Wireless Group and to obtain roaming rates that are more favorable than
those obtained by the AT&T Wireless Group, and may be better able to respond to
offers of the AT&T Wireless Group.

The AT&T Wireless Group's cellular operations have always experienced
direct competition from the second cellular licensee in each market. Beginning
in 1997, the AT&T Wireless Group began experiencing competition from as many as
six license holders in certain markets. Competition from new providers in the
AT&T Wireless Group's markets will continue to increase as the networks of
license holders are built out over the next several years. In addition, the FCC
is likely to offer additional spectrum for wireless mobile licenses in the
future using existing or new technologies.

PATENTS AND TRADEMARKS

AT&T and its subsidiaries own numerous patents in the United States and
foreign countries. The foreign patents are counterparts of our U.S. patents.
Many of these patents are licensed to others and AT&T and its subsidiaries are
licensed to use certain patents licensed from others. Patents will continue to
be managed by the group that has managed it historically. The AT&T Common Stock
Group and the AT&T Wireless Group will, on the same basis they have enjoyed
historically, have the right to use the patents managed by the other group, or
with respect to which either has the power to grant such rights, for appropriate
business activities. We expect there will be no royalty or licensing fees
related to these arrangements.

The groups also will collaborate to achieve enterprise objectives with
respect to the licensing or sale of patents to third parties. The policy of the
AT&T Wireless Group capital stock committee will be not to sell or license any
patents that are predominantly used by the AT&T Wireless Group if that sale or
license would result in a material competitive disadvantage to the AT&T Wireless
Group. Any

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fees obtained through such sales or licensing will be allocated to the group
that predominantly uses the patents sold or licensed, or if no specific patent
can be associated with a fee or such patent is not predominantly used by any one
group, then allocated using the same general allocation as overhead expenses.
The AT&T Wireless Group does not consider any individual patents to be material
to its business operation.

AT&T has numerous trademarks registered throughout the world. We consider
many of our trademarks to be valuable assets, particularly the AT&T brand name
and globe logo. The AT&T Wireless Group will have access to these trademarks,
including the AT&T brand name and globe logo, in the United States and other
countries under the same terms as for our patents described above. In total,
these patents, patent applications, trademarks and licenses, and, in particular,
the AT&T brand name, are material to the AT&T Wireless Group's business.

EMPLOYEES

At December 31, 1999, the AT&T Wireless Group employed approximately 18,000
individuals in its operations, including its fixed wireless operations,
virtually all of whom are located in the United States.

PROPERTIES

The AT&T Wireless Group owns, or controls through long-term leases or
licenses, properties consisting of plant and equipment used to provide wireless
communications services. In addition, it owns, or controls through leases,
properties used as administrative office buildings and/or retail sales
locations, customer care centers, and other facilities, such as research and
development facilities. These properties include land, interior and rooftop
office space, and space on existing structures of various types used to support
equipment used to provide wireless communications services. Most of the leased
properties are owned by private entities and the balance is owned by municipal
entities.

Plant and equipment used to provide wireless communications services
consist of:

- switching, transmission and receiving equipment,

- connecting lines (cables, wires, poles and other support structures,
conduits, etc.),

- land and buildings,

- easements, and

- other miscellaneous properties (work equipment, furniture and plants
under construction).

The majority of the lines connecting the AT&T Wireless Group services to other
telecommunications services and power sources are on or under public roads,
highways and streets. The remainder are on or under private property.

REGULATORY ENVIRONMENT

The FCC regulates the licensing, construction, operation, acquisition, sale
and resale of wireless systems in the United States pursuant to the
Communications Act of 1934 and the associated rules, regulations and policies
promulgated by the FCC.

LICENSING OF WIRELESS SERVICES SYSTEMS

The AT&T Wireless Group owns protected geographic service area licenses
granted by the FCC to provide cellular service and PCS. It also owns licenses
granted by the FCC to provide point-to-multi-point communications services in
various bands, including significant licenses in the 37 to 39 gigahertz bands.

A cellular system operates on one of two 25 megahertz frequency blocks that
the FCC allocates for cellular radio service. Cellular systems generally are
used for two-way mobile voice applications, although they may be used for data
applications and fixed wireless services as well. Cellular license areas are
issued for either metropolitan service areas or rural service areas. Initially,
one of the two cellular licenses available in each metropolitan service area or
rural service area was awarded to a

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local exchange telephone company by the FCC, while the other license was awarded
either through competitive processes or lotteries. Licenses were issued
beginning in 1983, and over the years numerous license transfers and corporate
reorganizations have obscured the original pattern of distributing one set of
licenses to local telephone company affiliates and the other to companies that
do not have local exchange service in the license area.

A PCS system operates on one of six frequency blocks allocated for personal
communications services. PCS systems generally are used for two-way voice
applications although they may carry two-way data communications as well.
Narrowband PCS systems, in contrast, are for non-voice applications such as
paging and data service and are separately licensed. For the purpose of awarding
PCS licenses, the FCC has segmented the United States into 51 large regions
called major trading areas, which are comprised of 493 smaller regions called
basic trading areas. The FCC awarded two PCS licenses for each major trading
area and four licenses for each basic trading area. Thus, generally, six
licensees are authorized to compete in each area. The two major trading area
licenses authorize the use of 30 megahertz of spectrum. One of the basic trading
area licenses is for 30 megahertz of spectrum, and the other three are for 10
megahertz each. The FCC permits licensees to split their licenses and assign a
portion, on either a geographic or frequency basis or both, to a third party.

The FCC awarded initial PCS licenses by auction. Auctions began with the 30
megahertz major trading area licenses and concluded in 1998 with the last of the
basic trading area licenses. However, in March 1998, the FCC adopted an order
that allows troubled entities that won PCS 30 megahertz C-Block licenses at
auction to obtain financial relief from their payment obligations and to return
some or all of their C-Block licenses to the FCC for reauctioning. The FCC
completed the reauction of the returned licenses in April 1999. In addition,
certain of the C-block licenses are currently in bankruptcy proceedings, and
these licenses may be returned to the FCC for reauction.

Under the FCC's current rules specifying spectrum aggregation limits
affecting wireless licensees, no entity may hold attributable interests,
generally 20% or more of the equity of, or an officer or director position with,
the licensee, in licenses for more than 45 megahertz of PCS, cellular and
certain specialized mobile radio services where there is significant overlap in
any geographic area. Significant overlap will occur when at least 10% of the
population of the PCS licensed service area is within the cellular and/or
specialized mobile radio service area(s). The FCC recently increased this limit
to 55 megahertz in situations in which a 25 megahertz cellular rural service
area is attributed to a 30 megahertz PCS license. These spectrum aggregation
rules are subject to a pending FCC proceeding that could revise or eliminate
them.

All wireless licenses have a 10-year term, at the end of which term they
must be renewed. The FCC will award a renewal expectancy to a wireless licensee
that has provided substantial service during its past license term, and has
substantially complied with applicable FCC rules and policies and the
Communications Act. Licenses may be revoked for cause and license renewal
applications denied if the FCC determines that a renewal would not serve the
public interest. FCC rules provide that competing renewal applications for
licenses will be considered in comparative hearings, and establish the
qualifications for competing applications and the standards to be applied in
hearings.

All wireless licenses must satisfy specified coverage requirements.
Cellular licenses were required, during the five years following the grant of
the license, to construct their systems to provide service (at a specified
signal strength) to the territory encompassed by their service area. Failure to
provide such coverage resulted in reduction of the relevant license area by the
FCC. All A and B block PCS licensees must construct facilities that offer
coverage to one-third of the population of the service area within five years of
the original license grants and to two-thirds of the population within ten
years. All D and E block PCS licensees must construct facilities that offer
coverage to one-fourth of the population of the licensed area or "make a showing
of substantial service in their license area" within five years of the original
license grants. Licensees that fail to meet the coverage requirements may be
subject to forfeiture of the license.
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For a period of up to five years after the grant of a PCS license, subject
to extension, a licensee will be required to share spectrum with existing
licensees that operate certain fixed microwave systems within its license area
under circumstances where interconnection is not available through the local
exchange carrier or the competitive local exchange carrier. In an effort to
balance the competing interests of existing microwave users and newly authorized
PCS licensees, the FCC has adopted a transition plan to relocate such microwave
operators to other spectrum blocks and a cost sharing plan so that if the
relocation of an incumbent benefits more than one PCS licensee, those licensees
will share the cost of the relocation. Initially, this transition plan allowed
most microwave users to operate in the PCS spectrum for a voluntary two-year
negotiation period and an additional mandatory one-year negotiation period. For
public safety entities that dedicate a majority of their system communications
to police, fire or emergency medical services operations, the voluntary
negotiation period is three years, with an additional mandatory two-year
negotiation period. In 1998, the FCC shortened the voluntary negotiation period
by one year, without lengthening the mandatory negotiation period, for
non-public safety PCS licensees in the C, D, E and F Blocks. Parties unable to
reach agreement within these time periods may refer the matter to the FCC for
resolution, but the incumbent microwave user is permitted to continue its
operations until final FCC resolution of the matter. The transition and cost
sharing plans expire on April 4, 2005, at which time remaining microwave
incumbents in the PCS spectrum will be responsible for the costs of relocating
to alternate spectrum locations.

Wireless systems are subject to certain FAA regulations governing the
location, lighting and construction of transmitter towers and antennas and are
subject to regulation under federal environmental laws and the FCC's
environmental regulations. State or local zoning and land use regulations also
apply to tower siting and construction activities. We expect to use common
carrier point-to-point microwave facilities to connect certain wireless cell
sites, and to link them to the main switching office. The FCC licenses these
facilities separately and they are subject to regulation as to technical
parameters and service.

The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of private mobile radio service or of
commercial mobile radio service, which includes PCS and cellular service. The
FCC does not regulate commercial mobile radio service or private mobile radio
service rates. However, commercial mobile radio service providers are common
carriers and are required under the Communications Act to offer their services
to the public without unreasonable discrimination. The FCC's rules currently
require providers to permit others to resell their services for a profit;
however, these rules will expire in 2002.

TRANSFERS AND ASSIGNMENTS OF CELLULAR AND PCS LICENSES

The Communications Act and FCC rules require the FCC's prior approval of
the assignment or transfer of control of a license for a PCS or cellular system.
In addition, the FCC has established transfer disclosure requirements that
require licensees who assign or transfer control of a PCS license within the
first three years of their license terms to file associated sale contracts,
option agreements, management agreements or other documents disclosing the total
consideration that the licensee would receive in return for the transfer or
assignment of its license. Non-controlling interests in an entity that holds an
FCC license generally may be bought or sold without FCC approval subject to the
FCC's spectrum aggregation limits. However, notification and expiration or
earlier termination of the applicable waiting period under Section 7A of the
Clayton Act by either the Federal Trade Commission or the Department of Justice
may be required, as well as approval by state or local regulatory authorities
having competent jurisdiction, if we sell or acquire PCS or cellular interests
over a certain size.

FOREIGN OWNERSHIP

Under existing law, no more than 20% of an FCC licensee's capital stock may
be owned, directly or indirectly, or voted by non-U.S. citizens or their
representatives, by a foreign government or its

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representatives or by a foreign corporation. If an FCC licensee is controlled by
another entity, as is the case with our ownership structure, up to 25% of that
entity's capital stock may be owned or voted by non-U.S. citizens or their
representatives, by a foreign government or its representatives or by a foreign
corporation. Foreign ownership above the 25% level may be allowed should the FCC
find such higher levels not inconsistent with the public interest. The FCC has
ruled that higher levels of foreign ownership, even up to 100%, are
presumptively consistent with the public interest with respect to investors from
certain nations. If our foreign ownership were to exceed the permitted level,
the FCC could revoke our FCC licenses, although we could seek a declaratory
ruling from the FCC allowing the foreign ownership or take other actions to
reduce our foreign ownership percentage in order to avoid the loss of our
licenses. We have no knowledge of any present foreign ownership in violation of
these restrictions.

RECENT REGULATORY DEVELOPMENTS

The FCC has announced rules for making emergency 911 services available by
cellular, PCS and other commercial mobile radio service providers, including
enhanced 911 services that provide the caller's telephone number, location and
other useful information. The original timetable required commercial mobile
radio services providers to be able to process and transmit 911 calls without
call validation, including those from callers with speech or hearing
disabilities, by late 1997. Additionally, commercial mobile radio service
providers are required to take actions enabling them to relay a caller's
automatic number identification and cell site if requested to do so by a public
safety dispatch agency that agreed to reimburse the provider for the additional
expenses incurred to provide those services. In October 1999, the FCC revised
its rules to eliminate any requirement that such agencies reimburse wireless
providers. In a companion order issued earlier in the fall of 1999, the FCC also
modified rules requiring commercial mobile radio service providers to provide
information on the location of a 911 call. The modified rules allow providers to
use either network or handset-based technologies to provide such information.
However, providers are not permitted to recover their costs of deploying such
technologies from dispatch agencies.

The FCC has granted waivers of the requirement to provide 911 service to
users with speech or hearing disabilities to various providers, and we have
obtained a waiver. On June 9, 1999, the FCC also adopted rules designed to
ensure that analog cellular calls to 911 are completed. These rules, which do
not apply to digital cellular service or to PCS, give each cellular provider a
choice of three ways to meet this requirement. State actions incompatible with
the FCC rules are subject to preemption.

On August 8, 1996, the FCC released its order implementing the
interconnection provisions of the Telecommunications Act. Although many of the
provisions of this order were struck down by the U.S. Court of Appeals for the
Eighth Circuit, on January 25, 1999, the U.S. Supreme Court reversed the Eighth
Circuit and upheld the FCC in all respects material to our operations. On June
10, 1999, the Eighth Circuit issued an order requesting briefs on certain issues
it did not address in its earlier order, including the pricing regime for
interconnection. While appeals have been pending, the rationale of the FCC's
order has been adopted by many states' public utility commissions, with the
result that the charges that cellular and PCS operators pay to interconnect
their traffic to the public switched telephone network have declined
significantly from pre-1996 levels.

In its implementation of the Telecommunications Act, the FCC established
federal universal service requirements that affect commercial mobile radio
service operators. Under the FCC's rules, commercial mobile radio service
providers are potentially eligible to receive universal service subsidies for
the first time; however, they are also required to contribute to the federal
universal service fund and can be required to contribute to state universal
funds. Many states also are moving forward to develop state universal service
fund programs. A number of these state funds require contributions, varying
greatly from state to state, from commercial mobile radio service providers. The
FCC's universal service order was modified on appeal in the U.S. Court of
Appeals for the Fifth Circuit.

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The court's ruling has had the effect of reducing commercial mobile radio
service provider support payments required for the federal universal service
programs.

On August 1, 1996, the FCC released a report and order expanding the
flexibility of cellular, PCS and other commercial mobile radio service providers
to provide fixed as well as mobile services. These fixed services include, but
need not be limited to, wireless local loop services, for example, to apartment
and office buildings, and wireless backup services to private branch exchange or
switchboards and local area networks, to be used in the event of interruptions
due to weather or other emergencies. The FCC has not yet decided whether fixed
services provided on a co-primary basis to mobility services should be subjected
to universal service obligations, or how such fixed services should be
regulated, but it has proposed a presumption that they be regulated as
commercial mobile radio service services. If the fixed services are provided as
an ancillary service to a carrier's mobility services, the FCC has decided that
such fixed services should be regulated as commercial mobile radio services.

The FCC has adopted rules on telephone number portability that will enable
customers to migrate their landline and cellular telephone numbers to cellular
or PCS providers and from a cellular or PCS provider to another service
provider. On February 8, 1999, the FCC extended the deadline for compliance with
this requirement to November 24, 2002, subject to any later determination that
number portability is necessary to conserve telephone numbers. The FCC has also
adopted rules requiring cellular and PCS providers to provide functions to
facilitate electronic surveillance by law enforcement officials by June 30,
2000, and has proposed to adopt certain additional obligations furthering
provision of these functions. Representatives of the cellular and PCS industry
are challenging the surveillance rules. Additionally, it is not clear that
commercial mobile radio service providers will be able to comply with the rules'
compatibility requirements by the current deadline of June 30, 2000; nor is it
clear whether the FCC will grant waivers to extend the deadline or what the
scope of penalties for failing to comply may be.

The FCC has determined that the interstate, interexchange offerings,
commonly referred to as long distance, of commercial mobile radio service
providers are subject to the interstate, interexchange rate averaging and
integration provisions of the Communications Act. Rate averaging requires us to
average our interstate long distance commercial mobile radio service rates
between high cost and urban areas. The FCC has delayed implementation of the
rate integration requirements with respect to wide area rate plans we offer
pending further reconsideration of its rules. The FCC also delayed the
requirement to integrate commercial mobile radio service long distance rates
among commercial mobile radio service affiliates. On December 31, 1998, the FCC
reaffirmed, on reconsideration, that its interexchange rate integration rules
apply to interexchange commercial mobile radio service services. The FCC
announced it would initiate a further proceeding to determine how integration
requirements apply to typical commercial mobile radio service offerings,
including one-rate plans. Until this further proceeding is concluded, the FCC
will enforce long distance rate integration on our services only where we
separately state a long distance toll charge and bill to our customers. To the
extent that the AT&T Wireless Group offers services subject to the FCC's rate
integration and averaging requirements, these requirements generally reduce its
pricing flexibility. We cannot assure you that the FCC will decline to impose
rate integration or averaging requirements on the AT&T Wireless Group or decline
to require it to integrate its commercial mobile radio service long distance
rates across its commercial mobile radio service affiliates.

The FCC recently adopted new rules limiting the use of customer proprietary
network information by telecommunications carriers in marketing a broad range of
telecommunications and other services to their customers and the customers of
affiliated companies. The rules were struck down by the federal circuit court in
1999, and their effectiveness has been stayed pending the court's review of a
petition to the FCC for reconsideration. Even if the rules are reinstated, the
AT&T Wireless Group does not anticipate that they will result in a significant
adverse impact on its financial position, results of operation or liquidity.

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In addition, state commissions have become increasingly aggressive in their
efforts to conserve numbering resources. These efforts may impact wireless
service providers disproportionately by imposing additional costs or limiting
access to numbering resources. Examples of state conservation methods include:
number pooling, number rationing and code sharing. A number of states have
petitioned the FCC for authority to adopt "technology specific" overlays that
would require wireless providers to obtain telephone numbers out of a separate
area code and may require wireless providers to change their customers'
telephone numbers. The FCC approval and the states' subsequent implementation of
such "technology specific overlays" could increase wireless providers' cost of
doing business and impact their ability to market services. On June 2, 1999, the
FCC released a notice of proposed rulemaking soliciting comments on a variety of
administrative and technical measures that would promote more efficient
allocation and use of numbering resources. Adoption of some of the proposed
methods could have a disproportionate impact on commercial mobile radio services
providers.

The FCC is also considering adopting rules to govern customer billing by
commercial mobile radio services providers and applied a number of these rules
to commercial mobile radio service providers. The FCC adopted detailed billing
rules for landline telecommunications service providers and is considering
whether to extend the remaining rules to commercial mobile radio services
providers. The FCC may require that more billing detail be provided to
consumers, which could add to the expense of the billing process as systems are
modified to conform to any new requirements. The FCC also is considering whether
carriers that decide to pass through their mandatory universal service
contributions to their customers should be required to provide a full
explanation of the program, and whether to ensure that the carriers that pass
through their contribution do not recover amounts greater than their mandatory
contributions from their customers. Adoption of some of the FCC's proposals
could increase the complexity of our billing processes and restrict our ability
to bill customers for services in the most commercially advantageous way.

The FCC has adopted an order that determines the obligations of
telecommunications carriers to make their services accessible to individuals
with disabilities. The order requires telecommunications services providers to
offer equipment and services that are accessible to and useable by persons with
disabilities. While the rules exempt telecommunications carriers from meeting
general disability access requirements if such results are not readily
achievable, it is not clear how liberally the FCC will construe this exemption.
Accordingly, the rules require us to make material changes to our network,
product line, or services at our expense.

In June 1999, the FCC initiated an administrative rulemaking proceeding to
help facilitate the offering of calling party pays as an optional wireless
service. Under the calling party pays service, the party placing the call to a
wireless customer pays the wireless airtime charges. Most wireless customers in
the United States now pay both to place calls and to receive them. Adoption of a
calling party pays system on a widespread basis could make commercial mobile
radio service providers more competitive with traditional landline
telecommunications providers for the provision of regular telephone service.

STATE REGULATION AND LOCAL APPROVALS
State and local governments are preempted from regulating either market
entry by, or the rates of, wireless operators. However, state governments can
regulate other terms and conditions of wireless service and several states have
imposed (or have proposed legislation that will impose) various consumer
protection regulations on the wireless industry. States also may impose their
own universal service support regimes on wireless and other telecommunications
carriers, similar to the requirements that have been established by the FCC. At
the local level, wireless facilities typically are subject to zoning and land
use regulation. State and local jurisdictions may also impose some conditions on
a driver's use of wireless technology while operating a motor vehicle. However,
under the federal Telecommunications Act, neither local nor state governments
may categorically prohibit the construction of wireless facilities in any
community.
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LEGAL PROCEEDINGS

On July 8, 1997, MCI and Ronald A. Katz Technology Licensing, L.P. filed
suit in the U.S. District Court in Philadelphia, Pennsylvania against AT&T,
claiming, among other things, that services provided by the AT&T Wireless Group
infringe patents held by or licensed to the plaintiffs. MCI and Katz currently
claim that the AT&T Wireless Group infringed patents relating to customer
service, wireless fraud protection and prepaid wireless service technology
applications. The plaintiffs have not specified requested damages.

A number of lawsuits exist that request class certification for claims that
the AT&T Wireless Group collected charges for local government taxes from
customers that were not properly subject to those charges. The AT&T Wireless
Group expects to assert claims for indemnity against several local government
entities in connection with these claims.

Several lawsuits exist that request class certification for claims that the
AT&T Wireless Group did not have sufficient network capacity to support the
influx of new subscribers who signed up for AT&T Digital One Rate service
beginning in May 1998 and therefore has failed to provide service of a quality
allegedly promised to subscribers. The plaintiffs in these cases have not
asserted specific claims for damages, with the exception of one case filed in
Texas in which the named plaintiffs have asserted claims for compensatory and
punitive damages totaling $100 million.

A number of other lawsuits exist that are brought on behalf of consumers or
request class certification for contract, misrepresentation or unfair practice
claims and, depending on the case, relating to AT&T Wireless Group's billing
practices (including rounding up of partial minutes of use to full minute
increments and billing send to end), coverage, dropped calls, price fixing or
mistaken bills. Although the plaintiffs in these cases have not specified
alleged damages, the damages in two of the cases are alleged to exceed $100
million. One of these two cases has been dismissed and is on appeal and the
other currently is in settlement negotiations.

The AT&T Wireless Group is involved in litigation in which the Cellular One
Group claims that use of the name "AT&T Digital One Rate" infringes a
trademarked name, "Digital One" allegedly used by the Cellular One Group. The
Cellular One Group has not specified amounts of claimed damages.

On July 9, 1999, GTE filed suit in the U.S. District Court in Richmond,
Virginia against Nokia, claiming that the Nokia phones manufactured for the AT&T
Wireless Group infringe a GTE patent for over-the-air activation. On October 29,
1999, the AT&T Wireless Group filed a declaratory judgment action in the U.S.
District Court in Seattle, Washington, seeking a ruling that the AT&T Wireless
Group's use of over-the-air activation and the functionality built into Nokia's
phones does not infringe the GTE patent. On December 23, 1999, the U.S. District
Court in Virginia granted the AT&T Wireless Group's request to transfer GTE's
Virginia action to Seattle. GTE has not specified amounts of claimed damages.
The AT&T Wireless Group is seeking a ruling that its use of over-the-air
activation does not infringe GTE's patent.

The AT&T Wireless Group is vigorously defending each of these claims. The
AT&T Wireless Group cannot predict the final outcome of these disputes, but does
not believe that it will suffer any material liability from them.

The AT&T Wireless Group also is a defendant in other legal actions
involving claims incidental to the normal conduct of the running of its
business. The AT&T Wireless Group believes that the amounts that may be paid in
these actions will not be material to its financial position, or its results of
operations or cash flow.

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MANAGEMENT OF THE AT&T WIRELESS GROUP

The following table sets forth the senior management of the AT&T Wireless
Group upon consummation of the initial public offering:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John D. Zeglis 52 Chairman and Chief Executive Officer
Mohan Gyani 48 President and Chief Executive Officer, AT&T Wireless
Services
Michael G. Keith 51 President and Chief Executive Officer, AT&T Fixed Wireless
Services
Steven L. Elfman 44 Senior Vice President and Chief Information Officer
David B. Gibbons 33 Vice President and Chief Architect, AT&T Fixed Wireless
Services
Robert H. Johnson 46 Executive Vice President, National Wireless Operations
Joseph McCabe Jr. 49 Vice President and acting Chief Financial Officer
Roderick Nelson 40 Chief Technology Officer, AT&T Wireless Services
Jordan M. Roderick 42 President, International
Laurence C. Seifert 62 Executive Vice President and Chief Operating Officer,
AT&T Fixed Wireless Services
Gregory L. Slemons 46 Senior Vice President, Wireless Network Services
Kendra VanderMeulen 48 Senior Vice President, Product Development and Mobile
Internet Strategy
</TABLE>

John D. Zeglis was named Chief Executive Officer of the AT&T Wireless Group
in 1999. Formerly a partner with Sidley & Austin, Mr. Zeglis joined AT&T in 1984
as corporate Vice President -- Law, and was named AT&T's General Counsel in
1986. In 1997, Mr. Zeglis was named President of AT&T and elected to our board
of directors. Mr. Zeglis is a director of Helmrich and Payne Corporation,
Dynergy Corporation and Sara Lee Corporation.

Mohan Gyani was named Executive Vice President and Chief Financial Officer
of the AT&T Wireless Group and then became President and Chief Executive Officer
of AT&T Wireless Services in 2000. From 1995 to 1999, Mr. Gyani was Executive
Vice President and Chief Financial Officer of Airtouch Communications. Following
the merger of Vodafone and Airtouch, Mr. Gyani was head of strategy and
corporate development and a member of the board of directors of Vodafone
AirTouch plc.

Michael G. Keith was named President and Chief Executive Officer, AT&T
Fixed Wireless Services of the AT&T Wireless Group in 1999. Mr. Keith is
responsible for developing and launching the AT&T Wireless Group's fixed
wireless business. Mr. Keith has held numerous sales and marketing positions at
AT&T since he joined the company in 1978. In 1996, Mr. Keith was promoted to
Vice President & General Manager for Business Customer Care. He was named Vice
President & General Manager for Global Services in 1997, and President -- AT&T
Business Services in 1998.

Steven L. Elfman was named Senior Vice President and Chief Information
Officer of the AT&T Wireless Group in March 2000. Mr. Elfman held the same
position with AT&T Wireless Services since joining AT&T in July 1997. Mr. Elfman
is responsible for AT&T Wireless Service's information technology research,
development, implementation and national deployment. This includes all aspects
of computing, telecommunications for internal use and applications systems. Mr.
Elfman leads the AT&T Wireless Group's strategy and development of e-commerce.
In addition, Mr. Elfman is responsible for business security, fraud management,
supply management and facilities

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management. Prior to joining AT&T, Mr. Elfman was the Senior Vice President and
Chief Information Officer at GE Capital Fleet Services in Minneapolis,
Minnesota, responsible for all aspects of Information Technology in North
America, Europe and Australia.

David B. Gibbons was named Vice President and Chief Architect, AT&T Fixed
Wireless Services in March 2000. Mr. Gibbons is responsible for the end to end
system architecture for the fixed wireless network and for advanced technology
development. The current focus of Mr. Gibbons team is on voice-over-IP and
developing wireless technologies that enable multi-megabit broadband services.
Before assuming his current role, Mr. Gibbons was responsible for the software
development activities for our fixed wireless program.

Robert H. Johnson was named Executive Vice President -- National Wireless
Operations in September 1999. Mr. Johnson is responsible for all sales,
distribution, marketing and customer care activities for AT&T Wireless Services
consumer and business markets. Prior thereto, Mr. Johnson was the Senior Vice
President of National Markets for AT&T Wireless Services. In this role, Mr.
Johnson was responsible for twenty-five major markets across the United States.

Joseph McCabe Jr. is the Vice President and acting Chief Financial Officer
of the AT&T Wireless Group. For the last three years he has been the Chief
Financial Officer of AT&T Wireless Services. Mr. McCabe has over 15 years of
financial experience in the telecommunications industry, including senior
positions in AT&T's business products, Internet and consumer long-distance
businesses.

Roderick Nelson is the Chief Technology Officer of AT&T Wireless Services
and head of the Technology Development Group. Mr. Nelson is responsible for
defining the future wireless network architecture and technology direction.
Currently, the major emphasis of this work is on planning for high-speed
wireless IP data and the introduction of third generation wireless network
technology. Since joining AT&T Wireless Services in 1985, Mr. Nelson has led the
introduction of many wireless technologies and capabilities. These include the
introduction of a nationwide signaling network for wireless automatic roaming,
TDMA digital wireless service, dual band, dual mode phones, and wireless
intelligent network services.

Jordan Roderick was named President, International in March 2000. Mr.
Roderick is responsible for all of the AT&T Wireless Group's international
operations and ventures. Prior to this position, Mr. Roderick was Executive Vice
President, Wireless Products and Technology at AT&T Wireless Services. In this
capacity, he had overall responsibility for product development, technology
development, terminal equipment, information systems and several other
functions.

Laurence C. Seifert is Executive Vice President and Chief Operating Officer
of AT&T Wireless Services. Prior to this position, Mr. Seifert was the Senior
Vice President, Wireless Local Technology Group and was responsible for fixed
wireless product design and development, supply systems integration, network
engineering, network deployment and customer operations. Mr. Seifert has also
served as AT&T's Vice President, Global Manufacturing and Engineering and was a
member of the Bell Labs Council. Mr. Seifert is a member of the National Academy
of Engineering.

Gregory L. Slemons is the Senior Vice President, Wireless Network Services.
Mr. Slemons has national responsibility for overseeing the development,
engineering, and maintenance and operation of AT&T Wireless Services network.
Mr. Slemons also is responsible for developing and overseeing the AT&T Wireless
Services capital program and the network operating expense budgets. Prior to his
appointment in 1997, Mr. Slemons was AT&T Wireless Services' Vice President of
Technical Services, where he guided and managed a large portion of the PCS
buildout and new market start-

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ups. Mr. Slemons has been in the wireless business since 1985 and has led a
major portion of the development and operation of McCaw Cellular networks in the
mid to late 1980's. He has held numerous regional senior network leadership
positions over his 14 years in the wireless business. Prior to joining McCaw,
Mr. Slemons held various management positions in AT&T for 13 years involving the
engineering and operations of communications networks.

Kendra VanderMeulen is the Senior Vice President of Product Development and
Mobile Internet Strategy, responsible for the development, introduction and
management of new mobility products, including data, to meet customer needs. She
is responsible for the development of the nationwide mobile, Internet and data
business. Ms. VanderMeulen joined AT&T in 1994 to lead the formation of the
wireless data business. This internal start-up business required the development
of new wireless Internet technologies, deployment of a nationwide circuit and
packet data networks, development of value-added products and services along
with the development of marketing and sales capabilities required to launch a
new industry segment.

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DESCRIPTION OF AT&T CAPITAL STOCK

The following description of certain terms of the capital stock of AT&T
does not purport to be complete, and is qualified in its entirety by reference
to the AT&T charter. The terms of the Class A Liberty Media Group tracking stock
and the Class B Liberty Media Group tracking stock can be found in the AT&T
charter. For more information on how you can obtain the AT&T charter, see "Other
Information -- Where You Can Find More Information" on page 107. You are urged
to read the AT&T charter in its entirety.

GENERAL

The AT&T charter currently provides that AT&T is authorized to issue 14.85
billion shares of capital stock, consisting of 100 million shares of AT&T
preferred stock and 14.75 billion shares of common stock, of which six billion
are shares of AT&T common stock, 2.5 billion are shares of Class A Liberty Media
Group tracking stock, 250 million are shares of Class B Liberty Media Group
tracking stock and six billion are shares of AT&T Wireless Group tracking stock.
As of February 29, 2000, 3,194,755,604 shares of AT&T common stock, no shares of
AT&T preferred stock, 1,181,420,568 shares of Class A Liberty Media Group
tracking stock and 103,117,226 shares of Class B Liberty Media Group tracking
stock and no shares of AT&T Wireless Group tracking stock were issued and
outstanding.

Although our board of directors has no intention at the present time of
doing so, it could issue common stock, warrants or a series of AT&T preferred
stock that could, depending on the terms of such securities, impede the
completion of a merger, tender offer or other takeover attempt. Our AT&T board
of directors will make any determination to issue such shares based on its
judgment as to the best interests of AT&T and its shareholders. Our board of
directors, in so acting, could issue securities having terms that could
discourage an acquisition attempt through which an acquirer may be able to
change the composition of our board of directors, including a tender offer or
other transaction that some, or a majority, of AT&T's shareholders might believe
to be in their best interests or in which AT&T's shareholders might receive a
premium for their stock over the then-current market price of stock.

AT&T COMMON STOCK

The holders of AT&T common stock are entitled to one vote for each share on
all matters voted on by shareholders, including elections of directors, and,
except as otherwise required by law or provided in any resolution adopted by our
board of directors with respect to any series of AT&T preferred stock, the
holders of such shares possess all voting power. Subject to any preferential
rights of any outstanding series of AT&T preferred stock created by our board of
directors from time to time, the holders of AT&T common stock are entitled to
such dividends as may be declared from time to time by our board of directors
from funds available therefor, and, upon liquidation, will be entitled to
receive pro rata all assets of AT&T available for distribution to such holders.

AT&T PREFERRED STOCK

AT&T preferred stock may be issued from time to time in one or more series.
All shares of AT&T preferred stock of all series will rank equally and be
identical in all respects, except that our board of directors is authorized to
fix the number of shares in each series, the designation thereof, and, subject
to the provisions of Article Third of the AT&T charter, the relative rights,
preferences

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and limitations of each series and the variations in such rights, preferences
and limitations as between series and specifically is authorized to fix with
respect to each series:

- the dividend rate on the shares of such series and the date or dates from
which dividends will be cumulative; the times when, the prices at which,
and all other terms and conditions upon which, shares of such series will
be redeemable,

- the amounts that the holders of shares of such series will be entitled to
receive upon the liquidation, dissolution or winding up of AT&T, which
amounts may vary depending on whether such liquidation, dissolution or
winding up is voluntary or involuntary and, if voluntary, may vary at
different dates,

- whether or not the shares of such series will be subject to the operation
of a purchase, retirement or sinking fund and, if so, the extent to and
manner in which such purchase, retirement or sinking fund will be applied
to the purchase or redemption of the shares of such series for retirement
or for other corporate purposes and the terms and provisions relative to
the operation of the said fund or funds,

- whether or not the shares of such series will be convertible into or
exchangeable for shares of any other class or series or for any class of
common shares and, if so, the price or prices or the rate or rates of
conversion or exchange and the method, if any, of adjusting the same,

- the restrictions, if any, upon the payment of dividends or making of
other distributions on, and upon the purchase or other acquisition of,
common shares,

- the restrictions, if any, upon the creation of indebtedness, and the
restrictions, if any, upon the issue of any additional shares ranking on
a parity with or prior to the shares of such series in addition to the
restrictions provided for in Article Third of the AT&T charter,

- the voting powers, if any, of the shares of such series in addition to
the voting powers provided for in Article Third of the AT&T charter, and

- such other rights, preferences and limitations as will not be
inconsistent with Article Third of the AT&T charter.

All shares of any particular series will rank equally and be identical in
all respects, except that shares of any one series issued at different times may
differ as to the date from which dividends will be cumulative.

Dividends on shares of AT&T preferred stock of each series will be
cumulative from the date or dates fixed with respect to such series, and will be
paid or declared or set apart for payment for all past dividend periods and for
the current dividend period before any dividends (other than dividends payable
in common shares) will be declared or paid or set apart for payment on common
shares. Whenever, at any time, full cumulative dividends for all past dividend
periods and for the current dividend period will have been paid or declared and
set apart for payment on all then-outstanding shares of AT&T preferred stock and
all requirements with respect to any purchase, retirement or sinking fund or
funds for all series of AT&T preferred stock will have been complied with, our
board of directors may declare dividends on the common shares and the shares of
AT&T preferred stock will not be entitled to share therein.

Upon any liquidation, dissolution or winding up of AT&T, the holders of
shares of AT&T preferred stock of such series will be entitled to receive the
amounts to which such holders are entitled as fixed with respect to such series,
including all dividends accumulated to the date of final distribution, before
any payment or distribution of assets of AT&T will be made to or set apart for

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the holders of common shares and, after such payments will have been made in
full to the holders of shares of AT&T preferred A stock, the holders of common
shares will be entitled to receive any and all assets remaining to be paid or
distributed to shareholders and the holders of shares of AT&T preferred stock
will not be entitled to share therein. For the purposes of this paragraph, the
voluntary sale, conveyance, lease, exchange or transfer of all or substantially
all the property or assets of AT&T or a consolidation or merger of AT&T with one
or more other corporations (whether or not AT&T is the surviving corporation of
such consolidation or merger) will not be deemed to be a liquidation,
dissolution or winding up, voluntary or involuntary.

The aggregate amount that all shares of AT&T preferred stock outstanding at
any time will be entitled to receive on involuntary liquidation, dissolution or
winding up will not exceed $8 billion.

So long as any shares of AT&T preferred stock are outstanding, AT&T will
not:

- authorize shares of stock ranking prior to shares of AT&T preferred stock
or change any provision of Article Third of the AT&T charter so to affect
adversely shares of AT&T preferred stock without the affirmative vote or
consent of the holders of at least 66 2/3% of all the shares of AT&T
preferred stock at the time outstanding;

- change any of the provisions of any series of AT&T preferred stock at the
time outstanding so as to affect adversely shares of such series without
the affirmative vote or consent of the holders of at least 66 2/3% of
such series of AT&T preferred stock; or

- increase the authorized number of shares of AT&T preferred stock or
increase the authorized number of shares of any class of stock ranking on
a parity with the AT&T preferred stock without the affirmative vote or
consent of the holders of at least a majority of all the shares of AT&T
preferred stock at the time outstanding.

Whenever, at any time or times, dividends payable on shares of AT&T
preferred stock will be in default in an aggregate amount equivalent to six full
quarterly dividends on any series of AT&T preferred stock at the time
outstanding, the number of directors then constituting our board of directors
will be increased by two, and the outstanding shares of AT&T preferred stock
will, in addition to any other voting rights, have the exclusive right, voting
separately as a class and without regard to series, to elect two directors of
AT&T to fill such newly created directorships, and such right will continue
until such time as all dividends accumulated on all shares of AT&T preferred
stock to the latest dividend payment date will have been paid or declared and
set apart for payment.

No holder of shares of AT&T preferred stock of any series, irrespective of
any voting or other right of shares of such series, will have, as such holder,
any preemptive right to purchase any other shares of AT&T or any securities
convertible into or entitling the holder to purchase such other shares.

If, in any case, the amounts payable with respect to any requirements to
retire shares of AT&T preferred stock are not paid in full in the case of all
series with respect to which such requirements exist, the number of shares to be
retired in each series will be in proportion to the respective amounts that
would be payable on account of such requirements if all amounts payable were
paid in full.

AT&T WIRELESS GROUP TRACKING STOCK

AT&T WIRELESS GROUP

We designed AT&T Wireless Group tracking stock to track the economic
performance of the AT&T Wireless Group. The "AT&T Wireless Group" consists of,
generally, the interest of AT&T or any of its subsidiaries in all of the
businesses, assets and liabilities reflected in the audited combined

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financial statements of the AT&T Wireless Group, as of December 31, 1999, as
included in this prospectus, including any successor to the AT&T Wireless Group
by merger, consolidation or sale of all or substantially all of its assets. The
AT&T charter contains adjustments to the definition of the AT&T Wireless Group
to reflect, among other things, related assets and liabilities (including
contingent liabilities), net income and net losses arising after the date of
such financial statements, contributions and allocations of assets, liabilities
and businesses between the groups and acquisitions and dispositions.

The "AT&T Common Stock Group" consists of, generally, the interest of AT&T
or any of its affiliates in all of the businesses in which AT&T or any of its
affiliates (or any of their predecessors or successors) is or has been engaged,
directly or indirectly, and the respective assets and liabilities of AT&T or any
of its affiliates, other than:

- the economic interest in the AT&T Wireless Group represented by the
outstanding shares of AT&T Wireless Group tracking stock, and

- any businesses, assets or liabilities of the Liberty Media Group.

We created the Liberty Media Group at the time of the TCI merger and
defined it to consist primarily of TCI's programming assets and businesses,
TCI's principal international assets and businesses, and substantially all of
TCI's non-cable and non-programming assets and businesses other than its
interest in At Home Corporation.

AT&T WIRELESS GROUP ALLOCATION FRACTION

The tracking stock amendment defines the "AT&T Wireless Allocation
Fraction" to represent the interest in the economic performance of the AT&T
Wireless Group reflected by AT&T Wireless Group tracking stock issued to the
public. At any time that all of the interest in the economic performance of the
AT&T Wireless Group is not reflected by the outstanding AT&T Wireless Group
tracking stock, this fraction will be used, in effect, to allocate to the AT&T
Common Stock Group the right to participate in any dividend, distribution or
liquidation payment made to holders of AT&T Wireless Group tracking stock. This
right to participate will reflect the inter-group interest of the AT&T Common
Stock Group in the AT&T Wireless Group, which will be equal to one minus this
fraction. At any time that all of the interest in the economic performance of
the AT&T Wireless Group is fully reflected by the outstanding AT&T Wireless
Group tracking stock, this fraction will equal one and, accordingly, the
inter-group interest will equal zero.

Subject to the criteria we describe below, this fraction is subject to
adjustment from time to time as our board of directors deems appropriate:

- to reflect subdivisions (by stock split or otherwise) and combinations
(by reverse stock split or otherwise) of AT&T Wireless Group tracking
stock and stock dividends payable in shares of AT&T Wireless Group
tracking stock,

- to reflect the fair market value of contributions or allocations by AT&T
of cash, property or other assets or liabilities from the AT&T Common
Stock Group to the AT&T Wireless Group (or vice versa), or of cash or
property or other assets or liabilities of the AT&T Common Stock Group
to, or for the benefit of, employees of the AT&T Wireless Group in
connection with employee benefit plans or arrangements of AT&T or any of
its subsidiaries (or vice versa),

- to reflect the number of shares of capital stock of AT&T contributed to,
or for the benefit of, employees of the AT&T Wireless Group in connection
with benefit plans or arrangements of AT&T or any of its subsidiaries,

- to reflect repurchases by AT&T of shares of AT&T Wireless Group tracking
stock for the account of the AT&T Wireless Group,

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- to reflect issuances of AT&T Wireless Group tracking stock for the
account of the AT&T Wireless Group,

- to reflect dividends or other distributions to holders of AT&T Wireless
Group tracking stock, to the extent no payment is made to the AT&T Common
Stock Group, and

- under such other circumstances as our board of directors determines
appropriate to reflect the economic substance of any other event or
circumstance.

In addition, in determining the percentage interest of holders of AT&T
Wireless Group tracking stock in any particular dividend or other distribution,
we will reduce the economic interest of holders of AT&T Wireless Group tracking
stock to reflect dilution arising from shares of AT&T Wireless Group tracking
stock reserved for issuance upon conversion, exercise or exchange of other
securities that are entitled to participate in such dividend or other
distribution.

The tracking stock amendment provides that any such adjustment must be made
in a manner that our board of directors determines to be fair and equitable to
holders of AT&T common stock and AT&T Wireless Group tracking stock. In the
event that any assets or other property are acquired by the AT&T Common Stock
Group and allocated or contributed to the AT&T Wireless Group, the consideration
paid by the AT&T Common Stock Group to acquire such assets or other property
will be presumed to be its "fair market value" as of its acquisition. Any
adjustment to the AT&T Wireless Group Allocation Fraction made by our board of
directors in accordance with these principles will be at the sole discretion of
our board of directors and will be final and binding on all shareholders.

VOTING RIGHTS

Except as we describe below, each outstanding share of AT&T Wireless Group
tracking stock will initially have a number of votes, or a fraction of a vote,
rounded to the nearest tenth, equal to:

- the initial public offering price per share of AT&T Wireless Group
tracking stock, divided by

If the fraction resulting from this formula is greater than 0.8 and less
than 1.2, we will set the initial vote at one vote per share of AT&T Wireless
Group tracking stock, even if this is not the nearest tenth. Similarly, if the
resulting fraction is greater than 0.4 and less than 0.6, we will set the
initial vote at one-half vote per share of AT&T Wireless Group tracking stock,
even if this is not the nearest tenth. After the initial vote is set, the voting
rights of the AT&T Wireless Group tracking stock will be subject to adjustments
to reflect stock splits, reverse stock splits, stock dividends or certain stock
distributions with respect to AT&T common stock, AT&T Wireless Group tracking
stock or Liberty Media Group tracking stock.

Holders of AT&T common stock are entitled to one vote on all matters voted
on by shareholders. Holders of Class B Liberty Media Group tracking stock are
entitled to 0.75 of a vote per share and holders of Class A Liberty Media Group
tracking stock have 0.075 of a vote per share on all matters voted on by
shareholders. The voting rights of AT&T common stock, Class B Liberty Media
Group tracking stock and Class A Liberty Media Group tracking stock will be
subject to adjustments to reflect stock splits, reverse stock splits, stock
dividends or certain stock distributions with respect to AT&T common stock, AT&T
Wireless Group tracking stock or Liberty Media Group tracking stock, including
any distribution of AT&T Wireless Group tracking stock to holders of AT&T common
stock.

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Except as otherwise required by New York law or any special voting rights
of any class or series of AT&T preferred stock, Liberty Media Group tracking
stock or any other class of AT&T common shares, holders of shares of AT&T common
stock, AT&T Wireless Group tracking stock, each other class of common shares, if
any, that is entitled to vote, Class A Liberty Media Group tracking stock and
Class B Liberty Media Group tracking stock, and holders of shares of each class
or series of AT&T preferred stock, if any, that is entitled to vote, will vote
as one class with respect to all matters to be voted on by shareholders of AT&T.

No separate class vote of AT&T Wireless Group tracking stock will be
required, except as required by the New York Business Corporation Law.

DIVIDENDS

General. Provided that AT&T has sufficient assets to pay a dividend under
applicable law, after excluding the available dividend amount relating to the
Liberty Media Group, dividends on AT&T Wireless Group tracking stock are limited
to an available dividend amount that is designed to be equivalent to the amount
that would legally be available for dividends on that stock if the AT&T Wireless
Group were a stand-alone corporation. Dividends on AT&T common stock are limited
to the amount of legally available funds for all of AT&T less the sum of the
available dividend amount for AT&T Wireless Group tracking stock and the
available dividend amount for Liberty Media Group tracking stock. AT&T does not
expect to pay dividends on shares of AT&T Wireless Group tracking stock.

Discrimination among classes of common shares. Our charter does not
provide for mandatory dividends. Provided that there are sufficient assets to
pay a dividend on a class of stock as described under "-- General," our board of
directors will have the sole authority and discretion to declare and pay
dividends (or to refrain from declaring or paying dividends), in equal or
unequal amounts, on AT&T common stock, AT&T Wireless Group tracking stock,
Liberty Media Group tracking stock, any other class of common shares or any two
or more of such classes. Subject to not exceeding the applicable available
dividend amount, our board of directors has this power regardless of the
relative available dividend amounts, prior dividend amounts declared,
liquidation rights or any other factor. Our board of directors has adopted a
policy with respect to Liberty Media Group tracking stock that it will
distribute to the holders of Liberty Media Group tracking stock any dividends it
receives from any entity included in the Liberty Media Group.

SHARE DISTRIBUTIONS

Subject to the provisions of Liberty Media Group tracking stock, AT&T may
declare and pay a distribution consisting of shares of AT&T common stock, AT&T
Wireless Group tracking stock or any other securities of AT&T or any other
person to holders of AT&T Wireless Group tracking stock only in accordance with
the provisions described below. We refer to this type of distribution as a
"share distribution."

Distributions on AT&T common stock or AT&T Wireless Group tracking
stock. Subject to any limitations imposed by the terms of Liberty Media Group
tracking stock, AT&T may declare and pay a share distribution to holders of AT&T
common stock, AT&T Wireless Group tracking stock or any other class of common
shares consisting of any securities of AT&T, any subsidiary of AT&T, or any
other person. However, securities attributable to a group may be distributed to
holders of another group only for consideration.

Discrimination among classes of common shares. The AT&T charter does not
provide for mandatory share distributions. Subject to the restrictions described
above or that are in effect

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regarding Liberty Media Group tracking stock, our board of directors will have
the sole authority and discretion to declare and pay share distributions (or to
refrain from declaring or paying share distributions), in equal or unequal
amounts, on AT&T common stock, AT&T Wireless Group tracking stock, Liberty Media
Group tracking stock, any other class of common shares or any two or more of
such classes. Subject to not exceeding the applicable available dividend
amounts, our board of directors has this power regardless of the relative
available dividend amounts, prior share distributions amounts declared,
liquidation rights or any other factor.

REDEMPTION

Redemption in exchange for shares of AT&T common stock at option of our
board of directors. At any time following either the occurrence of tax-related
events or the second anniversary of the date that AT&T Wireless Group tracking
stock is initially issued, our board of directors, in its sole discretion, may
redeem all outstanding shares of AT&T Wireless Group tracking stock for shares
of AT&T common stock. In such event, each share of AT&T Wireless Group tracking
stock will be redeemed in exchange for that number of shares of AT&T common
stock, calculated to the nearest 1/10,000, equal to 110% of the ratio of the
average market price per share of AT&T Wireless Group tracking stock to the
average market price per share of AT&T common stock.

In this case, the average market price per share of AT&T common stock or
AT&T Wireless Group tracking stock, as the case may be, means the average of the
daily market value per share for such AT&T common stock or AT&T Wireless Group
tracking stock for the 40 consecutive trading days ending on the 15th trading
day prior to the date notice of the redemption is mailed to holders of AT&T
Wireless Group tracking stock.

In order to redeem AT&T Wireless Group tracking stock on the basis of a tax
event, AT&T must obtain the opinion of counsel that, as a result of an amendment
to or change (or prospective change) in a law or an interpretation of the law
that takes place after the AT&T Wireless Group tracking stock is issued, there
is more than an insubstantial risk that:

- any issuance of AT&T Wireless Group tracking stock would be treated as a
sale or other taxable disposition by AT&T or any of its subsidiaries of
any of the assets, operations or relevant subsidiaries underlying the
AT&T Wireless Group tracking stock,

- the existence of AT&T Wireless Group tracking stock would subject AT&T,
its subsidiaries or its affiliates, or any of their respective successors
to the imposition of tax or other adverse tax consequences, or

- either AT&T common stock or AT&T Wireless Group tracking stock would not
be treated solely as common stock of AT&T.

Redemption in exchange for stock of qualifying subsidiaries at option of
our board of directors. The AT&T charter also provides that AT&T may, at any
time, redeem all outstanding shares of AT&T Wireless Group tracking stock in
exchange for a specified number of outstanding shares of common stock of a
subsidiary of AT&T that satisfies certain requirements under the Internal
Revenue Code and that holds all of the assets and liabilities of the AT&T
Wireless Group. We refer to a subsidiary that satisfies these requirements as a
"qualifying subsidiary." This type of redemption may only be made on a pro rata
basis, and must be tax free to the holders of AT&T Wireless Group tracking
stock, except with respect to any cash that holders receive in lieu of
fractional shares.

In this case, we would exchange each share of AT&T Wireless Group tracking
stock, on a pro rata basis, for an aggregate number of shares of common stock of
the qualifying subsidiary equal to the number of outstanding shares of common
stock of the qualifying subsidiary held by AT&T.

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Redemption in connection with certain significant transactions. In the
event of a sale, transfer, assignment or other disposition by AT&T in a
transaction or series of related transactions, of all or substantially all of
the properties and assets of the AT&T Wireless Group, AT&T is generally required
to take one of the following actions, which will be selected in the sole
discretion of our board of directors:

- AT&T may redeem each outstanding share of AT&T Wireless Group tracking
stock in exchange for a number of shares of AT&T common stock (calculated
to the nearest 1/10,000) equal to 110% of the ratio of the average market
price per share of AT&T Wireless Group tracking stock to the average
market price per share of AT&T common stock. For this purpose, the
"average market price per share" of AT&T common stock or AT&T Wireless
Group tracking stock, as the case may be, means the average of the daily
market value per share for such AT&T common stock or AT&T Wireless Group
tracking stock during the 10-trading day period beginning on the 15th
trading day following completion of that transaction.

- Subject to limitations, AT&T may declare and pay a dividend in cash
and/or in securities (other than AT&T common stock) or other property to
holders of the outstanding shares of AT&T Wireless Group tracking stock
equally on a share-for-share basis in an aggregate amount equal to the
net proceeds of the disposition allocable to AT&T Wireless Group tracking
stock.

- Subject to limitations, if the disposition involves the disposition of
all, not merely substantially all, of the properties and assets of the
AT&T Wireless Group, AT&T may redeem all outstanding shares of AT&T
Wireless Group tracking stock in exchange for cash and/or securities or
other property in an aggregate amount equal to the net proceeds of such
disposition allocable to the AT&T Wireless Group tracking stock.

- Subject to limitations, if the disposition involves substantially all,
but not all, of the properties and assets of the AT&T Wireless Group,
AT&T may redeem a number of outstanding shares of AT&T Wireless Group
tracking stock in exchange for a redemption price equal to the net
proceeds of that disposition. The number of shares of AT&T Wireless Group
tracking stock to be redeemed would be equal to the lesser of (1) a
number determined by dividing the aggregate amount allocated to the
redemption of these shares by the average market value of one share of
AT&T Wireless Group tracking stock during the 10-trading day period
beginning on the 15th trading day following the completion of that
disposition and (2) the total number of outstanding shares of AT&T
Wireless Group tracking stock.

- Subject to limitations, AT&T may take a combination of the actions
described in the preceding bullets whereby AT&T may redeem some shares of
AT&T Wireless Group tracking stock in exchange for shares of AT&T common
stock at the exchange rate described in the first bullet above, and use
an amount equal to a portion of the net proceeds of the disposition
allocable to AT&T Wireless Group tracking stock to either (1) declare and
pay a dividend as described in the second bullet above, or (2) redeem
part or all of the remaining shares of AT&T Wireless Group tracking stock
as described in the third or fourth bullet above.

For purposes of these provisions, "substantially all of the properties and
assets" of the AT&T Wireless Group as of any date means a portion of such
properties and assets that represents at least 80% of the fair value of the
properties and assets attributed to the AT&T Wireless Group as of such date.

Certain exceptions. The provisions described under "-- Redemption in
connection with certain significant transactions" will not apply, and AT&T will
not be required to redeem any securities or

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make any dividend or other distribution it would otherwise be required to make,
in some circumstances, including the following:

- if the underlying disposition is conditioned upon the affirmative vote of
a majority of holders of AT&T Wireless Group tracking stock, voting as a
separate class,

- if the disposition is in connection with a liquidation of AT&T,

- if the disposition is to a person or group of which AT&T is the majority
owner and the AT&T Wireless Group receives in exchange primarily equity
securities of that person or group as consideration,

- in connection with a spin-off or similar disposition of AT&T's entire
interest in the AT&T Wireless Group to the holders of AT&T Wireless Group
tracking stock, including a disposition that is made in connection with a
mandatory redemption as described under "-- Redemption in exchange for
shares of AT&T common stock at option of our board of directors" or
"-- Redemption in exchange for stock of qualifying subsidiaries at option
of our board of directors," and

- in connection with a "related business transaction," which generally
means a disposition of all or substantially all of the assets attributed
to the AT&T Wireless Group in which AT&T receives equity securities of an
entity that engages or proposes to engage primarily in one or more
businesses similar or complementary to the businesses conducted by the
AT&T Wireless Group prior to such transaction.

GENERAL PROCEDURES

Public announcements; notices. In the case of specified dispositions or a
redemption, AT&T will publicly announce or otherwise provide specified
information to holders of AT&T Wireless Group tracking stock.

Fractional shares. Our board of directors will not have to issue or
deliver any fractional shares to any holder of AT&T Wireless Group tracking
stock upon any redemption, dividend or other distribution under the provisions
described under "-- Redemption." Instead of issuing fractional shares, AT&T will
pay cash for the fractional share in an amount equal to the fair market value of
the fractional share, without interest.

No adjustments for dividends or other distributions. No adjustments for
dividends will be made upon the exchange of any shares of AT&T Wireless Group
tracking stock; except that, if a redemption date with respect to AT&T Wireless
Group tracking stock comes after the record date for the payment of a dividend
or other distribution to be paid on that stock but before the payment or
distribution, the registered holders of those shares at the close of business on
such record date will be entitled to receive the dividend or other distribution
on the payment date, notwithstanding the redemption of those shares or AT&T's
default in payment of the dividend or distribution.

Payment of taxes. If any person exchanging a certificate representing
shares of AT&T Wireless Group tracking stock wants us to issue a certificate in
a different name than the registered name on the old certificate, that person
must pay any transfer or other taxes required by reason of the issuance of the
certificate in another name or establish, to the satisfaction of AT&T or its
agent, that the tax has been paid or is not applicable.

LIQUIDATION RIGHTS

In the event of a liquidation, dissolution or winding up of AT&T, whether
voluntary or involuntary, AT&T will first pay or provide for payment of debts
and other liabilities of AT&T, including the liquidation preferences of any
class or series of AT&T preferred stock. Thereafter, holders of the shares of
AT&T common stock, Liberty Media Group tracking stock, AT&T Wireless

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Group tracking stock and any other class of AT&T common shares will share in the
funds of AT&T remaining for distribution to its common shareholders in
proportion to the aggregate market capitalization of the outstanding shares of
each class of stock, as applicable, to the aggregate market capitalization of
all the classes of AT&T common stock. AT&T will calculate the market
capitalizations based on the 20-trading day period ending on the trading day
prior to the date of the public announcement of the liquidation, dissolution or
winding up of AT&T.

None of the following, by itself, will constitute a liquidation,
dissolution or winding up of AT&T:

- the consolidation or merger of AT&T with or into any other corporation or
corporations or the sale, transfer or lease of all or substantially all
of the assets of AT&T,

- any transaction or series of related transactions that results in all of
the assets and liabilities included in the AT&T Wireless Group being held
by one or more AT&T Wireless Group subsidiaries and the distribution of
such AT&T Wireless Group subsidiaries, and no other material assets or
liabilities, to the holders of the outstanding AT&T Wireless Group
tracking stock, and

- any transaction or series of related transactions that results in all of
the assets and liabilities included in the Liberty Media Group being held
by one or more Liberty Media Group subsidiaries and the distribution of
such Liberty Media Group subsidiaries, and no other material assets or
liabilities, to the holders of the outstanding Liberty Media Group
tracking stock (but this will be subject to the provisions relating to
the redemption of shares of Liberty Media Group tracking stock described
in our charter).

DETERMINATIONS BY OUR BOARD OF DIRECTORS

Any determinations made by our board of directors under any provision
described in the AT&T charter will be final and binding on all shareholders of
AT&T, except as may otherwise be required by law. AT&T will prepare a statement
of any determination by our board of directors respecting the fair market value
of any properties, assets or securities, and will file the statement with our
Corporate Secretary.

ANTI-TAKEOVER CONSIDERATIONS

The New York Business Corporation Law, the AT&T charter and the AT&T
by-laws contain provisions which could serve to discourage or make more
difficult a change in control of AT&T without the support of the AT&T board of
directors or without meeting various other conditions.

BUSINESS COMBINATIONS

Under the NYBCL, a plan of merger or consolidation, a plan of share
exchange or the sale, lease, exchange or other disposition of all or
substantially all of the assets of a corporation is required to be approved in
the case of corporations like AT&T that were in existence on February 22, 1998
and that do not expressly provide in their certificates of incorporation for
majority approval of such transactions, by two-thirds of the votes of all
outstanding shares entitled to vote thereon. The AT&T charter does not contain a
provision expressly providing for majority approval of such transactions.

STATE TAKEOVER LEGISLATION

Section 912 of the NYBCL prohibits any business combination (defined to
include a variety of transactions, including mergers, sales or dispositions of
assets, issuances of stock, liquidations,

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reclassifications and benefits from the corporation, including loans or
guarantees) with, involving or proposed by any interested shareholder (defined
generally as any person who, directly or indirectly, beneficially owns 20% or
more of the outstanding voting stock of a New York corporation) for a period of
five years after the date on which the interested shareholder became an
interested shareholder. After such five-year period, a business combination
between a New York corporation and such interested shareholder is prohibited
unless either certain "fair price" provision are complied with or the business
combination is approved by a majority of the outstanding voting stock not
beneficially owned by such interested shareholder or its affiliates and
associates. The restrictions of the NYBCL do not apply, however, to any business
combination with an interested shareholder if such business combination, or the
purchase of stock by the interested shareholder that cause such shareholder to
become an interested shareholder, was approved by the board of directors of the
New York corporation prior to the date on which the interested shareholder
became an interested shareholder.

A New York corporation may adopt an amendment to its by-laws, approved by
the affirmative vote of a majority of votes of the outstanding voting stock,
excluding the voting stock of interested shareholders and their affiliates and
associates, expressly electing not to be governed by Section 912 of the NYBCL.
Such amendment will not, however, be effective until 18 months after such
shareholder vote and will not apply to any business combination with an
interested shareholder who was such on or prior to the effective date of such
amendment. The AT&T by-laws contain no provision electing not to be governed by
such section of the NYBCL.

RIGHTS OF DISSENTING SHAREHOLDERS

Holders of AT&T capital stock currently do not have dissent rights because
AT&T capital stock is listed on a national securities exchange.

SHAREHOLDER ACTION

Under the NYBCL, any action required or permitted to be taken by a vote at
a meeting of shareholders may be taken without a meeting by written consent,
setting forth the action so taken, signed by the holders of all outstanding
shares entitled to vote thereon or, if the certificate of incorporation so
permits, signed by holders of outstanding shares having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. The AT&T charter does not contain such a provision.

SHAREHOLDER PROPOSALS

The AT&T by-laws require that, for business to be properly brought before
an annual meeting by a shareholder, the shareholder must have delivered notice
thereof to AT&T (containing certain information specified in the AT&T by-laws)
not less than 90 nor more than 120 days prior to the first anniversary of the
preceding year's annual meeting.

MEETINGS OF SHAREHOLDERS

The AT&T by-laws provide that special meetings of the shareholders may be
called at any time by the Chairman of the Board, by our board of directors or
upon a request signed by shareholders representing at least 33 1/3% of the AT&T
shares.

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CUMULATIVE VOTING

Under the NYBCL, the certificate of incorporation may provide that in all
elections of directors each shareholder is entitled to cumulate such
shareholder's votes. The AT&T charter does not contain such a provision.

REMOVAL OF DIRECTORS

The NYBCL provides that any or all of the directors may be removed for
cause by vote of the shareholders and, if the certificate of incorporation or
the specific provisions of a by-law adopted by the shareholders provide,
directors may be removed for cause by action of the board of directors. If the
certificate of incorporation or the by-laws so provide, any or all of the
directors may be removed without cause by vote of the shareholders.

Neither the AT&T charter nor the AT&T by-laws provide that directors may be
removed without cause by action of the shareholders or that directors may be
removed by our board of directors.

VACANCIES

The certificate of incorporation or by-laws may provide that newly created
directorships or vacancies are to be filled by vote of the shareholders. Unless
the certificate of incorporation or the specific provisions of a by-law adopted
by the shareholders provide that the board of directors may fill vacancies
occurring on the board of directors by reason of the removal of directors
without cause, such vacancies may be filled only by vote of the shareholders. A
director elected to fill a vacancy, unless elected by the shareholders, will
hold office until the next meeting of shareholders at which the election of
directors is in the regular order of business and until his or her successor has
been elected and qualified.

The AT&T by-laws provide that any vacancy on our board of directors may be
filled by a majority vote of the remaining directors, though less than a quorum.

NO PREEMPTIVE RIGHTS

Holders of AT&T common stock, AT&T Wireless Group tracking stock or Liberty
Media Group tracking stock do not have any preemptive rights to subscribe for
any additional shares of capital stock or other obligations convertible into or
exercisable for shares of capital stock that may hereafter be issued by AT&T.

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RELATIONSHIP BETWEEN THE AT&T COMMON STOCK GROUP
AND THE AT&T WIRELESS GROUP

The description of the AT&T Wireless Group capital stock committee and the
AT&T Wireless Group policy statement below is not complete and is qualified in
its entirety by reference to the AT&T by-laws and the AT&T Wireless Group policy
statement. For information on how to obtain these documents, see "Other
Information -- Where You Can Find More Information" on page 107. You are urged
to read them in their entirety.

AT&T WIRELESS GROUP CAPITAL STOCK COMMITTEE

The AT&T Wireless Group capital stock committee of our board of directors
will oversee the interaction between the businesses of the AT&T Common Stock
Group and the AT&T Wireless Group. The members of the AT&T Wireless Group
capital stock committee are selected by our board of directors. The AT&T by-laws
provide that our board of directors will delegate to the AT&T Wireless Group
capital stock committee authority to:

- interpret, make determinations under and oversee the implementation of
the policies described in the Policy Statement Regarding AT&T Wireless
Group Tracking Stock Matters described under "-- AT&T Wireless Group
Policy Statement,"

- review the policies, programs and practices of AT&T relating to:

-- the business and financial relationships between AT&T or any of its
units, other than the Liberty Media Group, with the AT&T Wireless
Group,

-- dividends in respect of, disclosures to shareholders and the public
concerning, and transactions by AT&T or any of its subsidiaries,
other than subsidiaries included in the Liberty Media Group, in
shares of AT&T Wireless Group tracking stock, and

-- any matters arising in connection with any of the foregoing, all to
the extent the AT&T Wireless Group capital stock committee may deem
appropriate, and

- recommend changes in the policies, programs and practices that the AT&T
Wireless Group capital stock committee may deem appropriate.

The AT&T Wireless Group capital stock committee will have and may exercise
such other powers, authority and responsibilities as our board of directors may
determine from time to time. Although our board of directors has no present
intention to do so, it may modify, suspend or rescind the by-laws or adopt
additional by-laws, at any time, without the approval of our shareholders,
subject to our board of directors' fiduciary duties.

AT&T WIRELESS GROUP POLICY STATEMENT

AT&T will, effective upon issuance of AT&T Wireless Group tracking stock,
adopt the AT&T Wireless Group policy statement, which AT&T intends to follow.

GENERAL POLICY

Our board of directors has determined that all material matters in which
holders of AT&T common stock and AT&T Wireless Group tracking stock may have
divergent interests will be generally resolved in a manner that is in the best
interests of AT&T and all of its common shareholders after giving fair
consideration to the potentially divergent interests and all other relevant

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interests of the holders of the separate classes of AT&T common shares. Under
the AT&T Wireless Group policy statement, the relationship between the AT&T
Common Stock Group and the AT&T Wireless Group and the means by which the terms
of any material transaction between them will be determined will be governed by
a process of fair dealing.

RELATIONSHIP BETWEEN THE AT&T COMMON STOCK GROUP AND THE AT&T WIRELESS
GROUP

The AT&T Wireless Group policy statement provides that AT&T will seek to
manage the AT&T Common Stock Group and the AT&T Wireless Group in a manner
designed to maximize the operations, unique assets and value of both groups, and
with complementary deployment of capital and facilities. AT&T expects that the
operating relationship between the two groups will include the coordination and
use of bundled offers, network services, marketing, sales, branding, and other
intellectual property and technology. AT&T and the AT&T Wireless Group expect to
use common platforms and technology across their services where possible. In
addition, there will be various financial arrangements between the two groups,
including with respect to debt, other financings and taxes.

General. The AT&T Wireless Group policy statement provides that, except as
otherwise provided in the policy statement, all material commercial transactions
between the AT&T Common Stock Group and the AT&T Wireless Group will be on
commercially reasonable terms taken as a whole and will be subject to the review
and approval of the AT&T Wireless Group capital stock committee.

Allocation of corporate overhead and support services. Each group will
have access to the support services of the other group, including customer care
and billing platforms.

For shared corporate services that arise as a result of being part of a
combined entity, including securities filing and financial reporting services,
costs relating to these services will be:

- allocated directly to the group utilizing those services, and

- if not directly allocable to a group, allocated between the groups on a
fair and reasonable basis as our board of directors determines.

For other support services, for example, billing and purchasing services,
the AT&T Wireless Group policy statement provides that the groups will seek to
achieve enterprise efficiencies to minimize the aggregate costs incurred by the
two groups combined, although each group also will be entitled to negotiate and
procure support services on their own either from the other group or from third
parties.

Sourcing and provision of other services. Each group will use exclusively
the services that the other group offers for use in their respective packaged,
bundled, combined or integrated offerings. This would, for example, require the
AT&T Wireless Group to procure long distance services for its wireless service
bundles exclusively from the AT&T Common Stock Group and require the AT&T Common
Stock Group to procure wireless services for its bundled offerings exclusively
from the AT&T Wireless Group. The policy statement further provides that each
group will provide these services to the other group at the best price offered
by that group to third parties in similar situations when taking into account
all relevant factors, including the availability of wholesale pricing, volume,
peak/off-peak usage and length of commitment. The establishment of such price
should also give consideration to other factors, as appropriate, such as avoided
costs and synergies to be shared between the groups. In addition, each group
will cooperate in good faith to develop offers that reflect such other factors.

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Marketing of services. The policy statement provides that, as a general
matter, each group will design, develop, deploy, produce, market, sell and
service their own service offerings and choose their own sales channels. In
addition, each group will be able to negotiate for the use of the sales channels
of the other group to offer their services. With respect to fixed wireless
services, however, it is currently intended that the AT&T Wireless Group will
not develop, deploy, produce, market or sell:

- fixed wireless voice and data services to residences located in the AT&T
Common Stock Group's currently owned and operated broadband service areas
or after acquired owned and operated broadband service areas in which
fixed wireless has not begun deployment at the time of acquisition,

- fixed wireless voice and data services to businesses that are otherwise
connected by AT&T fiber or broadband, and

- fixed wireless voice services to residences located in broadband service
areas served by a cable operator in which the AT&T Common Stock Group
currently has or has contracted for, as of the initial issuance of the
AT&T Wireless Group tracking stock, a substantial equity interest if such
operator offers AT&T branded residential telephony services within a
commercially reasonable time, unless prior thereto the AT&T Wireless
Group has received the approval of our board of directors. Such approval
will be based on the value and likelihood, considering all terms and
conditions, of any actual or prospective AT&T branded telephony offers by
such cable operator.

Furthermore, the AT&T Wireless Group is subject to all existing agreements
and arrangements (including reasonable amendments thereto) entered into by AT&T
with third parties.

With respect to residences located in the same marketing areas as AT&T's
broadband service areas, the AT&T Wireless Group will, to the extent practical,
conform its voice and data offers to those of the AT&T Common Stock Group and
the AT&T Common Stock Group will have the non-exclusive right to market the AT&T
Wireless Group's fixed wireless services for which it will receive a sales
agency fee. Marketing areas may include those markets in which AT&T has
significant cable licenses and in which geographic proximity, marketing overlap
or other factors support coordinated marketing and sales activities, including
development of specific consumer and business service offers. In addition, the
policy statement provides that the groups will work collaboratively with each
other to understand and take into account the other's expansion, acquisition,
deployment, marketing and sales plans, with the goal of minimizing overlaps and
conflicts between the groups.

It is expected that when the combined services of the two groups are
bundled or offered together and the total cost to consumers of each of those
services are separately identified on a billing statement, each of the AT&T
Common Stock Group and the AT&T Wireless Group will control the pricing of its
respective services and receive the associated revenues. The group which sells
the service to the public will receive an appropriate fee from the other group
for selling the service.

In a bundled product offering where the services of the two groups are
integrated and the total cost to consumers of each of those services are not
separately identified on a billing statement, the groups are expected to work
collaboratively to determine the nature of their arrangements and are also
permitted to source the services of the other group as described above;
provided, however, that neither group may offer a bundle of services comprised
primarily of the services of the other group without that other group's
agreement.

Inter-Group Interest. The AT&T Wireless Group policy statement provides
that the AT&T Wireless Group will not acquire an inter-group interest in the
AT&T Common Stock Group.

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CORPORATE OPPORTUNITIES

The AT&T Wireless Group policy statement provides that our board of
directors will allocate any business opportunities and operations, any acquired
assets and businesses and any assumed liabilities between the two groups, in
whole or in part, as it considers to be in the best interests of AT&T and its
shareholders as a whole and as contemplated by the other provisions of the
policy statement. If a business opportunity or operation, an acquired asset or
business, or an assumed liability would be suitable to be undertaken by or
allocated to either group, our board of directors will allocate it using its
business judgment or in accordance with procedures that our board of directors
adopts from time to time to ensure that decisions will be made in the best
interests of AT&T and its shareholders as a whole. Any allocation of this type
may involve the consideration of a number of factors that our board of directors
determines to be relevant, including, without limitation, whether the business
opportunity or operation, the acquired asset or business, or the assumed
liability is principally within the existing scope of a group's business and
whether a group is better positioned to undertake or have allocated to it such
business opportunity or operation, acquired asset or business or assumed
liability. Our board of directors currently intends, however, subject to and
without limiting these provisions, and subject to pre-existing agreements
relating to international markets, to allocate future mobile and fixed wireless
opportunities to the AT&T Wireless Group.

Except under the policy statement and any other policies adopted by our
board of directors, which policies will be designed to minimize conflicts
between the groups, harmonize capital spending and promote the use by each group
of services of the other group, neither the AT&T Wireless Group nor the AT&T
Common Stock Group will have any duty, responsibility or obligation to refrain
from:

- engaging in the same or similar activities or lines of business as any
member of the other group,

- doing business with any potential or actual supplier, competitor or
customer of any member of any other group, or

- engaging in, or refraining from, any other activities whatsoever relating
to any of the potential or actual suppliers or customers of any member of
the other group.

In addition, except under the policy statement and any other policies adopted by
our board of directors, neither the AT&T Wireless Group nor the AT&T Common
Stock Group will have any duty, responsibility or obligation:

- to communicate or offer any business or other corporate opportunity to
any other person, including any business or other corporate opportunity
that may arise that more than one group may be financially able to
undertake, and that are, from their nature, in the line of more than one
group's business and are of practical advantage to more than one group,

- to provide financial support to another group, or any member of that
group, except as described under "-- Relationship with AT&T -- Financing
arrangements," or

- otherwise to assist any other group.

Under no circumstances will any members of the AT&T Wireless Group or the
AT&T Common Stock Group be prevented from entering into written agreements with
another group to define or restrict any aspect of the relationship between the
groups.

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DIVIDEND POLICY

The policy statement provides that, subject to the limitations on dividends
set forth in our charter, including any preferential rights of any series of
preferred stock of AT&T, and to the limitations of applicable law, holders of
shares of AT&T Wireless Group tracking stock will be entitled to receive
dividends on that stock when, as and if our board of directors authorizes and
declares dividends on that stock.

Since the AT&T Wireless Group is expected to require significant capital
commitments to finance its operations and fund its future growth, the AT&T
Wireless Group policy statement provides that AT&T does not expect to pay any
dividends on shares of AT&T Wireless Group tracking stock. If and when our board
of directors determines to pay any dividends on shares of AT&T Wireless Group
tracking stock, the policy statement provides that this determination will be a
business decision that our board of directors makes from time to time based upon
the results of operations, financial condition and capital requirements of AT&T
and other factors that our board of directors considers relevant. Payment of
dividends on AT&T Wireless Group tracking stock also may be restricted by loan
agreements, indentures and other transactions that AT&T enters into from time to
time.

FINANCIAL REPORTING

The AT&T Wireless Group policy statement provides that AT&T will prepare
and include in its filings with the SEC financial statements of AT&T and the
AT&T Wireless Group for so long as AT&T Wireless Group tracking stock is
outstanding.

AT&T WIRELESS GROUP CAPITAL STOCK COMMITTEE

Our by-laws provide for the AT&T Wireless Group capital stock committee of
our board of directors that we describe above under "-- AT&T Wireless Group
Capital Stock Committee."

In making determinations in connection with the policies set forth in the
AT&T Wireless Group policy statement, the members of our board of directors and
the AT&T Wireless Group capital stock committee will act in a fiduciary capacity
and in accordance with legal guidance concerning their respective obligations
under applicable law. The delegation of responsibilities to the AT&T Wireless
Group capital stock committee will be subject to changes our board of directors
may determine.

AMENDMENT AND MODIFICATION TO THE AT&T WIRELESS GROUP POLICY STATEMENT

Our board of directors may modify, suspend or rescind the policies set
forth in the AT&T Wireless policy statement, including any resolution
implementing the provisions of the policy statement. Our board may also adopt
additional or other policies or make exceptions with respect to the application
of the policies described in the AT&T Wireless Group policy statement in
connection with particular facts and circumstances, all as our board may
determine, consistent with its fiduciary duties to AT&T and all of our
shareholders.

RELATIONSHIP WITH AT&T

BRANDING

The AT&T Wireless Group will be permitted, on the same discretionary basis
as other businesses that AT&T wholly owns, or substantially owns in excess of a
majority of the economic interest in, to operate under the AT&T service mark for
appropriate business activities in its capacity

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as a division or subsidiary of AT&T. We expect that there will be no royalty or
licensing fees related to the use of branding. AT&T's divisions' or
subsidiaries' use of the brand is limited in certain respects, including
requiring compliance with AT&T's corporate brand strategy, policies, graphics
standards, advertising policies, quality control and restrictions on certain
activities relating to the brand, including a prohibition on licensing and
sublicensing without corporate approval.

INTELLECTUAL PROPERTY

Intellectual property will continue to be managed by the group that has
managed it historically. The AT&T Common Stock Group and the AT&T Wireless Group
will, on the same basis they have enjoyed historically, have the right to use
the intellectual property managed by the other group, or with respect to which
either has the power to grant such rights, for appropriate business activities.
The groups also will collaborate to achieve enterprise objectives with respect
to the licensing or sale of intellectual property to third parties. The policy
of the AT&T Wireless Group capital stock committee will be not to sell or
license any intellectual property that is predominantly used by the AT&T
Wireless Group if that sale of license would result in a material competitive
disadvantage to the AT&T Wireless Group. Any fees obtained through such sales or
licensing will be allocated to the group that predominantly uses the
intellectual property sold or licensed, or if no specific intellectual property
can be associated with a fee or such intellectual property is not predominantly
used by any one group, then allocated using the same general allocation as
overhead expenses.

COMMERCIAL TRANSACTIONS BETWEEN GROUPS

We intend that all commercial transactions between the AT&T Common Stock
Group and the AT&T Wireless Group will be on commercially reasonable terms taken
as whole. We expect the groups will negotiate and develop their arrangements
over time and that these arrangements will be subject to the review and approval
of the AT&T Wireless Group capital stock committee.

We may reallocate assets between the AT&T Common Stock Group and the AT&T
Wireless Group in exchange for an increase or decrease in the retained
inter-group interest held by the AT&T Common Stock Group in the AT&T Wireless
Group. Any reallocations of assets between the groups that do not result in such
an adjustment, other than reallocations made under a contract for the provision
of goods or services between the groups, will be accompanied by:

- the reallocation by the transferee group to the transferor group of other
assets or consideration,

- the creation of inter-group debt owed by the transferee group to the
transferor group, or

- the reduction of inter-group debt owed by the transferor group to the
transferee group,

in each case, in an amount having a fair market value, in the judgment of our
board of directors, equivalent to the fair market value of the assets
reallocated by the transferor group.

FINANCING ARRANGEMENTS

Loans from AT&T or any member of the AT&T Common Stock Group to any member
of the AT&T Wireless Group will be made at interest rates and on other terms and
conditions designed to be substantially equivalent to the interest rates and
other terms and conditions that the AT&T Wireless Group would be able to obtain
from third parties, including the public markets, as a non-affiliate of AT&T
without the benefit of any guaranty by AT&T or any member of the AT&T Common
Stock Group. This policy contemplates that these loans will be made on the basis
set forth above regardless of the interest rates and other terms and conditions
on which AT&T or members of

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the AT&T Common Stock Group may have acquired the funds. If, however, AT&T
incurs any fees or charges in order to keep available funds for use by the AT&T
Wireless Group, those fees or charges will be allocated to the AT&T Wireless
Group.

We currently intend to borrow funds and provide the proceeds to the AT&T
Wireless Group on the terms and conditions described above and subject to market
availability. In addition, a corporate entity within the AT&T Wireless Group has
issued to AT&T $1.0 billion of 9% cumulative preferred stock that, subject to
the approval of the AT&T Wireless Group capital stock committee, is redeemable
at the option of AT&T. This preferred stock is held by AT&T on behalf of the
AT&T Common Stock Group. The AT&T Common Stock Group also has $3.4 billion of
AT&T Wireless Group indebtedness at December 31, 1999, of which $2.0 billion is
convertible into an additional $2.0 billion of such preferred stock. We expect
this conversion to occur simultaneously with the initial public offering.

ACCOUNTING MATTERS

Following issuance of the shares of AT&T Wireless Group tracking stock,
AT&T will prepare financial statements in accordance with generally accepted
accounting principles, consistently applied, for the AT&T Wireless Group, and
pro forma financial information for the AT&T Common Stock Group, as well as full
consolidated financial statements of AT&T. The financial statements and
information for each of the groups principally will reflect the financial
position, results of operations and cash flows of the businesses included in
those groups. Notwithstanding any allocation of assets or liabilities for
dividend purposes or the purpose of preparing group financial statements,
holders of AT&T common stock and holders of AT&T Wireless Group tracking stock
will continue to be subject to risks associated with an investment in a single
corporation and all of AT&T's businesses, assets and liabilities.

TAX SHARING AGREEMENT

Prior to issuance of the shares of AT&T Wireless Group tracking stock, the
AT&T Common Stock Group and the AT&T Wireless Group will enter into a tax
sharing agreement that will provide for tax sharing payments between the AT&T
Common Stock Group and the AT&T Wireless Group based on the taxes or tax
benefits of a hypothetical affiliated group consisting of the AT&T Common Stock
Group and the AT&T Wireless Group. This hypothetical group will not include the
Liberty Media Group. A separate tax sharing agreement exists between the AT&T
Common Stock Group and the Liberty Media Group under which tax sharing payments
are made between AT&T and the Liberty Media Group to the extent that the taxes
of the actual affiliated group of which AT&T is the common parent are increased
or decreased as a result of the inclusion of the Liberty Media Group in that
affiliated group.

Under the tax sharing agreement between the AT&T Common Stock Group and the
AT&T Wireless Group, the consolidated tax liability before credits of the
hypothetical group consisting of the AT&T Common Stock Group and the AT&T
Wireless Group will be allocated between the AT&T Common Stock Group and the
AT&T Wireless Group based on each group's contribution to consolidated taxable
income of the hypothetical group. Such allocation will take into account losses,
deductions and other tax attributes, such as capital losses or charitable
deductions, that are utilized by the hypothetical group even if these attributes
could not be utilized on a stand-alone basis. For purposes of the tax sharing
agreement, the $1.0 billion of 9% cumulative preferred stock issued by a
corporate entity within the AT&T Wireless Group to AT&T, the $3.4 billion of
AT&T Wireless Group indebtedness held by the AT&T Common Stock Group and any
preferred stock resulting from a conversion of any portion of such indebtedness
will be treated as intercompany debt instruments,

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each with an issue price equal to its face amount, for federal, state and local
income tax purposes. Accordingly, tax sharing payments will be calculated by
treating coupon payments on the preferred stock and debt as interest expense to
the AT&T Wireless Group and interest income to the AT&T Common Stock Group.

Tax sharing payments in respect of consolidated tax liability of the
hypothetical group before credits will be made as follows. With respect to each
taxable period ending after the date that AT&T Wireless Group tracking stock
initially is issued, if the hypothetical group has consolidated federal taxable
income, or consolidated, combined or unitary taxable income for state, local or
foreign tax purposes, for the taxable period, then:

- if the AT&T Wireless Group has allocated taxable income for the taxable
period, the AT&T Wireless Group will pay the AT&T Common Stock Group the
tax on the AT&T Wireless Group's allocated taxable income for the taxable
period, and

- if the AT&T Wireless Group has allocated taxable loss for the taxable
period, the AT&T Common Stock Group will pay the AT&T Wireless Group the
amount by which the hypothetical group's taxes would be reduced for the
taxable period by reason of the AT&T Wireless Group's allocated taxable
loss.

With respect to each taxable period ending after the date that AT&T Wireless
Group tracking stock initially is issued, if the hypothetical group has a
consolidated net operating loss for federal income tax purposes, or
consolidated, combined or unitary net operating loss for state, local or foreign
tax purposes, for the taxable period, then:

- if the AT&T Common Stock Group and the AT&T Wireless Group each have
allocated taxable losses, the refund or other tax benefit arising from
the consolidated net operating loss, and any payment from the Liberty
Media Group in respect of the taxable income of the Liberty Media Group
for such period, will be shared between the AT&T Common Stock Group and
the AT&T Wireless Group in proportion to their respective allocated
losses for the taxable period,

- if the AT&T Wireless Group has an allocated taxable loss and the AT&T
Common Stock Group has allocated taxable income, then the AT&T Common
Stock Group will pay the AT&T Wireless Group the amount by which the
hypothetical group's taxes for the taxable period would be reduced by
reason of the AT&T Wireless Group's allocated taxable loss and the refund
or other tax benefit arising from the consolidated net operating loss,
and any payment from the Liberty Media Group in respect of the taxable
income of the Liberty Media Group for such period, will be allocated to
the AT&T Wireless Group, and

- if the AT&T Wireless Group has allocated taxable income and the AT&T
Common Stock Group has an allocated taxable loss, then the AT&T Wireless
Group will pay the AT&T Common Stock Group the amount by which the
hypothetical group's taxes for the taxable period would be reduced by
reason of the AT&T Common Stock Group's allocated taxable loss and the
AT&T Common Stock Group will retain the refund or other tax benefit
arising from the consolidated net operating loss, and any payment from
the Liberty Media Group in respect of the taxable income of the Liberty
Media Group for such period.

Consolidated tax credits of the hypothetical group will be allocated
between the AT&T Common Stock Group and the AT&T Wireless Group based on each
group's contribution to each tax credit. Such allocation will take into account
credits that are utilized by the hypothetical group even if such credits could
not be utilized on a stand-alone basis. Appropriate tax sharing payments in
respect of such credits will be made between the groups consistent with such
allocation.

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The tax sharing payments described above assume that the members of the
AT&T Common Stock Group and the AT&T Wireless Group are members of the same
affiliated, consolidated, combined or unitary group for the relevant federal,
state, local or foreign income tax purposes. It is possible, however, that the
Internal Revenue Service may assert that AT&T Wireless Group tracking stock is
not stock of AT&T, in which case the members of the AT&T Common Stock Group and
the AT&T Wireless Group may not be members of the same federal income tax
affiliated group filing consolidated returns. AT&T believes that it is unlikely
that the IRS would prevail on that view, but no assurance can be given in that
regard. The AT&T Wireless Group would be responsible under the tax sharing
agreement for any corporate-level taxes resulting from the treatment of AT&T
Wireless Group tracking stock as not stock of AT&T, and any corporate-level
taxes on the actual or deemed disposition of the AT&T Wireless Group caused by
the issuance of AT&T Wireless Group tracking stock. See "Risk Factors -- AT&T
Wireless Group Tracking Stock -- Changes in the tax law or in the interpretation
of current tax law may result in redemption of AT&T Wireless Group tracking
stock or cessation of the issuance of further shares."

With respect to taxable periods ending on or prior to the date on which
AT&T Wireless Group tracking stock is initially issued, the AT&T Wireless Group
will generally be responsible for the taxes attributable to the businesses and
entities comprising the AT&T Wireless Group. The responsibility of the AT&T
Wireless Group to pay for consolidated income taxes attributable to it, and the
AT&T Common Stock Group's responsibility to pay the AT&T Wireless Group for tax
benefits attributable to the AT&T Wireless Group, will generally be considered
to have been settled for taxable periods ending on or prior to the date on which
AT&T Wireless Group tracking stock is initially issued, except that:

- the AT&T Wireless Group will be required to pay the AT&T Common Stock
Group (or the AT&T Common Stock Group will be required to pay the AT&T
Wireless Group) with respect to the taxable period ending on December 31,
1999 in the event that the taxable income or loss used to calculate the
consolidated income tax asset or liability accruals for taxes currently
payable set forth on the financial statements of the AT&T Wireless Group
differs from the AT&T Wireless Group taxable income or loss reflected in
the 1999 income tax return of the consolidated group, and

- consolidated income taxes resulting from audit adjustments or other tax
contests will be payable based on each group's contribution to
consolidated taxable income. Accordingly, the AT&T Wireless Group will be
required to pay the AT&T Common Stock Group in the event that a loss or
deduction attributable to the AT&T Wireless Group for such a period is
disallowed.

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THE INCENTIVE PLAN

GENERAL

We currently issue stock-based awards to our employees under the AT&T 1997
Long Term Incentive Program. AT&T's shareholders approved this plan in 1997 and
approved amendments to it in 1999 and 2000. As of January 1, 2000, this plan
authorized a total of approximately 206 million shares of AT&T common stock for
stock-based awards consisting of:

- stock options, including incentive stock options (ISOs) under the
Internal Revenue Code,

- stock appreciation rights (SARs), in tandem with stock options or
free-standing,

- restricted stock,

- performance shares and performance units conditioned upon meeting
performance criteria, and

- other awards of stock or awards valued in whole or in part by reference
to, or otherwise based on, stock or other property of AT&T (other stock
unit awards).

In connection with any award or any deferred award, payments may also be
made representing dividends or their equivalent.

SUMMARY OF AMENDMENTS TO THE PLAN

On March 14, 2000, our shareholders approved new amendments to the plan
which do the following:

- in addition to the number of shares of AT&T common stock authorized for
stock-based awards under the plan, authorize a number of shares of AT&T
Wireless Group tracking stock equal to 5% of the total number of such
shares outstanding for stock-based awards under the plan, a maximum of
25% of which can be used for other than options and/or SARs, and a
maximum of 10% of which can be used for restricted stock with a
restriction period of less than three years,

- in addition to the above, authorize the issuance of stock-based awards
based on AT&T Wireless Group tracking stock as an adjustment to existing
stock based awards based on AT&T common stock, as a result of the
distribution of AT&T Wireless Group tracking stock to holders of AT&T
common stock,

- amend the provisions of the plan, which provided that no participant may
be granted options and/or SARs with respect to more than three million
shares of AT&T common stock during any calendar year period, to provide
that no participant may be granted more than three million shares of AT&T
common stock and three million shares of AT&T Wireless Group tracking
stock during any calendar year period,

- subject to adjustments permitted by the plan, beginning in 2001, annually
increase the number of shares of AT&T Wireless Group tracking stock
available for stock-based awards by 2.0% of the total shares of AT&T
Wireless Group tracking stock outstanding on the first calendar day of
each year during the remaining term of the plan, which ends on May 31,
2004,

- amend the provisions of the plan to limit the aggregate number of shares
that may be granted in the form of ISOs to no more than 75 million shares
of AT&T common stock and no more than 50% of the shares of AT&T Wireless
Group tracking stock authorized for stock based awards under the plan,

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<PAGE> 104

- amend the provisions of the plan to permit stock-based awards for
non-employee directors of AT&T, and

- amend the definitions of "Shares" in the plan to provide for definitions
of shares of AT&T common stock and shares of AT&T Wireless Group tracking
stock.

As defined in the amendment to the plan, the term "outstanding" includes:

- the total issued and outstanding shares of AT&T Wireless Group tracking
stock, plus

- the number of shares of AT&T Wireless Group tracking stock represented by
the inter-group interest held by the AT&T Common Stock Group on the
particular reference date.

BOARD ADJUSTMENT TO OUTSTANDING STOCK-BASED AWARDS

On the date of the contemplated distribution, if any, of shares of AT&T
Wireless Group tracking stock to holders of AT&T common stock, we currently
intend to issue stock-based awards based on AT&T Wireless Group tracking stock
to holders of stock-based awards based on AT&T common stock.

Under its authority to adjust the terms of outstanding stock-based awards,
the Committee has adopted a resolution that provides that on the date of the
distribution of AT&T Wireless Group tracking stock to holders of AT&T common
stock the terms of outstanding stock options will be adjusted to reflect the
distribution. Each stock option issued to purchase shares of AT&T common stock
will be converted into an option to purchase the same number of shares of AT&T
common stock and an option to purchase a number of shares of AT&T Wireless Group
tracking stock to be determined at that time based on the distribution ratio.

The strike price or exercise price of the options relating to AT&T common
stock and AT&T Wireless Group tracking stock will be restated at prices intended
to preserve the intrinsic value of the original award and based on the fair
market value of each share of AT&T common stock and AT&T Wireless Group tracking
stock. All other terms of each option will be the same as the original terms of
each related option.

As of December 31, 1999, there were 168.8 million AT&T options outstanding
with an average exercise price of $37.42. Pro forma for the MediaOne
acquisition, there are estimated to be 195.6 million AT&T options outstanding
with an average exercise price of $37.81. Pursuant to the principles described
in the paragraph above, if a distribution of AT&T's entire retained interest in
the AT&T Wireless Group were to occur through a dividend of AT&T Wireless Group
tracking stock to holders of AT&T common stock at a time when (i) AT&T's
retained interest was the same as it will be immediately following the closing
of the initial public offering, (ii) there were 3.773 billion shares of AT&T
common stock outstanding (the estimated number of shares of fully diluted AT&T
common stock outstanding pro forma for the MediaOne acquisition), (iii) the AT&T
price per share was $60 5/16 (the closing price per share for AT&T common stock
on March 27, 2000) and (iv) the AT&T Wireless Group's share price was $29 (the
mid-point of the range set forth on the cover page of this prospectus), a total
of approximately 101.1 million AT&T Wireless Group options with an average
exercise price of $18.18 would be issued as part of the conversion.

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CERTAIN MATERIAL U.S. FEDERAL TAX CONSIDERATIONS

MATERIAL U.S. FEDERAL TAX CONSIDERATIONS FOR NON-U.S. HOLDERS

The following is a general discussion of the material U.S. federal income
and estate tax considerations with respect to the ownership and disposition of
AT&T Wireless Group tracking stock applicable to Non-U.S. Holders. In general, a
"Non-U.S. Holder" is any holder other than:

- a citizen or resident of the United States,

- a corporation created or organized in the United States or under the laws
of the United States or of any state,

- an estate, the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source, and

- a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more U.S.
persons have the authority to control all substantial decisions of the
trust.

This discussion is based on current provisions of the Internal Revenue
Code, Treasury Regulations promulgated under the Internal Revenue Code, judicial
opinions, published positions of the Internal Revenue Service, and all other
applicable authorities, all of which are subject to change, possibly with
retroactive effect. This discussion does not address all aspects of income and
estate taxation or any aspects of state, local or non-U.S. taxes, nor does it
consider any specific facts or circumstances that may apply to a particular
Non-U.S. Holder that may be subject to special treatment under the U.S. federal
income tax laws, such as insurance companies, tax-exempt organizations,
financial institutions, brokers, dealers in securities, and U.S. expatriates.
ACCORDINGLY, PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR TAX ADVISORS
REGARDING THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX
CONSIDERATIONS WITH RESPECT TO ACQUIRING, OWNING AND DISPOSING OF SHARES OF AT&T
WIRELESS GROUP TRACKING STOCK.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to U.S.
withholding tax at a rate of 30% of the gross amount, or a lower rate prescribed
by an applicable income tax treaty, unless the dividends are effectively
connected with a trade or business carried on by the Non-U.S. Holder within the
United States. Dividends effectively connected with such a U.S. trade or
business generally will not be subject to U.S. withholding tax if the Non-U.S.
Holder files the required forms, including Internal Revenue Service Form W-8ECI,
with the payor of the dividend, and generally will be subject to U.S. federal
income tax on a net income basis, in the same manner as if the Non-U.S. Holder
were a resident of the United States. A Non-U.S. Holder that is a corporation
may be subject to an additional branch profits tax at a rate of 30%, or such
lower rate as may be specified by an applicable income tax treaty, on the
repatriation from the United States of its "effectively connected earnings and
profits," subject to adjustments. To determine the applicability of a tax treaty
providing for a lower rate of withholding under the currently effective Treasury
Regulations, the "Current Regulations," and published Internal Revenue Service
positions, dividends paid to an address in a foreign country are presumed to be
paid to a resident of that country absent knowledge to the contrary. Under
Treasury Regulations issued in October 1997, the "Final Regulations," and
generally effective for payments made after December 31, 2000, however, a
Non-U.S. Holder, including, for some Non-U.S. Holders that are entities, the
owner or owners of such entities, will be required to satisfy certification
requirements in order to claim a reduced rate of withholding under an applicable
income tax treaty.

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<PAGE> 106

GAIN ON SALE OR OTHER DISPOSITION OF COMMON STOCK

In general, a Non-U.S. Holder will not be subject to U.S. federal income
tax on any gain realized upon the sale or other disposition of the holder's
shares of AT&T Wireless Group tracking stock unless:

- the gain is effectively connected with a trade or business carried on by
the Non-U.S. Holder within the United States, in which case the branch
profits tax discussed above may also apply if the Non-U.S. Holder is a
corporation,

- the Non-U.S. Holder is an individual who holds shares of AT&T Wireless
Group tracking stock as a capital asset and is present in the United
States for 183 days or more in the taxable year of disposition and meets
other tests,

- the Non-U.S. Holder is subject to tax under the provisions of the
Internal Revenue Code regarding the taxation of U.S. expatriates, or

- AT&T is or has been a U.S. real property holding corporation for U.S.
federal income tax purposes -- which AT&T does not believe that it has
been, currently is, or will become -- at any time within the shorter of
the five-year period preceding such disposition and such Non-U.S.
Holder's holding period. If AT&T were or were to become a U.S. real
property holding corporation at any time during this period, gains
realized upon a disposition of AT&T Wireless Group tracking stock by a
Non-U.S. Holder that did not directly or indirectly own more than 5% of
the AT&T Wireless Group tracking stock during this period generally would
not be subject to U.S. federal income tax, provided that AT&T Wireless
Group tracking stock is "regularly traded on an established securities
market" (within the meaning of Section 897(c)(3) of the Internal Revenue
Code).

ESTATE TAX

AT&T Wireless Group tracking stock owned or treated as owned by an
individual who is not a citizen or resident, as defined for U.S. federal estate
tax purposes, of the United States at the time of death will be includible in
the individual's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise, and therefore may be subject to
U.S. federal estate tax.

BACKUP WITHHOLDING, INFORMATION REPORTING AND OTHER REPORTING REQUIREMENTS

We must report annually to the Internal Revenue Service and to each
Non-U.S. Holder the amount of dividends paid to, and the tax withheld with
respect to, the Non-U.S. Holder. These reporting requirements apply regardless
of whether withholding was reduced or eliminated by an applicable tax treaty.
Copies of this information also may be made available under the provisions of a
specific treaty or agreement with the tax authorities in the country in which
the Non-U.S Holder resides or is established.

Under the Current Regulations, U.S. backup withholding tax, which generally
is imposed at the rate of 31% on applicable payments to persons that fail to
furnish the information required under the U.S. information reporting
requirements, and information reporting requirements other than those discussed
in the previous paragraph, generally will not apply to dividends paid on AT&T
Wireless Group tracking stock to a Non-U.S. Holder at an address outside the
United States. Backup withholding and information reporting generally will
apply, however, to dividends paid on shares of AT&T Wireless Group tracking
stock to a Non-U.S. Holder at an address in the United States if the holder
fails to establish an exemption or to provide other required information to the
payor.

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<PAGE> 107

Under the Current Regulations, the payment of proceeds from the disposition
by a Non-U.S. Holder of AT&T Wireless Group tracking stock by or through a U.S.
office of a broker will be subject to information reporting and backup
withholding, unless the beneficial owner, under penalties of perjury, certifies,
among other things, its status as a Non-U.S. Holder or otherwise establishes an
exemption. The payment of proceeds from the disposition by a Non-U.S. Holder of
AT&T Wireless Group tracking stock by or through a Non-U.S. office of a broker
generally will not be subject to backup withholding and information reporting,
except as noted below. In the case of proceeds from a disposition by a Non-U.S.
Holder of AT&T Wireless Group tracking stock paid by or through a non-U.S.
office of a broker that is:

- a U.S. person,

- a "controlled foreign corporation" for U.S. federal income tax purposes,
or

- a foreign person 50% or more of whose gross income from a specified
period is effectively connected with a U.S. trade or business,

information reporting, but not backup withholding, will apply unless the broker
has documentary evidence in its files that the beneficial owner is a Non-U.S.
Holder and other conditions are satisfied, or the beneficial owner otherwise
establishes an exemption, and the broker has no actual knowledge to the
contrary.

Under the Final Regulations, generally effective for payments made after
December 31, 2000, the payment to a Non-U.S. Holder of dividends or of proceeds
from the disposition of AT&T Wireless Group tracking stock may be subject to
information reporting and backup withholding unless the recipient satisfies the
certification requirements of the Final Regulations or otherwise establishes an
exemption.

Backup withholding is not an additional tax. Any amounts withheld under the
backup withholding rules from a payment to a Non-U.S. Holder can be refunded or
credited against the Non-U.S. Holder's U.S. federal income tax liability, if
any, provided that the required information is furnished to the Internal Revenue
Service in a timely manner.

The foregoing discussion of U.S. federal income and estate tax
considerations is not tax advice and is not based on an opinion of counsel.
Accordingly, each prospective Non-U.S. Holder of AT&T Wireless Group tracking
stock should consult that holder's own tax adviser with respect to the federal,
state, local and non-U.S. tax consequences of the acquisition, ownership and
disposition of AT&T Wireless Group tracking stock.

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO AT&T

Subject to the discussion below in this section, neither the creation of
AT&T Wireless Group tracking stock, the occurrence of the initial public
offering of AT&T Wireless Group tracking stock nor the distribution of AT&T
Wireless Group tracking stock to holders of AT&T common stock will be taxable to
AT&T.

The conclusions in the preceding paragraph are not free from doubt. These
conclusions assume that AT&T Wireless Group tracking stock is treated as a class
of common stock of AT&T. The filing of consolidated income tax returns by the
AT&T Common Stock Group together with the AT&T Wireless Group also assumes that
AT&T Wireless Group tracking stock is treated as a class of common stock of
AT&T. While AT&T believes that, under current law, AT&T Wireless Group tracking
stock will be treated as common stock of AT&T, there are no authorities directly
on point nor will AT&T receive an advance ruling from the Internal Revenue
Service. There is a risk that the Internal Revenue Service could assert that
AT&T Wireless Group tracking stock is property other than common stock of AT&T.
AT&T believes it is unlikely the Internal Revenue Service would prevail on that
view, but no assurance can be given that the views expressed in the preceding
paragraph, if contested, would be sustained by a court.

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<PAGE> 108

The foregoing discussion is only a summary of the material federal income
tax consequences of the issuance and distribution of AT&T Wireless Group
tracking stock to AT&T. It is not a complete analysis of all potential tax
effects relevant to the issuance or distribution of AT&T Wireless Group tracking
stock. The discussion does not address any consequences that may arise under any
state, local or foreign jurisdiction. The discussion is based on the Internal
Revenue Code, Treasury Regulations promulgated under the Internal Revenue Code,
judicial opinions, published positions of the Internal Revenue Service, and all
other applicable authorities, all of which are subject to change, possibly with
retroactive effect. Any such change could affect the continuing validity of this
discussion. PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS
CONCERNING THE U.S. FEDERAL, STATE AND LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
ISSUANCE OF AT&T WIRELESS GROUP TRACKING STOCK.

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<PAGE> 109

UNDERWRITING

Under the terms and subject to the conditions contained in an underwriting
agreement, dated , 2000, the U.S. underwriters named below have
severally agreed to purchase, and we have agreed to sell to them, the respective
number of shares of AT&T Wireless Group tracking stock set forth below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- -----------
<S> <C>
Goldman, Sachs & Co. .......................................
Merrill Lynch, Pierce, Fenner & Smith, Incorporated.........
Salomon Smith Barney Inc. ..................................
Credit Suisse First Boston Corporation......................
Lehman Brothers Inc. .......................................
Morgan Stanley & Co. Incorporated...........................
Banc of America Securities LLC..............................
M.R. Beal & Company.........................................
Bear, Stearns & Co. Inc. ...................................
Chase Securities Inc........................................
Deutsche Bank Securities Inc. ..............................
Donaldson, Lufkin & Jenrette Securities Corporation.........
J.P. Morgan Securities Inc. ................................
PaineWebber Incorporated....................................
Prudential Securities Incorporated..........................
Sanford C. Bernstein & Co., Inc. ...........................
Thomas Weisel Partners LLC..................................
-----------
Total.................................................. 306,000,000
===========
</TABLE>

The representatives of the U.S. underwriters are Goldman, Sachs & Co.,
Merrill Lynch, Pierce, Fenner & Smith, Incorporated and Salomon Smith Barney
Inc. The underwriting agreement provides that the obligations of the several
U.S. underwriters to pay for and accept delivery of the shares of AT&T Wireless
Group tracking stock offered in this prospectus are subject to the approval of
specified legal matters by their counsel and to other conditions. The U.S.
underwriters are obligated to take and pay for all of the shares of AT&T
Wireless Group tracking stock offered hereby, except those shares covered by the
over-allotment option described below, if any shares are taken.

Thomas Weisel Partners LLC, one of the U.S. underwriters, was organized and
registered as a broker-dealer in December 1998. Since December 1998, Thomas
Weisel Partners LLC has acted as a lead or co-manager on numerous public
offerings of equity securities.

The U.S. underwriters initially propose to offer a portion of the shares of
AT&T Wireless Group tracking stock directly to the public at the public offering
price set forth on the cover page of this prospectus and a portion to some
dealers at a price that represents a concession not in excess of $ per
share under the public offering price. Any U.S. underwriter may allow, and these
dealers may reallow, a concession not in excess of $ per share to other
brokers or to other dealers. After the initial offering of the shares of the
AT&T Wireless Group tracking stock, the offering price and other selling terms
may be varied by the representatives.

We and the International underwriters have entered into an international
underwriting agreement providing for the concurrent offer and sale of AT&T
Wireless Group tracking stock in an international offering outside the United
States. The initial public offering price and aggregate underwriting discounts
and commissions per share for the two offerings are identical. The closing of
the U.S. offering is a condition to the closing of the international offering
(and vice versa). The representatives of the International underwriters are
Goldman Sachs International, Merrill Lynch International and Salomon Brothers
International Limited. We refer to the U.S. underwriters and the International
underwriters as the underwriters.

The underwriters have entered into an agreement in which they agree to
restrictions on where and to whom they and any dealer purchasing from them may
offer shares as part of the distribution

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of the shares. The underwriters also have agreed that they may sell shares among
each of the underwriting groups.

We have granted to the U.S. underwriters an option, exercisable for 30 days
from the date of this prospectus to purchase up to an aggregate of 45,900,000
additional shares at the public offering price set forth on the cover page of
this prospectus, less underwriting discounts and commissions. The U.S.
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any. To the extent this option is exercised, each U.S.
underwriter will become obligated, subject to specified conditions, to purchase
shares in approximately the same proportion as set forth in the table above. We
have also granted to the International underwriters an option to purchase up to
an aggregate of 8,100,000 additional shares on the same terms and conditions. If
the U.S. and International underwriters' options are exercised in full, the
total price to the public for this offering would be $ ,
the total underwriting discounts and commissions would be $ and the
total proceeds to AT&T Wireless Group and the AT&T Common Stock Group would be
$ .

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
AT&T Wireless Group tracking stock offered by them.

At our request, the underwriters have reserved up to 36,000,000 shares of
AT&T Wireless Group tracking stock offered hereby for sale at the initial public
offering price to all of our U.S.-based employees. The number of shares
available for sale to the general public will be reduced to the extent that
these employees purchase these reserved shares. Any reserved shares not so
purchased will be offered by the underwriters to the general public on the same
basis as the other shares of AT&T Wireless Group tracking stock offered hereby.

We intend to list the AT&T Wireless Group tracking stock on the New York
Stock Exchange under the symbol "AWE." The underwriters intend to sell shares to
a minimum of 2,000 beneficial owners in lots of 100 or more so as to meet the
distribution requirements of this listing.

In connection with this offering, AT&T Corp. has agreed that, without the
prior written consent of a majority of the representatives on behalf of the
underwriters, it will not, during the period ending 180 days after the date of
this prospectus:

- register for sale or offer, issue, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of AT&T
Wireless Group tracking stock or any securities convertible into or
exercisable or exchangeable for AT&T Wireless Group tracking stock, or

- enter into any swap or other arrangement that transfers, in whole or in
part, any of the economic consequences of ownership of AT&T Wireless
Group tracking stock, whether any of these transactions described above
is to be settled by delivery of AT&T Wireless Group tracking stock or
other securities, in cash or otherwise.

The restrictions described in the preceding list do not apply in the
following circumstances:

- the sale of AT&T Wireless Group tracking stock to the underwriters,

- the issuance of AT&T Wireless Group tracking stock upon the exercise,
exchange or conversion of any security outstanding on the date of this
prospectus,

- the issuance of AT&T Wireless Group tracking stock pursuant to any AT&T
Wireless Group's employee benefit, director or shareowner plan in
existence on the date of this prospectus, and

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<PAGE> 111

amount over the lock-up period equal to 10% of the total number of (A)
shares of AT&T Wireless Group tracking stock that are outstanding after
this offering plus (B) the equivalent number of shares of AT&T Wireless
Group tracking stock represented by the inter-group interest held by the
AT&T Common Stock Group, provided that certain control persons receiving
shares agree in writing to be bound by the provisions of the restrictions
for the remainder of the lock-up period as if it were AT&T Corp.

Certain underwriters will be facilitating Internet distribution for this
offering to certain of their Internet subscription customers. These underwriters
intend to allocate a limited number of shares for sale to their online brokerage
customers. An electronic prospectus will be available on their Websites. Other
than the prospectus in electronic format, the information on these Websites
relating to this offering is not a part of this prospectus.

In order to facilitate this offering of the AT&T Wireless Group tracking
stock, the underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of the AT&T Wireless Group tracking stock.
Specifically, the underwriters may over-allot in connection with the offering,
creating a short position in AT&T Wireless Group tracking stock for their own
account. In addition, to cover over-allotments or to stabilize the price of the
AT&T Wireless Group tracking stock, the underwriters may bid for, and purchase,
shares of AT&T Wireless Group tracking stock in the open market. Finally, the
underwriting syndicate may reclaim selling concessions allowed to an underwriter
or a dealer for distributing AT&T Wireless Group tracking stock in the offering,
if the syndicate repurchases previously distributed AT&T Wireless Group tracking
stock in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of AT&T Wireless Group tracking stock above independent market
levels. The underwriters are not required to engage in these activities, and may
end any of these activities at any time.

Some of the underwriters engage in transactions with, and perform services
for, our company in the ordinary course of business and have engaged and may in
the future engage in commercial banking and investment banking transactions with
us, for which they receive customary compensation.

We have agreed with the underwriters to indemnify each other against some
liabilities relating to this offering, including liabilities under the
Securities Act of 1933.

We estimate the expenses for this offering to be $12.5 million.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for the AT&T
Wireless Group tracking stock. The initial public offering price was determined
by negotiations between the U.S. representatives and us. Among the numerous
factors we and the U.S. representatives considered in determining the initial
public offering price were our future prospects and our industry in general, our
sales, earnings and other financial and operating information in recent periods,
and the price-earnings ratios, price-sales ratios, market prices of securities
and other financial and operating information of companies engaged in activities
similar to ours.

LEGAL MATTERS

The validity of the AT&T Wireless Group tracking stock offered in the
offering will be passed upon for AT&T by Robert S. Feit, Esq., General Attorney
and Assistant Secretary of AT&T. As of December 31, 1999, Mr. Feit was the
beneficial owner of approximately and had options to purchase in excess of .
Davis Polk & Wardwell of New York, New York is passing upon the validity of the
AT&T Wireless Group tracking stock for the underwriters. Such firm from time to
time acts as counsel for AT&T.

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<PAGE> 112

UNDERWRITING

Under the terms and subject to the conditions contained in an international
underwriting agreement, dated , 2000, the International
underwriters named below have severally agreed to purchase, and we have agreed
to sell to them, the respective number of shares of AT&T Wireless Group tracking
stock set forth below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---- -----------
<S> <C>
Goldman Sachs International.................................
Merrill Lynch International.................................
Salomon Brothers International Limited......................
ABN AMRO Rothschild.........................................
Credit Suisse First Boston (Europe) Limited.................
Deutsche Bank AG London.....................................
UBS AG, acting through its division Warburg Dillon Read.....
BNP Paribas Group...........................................
Cazenove & Co. .............................................
Daiwa Securities SB Capital Markets Europe Limited..........
HSBC Investment Bank plc....................................
ING Barings Limited as agent for ING Bank N.V., London
branch......................................................
Banca d'Intermediazione Mobiliare IMI S.p.A.................
-----------
Total.................................................. 54,000,000
===========
</TABLE>

The representatives of the International underwriters are Goldman Sachs
International, Merrill Lynch International and Salomon Brothers International
Limited. The international underwriting agreement provides that the obligations
of the several International underwriters to pay for and accept delivery of the
shares of AT&T Wireless Group tracking stock offered in this prospectus are
subject to the approval of specified legal matters by their counsel and to other
conditions. The International underwriters are obligated to take and pay for all
of the shares of AT&T Wireless Group tracking stock offered hereby, if any
shares are taken.

The International underwriters initially propose to offer a portion of the
shares of AT&T Wireless Group tracking stock directly to the public at the
public offering price set forth on the cover page of this prospectus and a
portion to some dealers at a price that represents a concession not in excess of
$ per share under the public offering price. Any International
underwriter may allow, and these dealers may reallow, a concession not in excess
of $ per share to other brokers or to other dealers. After the initial
offering of the shares of the AT&T Wireless Group tracking stock, the offering
price and other selling terms may be varied by the representatives.

We and the U.S. underwriters have entered into an underwriting agreement
providing for the concurrent offer and sale of AT&T Wireless Group tracking
stock in an offering in the United States. The initial public offering price and
aggregate underwriting discounts and commissions per share for the two offerings
are identical. The closing of the international offering is a condition to the
closing of the U.S. offering (and vice versa). The representatives of the U.S.
underwriters are Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith,
Incorporated and Salomon Smith Barney Inc. We refer to the International
underwriters and the U.S. underwriters as the underwriters.

The underwriters have entered into an agreement in which they agree to
restrictions on where and to whom they and any dealer purchasing from them may
offer shares as part of the distribution of the shares. The underwriters also
have agreed that they may sell shares among each of the underwriting groups.

We have granted to the International underwriters an option, exercisable
for 30 days from the date of this prospectus to purchase up to an aggregate of
8,100,000 additional shares at the public offering price set forth on the cover
page of this prospectus, less underwriting discounts and

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<PAGE> 113

commissions. The International underwriters may exercise this option solely for
the purpose of covering over-allotments, if any. To the extent this option is
exercised, each International underwriter will become obligated, subject to
specified conditions, to purchase shares in approximately the same proportion as
set forth in the table above. We have also granted to the U.S. underwriters an
option to purchase up to an aggregate of 45,900,000 additional shares on the
same terms and conditions. If the U.S. and International underwriters' option
are exercised in full, the total price to the public for this offering would be
$ , the total underwriting discounts and commissions would be
$ and the total proceeds to AT&T Wireless Group and the AT&T Common
Stock Group would be $ .

The underwriters have informed us that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
AT&T Wireless Group tracking stock offered by them.

The restrictions described in the preceding list do not apply in the
following circumstances:

- the sale of AT&T Wireless Group tracking stock to the underwriters,

- the issuance of AT&T Wireless Group tracking stock upon the exercise,
exchange or conversion of any security outstanding on the date of this
prospectus,

- the issuance of AT&T Wireless Group tracking stock pursuant to any AT&T
Wireless Group's employee benefit, director or shareowner plan in
existence on the date of this prospectus, and

- AT&T Wireless Group tracking stock issued as consideration in connection
with mergers, acquisitions, business combinations or other similar
transactions in the wireless industry involving us or any of our
subsidiaries or the AT&T Wireless Group, up to an aggregate amount over
the lock-up period equal to 10% of the total number of (A) shares of AT&T
Wireless Group tracking stock that are outstanding after this offering
plus (B) the equivalent number of shares of AT&T Wireless Group tracking
stock represented by the inter-group interest held by the AT&T Common
Stock Group, provided that certain control persons

104
<PAGE> 114

receiving shares agree in writing to be bound by the provisions of the
restrictions for the remainder of the lock-up period as if it were AT&T
Corp.

In order to facilitate this offering of AT&T Wireless Group tracking stock,
the underwriters may engage in transactions that stabilize, maintain or
otherwise affect the price of AT&T Wireless Group tracking stock. Specifically,
the underwriters may over-allot in connection with the offering, creating a
short position in AT&T Wireless Group tracking stock for their own account. In
addition, to cover over-allotments or to stabilize the price of AT&T Wireless
Group tracking stock, the underwriters may bid for, and purchase, shares of AT&T
Wireless Group tracking stock in the open market. Finally, the underwriting
syndicate may reclaim selling concessions allowed to an underwriter or a dealer
for distributing AT&T Wireless Group tracking stock in the offering, if the
syndicate repurchases previously distributed AT&T Wireless Group tracking stock
in transactions to cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of AT&T Wireless Group tracking stock above independent market
levels. The underwriters are not required to engage in these activities, and may
end any of these activities at any time.

We have agreed with the underwriters to indemnify each other against some
liabilities relating to this offering, including liabilities under the
Securities Act of 1933.

We estimate the expenses for this offering to be $12.5 million.

PRICING OF THIS OFFERING

Prior to this offering, there has been no public market for AT&T Wireless
Group tracking stock. The initial public offering price was determined by
negotiations between the U.S. representatives and us. Among the numerous factors
we and the U.S. representatives considered in determining the initial public
offering price were our future prospects and our industry in general, our sales,
earnings and other financial and operating information in recent periods, and
the price-earnings ratios, price-sales ratios, market prices of securities and
other financial and operating information of companies engaged in activities
similar to ours.

LEGAL MATTERS

The validity of the AT&T Wireless Group tracking stock offered in the
offering will be passed upon for AT&T by Robert S. Feit, Esq., General Attorney
and Assistant Secretary of AT&T. As of December 31, 1999, Mr. Feit was the
beneficial owner of approximately and had options to purchase in
excess of . Davis Polk & Wardwell of New York, New York is passing
upon the validity of AT&T Wireless Group tracking stock for the underwriters.
Such firm from time to time acts as counsel for AT&T.

105
<PAGE> 115

OTHER INFORMATION

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 with respect to:

- the financial condition,

- results of operations,

- cash flows,

- dividends,

- financing plans,

- business strategies,

- operating efficiencies or synergies,

- budgets,

- capital and other expenditures,

- competitive positions,

- growth opportunities for existing products, benefits from new technology,

- plans and objectives of management,

- markets for stock of AT&T, the AT&T Common Stock Group and the AT&T
Wireless Group, and

- other matters.

Statements in this prospectus that are not historical facts are hereby
identified as "forward-looking statements" for the purpose of the safe harbor
provided by Section 21E of the Securities Exchange Act of 1934 and Section 27A
of the Securities Act of 1933. These forward-looking statements, including,
without limitation, those relating to the future business prospects, revenues,
working capital, liquidity, capital needs, network build out, interest costs and
income, in each case, relating to AT&T, the AT&T Common Stock Group and the AT&T
Wireless Group, wherever they occur in this prospectus, are necessarily
estimates reflecting the best judgment of senior management and involve a number
of risks and uncertainties that could cause actual results to differ materially
from those suggested by the forward-looking statements. These forward-looking
statements should, therefore, be considered in light of various important
factors, including those set forth in this prospectus. Important factors that
could cause actual results to differ materially from estimates or projections
contained in the forward-looking statements include, without limitation:

- the effects of vigorous competition in the markets in which these
entities operate,

- the ability to enter into agreements to, and the cost of, entering new
markets necessary to provide nationwide services,

- the ability of AT&T to establish a significant market presence in new
geographic and service markets,

- the risks related to AT&T's investments in the Liberty Media Group and
joint ventures,

- the impact of any unusual items resulting from ongoing evaluations of the
business strategies of these entities or groups,

- requirements imposed on these entities or groups or latitude allowed to
their competitors by the FCC or state regulatory commissions under the
Telecommunications Act or other applicable laws and regulations,

- unexpected results of litigation filed against these entities,

- the possibility of one or more of the markets in which these entities
compete being impacted by changes in political, economic or other
factors, such as monetary policy, legal and

106
<PAGE> 116

regulatory changes or other external factors over which these entities or
groups have no control, and

- those factors listed under "Risk Factors -- AT&T Wireless Group Tracking
Stock" and "Risk Factors -- The AT&T Wireless Group."

The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are found at various places throughout this
prospectus and throughout the other documents incorporated herein by reference,
including, but not limited to, AT&T's 1999 Annual Report on Form 10-K, including
any amendments to the annual report. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this prospectus. AT&T undertakes no obligation to publicly release any revisions
to these forward-looking statements to reflect events or circumstances after the
date of this prospectus or to reflect the occurrence of unanticipated events.
Moreover, in the future, AT&T, through its senior management, may make
forward-looking statements about the matters described in this prospectus or
other matters concerning AT&T, the AT&T Wireless Group or the AT&T Common Stock
Group.

EXPERTS

The consolidated financial statements of AT&T Corp. incorporated in this
Registration Statement/Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1999, have been so incorporated in reliance on
the report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

The combined financial statements of the AT&T Wireless Group as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999 included in this Registration Statement/Prospectus have been so
included in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.

The combined balance sheets of Liberty Media Group (New Liberty or
Successor) as of December 31, 1999, and of Liberty Media Group (Old Liberty or
Predecessor) as of December 31, 1998, and the related combined statements of
operations and comprehensive earnings, combined equity and cash flows for the
period from March 1, 1999 to December 31, 1999 (Successor period) and from
January 1, 1999 to February 28, 1999 and for each of the years in the two-year
period ended December 31, 1998 (Predecessor periods), which appears as an
exhibit to the AT&T Corp. Annual Report on Form 10-K for the year ended December
31, 1999, dated March 27, 2000, of AT&T have been incorporated by reference
herein in reliance upon the report, dated February 29, 2000, of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements and financial statement schedule
included in MediaOne Group, Inc.'s Annual Report on Form 10-K for the year ended
December 31, 1999 have been audited by Arthur Anderson LLP, independent public
accountants, as indicated in their reports with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting and auditing in giving said reports.

WHERE YOU CAN FIND MORE INFORMATION

AT&T files annual, quarterly and special reports, prospectuses and other
information with the SEC. You may read and copy any reports, statements or other
information we file at the SEC's public reference rooms at 450 Fifth Street,
N.W., Washington, D.C. 20549, 7 World Trade Center, Suite 1300, New York, New
York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information on
the public

107
<PAGE> 117

reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the Internet world wide web site
maintained by the SEC at www.sec.gov.

AT&T filed a Registration Statement on Form S-3 to register with the SEC
the AT&T Wireless Group tracking stock. This prospectus is a part of the
Registration Statement and constitutes a prospectus of AT&T.

As allowed by SEC rules, this prospectus does not contain all the
information you can find in the Registration Statement or the exhibits to the
Registration Statement.

The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that we
have previously filed with the SEC. These documents contain important
information about our companies and their financial condition.

<TABLE>
<CAPTION>
AT&T SEC FILINGS (FILE
NO. 1-1105) PERIOD
- ---------------------- ------
<S> <C>
Annual Report on Form 10-K........... Year ended December 31, 1999 filed on March 27, 2000
Current Reports on
Form 8-K........................... Filed on January 6, 2000, January 14, 2000, March 13,
2000, March 17, 2000 and March 27, 2000
Proxy Statements..................... Filed on January 7, 2000, February 8, 2000 and March 27,
2000
</TABLE>

AT&T also incorporates by reference into this prospectus additional
documents that may be filed with the SEC pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act from the date of this prospectus prior to the
termination of the offering. These include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as prospectuses. Any statements contained in a previously filed
document incorporated by reference herein is deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
(or in a subsequently filed document which also is incorporated by reference
herein) modifies or supersedes such statement.

If you are a shareholder, we may have sent you some of the documents
incorporated by reference, but you can obtain any of them through us, the SEC or
the SEC's Internet world wide web site as described above. Documents
incorporated by reference are available from us without charge, excluding
exhibits thereto unless we have specifically incorporated by reference such
exhibits in this prospectus. Any person, including any beneficial owner, to whom
this prospectus is delivered may obtain documents incorporated by reference in,
but not delivered with, this prospectus by requesting them in writing or by
telephone at the following address:

AT&T Corp
32 Avenue of the Americas
New York, New York, 10013-2412
Tel: (212) 387-5400
Attn: Corporate Secretary's Department

108
<PAGE> 118

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
HISTORICAL FINANCIAL STATEMENTS
AT&T WIRELESS GROUP
Report of Independent Accountants......................... F-2
Combined Statements of Operations for the years ended
December 31, 1999, 1998 and 1997....................... F-3
Combined Balance Sheets at December 31, 1999 and 1998..... F-4
Combined Statements of Changes in Shareowner's Equity for
the years ended December 31, 1999, 1998 and 1997....... F-5
Combined Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997....................... F-6
Notes to Combined Financial Statements.................... F-7

PRO FORMA FINANCIAL STATEMENTS
AT&T WIRELESS GROUP
Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-25
Unaudited Pro Forma Condensed Combined Statement of
Operations for the year ended December 31, 1999........ F-26
Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1999...................................... F-27
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-28
AT&T COMMON STOCK GROUP
Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-29
Unaudited Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1999................... F-30
Unaudited Pro Forma Condensed Combined Balance Sheet as of
December 31, 1999...................................... F-31
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-33
</TABLE>

F-1
<PAGE> 119

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareowner of the AT&T Wireless Group:

In our opinion, the accompanying combined balance sheets and the related
combined statements of operations and changes in shareowner's equity and of cash
flows present fairly, in all material respects, the financial position of the
AT&T Wireless Group at December 31, 1999 and 1998, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1999, in conformity with accounting principles generally accepted
in the United States. These financial statements are the responsibility of the
AT&T Wireless Group's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.

The AT&T Wireless Group is a fully integrated business unit of AT&T Corp.;
consequently, as indicated in Note 1, these combined financial statements have
been derived from the consolidated financial statements and accounting records
of AT&T Corp. and reflect certain assumptions and allocations. Moreover, as
indicated in Note 1, the AT&T Wireless Group relies on AT&T Corp. for
administrative, management and other services. The financial position, results
of operations and cash flows of the AT&T Wireless Group could differ from those
that would have resulted had the AT&T Wireless Group operated autonomously or as
an entity independent of AT&T Corp. As more fully discussed in Note 1, the
combined financial statements of the AT&T Wireless Group should be read in
conjunction with the audited consolidated financial statements of AT&T Corp.

PRICEWATERHOUSECOOPERS LLP

March 17, 2000

F-2
<PAGE> 120

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
REVENUES
Services revenues........................................... $6,823 $4,779 $4,249
Equipment revenues.......................................... 804 627 419
Total revenues.............................................. 7,627 5,406 4,668
OPERATING EXPENSES
Network and other costs of services......................... 3,846 2,428 1,770
Depreciation and amortization............................... 1,253 1,079 826
Selling, general and administrative......................... 2,663 2,122 1,982
Asset impairment and restructuring charges.................. 531 120 160
Total operating expenses.................................... 8,293 5,749 4,738
OPERATING LOSS.............................................. (666) (343) (70)
Other income, net........................................... 176 764 288
Interest expense............................................ 136 120 --
(Loss) income before income taxes........................... (626) 301 218
(Benefit) provision for income taxes........................ (221) 137 93
NET (LOSS) INCOME........................................... (405) 164 125
Dividend requirements on preferred stock held by AT&T,
net....................................................... 56 56 56
NET (LOSS) INCOME ATTRIBUTABLE TO AT&T'S RESIDUAL
INTEREST.................................................. $ (461) $ 108 $ 69
</TABLE>

The notes are an integral part of these combined financial statements.
F-3
<PAGE> 121

AT&T WIRELESS GROUP

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1999 1998
-------- --------
DOLLARS IN MILLIONS
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 5 $ 27
Accounts receivable, less allowances of $130 and $74........ 1,300 885
Inventories................................................. 162 206
Deferred income taxes....................................... 127 91
Prepaid expenses and other current assets................... 34 29
TOTAL CURRENT ASSETS........................................ 1,628 1,238
Property, plant and equipment, net.......................... 6,349 5,182
Licensing costs, net of accumulated amortization of $1,519
and $1,290................................................ 8,571 7,928
Investments................................................. 4,502 3,795
Goodwill, net and other assets.............................. 2,462 1,317
TOTAL ASSETS................................................ $23,512 $19,460
LIABILITIES
Accounts payable............................................ $ 921 $ 628
Payroll and benefit-related liabilities..................... 291 202
Debt maturing within one year............................... 154 89
Other current liabilities................................... 931 707
TOTAL CURRENT LIABILITIES................................... 2,297 1,626
Long-term debt due to AT&T.................................. 3,400 2,500
Deferred income taxes....................................... 3,750 3,662
Other long-term liabilities................................. 48 35
TOTAL LIABILITIES........................................... 9,495 7,823
MINORITY INTEREST........................................... 20 105
SHAREOWNER'S EQUITY
Preferred stock held by AT&T................................ 1,000 1,000
AT&T's residual interest.................................... 12,971 10,535
Accumulated other comprehensive income...................... 26 (3)
TOTAL SHAREOWNER'S EQUITY................................... 13,997 11,532
TOTAL LIABILITIES AND SHAREOWNER'S EQUITY................... $23,512 $19,460
</TABLE>

The notes are an integral part of these combined financial statements.
F-4
<PAGE> 122

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CHANGES IN SHAREOWNER'S EQUITY

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------------
1999 1998 1997
------- ------- -------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
PREFERRED STOCK HELD BY AT&T................................ $ 1,000 $ 1,000 $ 1,000
AT&T'S RESIDUAL INTEREST
Balance at beginning of year.............................. 10,535 10,139 9,433
Net (loss) income attributable to AT&T's residual
interest............................................... (461) 108 69
Transfers from parent, net................................ 2,897 288 637
------- ------- -------
Balance at end of year...................................... 12,971 10,535 10,139
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of year.............................. (3) 48 64
Other comprehensive income (net of taxes of $18, $(31),
$(10))................................................. 29 (51) (16)
------- ------- -------
Balance at end of year...................................... 26 (3) 48
------- ------- -------
TOTAL SHAREOWNER'S EQUITY................................... $13,997 $11,532 $11,187
======= ======= =======
SUMMARY OF TOTAL COMPREHENSIVE INCOME:
Net (loss) income attributable to AT&T's residual
interest............................................... $ (461) $ 108 $ 69
Dividend requirements on preferred stock held by AT&T,
net.................................................... 56 56 56
------- ------- -------
Net (loss) income......................................... (405) 164 125
Other comprehensive income................................ 29 (51) (16)
------- ------- -------
TOTAL COMPREHENSIVE INCOME.................................. $ (376) $ 113 $ 109
======= ======= =======
</TABLE>

The notes are an integral part of these combined financial statements.
F-5
<PAGE> 123

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income......................................... $ (405) $ 164 $ 125
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Gains on sale/exchange of investments................... (99) (600) (57)
Asset impairment and restructuring charges.............. 531 120 80
Depreciation and amortization........................... 1,253 1,079 826
Deferred income taxes................................... (180) (40) 254
Net equity earnings from investments.................... (54) (114) (222)
Minority interests in consolidated subsidiaries......... (17) (35) 11
Provision for uncollectibles............................ 200 99 116
Increase in accounts receivable......................... (514) (307) (90)
Increase in accounts payable............................ 221 174 152
Net decrease (increase) in other operating assets and
liabilities.......................................... 88 (126) 143
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 1,024 414 1,338
INVESTING ACTIVITIES
Capital expenditures and other additions.................. (2,429) (1,219) (1,931)
Net acquisitions of licenses.............................. (47) (65) (443)
Equity investment distributions and sales................. 236 1,354 294
Equity investment contributions and purchases............. (284) (156) (84)
Net dispositions of businesses............................ 244 324 --
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES....... (2,280) 238 (2,164)
FINANCING ACTIVITIES
Increase in short-term borrowings......................... 65 43 --
Increase in long-term debt due to AT&T.................... 900 100 200
Dividend requirements on preferred stock, net............. (56) (56) (56)
Transfers from (to) parent, net........................... 344 (694) 611
Other financing activities, net........................... (19) (24) (13)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES....... 1,234 (631) 742
Net (decrease) increase in cash and cash equivalents...... (22) 21 (84)
Cash and cash equivalents at beginning of year............ 27 6 90
Cash and cash equivalents at end of year.................. $ 5 $ 27 $ 6
</TABLE>

The notes are an integral part of these combined financial statements.
F-6
<PAGE> 124

AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS UNLESS OTHERWISE NOTED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The AT&T Wireless Group is a fully integrated business unit of AT&T Corp.
The AT&T Wireless Group provides domestic wireless voice and data services in
the 850 megahertz cellular markets and 1900 megahertz Personal Communications
Services (PCS) markets. The AT&T Wireless Group also sells handsets and
accessories to its customers, which generally result in a loss. In addition, the
AT&T Wireless Group results include their aviation communications business,
earnings or losses associated with equity interests in wireless communications
ventures and partnerships, both in the United States and internationally, and
the costs associated with the development of fixed wireless technology. The
results of the messaging services business are included through October 2, 1998
(date of sale). The combined financial statements reflect the results of
operations, financial position, changes in shareowner's equity and cash flows of
these businesses of AT&T as if these combined businesses were a separate entity
for all periods presented. The financial information included herein may not
necessarily reflect the combined results of operations, financial position,
changes in shareowner's equity and cash flows of the AT&T Wireless Group had it
been a separate, stand-alone entity during the periods presented. The combined
financial statements of the AT&T Wireless Group should be read in conjunction
with the audited consolidated financial statements of AT&T.

As an integrated business unit of AT&T, the AT&T Wireless Group does not
prepare separate financial statements in accordance with generally accepted
accounting principles (GAAP) in the normal course of operations. However, these
combined financial statements were prepared in accordance with GAAP for purposes
of this filing in connection with AT&T's plan to issue a tracking stock which
reflects the economic performance of the AT&T Wireless Group. The combined
financial statements of the AT&T Wireless Group reflect the assets, liabilities,
revenues and expenses directly attributable to the AT&T Wireless Group, as well
as allocations deemed reasonable by management, to present the results of
operations, financial position and cash flows of the AT&T Wireless Group on a
stand-alone basis. The allocation methodologies have been described within the
notes to the combined financial statements where appropriate, and management
considers the allocations to be reasonable. Changes in AT&T's residual interest
represent net transfers to or from AT&T, after giving effect to the net income
or loss attributable to AT&T's residual interest in the AT&T Wireless Group
during the period and are assumed to be settled in cash. AT&T's capital
contributions for purchase business combinations and initial investments in
joint ventures and partnerships which AT&T attributed to the AT&T Wireless Group
have been treated as noncash transactions. Earnings per share disclosure has not
been presented as the AT&T Wireless Group is a business unit of AT&T and
earnings per share data is not considered meaningful.

The capital structure of the AT&T Wireless Group has been assumed based
upon AT&T's historical capital ratio adjusted for certain items. This has
resulted in $3,400, $2,500 and $2,400 in intercompany indebtedness at December
31, 1999, 1998 and 1997, respectively, paying annual interest at 7.25% for the
year ended December 31, 1999 and 7.75% for the years ended December 31, 1998 and
1997. The interest rate charged is designed to be substantially equivalent to
the interest rates that the AT&T Wireless Group would be able to obtain from
third parties, including the public markets, as a nonaffiliate of AT&T without
the benefit of any guaranty by AT&T. In addition, the AT&T Wireless Group has
issued to AT&T $1 billion of 9% cumulative preferred stock that, subject to the

F-7
<PAGE> 125
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

approval of the AT&T Wireless Group capital stock committee, is redeemable at
the option of AT&T. At the time of the initial public offering, $2 billion of
the intercompany indebtedness is anticipated to be converted into an additional
$2 billion of 9% cumulative preferred stock. Interest expense presented is net
of $88, $75 and $178 amounts capitalized for the years ended December 31, 1999,
1998 and 1997, respectively.

General corporate overhead related to AT&T's corporate headquarters and
common support divisions has been allocated to the AT&T Wireless Group based on
the ratio of the AT&T Wireless Group's external costs and expenses to AT&T's
consolidated external costs and expenses, adjusted for any functions that the
AT&T Wireless Group performs on its own. However, the costs of these services
charged to the AT&T Wireless Group are not necessarily indicative of the costs
that would have been incurred if the AT&T Wireless Group had performed these
functions entirely as a stand-alone entity, nor are they indicative of costs
that will be charged in the future.

Consolidated income tax provisions, related tax payments or refunds, and
deferred tax balances of AT&T have been allocated to the AT&T Wireless Group
based principally on the taxable income and tax credits directly attributable to
the AT&T Wireless Group. These allocations reflect the AT&T Wireless Group's
contribution to AT&T's consolidated taxable income and the consolidated tax
liability and tax credit position. Prior to the issuance of any shares of the
AT&T Wireless Group tracking stock, the AT&T Common Stock Group (which consists
of the operations of AT&T other than those attributed to AT&T tracking stocks)
and the AT&T Wireless Group have agreed to enter into a tax sharing agreement
that will provide for tax sharing payments based on the taxes or tax benefits of
a hypothetical affiliated group consisting of the AT&T Common Stock Group and
the AT&T Wireless Group. Based on this agreement, the consolidated tax liability
before credits will be allocated between the groups, based on each group's
contribution to consolidated taxable income of the hypothetical group. For
purposes of the tax sharing agreement, the 9% cumulative preferred stock held by
AT&T will be treated as if it were an intercompany debt instrument and,
accordingly, tax sharing payments will be calculated by treating coupon payments
on the preferred stock as interest expense to the AT&T Wireless Group and
interest income to the AT&T Common Stock Group. The preferred stock dividends,
net of the amounts recorded in accordance with the methodology contained in the
tax sharing agreement, have been recorded in AT&T Wireless Group's equity.
Consolidated tax credits of the hypothetical group will be allocated between
groups based on each group's contribution to each tax credit.

CASH EQUIVALENTS

All highly liquid investments with original maturities of generally three
months or less are considered to be cash equivalents.

CASH FLOWS

For purposes of the combined statements of cash flows, all transactions
between the AT&T Wireless Group and AT&T, except for purchase business
combinations and initial investments in joint ventures and partnerships which
were funded by AT&T and contributed by AT&T to the AT&T Wireless Group, have
been accounted for as having been settled in cash at the time the transaction
was recorded by the AT&T Wireless Group.

F-8
<PAGE> 126
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

INVENTORIES

Inventories, which consist principally of handsets and accessories, are
recorded at the lower of cost or market. Cost is principally determined by the
first-in, first-out (FIFO) method.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at cost, unless impaired, and
depreciation is determined based upon the assets' estimated useful lives.
Depreciation is calculated on a straight-line basis according to the following
useful lives:

<TABLE>
<S> <C>
Wireless communications systems and other equipment 3-15 years
Building and improvements 5-20 years
</TABLE>

When the AT&T Wireless Group sells, disposes or retires assets, the related
gains or losses are included in operating results.

During 1998, the AT&T Wireless Group completed a review of the estimated
service lives of certain wireless communications equipment. As a result,
effective January 1, 1998, the estimated service lives of such equipment were
changed from 12 years to varying periods ranging primarily from seven to ten
years, with certain assets being changed to 15 years, depending on the nature of
the equipment. The net impact of these changes to 1998 results was an annual
increase in depreciation expense of approximately $42 and an annual reduction in
net income of approximately $26.

SOFTWARE CAPITALIZATION

In 1998, the AT&T Wireless Group adopted Statement of Position (SOP) 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." In accordance with this standard, certain direct development
costs associated with internal-use software are capitalized, including external
direct costs of materials and services, and payroll costs for employees devoting
time to the software projects. These costs are included within other assets and
are amortized over a period not to exceed five years beginning when the asset is
substantially ready for use. Costs incurred during the preliminary project
stage, as well as maintenance and training costs, are expensed as incurred. The
AT&T Wireless Group also capitalizes initial operating-system software costs and
amortizes them over the life of the associated hardware. The annual impact of
adoption of SOP 98-1 was a reduction of approximately $12 in selling, general
and administrative expenses and an annual increase in net income of
approximately $7 for the year ended December 31, 1998.

The AT&T Wireless Group also capitalizes costs associated with the
development of application software incurred from the time technological
feasibility is established until the software is ready to provide service to
customers. These capitalized costs are included in property, plant and equipment
and are amortized over a useful life not to exceed five years.

LICENSING COSTS

Licensing costs are primarily incurred to develop or acquire cellular (850
megahertz) and PCS (1900 megahertz) licenses. In addition, licensing costs
include costs incurred to develop or acquire 38 gigahertz licenses. Amortization
begins with the commencement of service to customers and is computed using the
straight-line method over periods not exceeding 40 years.

F-9
<PAGE> 127
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

CAPITALIZED INTEREST

The AT&T Wireless Group capitalizes interest which is applicable to the
construction of significant additions to property, plant, and equipment and the
acquisitions of licenses until the assets are placed into service. These costs
are amortized over the related assets' estimated useful lives.

INVESTMENTS

Investments in which the AT&T Wireless Group exercises significant
influence but which the AT&T Wireless Group does not control are accounted for
under the equity method of accounting. Investments in which the AT&T Wireless
Group has no significant influence over the investee are accounted for under the
cost method of accounting. Under the equity method, investments are stated at
initial cost and are adjusted for AT&T Wireless Group's subsequent contributions
and its share of earnings or losses, and distributions. The excess of the
investment over the underlying book value of the investees' net assets is being
amortized over periods not exceeding 40 years.

Investments covered under the scope of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," are classified as "available for sale" and are carried at fair
value. Unrealized gain or loss, net of tax, are included as a component of
accumulated other comprehensive income within shareowner's equity.

GOODWILL

Goodwill is the excess of the purchase price over the fair value of net
assets acquired in business combinations accounted for as purchases. Goodwill is
amortized on a straight-line basis over periods not exceeding 40 years.

VALUATION OF LONG-LIVED ASSETS

Long-lived assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. It is
reasonably possible that these assets could become impaired as a result of
technological or other industry changes. For assets the AT&T Wireless Group
intends to hold for use, if the total of the expected future undiscounted cash
flows is less than the carrying amount of the asset, a loss is recognized for
the difference between the fair value and carrying value of the asset. For
assets the AT&T Wireless Group intends to dispose of, a loss is recognized for
the amount that the estimated fair value, less costs to sell, is less than the
carrying value of the assets.

REVENUE RECOGNITION

Wireless services revenues are recognized based upon minutes of traffic
processed and contracted fees. Equipment and other services revenues are
recognized when the products are delivered and accepted by customers and when
services are provided in accordance with contract terms.

ADVERTISING AND PROMOTIONAL COSTS

Costs of advertising and promotions are expensed as incurred. Advertising
and promotional expenses were $386, $344, and $305 in 1999, 1998, and 1997,
respectively.

F-10
<PAGE> 128
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

INCOME TAXES

The AT&T Wireless Group is not a separate taxable entity for federal and
state income tax purposes and its results of operations are included in the
consolidated federal and state income tax returns of AT&T and its affiliates.
The AT&T Wireless Group's provision or benefit for income taxes is based upon
its contribution to the overall income tax liability of AT&T and its affiliates.

ISSUANCE OF COMMON STOCK BY AFFILIATES

Changes in our proportionate share of the underlying equity of a subsidiary
or equity method investee, which result from the issuance of additional equity
securities by such entity, are recognized as increases or decreases in
shareowner's equity.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and revenues and expenses during the period reported. Actual results
could differ from those estimates. Estimates are used when accounting for
certain items such as the allowance for doubtful accounts, depreciation and
amortization, taxes, valuation of equity investments and asset impairment and
restructuring charges. Additionally, the AT&T Wireless Group evaluates the
useful lives of its wireless communications systems and other equipment based on
changes in technological and industry conditions.

CONCENTRATIONS

The AT&T Wireless Group purchases a substantial portion of its wireless
infrastructure equipment from three major suppliers. Additionally, three primary
vendors provide the multi-network handsets. Further, the AT&T Wireless Group
relies on one vendor to provide substantially all of its billing services. Loss
of any of these suppliers could adversely impact operations temporarily until a
comparable substitute could be found. The AT&T Wireless Group does not have a
concentration of available sources of labor or services, nor does the AT&T
Wireless Group have any significant concentration of business transacted with a
particular customer, that could, if suddenly eliminated, severely impact
operations.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." Among other
provisions, it requires that entities recognize all derivatives as either assets
or liabilities in the balance sheet and measure those instruments at fair value.
Gains and losses resulting from changes in the fair values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The effective date of this standard was delayed
via the issuance of SFAS No. 137. The effective date for SFAS No. 133 is now for
fiscal years beginning after June 15, 2000, though earlier adoption is
encouraged and retroactive application is prohibited. For the AT&T Wireless
Group this means that the standard must be adopted no later than January 1,
2001. Management does not expect the adoption of this standard will have a
material impact on the AT&T Wireless Group's results of operations, financial
position or cash flows.

F-11
<PAGE> 129
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(UNAUDITED)

3. ACQUISITIONS AND DIVESTITURES

During 1999, 1998 and 1997, the AT&T Wireless Group completed certain
transactions as part of its overall strategy to expand its wireless footprint
and divest itself of non core interests. The net pretax gains recognized were
$99, $600 and $57 in 1999, 1998, and 1997, respectively. The pretax gains and
losses from the sale and exchange transactions are included in other income, net
in the accompanying combined statements of operations. A summary of the
significant transactions follows:

On August 2, 1999, AT&T completed its acquisition of Honolulu Cellular
Telephone Company for cash. AT&T contributed its interest in Honolulu Cellular
to the AT&T Wireless Group as of the acquisition date. This transaction was
accounted for as a purchase.

On May 3, 1999, AT&T acquired Vanguard Cellular Systems, Inc. and has
contributed its interest in Vanguard to the AT&T Wireless Group as of the date
of acquisition. Under the agreement, each Vanguard shareholder was entitled to
elect to receive either cash or AT&T stock in exchange for their Vanguard shares
subject to the limitation that the overall consideration would consist of 50%
AT&T stock and 50% cash. Consummation of the merger resulted in the issuance of
approximately 12.6 million AT&T shares and payment of $485 in cash. In addition,
Vanguard had approximately $550 in debt, which has subsequently been repaid by
AT&T.

The merger with Vanguard was recorded as a purchase. Accordingly the
operating results of Vanguard have been included in the accompanying combined
financial statements since the date of acquisition. The excess of aggregate
purchase price over the fair market value of net assets acquired has been
assigned to licenses, goodwill and other intangible assets and is being
amortized over periods of ten to 40 years.

The following unaudited pro forma consolidated results of operations for
the years ended December 31, 1999 and 1998 assume the Vanguard acquisition
occurred as of January 1, 1998:

<TABLE>
<CAPTION>
FOR THE
YEARS ENDED
DECEMBER 31,
----------------
1999 1998
------ ------
<S> <C> <C>
Revenues.................................................... $7,784 $5,868
Net (loss) income........................................... (435) 254
Capital expenditures........................................ 2,492 1,223
</TABLE>

F-12
<PAGE> 130
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Pro forma data may not be indicative of the results that would have been
obtained had these events actually occurred at the beginning of the periods
presented, nor does it intend to be a projection of future results.

In April 1999, the AT&T Wireless Group acquired Bakersfield Cellular
Telephone Company in exchange for several cellular markets in Texas and cash.
The acquisition of Bakersfield Cellular was accounted for as a purchase.

In addition to the acquisitions of Vanguard, Honolulu Cellular and
Bakersfield Cellular, the AT&T Wireless Group acquired other cellular markets in
Utah, Oregon, California, Idaho, and Louisiana. All of the above acquisitions
were accounted for under the purchase method. The pro forma operating results of
these acquisitions other than Vanguard have not been presented as they are not
material to the overall operating results of the AT&T Wireless Group.

During 1999, the AT&T Wireless Group purchased minority interests in
several of the markets that they did not wholly own. The total of these
purchases, including both cash paid and stock issued by AT&T on the AT&T
Wireless Group's behalf totaled $87.

The following is a summary of all consideration paid for the completed
acquisitions through December 31, 1999, including the acquisition of Vanguard:

<TABLE>
<S> <C>
Fair value of AT&T stock issued............................. $ 531
Cash paid by AT&T........................................... 986
Liabilities assumed......................................... 555
Fair value of cellular markets exchanged.................... 51
Total purchase price........................................ $2,123
</TABLE>

The assets and liabilities of the acquired entities were recorded at their
fair market values at the dates of acquisition. The allocations were as follows:

<TABLE>
<S> <C>
License costs............................................... $ 915
Goodwill.................................................... 994
Other intangibles........................................... 100
Property, plant and equipment............................... 365
Net current assets.......................................... 5
Deferred tax liabilities.................................... (256)
Total purchase price........................................ $2,123
</TABLE>

In June 1999, the AT&T Wireless Group sold its interest in WOOD-TV for cash
resulting in a pretax gain of $88.

In May 1999, the AT&T Wireless Group sold its net assets in the geographic
area of San Juan, Puerto Rico, including a portion of the PCS license, to
TeleCorp PCS, Inc. for cash and preferred stock of TeleCorp resulting in a
pretax gain of $11.

F-13
<PAGE> 131
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

In the fourth quarter of 1998, the AT&T Wireless Group sold its net assets
in the geographic area of Norfolk, Virginia, including a portion of the PCS
license, to Triton PCS Holdings, Inc. for cash and preferred stock of Triton
resulting in a pretax gain of $29.

Also in the fourth quarter of 1998, the AT&T Wireless Group sold a portion
of its net assets in the geographic areas of Cincinnati and Dayton, Ohio,
including portions of the PCS licenses, to Cincinnati Bell Wireless, LLC for
cash and an ownership interest. A pretax gain of $24 was recognized on this
transaction.

On October 2, 1998, the AT&T Wireless Group sold its one-way messaging
services business and a narrowband PCS license to Metrocall, Inc. in exchange
for cash and preferred stock of Metrocall. A pretax loss of $5 was recognized on
this transaction. The AT&T Wireless Group subsequently contributed its
investment in the preferred stock of Metrocall to AT&T.

In the second quarter of 1998, the AT&T Wireless Group sold for cash its
interest in PriceCellular Corp. and recognized a pretax gain of $67.

In the second quarter of 1998, the AT&T Wireless Group sold for cash its
remaining equity interest in SmarTone Telecommunications Holdings Limited for a
pretax gain of $128.

In the first quarter of 1998, the AT&T Wireless Group sold for cash its
equity interest in LIN Television Corp. and recognized a pretax gain of $342.

In the fourth quarter of 1997, the AT&T Wireless Group sold for cash a
portion of its equity interest in SmarTone and recognized a pretax gain of $45.

4. ASSET IMPAIRMENT AND RESTRUCTURING CHARGES

During the fourth quarter of 1999, the AT&T Wireless Group recorded a $531
asset impairment charge primarily associated with the planned disposal of
certain wireless communications equipment resulting from a program to increase
capacity and operating efficiency of the wireless network. As part of a
multi-vendor program, contracts are being executed with certain vendors to
replace significant portions of the wireless infrastructure equipment in the
Western United States and the metropolitan New York markets. The program will
provide the AT&T Wireless Group with the newest technology available and allow
it to evolve to new third-generation digital technology, which will provide
high-speed data capabilities.

The planned disposal of the existing wireless infrastructure equipment
required an evaluation of asset impairment in accordance with SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," to write-down these assets to their fair value, which was
estimated by discounting the expected future cash flows of these assets through
the date of disposal. Since the assets will remain in service from the date of
the decision to dispose of these assets to the disposal date, the impairment has
been recorded as accumulated depreciation and the remaining net book value of
the assets will be depreciated over this shortened period.

During 1998, the AT&T Wireless Group recorded a pretax asset impairment
charge of $120, which represented the write-down of unrecoverable assets
associated with nonstrategic businesses.

During 1997, the AT&T Wireless Group recorded a pretax charge of $160
related to the decision to no longer pursue a two-way messaging business. This
charge included costs associated with the write-down of unrecoverable assets, as
well as costs related to contractual obligations and termination penalties.

F-14
<PAGE> 132
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

5. SUPPLEMENTARY FINANCIAL INFORMATION

SUPPLEMENTARY INCOME STATEMENT INFORMATION

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
INCLUDED IN DEPRECIATION AND AMORTIZATION
Amortization of licensing costs............................. $231 $210 $184
Amortization of goodwill.................................... 50 33 33
OTHER INCOME, NET
Interest income............................................. $ 4 $ 15 $ 9
Minority interests in consolidated subsidiaries............. 17 35 (11)
Net equity earnings from investments........................ 54 114 222
Gains on sale/exchange of investments....................... 99 600 57
Miscellaneous, net.......................................... 2 -- 11
Total other income, net..................................... $176 $764 $288
</TABLE>

SUPPLEMENTARY BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
1999 1998
------- -------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT, NET
Wireless communications systems and other equipment......... $10,127 $ 7,658
Land, buildings and improvements............................ 255 222
Total property, plant and equipment......................... 10,382 7,880
Accumulated depreciation.................................... (4,033) (2,698)
Property, plant and equipment, net.......................... $ 6,349 $ 5,182
GOODWILL, NET AND OTHER ASSETS
Goodwill.................................................... $ 2,303 $ 1,312
Accumulated amortization.................................... (168) (118)
Goodwill, net............................................... $ 2,135 $ 1,194
Other assets................................................ 327 123
Goodwill, net and other assets.............................. $ 2,462 $ 1,317
INCLUDED IN OTHER CURRENT LIABILITIES
Advertising and promotion accruals.......................... $ 162 $ 94
Business tax accruals....................................... 139 127
</TABLE>

SUPPLEMENTARY CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------
1999 1998 1997
---- ----- -----
<S> <C> <C> <C>
Interest payments, net of amounts capitalized............... $136 $ 120 $ --
Income tax (refunds) payments............................... (41) 177 (161)
</TABLE>

F-15
<PAGE> 133
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

6. INVESTMENTS

The AT&T Wireless Group holds investments in ventures and partnerships that
gain the AT&T Wireless Group access to additional domestic and international
wireless markets. Substantially all of these investments are accounted for under
the equity method.

At December 31, 1999 and 1998, the AT&T Wireless Group had equity method
investments of $4,409 and $3,766, respectively. Amortization of excess carrying
value of $19, $52, and $66 in 1999, 1998 and 1997, respectively, is reflected as
a component of other income, net in the accompanying combined statements of
operations. At December 31, 1999 and 1998, the carrying value of investments
accounted for under the equity method exceeded our share of the underlying
reported net assets by approximately $551 and $511, respectively.

Ownership of significant equity investments is as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
1999 1998
------ ------
<S> <C> <C>
AB Cellular................................................ 55.62%(1) 55.62%(1)
CMT Partners............................................... 50.00%(2) 50.00%(2)
Triton PCS Holdings, Inc................................... 16.80%(3) 18.66%(3)
TeleCorp PCS, Inc.......................................... 15.67%(4) 17.28%(4)
Tritel, Inc................................................ 21.64%(5) N/A
Cincinnati Bell Wireless, LLC.............................. 19.90%(6) 19.90%(6)
Rogers Cantel Mobile Communications, Inc................... 16.65%(7) N/A
</TABLE>

- -------------------------

(1) On November 13, 1998, the AT&T Wireless Group and BellSouth Corp. combined
their jointly owned cellular properties in Los Angeles Cellular Telephone
Company, Houston Cellular Telephone Company and Galveston Cellular Telephone
Company. Under the terms of the agreement, the ownership interests of the
AT&T Wireless Group and BellSouth in LA Cellular, Houston Cellular and
Galveston Cellular were folded into a single company, AB Cellular, which
continues to own, control and supervise all three properties. AT&T
contributed cash of approximately $1 billion to the new jointly controlled
company and subsequently contributed this interest to the AT&T Wireless
Group which now has an overall ownership interest of 55.62%. The AT&T
Wireless Group's voting interest in AB Cellular, however, is 50% and
therefore this investment is accounted for under the equity method. The AT&T
Wireless Group has a management agreement with the LA division of AB
Cellular to manage and supervise its operations. As manager, the AT&T
Wireless Group is committed to meet certain financial targets for the LA
division. The AT&T Wireless Group makes payments to AB Cellular for any
significant target deficiency and receives payments for any significant
target excess.

(2) Ownership percentages reflect voting and equity interests in a partnership
which owned and operated several licenses in Northern California, including
San Francisco/San Jose, and Kansas City, Missouri, and also a minority
interest in Dallas, Texas as of December 31, 1998. On October 1, 1999, CMT
Partners distributed certain assets including its ownership interest in
licenses in Kansas City, Missouri and Dallas, Texas to its partners. Through
this distribution, the

F-16
<PAGE> 134
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

AT&T Wireless Group received CMT Partners' ownership interest in Dallas,
Texas, and Vodafone AirTouch received CMT Partners' ownership interest in
Kansas City, Missouri. The AT&T Wireless Group continues to hold a 50%
equity and voting interest in the remaining assets of CMT Partners.

(3) During 1998, the AT&T Wireless Group entered into a venture with Triton PCS
Holdings, Inc. to build and operate digital wireless networks in the
Southeast and MidAtlantic areas of the United States. The AT&T Wireless
Group contributed licenses to the venture in exchange for preferred stock.
The effect of the above transaction resulted in a reclassification of
license balances of approximately $101 to investments in 1998. Additionally
during the fourth quarter of 1998, the AT&T Wireless Group sold its net
assets in the geographic area of Norfolk, Virginia, including a portion of
the PCS license, to Triton for cash and preferred stock. Ownership
percentage reflects the AT&T Wireless Group's ownership of common stock,
assuming conversion of all currently convertible preferred shares to common
stock. In addition, the AT&T Wireless Group holds redeemable preferred
shares in these investments, which are not currently convertible to common
stock. These preferred shares have certain liquidation preference rights.

(4) During 1998, the AT&T Wireless Group entered into a venture with TeleCorp
PCS, Inc. to build and operate digital wireless networks in portions of New
England and the Midwestern and Southeastern United States. The AT&T Wireless
Group contributed licenses to the venture in exchange for preferred stock.
The effect of the above transaction resulted in a reclassification of
license balances of approximately $40 to investments in 1998. Additionally
in May 1999, the AT&T Wireless Group sold its net assets in the geographic
area of San Juan, Puerto Rico, including a portion of the PCS license, to
TeleCorp for cash and preferred stock. Ownership percentage reflects the
AT&T Wireless Group's ownership of common stock, assuming conversion of all
currently convertible preferred shares to common stock. In addition, the
AT&T Wireless Group holds redeemable preferred shares in these investments,
which are not currently convertible to common stock. These preferred shares
have certain liquidation preference rights. See Note 13 regarding subsequent
transactions associated with TeleCorp.

(5) In January 1999, the AT&T Wireless Group entered into a venture with Tritel,
Inc. to build and operate a digital wireless network across parts of the
Southwestern United States. The AT&T Wireless Group contributed licenses to
the venture in exchange for preferred stock. The effect of the above
transaction resulted in a reclassification of license balances of
approximately $94 to investments in 1999. Ownership percentage reflects the
AT&T Wireless Group's ownership of common stock, assuming conversion of all
currently convertible preferred shares to common stock. In addition, the
AT&T Wireless Group holds redeemable preferred shares in these investments,
which are not currently convertible to common stock. These preferred shares
have certain liquidation preference rights. During the fourth quarter of
1999, Tritel completed its initial public offering resulting in the AT&T
Wireless Group recognizing a gain of $42, net of deferred taxes of $27. See
Note 13 regarding subsequent transactions with Tritel.

(6) During the fourth quarter of 1998, the AT&T Wireless Group sold a portion of
its net assets in the geographic areas of Cincinnati and Dayton, Ohio,
including portions of the PCS licenses, to Cincinnati Bell Wireless, LLC for
cash and an ownership interest. The effect of this transaction resulted in a
reclassification of license balances of approximately $20 to investments in
1998.

F-17
<PAGE> 135
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) In August 1999, AT&T and British Telecommunications plc through a newly
created joint venture acquired a 33.3% ownership interest in Rogers Cantel
Mobile Communications, Inc. for approximately $934 in cash. AT&T contributed
its interest in the joint venture to the AT&T Wireless Group as of the date
of acquisition. The investment is owned equally by the AT&T Wireless Group
and BT. This investment is accounted for under the equity method because of
our ability to elect certain members of the board of directors of this
entity, which we believe provides us with significant influence.

The combined results of operations and the financial position of the
significant equity method investments are summarized as follows:

CONDENSED INCOME STATEMENT INFORMATION

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1999 1998 1997
------ ------ ------
<S> <C> <C> <C>
Revenues.................................................... $2,647 $1,717 $1,712
Operating (loss) income..................................... (203) 477 560
Net (loss) income........................................... (270) 464 571
</TABLE>

CONDENSED BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
----------------
1999 1998
------ ------
<S> <C> <C>
Current assets.............................................. $2,891 $1,782
Noncurrent assets........................................... 8,097 4,990
Current liabilities......................................... 1,025 562
Noncurrent liabilities...................................... 2,938 811
</TABLE>

Current assets are comprised primarily of cash and accounts receivable.
Noncurrent assets are comprised primarily of net goodwill and other assets, net
property, plant and equipment and net licenses. Current liabilities are
comprised primarily of operating accruals and accounts payable. Noncurrent
liabilities are comprised primarily of long-term debt.

F-18
<PAGE> 136
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

7. INCOME TAXES

The following table shows the principal reasons for the difference between
the effective income tax rate and the United States federal statutory income tax
rate:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------
1999 1998 1997
----- ---- -----
<S> <C> <C> <C>
U.S. federal statutory income tax rate...................... 35% 35% 35%
Federal income tax at statutory rate........................ $(219) $105 $ 76
State and local income taxes, net of federal income tax
effect.................................................... (14) 12 9
Dividends received deduction................................ -- (2) (6)
Amortization of intangibles................................. 17 12 14
Unutilized foreign equity losses............................ 34 34 10
Change in valuation allowance and other estimates........... (50) (17) (13)
Net equity losses on investments............................ 13 -- --
Other differences -- net.................................... (2) (7) 3
(Benefit) provision for income taxes........................ $(221) $137 $ 93
Effective income tax rate................................... 35.3% 45.5% 42.7%
(BENEFIT) PROVISION FOR INCOME TAXES
CURRENT
Federal..................................................... $ (61) $152 $(149)
State and local............................................. 20 25 (12)
$ (41) $177 $(161)
DEFERRED
Federal..................................................... $(124) $(39) $ 229
State and local............................................. (56) (1) 25
$(180) $(40) $ 254
(Benefit) provision for income taxes........................ $(221) $137 $ 93
</TABLE>

Deferred income tax liabilities are taxes the AT&T Wireless Group expects
to pay in future periods. Similarly, deferred income tax assets are recorded for
expected reductions in taxes payable in future periods. Deferred income taxes
arise because of differences in the book and tax bases of certain assets and
liabilities.

F-19
<PAGE> 137
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income tax liabilities and assets consist of the following:

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
1999 1998
------- -------
<S> <C> <C>
LONG-TERM DEFERRED INCOME TAX LIABILITIES
Property, plant and equipment and licenses................ $(3,246) $(2,817)
Investments............................................... (508) (731)
Other..................................................... (49) (174)
Total long-term deferred income tax liabilities............. $(3,803) $(3,722)
LONG-TERM DEFERRED INCOME TAX ASSETS
Net operating loss/credit carryforwards................... $ 65 $ 75
Valuation allowance....................................... (12) (15)
Total net long-term deferred income tax assets.............. $ 53 $ 60
Net long-term deferred income tax liabilities............... $(3,750) $(3,662)
CURRENT DEFERRED INCOME TAX LIABILITIES
Total current deferred income tax liabilities............... $ -- $ --
CURRENT DEFERRED INCOME TAX ASSETS
Employee benefits......................................... 11 10
Reserves and allowances................................... 101 77
Other..................................................... 15 4
Total current deferred income tax assets.................. $ 127 $ 91
Current deferred income tax assets.......................... $ 127 $ 91
</TABLE>

At December 31, 1999, the AT&T Wireless Group had net operating loss
carryforwards for federal and state income tax purposes of $34 and $514,
respectively, expiring through 2019. The AT&T Wireless Group also has federal
tax credit carryforwards of $29 which are not subject to expiration. The AT&T
Wireless Group recorded a valuation allowance to reflect the estimated amount of
deferred tax assets which, more likely than not, will not be realized by AT&T.

8. EMPLOYEE BENEFIT PLAN

The AT&T Wireless Group sponsors a savings plan for the majority of its
employees. The plan allows employees to contribute a portion of their pretax
income in accordance with specified guidelines. The plan matches a percentage of
the employee contributions up to certain limits. In addition, the AT&T Wireless
Group may make discretionary or profit sharing contributions. Contributions
amounted to $37 in 1999, $31 in 1998 and $32 in 1997.

9. STOCK-BASED COMPENSATION PLANS

Under the 1997 Long-term Incentive Program, which was effective June 1,
1997, and amended on May 19, 1999 and on March 14, 2000, AT&T grants stock
options, performance shares, restricted

F-20
<PAGE> 138
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

stock and other awards. Under the Program, there were 150 million shares of
common stock available for grant with a maximum of 22.5 million common shares
that could be used for awards other than stock options. From the time the
Program became effective to the period ended December 31, 1999, there were
approximately 109 million shares granted and approximately 41 million shares
that remained available for grant. Beginning with January 1, 2000, the remaining
shares available for grant at December 31, of the prior year, plus 1.75% of the
shares of AT&T common stock outstanding on January 1 of each year become
available for grant. There is a maximum of 37.5 million shares that may be used
for awards other than stock options. The exercise price of any stock option is
equal to the stock price when the option is granted. Generally, the options vest
over three years and are exercisable up to 10 years from the date of grant.
Under the 1987 Long-term Incentive Program, which expired in April 1997, AT&T
granted awards with the same terms, and on January 1 of each year 0.6% of the
outstanding shares of AT&T common stock became available for grant.

Under the Program, performance share units are awarded to key employees in
the form of either common stock or cash at the end of a three-year period based
on AT&T's total shareholder return and certain financial performance targets.
Under the 1987 Long-term Incentive Program, performance share units with the
same terms were also awarded to key employees based on AT&T's return-to-equity
performance compared with a target.

On August 1, 1997, substantially all of the AT&T Wireless Group's employees
were granted a stock option award to purchase 150 shares representing a total of
1.8 million shares of AT&T's common stock. The options vest after three years
and are exercisable up to ten years from the grant date.

Under the AT&T 1996 Employee Stock Purchase Plan, which was effective July
1, 1996, AT&T is authorized to issue up to 75 million shares of common stock to
its eligible employees. Under the terms of the Plan, employees may have up to
10% of their earnings withheld to purchase AT&T's common stock. The purchase
price of the stock on the date of exercise is 85% of the average high and low
sale prices of shares on the New York Stock Exchange for that day. Under the
Plan, AT&T sold approximately 424 thousand shares to the AT&T Wireless Group
employees in 1999, approximately 535 thousand shares in 1998 and approximately
600 thousand shares in 1997.

AT&T applies Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," and related interpretations in accounting for its
plans. Accordingly, no compensation expense has been recognized for stock-based
compensation plans other than for performance-based and restricted stock awards
and stock appreciation rights. Compensation costs charged against the AT&T
Wireless Group's results of operations were not material in 1999, 1998 or 1997.

AT&T has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation." If AT&T had elected to recognize
compensation costs based on the fair value at the date of grant for awards in
1999, 1998 and 1997, consistent with the provisions of SFAS No. 123, the AT&T
Wireless Group's net (loss) income would have been adjusted to reflect
additional compensation expense resulting in the following pro forma amounts:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
---------------------
1999 1998 1997
----- ---- ----
<S> <C> <C> <C>
Net (loss) income........................................... $(464) $127 $107
</TABLE>

F-21
<PAGE> 139
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The pro forma effect on net (loss) income for 1999, 1998 and 1997 may not
be representative of the pro forma effect on net (loss) income of future years
because the SFAS No. 123 method of accounting for pro forma compensation expense
has not been applied to options granted prior to January 1, 1995.

At the date of grant, the weighted average exercise price for options
granted during 1999, 1998 and 1997 were $59.35, $41.86 and $27.31, respectively.

The weighted-average fair values at date of grant for options granted to
AT&T Wireless Group employees during 1999, 1998 and 1997 were $15.36, $9.80 and
$6.37, respectively, and were estimated using the Black-Scholes option-pricing
model. The weighted average risk-free interest rates applied for 1999, 1998 and
1997 were 4.71%, 5.27% and 6.14%, respectively. The following assumptions were
applied for 1999, 1998 and 1997, respectively: (i) expected dividend yields of
1.7%, 2.1% and 2.2%, (ii) expected volatility rates of 27.2%, 23.8% and 21.8%,
and (iii) expected lives of 4.9 years, 4.5 years and 4.5 years.

10. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable,
accounts payable and other current liabilities are a reasonable estimate of
their fair value due to the short-term nature of these instruments. The fair
value of the long term debt due to AT&T approximates its carrying value.

11. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the AT&T Wireless Group is subject to
proceedings, lawsuits and other claims. Such matters are subject to many
uncertainties and outcomes are not predictable with assurance. Consequently, the
AT&T Wireless Group is unable to ascertain the ultimate aggregate amount of
monetary liability or financial impact with respect to these matters at December
31, 1999. The AT&T Wireless Group also makes routine filings with the Federal
Communications Commission and state regulatory authorities. These matters could
affect the operating results of any one quarter when resolved in future periods.
However, the AT&T Wireless Group believes that after final disposition any
monetary liability or financial impact to us beyond that provided for at
year-end would not be material to our annual combined financial statements.

The AT&T Wireless Group leases land, buildings and equipment through
contracts that expire in various years through 2036. Rental expense under
operating leases was $205 in 1999, $181 in 1998 and $149 in 1997. The following
table shows the future minimum lease payments due under noncancelable operating
leases at December 31, 1999.

<TABLE>
<CAPTION>
2000 2001 2002 2003 2004 LATER YEARS
---- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
$180 $152 $113 $86 $61 $184
</TABLE>

In the second quarter of 1999, the AT&T Wireless Group entered into a
four-year commitment to purchase $1 billion in wireless network equipment. For
the year ended December 31, 1999, the AT&T Wireless Group spent over $500 in
partial satisfaction of this commitment.

In addition, the AT&T Wireless Group has agreements with other wireless
carriers regarding subscriber activity on other carriers' wireless systems.
These agreements establish general terms and charges for system usage, and in
some cases also establish minimum usage requirements.

During 1999, the AT&T Wireless Group has expensed $82 for losses associated
with commitments related to certain investments. Included in the $82 loss was
the AT&T Wireless

F-22
<PAGE> 140
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Group's commitment of $63 to fund the long-term debt obligations of one of its
investments, which fully satisfies the AT&T Wireless Group's commitment for this
investment.

The AT&T Wireless Group also has various other purchase commitments for
materials, supplies and other items incidental to the ordinary course of
business which are not significant individually, nor in the aggregate.

12. RELATED PARTY TRANSACTIONS

As discussed in Note 1, AT&T has provided necessary working capital
requirements through intercompany debt, preferred stock and cash contributions
to the AT&T Wireless Group. These amounts are reflected in the accompanying
combined balance sheets as preferred stock held by AT&T and long-term debt due
to AT&T. The 9% cumulative preferred stock was reflected at $1 billion and the
dividend requirements were $56 for each of the years ended December 31, 1999,
1998 and 1997, respectively, net of amounts recorded in accordance with the
methodology contained in the tax sharing agreement described in Note 1.

Intercompany debt and interest was assumed based upon the methodology
outlined in Note 1. Intercompany debt was reflected as $3,400, and $2,500 at
December 31, 1999 and 1998. Intercompany interest was $214, $190 and $178, in
1999, 1998 and 1997, respectively, of which $88, $75 and $178, respectively, was
capitalized.

The AT&T Wireless Group purchases long distance and other network related
services from AT&T at market-based prices. For the years ended December 31,
1999, 1998 and 1997, these amounts totaled $170, $65 and $58, respectively, and
are reflected within network and other costs of services expenses in the
accompanying combined statements of operations.

AT&T has allocated general corporate overhead expenses, including finance,
legal, marketing, use of the AT&T brand, planning and strategy and human
resources to the AT&T Wireless Group amounting to $40, $42 and $47 for the years
ended December 31, 1999, 1998 and 1997, respectively, which are included within
selling, general and administrative expenses in the accompanying combined
statements of operations.

Also included in selling, general and administrative expenses are charges
received from AT&T related to the AT&T Wireless Group's direct sales force who
are employees of AT&T, as well as commissions and marketing support costs
reimbursed to AT&T for costs incurred to acquire customers on our behalf. These
charges amounted to $223, $65 and $36 for the years ended December 31, 1999,
1998 and 1997, respectively.

The AT&T Wireless Group purchases their administrative telephone services
from AT&T. These amounts are included within selling, general and administrative
expenses and totaled $69, $50 and $33 as of December 31, 1999, 1998 and 1997,
respectively. Accounts payable in the accompanying combined balance sheets
included $5 and $12, as of December 31, 1999 and 1998, respectively, associated
with the purchases of these services.

The AT&T Wireless Group sells receivables to AT&T for wireless customers
whose wireless charges are combined ("bundled") with their long distance charges
into one bill. Accounts receivable in the accompanying combined balance sheets
included $83 and $59, as of December 31, 1999 and 1998, respectively, associated
with receivables from AT&T for these bundled customers. Selling, general and
administrative expenses included $65, $39 and $6, for the years ended December
31, 1999, 1998 and 1997, respectively, for the billing and collection fees
charged by AT&T. Additionally, selling, general and administrative expenses
included reimbursement to the AT&T Wireless Group from AT&T totaling $21, $26
and $37 for the years ended December 31, 1999, 1998 and 1997, respectively, for
costs incurred by the AT&T Wireless Group to develop bundled billing systems.

F-23
<PAGE> 141
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

Beginning in 1998, the AT&T Wireless Group utilizes the AT&T remittance
processing organization to process customer payments into AT&T's lockbox. The
AT&T Wireless Group paid $22 and $12 to AT&T for reimbursement of their costs
associated with these services for the years ended December 31, 1999 and 1998,
respectively.

13. SUBSEQUENT EVENTS

In February 2000, AT&T and Dobson Communications Corporation, through a
joint venture, acquired American Cellular Corporation for approximately $2.4
billion. AT&T contributed its interest in the joint venture to the AT&T Wireless
Group as of the date of the acquisition. The acquisition was funded with
non-recourse bank debt by the joint venture and cash equity contributions of
approximately $400 from each of the two partners. Dobson will be responsible for
day-to-day management of the joint venture, which will be equally owned and
jointly controlled by Dobson and the AT&T Wireless Group.

In February 2000, certain Dobson securities held by the AT&T Wireless Group
were redeemed, resulting in a net pretax gain of approximately $21.

In February 2000, TeleCorp PCS, Inc. announced that it will acquire Tritel,
Inc. for approximately $5.3 billion in stock. The AT&T Wireless Group currently
holds equity interests in each of these affiliates. Upon completion of the
transaction, the AT&T Wireless Group will own approximately 23% of the combined
entity. Additionally, in a separate transaction, the AT&T Wireless Group agreed
to exchange certain wireless licenses, commitments and rights in the Midwestern
United States, plus cash of approximately $100 for licenses owned by TeleCorp in
several New England markets. The boards of directors of AT&T and TeleCorp have
approved the transactions. The transactions are subject to certain federal
regulatory approvals and are expected to close in the fourth quarter of 2000.

In February 2000, AT&T announced the signing of an agreement to purchase
the assets of Wireless One Network, L.P., for cash of approximately $850. AT&T
will attribute its interest in Wireless One to the AT&T Wireless Group as of the
acquisition date. The transaction has been approved by the boards of directors
of AT&T and Wireless One, however the transaction is subject to the approval of
certain federal regulatory agencies. The transaction is anticipated to close in
June of 2000.

The AT&T Wireless Group has a signed agreement to sell one of its equity
investments and is expected to close by the end of the first quarter of 2000.

On February 3, 2000, a registration statement was filed with the SEC for an
initial public offering of AT&T Wireless Group tracking stock. The new tracking
stock will provide current AT&T shareowners and future investors with a security
tied directly to the economic performance of the AT&T Wireless Group. A special
AT&T shareowner meeting was held in March, voting in favor of the tracking stock
proposal. Holders of AT&T common stock and Liberty Media Group tracking stock
were entitled to vote at the special meeting. AT&T intends to conduct an initial
public offering of AT&T Wireless Group tracking stock in the second quarter of
2000. We currently intend to dispose of the AT&T Common Stock Group's interest
in the AT&T Wireless Group following the initial public offering in the form of
additional AT&T Wireless Group tracking stock. Such disposition will include a
distribution in the form of a dividend to holders of AT&T Common Stock Group
shares for at least a portion of such interest, but may also include an exchange
offer, a further sale of AT&T Wireless Group tracking stock or a combination
thereof. Holders of Liberty Media Group tracking stock will not be entitled to
this distribution.

F-24
<PAGE> 142

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma information set forth below has been prepared
assuming the AT&T Wireless Group was a separate group as of January 1, 1999 for
income statement purposes, and as of December 31, 1999 for balance sheet
purposes, subject to the assumptions and adjustments in the accompanying notes
to the pro forma information. The unaudited pro forma condensed combined balance
sheet does not purport to represent what the AT&T Wireless Group financial
position actually would have been had the AT&T Wireless Group been a separate
group on December 31, 1999 or to project the financial position for any future
date. The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1999 does not purport to represent what the AT&T
Wireless Group operations actually would have been had the AT&T Wireless Group
been a separate group on January 1, 1999 or to project operating results for any
future period.

The pro forma adjustments do not reflect any operating efficiencies and
cost savings that may be achieved with respect to the combined AT&T Common Stock
Group and AT&T Wireless Group. The pro forma adjustments do not include any
adjustments to historical sales for any future price changes nor any adjustments
to selling, marketing or any other expenses for any future operating changes.

F-25
<PAGE> 143

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1999

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
GROUP(1) ADJUSTMENTS GROUP
-------- ----------- -------------
<S> <C> <C> <C>
REVENUES.......................................... $7,627 -- $7,627

OPERATING EXPENSES
Network and other costs of services............... 3,846 -- 3,846
Depreciation and amortization..................... 1,253 -- 1,253
Selling, general and administrative............... 2,663 -- 2,663
Asset impairment and restructuring charges........ 531 -- 531
------ ----- ------
Total operating expenses.......................... 8,293 -- 8,293
OPERATING LOSS.................................... (666) -- (666)
Other income, net................................. 176 -- 176
Interest expense.................................. 136 $(136)(2) --
(Loss) income before income taxes................. (626) 136 (490)
(Benefit) provision for income taxes.............. (221) 52(4) (169)
------ ----- ------
NET (LOSS) INCOME................................. (405) 84 (321)
Dividend requirements on preferred stock held by
AT&T, net....................................... 56 111(2) 167
------ ----- ------
NET LOSS.......................................... $ (461) $ (27) $ (488)
====== ===== ======
Weighted Average Shares Outstanding(5)............ 2,310 2,310
Basic and Diluted Earnings Per Share.............. $(0.20) $(0.21)
</TABLE>

See Notes to Unaudited Pro Forma AT&T Wireless Group
Condensed Combined Financial Statements.
F-26
<PAGE> 144

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 1999

(IN MILLIONS)

<TABLE>
<CAPTION>
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
GROUP(1) ADJUSTMENTS GROUP
-------- ----------- -------------
<S> <C> <C> <C>
ASSETS:
Cash and cash equivalents......................... $ 5 -- $ 5
Accounts receivable, net.......................... 1,300 -- 1,300
Other current assets.............................. 323 -- 323
------- -------
TOTAL CURRENT ASSETS.............................. 1,628 -- 1,628
Property, plant and equipment, net................ 6,349 (7)(2) 6,342
Licensing cost, net............................... 8,571 (2)(2) 8,569
Investments....................................... 4,502 160(3) 4,662
Goodwill, net and other assets.................... 2,462 -- 2,462
------- -------
TOTAL ASSETS...................................... $23,512 151 $23,663
======= ======= =======
LIABILITIES:
Accounts payable.................................. $ 921 -- $ 921
Debt maturing within one year..................... 154 -- 154
Other current liabilities......................... 1,222 -- 1,222
------- -------
TOTAL CURRENT LIABILITIES......................... 2,297 -- 2,297
Long-term debt due to AT&T........................ 3,400 $(2,000)(2) 1,400
Deferred income taxes............................. 3,750 -- 3,750
Other long-term liabilities....................... 48 -- 48
------- ------- -------
TOTAL LIABILITIES................................. 9,495 (2,000) 7,495
MINORITY INTEREST................................. 20 -- 20
SHAREOWNER'S EQUITY:
Preferred stock held by AT&T...................... 1,000 2,000(2) 3,000
AT&T's residual interest.......................... 12,971 160(3) 13,122
(9)(2)
Accumulated other comprehensive income............ 26 -- 26
TOTAL SHAREOWNER'S EQUITY......................... 13,997 2,151 16,148
------- ------- -------
TOTAL LIABILITIES AND SHAREOWNER'S EQUITY......... $23,512 $ 151 $23,663
======= ======= =======
</TABLE>

See Notes to Unaudited Pro Forma AT&T Wireless Group
Condensed Combined Financial Statements.
F-27
<PAGE> 145

AT&T WIRELESS GROUP

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. This column reflects the historical combined results of operations and
financial position of AT&T Wireless Group.

2. Gives effect to the conversion of $2 billion of debt due to AT&T into
preferred stock held by AT&T and related adjustments to interest expense,
capitalized interest, and preferred stock dividends.

3. Gives effect to the allocation by AT&T of a portion of its investment in
Japan Telecom Co. Ltd. to AT&T Wireless Group.

4. Reflects the federal statutory and blended state tax effect on the pro forma
adjustments.

5. There were 2,310,000,000 shares assumed outstanding for the year ended
December 31, 1999, including 1,950,000,000 equivalent shares representing
AT&T's approximate 84% retained interest in the AT&T Wireless Group, and
360,000,000 shares assumed to be offered in the IPO.

F-28
<PAGE> 146

AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma information set forth below for the AT&T Common
Stock Group has been prepared assuming the AT&T Wireless Group was a separate
group as of January 1, 1999 for income statement purposes, and as of December
31, 1999 for balance sheet purposes, subject to the assumptions and adjustments
in the accompanying notes to the pro forma information. Accordingly, the AT&T
Common Stock Group pro forma condensed combined financial statements are
presented solely for the purpose of reporting the results of operations and
financial position of the AT&T Common Stock Group after attributing the domestic
and international mobile and fixed wireless communications operations and
certain other adjustments to the AT&T Wireless Group.

The unaudited pro forma condensed combined balance sheet does not purport
to represent what the AT&T Common Stock Group financial position actually would
have been had the AT&T Wireless Group been a separate group on December 31, 1999
or to project the AT&T Common Stock Group financial position for any future
date. The unaudited pro forma condensed combined statement of income for the
year ended December 31, 1999 does not purport to represent what the AT&T Common
Stock Group income actually would have been had the AT&T Wireless Group been a
separate group on January 1, 1999 or to project operating results for any future
period.

F-29
<PAGE> 147

AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 1999

(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
PRO FORMA
AT&T
WITH TCI AND AT&T PRO FORMA
MEDIAONE WIRELESS PRO FORMA AT&T COMMON
GROUP(1) GROUP(2) ADJUSTMENTS STOCK GROUP
------------ -------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES................................. $66,027 $7,627 227(3) $58,627
OPERATING EXPENSES
Access and other interconnection......... 14,686 -- -- 14,686
Network and other costs of services...... 15,918 3,846 227(3) 12,299
Selling, general and administrative...... 14,682 2,663 -- 12,019
Depreciation and amortization............ 9,674 1,253 8(5) 8,429
Asset impairment and restructuring
charges................................ 1,506 531 -- 975
------- ------ ---- -------
Total operating expenses................. 56,466 8,293 235 48,408
OPERATING INCOME (LOSS).................. 9,561 (666) (8) 10,219
Other income, net........................ 7,570 176 56(4) 7,630
214(4)
111(6)
(145)(6)
Interest expense......................... 3,474 136 214(4) 3,464
(88)(5)
Income from continuing operations before
income taxes........................... 13,657 (626) 102 14,385
Provision for income taxes............... 5,388 (221) (25)(8) 5,584
------- ------ ---- -------
INCOME FROM CONTINUING OPERATIONS........ 8,269 (405) 127 8,801
Dividend requirements on preferred
stocks,
net.................................... 35 56 56(4) 35
------- ------ ---- -------
INCOME FROM CONTINUING OPERATIONS AFTER
CONSIDERATION OF DIVIDEND REQUIREMENTS
ON PREFERRED STOCKS.................... $ 8,234 $ (461) 71 $ 8,766
======= ====== ==== =======
AT&T EARNINGS PER SHARE (EPS)
CALCULATION:
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 8,234 $ 8,766
Weighted average shares outstanding
(basic)................................ 3,789 3,789
Basic EPS................................ $ 2.17 $ 2.31
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 8,260 $ 8,792
Weighted average shares outstanding
(diluted).............................. 3,916 3,916
Diluted EPS.............................. $ 2.11 $ 2.25
</TABLE>

See Notes to Unaudited Pro Forma AT&T Common Stock Group
Condensed Combined Financial Statements.
F-30
<PAGE> 148

AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF DECEMBER 31, 1999

(IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA
AT&T AT&T PRO FORMA
WITH MEDIAONE WIRELESS PRO FORMA AT&T COMMON
GROUP(1) GROUP(2) ADJUSTMENTS STOCK GROUP
------------- -------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents......... $ 7,722 $ 5 $ -- $ 7,717
--
Receivables, net.................. 10,942 1,300 96(3) 9,738
Other current assets.............. 2,567 323 -- 2,244
-------- ------- ------- --------
TOTAL CURRENT ASSETS.............. 21,231 1,628 96 19,699
Property, plant and equipment,
net............................. 44,708 6,349 97(5) 38,456
Franchise costs, net.............. 54,635 -- -- 54,635
Licensing cost, net............... 8,548 8,571 23(5) --
Goodwill, net..................... 30,727 2,462 -- 28,265
Preferred stock investment in AT&T
Wireless Group.................. -- -- 1,000(4) 3,000
2,000(6)
Receivable from AT&T Wireless
Group........................... -- -- 3,400(4) 1,400
(2,000)(6)
Investments....................... 42,824 4,502 (160)(7) 38,162
Other assets...................... 9,064 -- -- 9,064
Assets held for sale.............. 9,498 -- -- 9,498
-------- ------- ------- --------
TOTAL ASSETS...................... $221,235 $23,512 $ 4,456 $202,179
======== ======= ======= ========
</TABLE>

F-31
<PAGE> 149
AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)

AS OF DECEMBER 31, 1999

(IN MILLIONS)

<TABLE>
<CAPTION>
PRO FORMA
AT&T AT&T PRO FORMA
WITH MEDIAONE WIRELESS PRO FORMA AT&T COMMON
GROUP(1) GROUP(2) ADJUSTMENTS STOCK GROUP
------------- -------- ----------- -----------
<S> <C> <C> <C> <C>
LIABILITIES
Accounts payable.................. $ 7,121 $ 921 $ 96(3) 6,296
Debt maturing within one year..... 32,840 154 -- 32,686
Other current liabilities......... 11,192 1,222 -- 9,970
-------- ------- ------- --------
TOTAL CURRENT LIABILITIES......... 51,153 2,297 96 48,952
Long-term debt.................... 30,470 3,400 3,400(4) 30,470
Deferred income taxes............. 44,616 3,750 -- 40,866
Other long-term liabilities and
deferred credits................ 8,021 48 -- 7,973
-------- ------- ------- --------
TOTAL LIABILITIES................. 134,260 9,495 3,496 128,261
MINORITY INTEREST................. 3,550 20 -- 3,530
Company-obligated convertible
quarterly income preferred
securities of subsidiary trust
holding solely subordinated debt
securities of AT&T.............. 4,700 -- -- 4,700
Subsidiary-obligated mandatorily
redeemable preferred securities
of subsidiaries holding solely
subordinated debt securities of
subsidiaries.................... 2,670 -- -- 2,670
Preferred stock subject to
mandatory redemption............ 50 -- -- 50
Total Shareowners' Equity......... 76,005 13,997 1,000(4) 62,968
120(5)
(160)(7)
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY.......................... $221,235 $23,512 $ 4,456 $202,179
======== ======= ======= ========
</TABLE>

F-32
<PAGE> 150

AT&T COMMON STOCK GROUP

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

1. The unaudited pro forma information set forth in this column gives effect to
the MediaOne and TCI mergers as if they had been completed on January 1,
1999 for income statement purposes, and as if the MediaOne merger had been
completed on December 31, 1999 for balance sheet purposes. AT&T's historical
balance sheet at December 31, 1999 includes the results of TCI. The merger
with TCI occurred on March 9, 1999. This column excludes the results of
operations and financial position of Liberty Media Group.

2. This column deducts the historical combined results of operations and
combined financial position of the AT&T Wireless Group.

3. Reflects certain Inter-Group transactions appropriately reflected in the
separate financial statements of the AT&T Common Stock Group that are
eliminated in the AT&T consolidated financial statements.

4. Reflects the impact of the AT&T Common Stock Group investment in preferred
stock of the AT&T Wireless Group and receivable from the AT&T Wireless Group
and related income impacts, all of which are eliminated in the AT&T
consolidated financial statements. The preferred stock has an annual
dividend rate of 9% and is recorded net of amounts in accordance with the
methodology contained in the tax sharing agreement. The receivable has an
annual rate of 7.25% for the year ended December 31, 1999 and interest is
calculated based on the average receivable balance.

5. Reflects adjustments made to capitalized interest on the intercompany debt
on the AT&T Wireless Group financial statements.

6. Reflects the conversion of $2 billion of intercompany receivable to
preferred stock of AT&T Wireless Group held by the AT&T Common Stock Group
which is expected to occur in connection with the initial public offering of
AT&T Wireless Group tracking stock.

7. Gives effect to the allocation by AT&T of a portion of its investment in
Japan Telecom Co. Ltd. to the AT&T Wireless Group.

8. Reflects the federal statutory and blended state tax effect on the pro forma
adjustments.

F-33
<PAGE> 151

[AT&T LOGO]
<PAGE> 152

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the estimated costs and expenses, other than
underwriting discounts and commissions, payable in connection with the sale of
AT&T Wireless Group tracking stock being registered, all of which will be paid
by the Registrant:

<TABLE>
<CAPTION>
AMOUNT
-----------
<S> <C>
SEC registration fee........................................ $ 3,497,472
New York Stock Exchange listing fee......................... 5,000
Printing expenses........................................... 2,500,000
Legal fees and expenses..................................... 4,000,000
Accounting fees and expenses................................ 2,000,000
Transfer agent and registrar fees and expenses.............. 15,000
Miscellaneous............................................... 482,528
-----------
Total.................................................. $12,500,000
===========
</TABLE>

---------------------------------

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Pursuant to the statutes of the State of New York, a director or officer of
a corporation is entitled, under specified circumstances, to indemnification by
the corporation against reasonable expenses, including attorneys' fees, incurred
by him in connection with the defense of a civil or criminal proceeding to which
he has been made, or threatened to be made, a party by reason of the fact that
he was such a director or officer. In certain circumstances, indemnity is
provided against judgments, fines and amounts paid in settlement. In general,
indemnification is available where the director or officer acted in good faith,
for a purpose such director or officer reasonably believed to be in the best
interests of the corporation. Specific court approval is required in some cases.
The foregoing statement is qualified in its entirety by reference to Sections
715, 717 and 721 through 725 of the New York Business Corporation Law ("NYBCL").

The by-laws of the Registrant provide that the Registrant is authorized, by
(i) a resolution of shareholders, (ii) a resolution of directors or (iii) an
agreement providing for such indemnification, to the fullest extent permitted by
applicable law, to provide indemnification and to advance expenses to its
directors and officers in respect of claims, actions, suits, or proceedings
based upon, arising from, relating to, or by reason of the fact that any such
director or officer serves or served in such capacity with the corporation or at
the request of the Registrant in any capacity with any other enterprise.

The Registrant has entered into contracts with its officers and directors,
pursuant to the provisions of NYBCL Section 721, by which it will be obligated
to indemnify such persons, to the fullest extent permitted by the NYBCL, against
expenses, fees, judgments, fines, and amounts paid in settlement in connection
with any present or future threatened, pending or completed action, suit or
proceeding based in any way upon or related to the fact that such person was an
officer or director of the Registrant or, at the request of the Registrant, an
officer, director or other partner, agent, employee, or trustee of another
enterprise. The contractual indemnification so provided will not extend to any
situation where a judgment or other final adjudication adverse to such person

II-1
<PAGE> 153

establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty or that there inured to such person a financial
profit or other advantage.

The directors and officers of the Registrant are covered by insurance
policies indemnifying them against certain liabilities, including certain
liabilities arising under the Securities Act, which might be incurred by them in
such capacities.

The Underwriting Agreements provide that the Underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of the Registrant against certain liabilities, including liabilities
under the Securities Act of 1933. Reference is made to the forms of Underwriting
Agreement filed as Exhibit 1.1 hereto.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1 Form of Underwriting Agreement between AT&T Corp. and the
underwriters.
4.1 The rights of holders of AT&T Wireless Group tracking stock
are defined in the Third Article of the Charter of AT&T
Corp. (filed as Exhibit A to the Proxy Statement on Schedule
14A, dated January 26, 2000 and incorporated herein by
reference).
4.2 Provisions regarding the AT&T Wireless Group Capital Stock
Committee are set forth in the Bylaws of AT&T (filed as
Exhibit B to the Proxy Statement on Schedule 14A, dated
January 26, 2000 and incorporated herein by reference).
4.3 The Policy Statement Regarding Wireless Group Tracking Stock
Matters of AT&T Corp. (filed as Exhibit B to the Proxy
Statement on Schedule 14A, dated January 26, 2000 and
incorporated herein by reference).
5.1 Opinion of Robert S. Feit, General Attorney and Assistant
Secretary of the Registrant, as to the legality of the
securities being registered.
23.1 Consent of Robert S. Feit, General Attorney and Assistant
Secretary of the Registrant (included in opinion of counsel
filed as Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP
23.3 Consent of PricewaterhouseCoopers LLP
23.4 Consent of KPMG LLP
23.5 Consent of Arthur Andersen
24.1* Powers of attorney executed by the officers and directors of
the Registrant who signed this Registration Statement.
</TABLE>

- -------------------------

* Previously filed.

(b) Financial Statement Schedules

None

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) That for purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant

II-2
<PAGE> 154

to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall
be deemed to be part of this Registration Statement as of the time it was
declared effective.

(2) That for the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.

(3) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.

(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.

II-3
<PAGE> 155

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
Registration Statement (No. 333-96037) to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 28th day of March, 2000.

AT&T CORP.

By: /s/ MARILYN J. WASSER
------------------------------------
Name: Marilyn J. Wasser
Title: Vice President-Law and
Secretary

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement (No. 333-96037) has been signed by the following
persons in the capacities indicated on March 28, 2000.

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Principal Executive Officer:

/s/ * Chairman of the Board and Chief Executive
- --------------------------------------------------- Officer
C. Michael Armstrong

Principal Financial Officer:

/s/ * Senior Executive Vice President and Chief
- --------------------------------------------------- Financial Officer
Charles Noski

Principal Accounting Officer:

/s/ * Vice President and Controller
- ---------------------------------------------------
Nicholas S. Cyprus

Directors:

/s/ * Director
- ---------------------------------------------------
Kenneth T. Derr

/s/ * Director
- ---------------------------------------------------
M. Kathryn Eickhoff

/s/ * Director
- ---------------------------------------------------
Walter Y. Elisha
</TABLE>

II-4
<PAGE> 156

<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ * Director
- ---------------------------------------------------
George M.C. Fisher

/s/ * Director
- ---------------------------------------------------
Donald V. Fites

/s/ * Director
- ---------------------------------------------------
Amos B. Hostetter, Jr.

/s/ * Director
- ---------------------------------------------------
Ralph S. Larsen

/s/ * Director
- ---------------------------------------------------
John C. Malone

/s/ * Director
- ---------------------------------------------------
Donald F. McHenry

/s/ * Director
- ---------------------------------------------------
Michael I. Sovern

/s/ * Director
- ---------------------------------------------------
Sanford I. Weill

/s/ * Director
- ---------------------------------------------------
Thomas H. Wyman

/s/ * President and Director
- ---------------------------------------------------
John D. Zeglis

*By: /s/ MARILYN J. WASSER
---------------------------------------------
Marilyn J. Wasser
(Attorney-in-Fact)
</TABLE>

II-5

<PAGE> 1
Exhibit 1.1

AT&T CORP.

__________ SHARES

AT&T WIRELESS GROUP TRACKING STOCK
PAR VALUE $1.00 PER SHARE

UNDERWRITING AGREEMENT

April __ , 2000

Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004

Merrill Lynch, Pierce,
Fenner & Smith Incorporated
World Financial Center
250 Vesey Street
New York, New York 10281

Salomon Smith Barney Inc.
Seven World Trade Center
New York, NY 10048

Goldman Sachs International
Peterborough Court
133 Fleet Street
London EC4A 2BB
England

Merrill Lynch International Limited
Ropemaker Place
25th Street
London EC24-9LY
England

Salomon Brothers International Limited
111 Buckingham Palace Road
London SW1W OSB
England
<PAGE> 2
As Representatives of the Several Underwriters
Named in Schedules I and II hereof

Dear Sirs and Mesdames:

The undersigned, AT&T Corp., a New York corporation (the "Company"),
hereby confirms its agreement with the several Underwriters, named in Schedules
I and II hereof, as follows:

1. Underwriters and Representatives. The term "U.S. Underwriters" as
used herein shall mean the several persons, firms and corporations named in
Schedule I hereof, and the term "U.S. Underwriter" shall mean any one of such
persons, firms or corporations. The term "International Underwriters" as used
herein shall mean the several persons, firms and corporations named in Schedule
II hereof, and the term "International Underwriter" shall mean any one of such
persons, firms or corporations. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "Underwriters." The
terms "U.S. Underwriters," "International Underwriters," "Underwriters,"
"persons," "firms" and "corporations" as used herein shall include the singular
of such terms as well as the plural. The term "U.S. Representatives" shall mean
Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Smith Barney Inc., who by signing this Agreement represent that they
have been authorized by each U.S. Underwriter to execute this Agreement on
behalf of such U.S. Underwriter and to act for such U.S. Underwriter in the
manner herein provided. The term "International Representatives" shall mean
Goldman Sachs International, Merrill Lynch International Limited and Salomon
Brothers International Limited, who by signing this Agreement represent that
they have been authorized by each International Underwriter to execute this
Agreement on behalf of such International Underwriter and to act for such
International Underwriter in the manner herein provided. The U.S.
Representatives and the International Representatives are hereinafter
collectively referred to as the "Representatives." All obligations of the
Underwriters hereunder are several and not joint.

2. Description of Securities. The Company proposes to issue and sell
an aggregate of __________ shares of its AT&T Wireless Group Tracking Stock, par
value $1.00 per share (the "U.S. Firm Tracking Stock") to the U.S. Underwriters
and an aggregate of __________ shares of its AT&T Wireless Group Tracking Stock,
par value $1.00 per share (the "International Firm Tracking Stock") to the
International Underwriters. The U.S. Firm Tracking Stock and International Firm
Tracking Stock are hereinafter collectively referred to as the "Firm Tracking
Stock." The Company also proposes to sell to the several U.S. Underwriters not
more than an additional _____ shares of AT&T Wireless Group Tracking Stock (the
"U.S. Additional Tracking Stock") and to the several International Underwriters
not more than an additional _____ shares of

2
<PAGE> 3
AT&T Wireless Group Tracking Stock (the "International Additional Tracking
Stock"), if requested by the Underwriters as provided in Section 4 hereof. The
U.S. Additional Tracking Stock and the International Additional Tracking Stock
are hereinafter collectively referred to as the "Additional Tracking Stock". The
Firm Tracking Stock and the Additional Tracking Stock are hereinafter referred
to as the "Tracking Stock."

For purposes of this Agreement, the terms "AT&T Common Stock Group,"
"AT&T Wireless Group" and "Liberty Media Group" have the meanings set forth in
the Prospectus (as defined herein).

It is understood and agreed to by all parties that the U.S.
Underwriters and the International Underwriters are simultaneously entering into
an Agreement between U.S. and International Underwriters which provides, among
other things, for the transfer of Tracking Stock between the two syndicates. Two
forms of prospectus are to be used in connection with the offering and sale of
Tracking Stock contemplated by the foregoing, one relating to the U.S. Firm
Tracking Stock and the U.S. Additional Tracking Stock, and the other relating to
the International Firm Tracking Stock and the International Additional Tracking
Stock. The latter form of prospectus will be identical to the former except for
certain substitute pages as included in the registration statement and
amendments thereto. Except as the context may otherwise require, references
herein to any prospectus, whether in preliminary or final form, and whether as
amended or supplemented, shall include the U.S. and international versions
thereof.

The Company and the U.S. Underwriters agree that up to ________ shares
of U.S. Firm Tracking Stock to be purchased by the U.S. Underwriters ("Directed
Shares") shall be reserved for sale by the Underwriters to certain eligible
employees, directors and certain other persons in the United States designated
by the Company ("Directed Share Invitees") pursuant to a directed share
subscription program (the "Directed Share Program"), as part of the distribution
of the Tracking Stock by the Underwriters, subject to the terms of this
Agreement, the applicable rules, regulations and interpretations of the National
Association of Securities Dealers, Inc. (the "NASD") and all other applicable
laws, rules and regulations. To the extent that such Directed Shares are not
orally confirmed for purchase by such Directed Share Invitees by the end of the
first business day after the date of this Agreement, such Directed Shares may be
reallocated to the Directed Share Invitees except as otherwise agreed with the
Company.

3. Representations and Warranties of the Company. The Company
represents and warrants to the several Underwriters that:

(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement (No. 333-96037) on Form
S-3, including a prospectus relating to the Tracking Stock, which

3
<PAGE> 4
has become effective under the Securities Act of 1933 (the "Act"). The
term "Registration Statement" means the Registration Statement as
amended to the date hereof including the information, if any, deemed to
be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A under the Act, and the term "Prospectus" means
the prospectus in the form first used to confirm sales of the Tracking
Stock. The term "preliminary prospectus" means any preliminary
prospectus relating to the Tracking Stock used prior to the
effectiveness of the Registration Statement. If the Company has filed
an abbreviated registration statement to register additional shares of
Tracking Stock pursuant to Rule 462(b) under the Act (the "Rule 462
Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462
Registration Statement. As used herein, Registration Statement,
Prospectus and preliminary prospectus shall include in each case the
material incorporated by reference therein.

(b) (i) Each part of the Registration Statement (including the
material incorporated by reference therein) when such part became
effective, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) each
preliminary prospectus relating to the Tracking Stock, if any, complied
when so filed in all material respects with the Act and the applicable
rules and regulations of the Commission thereunder, (iii) the
Registration Statement and the Prospectus comply and, as amended or
supplemented, if applicable, will comply in all material respects with
the Act and the applicable rules and regulations of the Commission
thereunder and (iv) the Registration Statement and the Prospectus do
not and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement, any preliminary prospectus or the Prospectus in reliance
upon written information furnished to the Company by or on behalf of
any Underwriter specifically for inclusion therein.

(c) Each document incorporated by reference in the Prospectus complied
when filed with the Commission in all material respects with the
provisions of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), together with the applicable instructions, rules and
regulations of the Commission thereunder, and each document, if any,
hereafter filed under the Exchange Act and so incorporated by reference
in the Prospectus will comply when so filed in all material respects
with the requirements of such Exchange Act, instructions, rules and
regulations.

4
<PAGE> 5
(d) The accountants who have certified or shall certify the financial
statements filed and to be filed with the Commission as parts of the
Registration Statement and the Prospectus are public or certified
accountants, independent with respect to the Company, as required by
the Act and the Exchange Act and the rules and regulations of the
Commission thereunder.

(e) All of the outstanding shares of capital stock of the Company
(including the tracking stock related to the Liberty Media Group) have
been duly authorized and validly issued and are fully paid and
non-assessable and not subject to any preemptive rights; the Tracking
Stock has been duly authorized and, when issued and delivered in
accordance with the terms hereof, will be validly issued, fully paid
and non-assessable, and the issuance of such Tracking Stock will not be
subject to any preemptive rights.

(f) Neither the issuance or sale of the Tracking Stock nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will result in a breach of any of
the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or instrument to
which the Company is a party or by which it is bound, or the Company's
Certificate of Incorporation or By-Laws, or, to the best of its
knowledge, any order, rule or regulation applicable to the Company of
any court, federal or state regulatory body, administrative agency or
other governmental body having jurisdiction over the Company or its
properties and except for the registration of the Tracking Stock under
the Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state or foreign securities laws in connection with the purchase and
distribution of the Tracking Stock by the Underwriters, no consent,
approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body is required for the
execution and delivery by the Company of, compliance by the Company
with the provisions of or consummation of the transactions contemplated
by, this Agreement.

(g) The tax sharing agreement as described in the Prospectus (the "Tax
Sharing Agreement") has been duly authorized, executed and delivered by
the Company and the AT&T Wireless Group and such agreement constitutes
a valid and binding agreement of the Company and the AT&T Wireless
Group.

(h) The financial statements, together with related schedules and
notes, included in or incorporated by reference in the Registration

5
<PAGE> 6
Statement and the Prospectus (and any amendment or supplement thereto),
present fairly in all material respects the combined financial
position, results of operations and changes in financial position of
the AT&T Wireless Group as discussed in the footnotes to the financial
statements on the basis stated in the Registration Statement and in the
Prospectus at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have
been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except
as disclosed therein; and the other financial statistical information
and data set forth in the Registration Statement and the Prospectus
(and any amendment or supplement thereto) is, in all material respects,
accurately presented and prepared on a basis consistent with such
financial statements and derived from the books and records of the
Company, including the AT&T Wireless Group.

4. Purchase and Sale of Tracking Stock. On the basis of the
representations and warranties and on the terms and subject to the
conditions herein set forth, each of the Underwriters agrees to
purchase from the Company, severally and not jointly, and on the terms
and subject to the conditions herein set forth the Company agrees to
sell to each of the Underwriters, severally and not jointly, the number
of shares of Firm Tracking Stock set forth opposite its name in
Schedule I or Schedule II hereof at a price of $_____ per share (the
"purchase price").

On the terms and subject to the conditions herein set forth,
the Company agrees to sell to the Underwriters the shares of Additional
Tracking Stock, and the Underwriters shall have a right to purchase,
severally and not jointly, the shares of Additional Tracking Stock in
such amounts and at such times as may be determined by the
Representatives (subject to the written notice as set forth in Section
6 hereof) at the purchase price per share set forth in the immediately
preceding paragraph. Shares of Additional Tracking Stock may be
purchased as provided herein and in Section 6 hereof solely for the
purpose of covering over-allotments made in connection with the
offering of the Firm Tracking Stock. If any shares of Additional
Tracking Stock are to be purchased, each Underwriter, severally and not
jointly, agrees to purchase the number of shares of Additional Tracking
Stock (subject to such adjustment to eliminate fractional shares as the
Representatives may determine) that bears the same proportion to the
total number of shares of Additional Tracking Stock to be purchased as
the number of shares of Firm Tracking Stock set forth in Schedule I or
Schedule II hereto opposite the name of such Underwriter bears to the
total number of Firm Tracking Stock.

The terms of the public offering of the Tracking Stock are as
set forth in the Prospectus.

6
<PAGE> 7

5. Closing. Delivery of, and payment of the purchase price for, the
shares of Firm Tracking Stock which the Underwriters severally agree to purchase
shall be made at the office of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York, at _____ a.m.(1) on April __, 2000 or at such other place or
time on the same or such other day as shall be agreed upon by the Company and
the Representatives. The time and date for such payment and delivery are herein
referred to as the "time of closing." At the time of closing, the Company will
deliver the shares of Firm Tracking Stock, registered in such names and in such
authorized denominations as the Representatives shall have specified not less
than two business days prior to the time of closing, against payment therefor as
provided in Section 6 hereof, through the facilities of the Depository Trust
Company to the Representatives for the respective accounts of the Underwriters.

The Company agrees to make the shares of Firm Tracking Stock available
to the Representatives for examination on behalf of the Underwriters at a place
to be mutually agreed upon, New York, New York, not later than 2:00 p.m. on the
business day next preceding the time of closing.

If, at the time of closing or on an Option Closing Date (as hereinafter
defined), as the case may be, for any reason (other than termination of this
Agreement in accordance with the provisions of Section 8, 9 or 10 hereof), one
or more of the Underwriters shall fail or refuse to pay for the shares of
Tracking Stock it has or they have agreed to purchase at such time (any such
Underwriter being hereinafter referred to as a "defaulting Underwriter"), and
the aggregate number of shares of the Tracking Stock which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase is not more
than one-tenth of the aggregate number of shares of Tracking Stock to be
purchased at such time, the remaining Underwriters shall be obligated severally
in the proportion which the number of shares of Firm Tracking Stock set forth
opposite their names in Schedule I or Schedule II of this Agreement bear to the
aggregate number of shares of Firm Tracking Stock set forth opposite the names
of all such non-defaulting Underwriters (or in such other proportion as the
Representatives shall specify) to purchase the Tracking Stock which the
defaulting Underwriter or Underwriters agreed but failed or refused to purchase;
provided that in no event shall the number of shares of Tracking Stock that any
Underwriter is obligated to purchase be increased pursuant to the provisions of
this paragraph by more than one-ninth of the number of shares of Tracking Stock
which such Underwriter has agreed to purchase at such time pursuant to Section 4
without the written consent of such Underwriter. In the event that any
defaulting Underwriter or Underwriters shall fail or refuse to purchase a number
of shares of Firm Tracking Stock at the time of closing which is more than
one-tenth of the aggregate principal amount of the Firm Tracking Stock, and if
arrangements satisfactory to the Representatives

(1) Times mentioned herein are New York time.

7
<PAGE> 8
and the Company for the purchase of all such Firm Tracking Stock are not made
within two business days after such default, this Agreement will terminate
without liability on the part of any of the non-defaulting Underwriters or of
the Company. In the event that any defaulting Underwriter or Underwriters shall
fail or refuse to purchase a number of shares of Additional Tracking Stock on
the Option Closing Date which is more than one-tenth of the aggregate principal
amount of the shares of Additional Tracking Stock, and if arrangements
satisfactory to the Representatives and the Company for the purchase of all such
shares of Additional Tracking Stock are not made within two business days after
such default, the non-defaulting Underwriters shall have the option to (i)
terminate their obligation hereunder to purchase shares of Additional Tracking
Stock or (ii) purchase not less than the number of shares of Additional Tracking
Stock that such non-defaulting Underwriters would have been obligated to
purchase in the absence of such default. In the event that the non-defaulting
Underwriters agree to purchase, in accordance with this paragraph, all the
shares of Tracking Stock which the defaulting Underwriter or Underwriters fail
or refuse to purchase, the Representatives or the Company shall have the right
to postpone the time of closing or the Option Closing Date, as the case may be,
but in no event longer than five business days, in order that the required
changes, if any, in the Registration Statement and in the Prospectus or in any
other documents or arrangements may be effected. Except to the extent provided
in subparagraphs (d) and (f) of Section 7 hereof, termination of this Agreement
pursuant to this Section 5 shall be without any liability on the part of the
Company or any Underwriter other than a defaulting Underwriter which shall have
failed, otherwise than for some reason sufficient to justify under the terms
hereof the cancellation or termination of its obligations hereunder, to pay for
the shares of Tracking Stock which such Underwriter has agreed to purchase (any
such failure or refusal being hereinafter referred to as a "default"). Unless
this Agreement is terminated in accordance with any of its provisions, a default
by one or more of the Underwriters shall not relieve any other Underwriter from
its obligation to purchase the shares of Tracking Stock which it has agreed to
purchase.

6. Payment. At the time of closing, the Company will cause the shares
of Firm Tracking Stock to be delivered to the Representatives for the account of
each Underwriter against payment to the Company of the purchase price of such
Firm Tracking Stock in Federal or other funds immediately available.

Payment for any shares of Additional Tracking Stock shall be made in
Federal or other funds immediately available at the office of Davis Polk &
Wardwell, 450 Lexington Avenue, New York, New York, at _______ a.m. on each date
(which may be the same as the time of closing but shall in no event be earlier
than the time of closing nor later than five business days after the giving of
the notice hereinafter referred to) as shall be designated in a written notice
from the Representatives to the Company of their determination, on behalf of the
Underwriters, to purchase a number, specified in said notice, of shares of

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<PAGE> 9
Additional Tracking Stock. The time and date of each such payment is hereinafter
referred to as an "Option Closing Date." The notice of the determination to
exercise an option to purchase shares of Additional Tracking Stock and of the
applicable Option Closing Date may be given at any time within 30 days after the
date of this Agreement.

In the event the Underwriters elect to exercise any over-allotment
option, certificates for the shares of Additional Tracking Stock shall be in
definitive form and registered in such names and in such authorized
denominations as the Representatives shall have specified not less than two
business days prior to the applicable Option Closing Date. The certificates
evidencing the shares of Additional Tracking Stock shall be delivered to the
Representatives on such Option Closing Date for the respective accounts of the
several Underwriters against payment to the Company of the purchase price
therefor.

7. Covenants of the Company. The Company agrees as follows:

(a) The Company will not file any amendment or supplement to the
Registration Statement or the Prospectus of which the Representatives
shall not previously have been advised or which shall be disapproved by
Davis Polk & Wardwell, which firm is acting as counsel for the
Underwriters.

(b) The Company will deliver to the Representatives a reasonable
number of copies of the registration statement as originally filed and
of all amendments thereto up to the time of closing. Promptly upon the
filing with the Commission of any amendment to the Registration
Statement or of any supplement to or amendment of the Prospectus, the
Company will deliver to the Representatives a reasonable number of
copies thereof.

(c) The Company will advise the Representatives promptly (confirming
such advice in writing) of any official request made by the Commission
for an amendment to the Registration Statement or Prospectus or for
additional information with respect thereto and of any official notice
of the institution of proceedings for, or of the entry of, a stop order
suspending the effectiveness of the Registration Statement. The Company
will use its best efforts to prevent the issuance of any such stop
order and, if such a stop order should be entered, the Company will
make every reasonable effort to obtain the lifting or removal thereof
as soon as possible.

(d) The Company will pay all expenses in connection with the
preparation and filing of the Registration Statement, the issuance and
delivery of the Tracking Stock and the printing of the copies of any

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<PAGE> 10
preliminary prospectus and of the Prospectus to be furnished as
provided in the first sentence of subparagraph (g) below; and will pay
any taxes on the issuance of the Tracking Stock, but will not pay any
transfer taxes. The Company will not be required to pay any amount for
any expenses of the Representatives or any of the Underwriters, except
the cost of mailing to Underwriters of copies of the Registration
Statement and all amendments thereto, the preliminary prospectuses and
the Prospectus, and except as provided by subparagraph (f) below. Costs
and expenses in connection with matters related to the Directed Share
Program will be set forth in a letter agreement dated the date of this
Agreement. The Company will not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated
profits.

(e) The Company will apply the proceeds from the sale of the Tracking
Stock as set forth under the heading "Use of Proceeds" appearing in the
Prospectus.

(f) The Company will use its best efforts to qualify the Tracking
Stock, or to assist in the qualification of the Tracking Stock by or on
behalf of the Representatives, for offer and sale under the securities
or Blue Sky laws of such states of the United States as the
Representatives may designate, and will pay or reimburse the
Representatives for counsel fees, filing fees and out-of-pocket
expenses in connection with such qualification; provided that the
Company shall not be required (i) to qualify as a foreign corporation
or to file a general consent to service of process in any state or (ii)
to pay, or to incur, or to reimburse the Representatives for, any such
expenses if no shares of Tracking Stock are delivered to and purchased
by the Underwriters hereunder because of a default by one or more of
the Underwriters or the termination of this Agreement pursuant to
Section 10 hereof.

(g) The Company will furnish to the Representatives or to the
respective Underwriters as many copies of the Prospectus as the
Representatives or the respective Underwriters may reasonably request
for the purposes contemplated by the Act. If, during such period after
the first date of the public offering of the Tracking Stock as, in the
opinion of the counsel for the Underwriters, the Prospectus is required
by law to be delivered, any event shall occur which should be set forth
in a supplement to or an amendment of the Prospectus in order to make
the Prospectus not misleading, the Company will, upon the occurrence of
each such event, forthwith at its expense, prepare and furnish to the
Representatives or to the respective Underwriters as many copies as the
Representatives or the respective Underwriters may reasonably request
for the purposes contemplated by the Act of a supplement to or
amendment of the Prospectus which will supplement or amend the
Prospectus so that, as

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<PAGE> 11
supplemented or amended, it will not at the date of such supplement or
amendment contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statement
therein not misleading. For the purpose of this subparagraph (g), the
Company will furnish such reasonable information with respect to itself
as the Representatives may from time to time request, and the
Representatives, at their own expense, may visit any of the properties
of the Company (including the AT&T Wireless Group) and may inspect the
books of account of the Company (including the AT&T Wireless Group) at
any reasonable time. Notwithstanding any of the other provisions of
this subparagraph (g), the Company shall not be under any obligation to
furnish any supplement to or amendment of the Prospectus on account of
any change in, or to include in any amended prospectus any change in,
the information furnished to the Company by any Underwriter or
Underwriters or by the Representatives on its or their behalf for use
in the Prospectus, unless the Representatives have advised the Company
in writing of such change and has requested the Company at the expense
of such Underwriter or Underwriters to prepare a supplement to or
amendment of the Prospectus to reflect such change or to include such
change in an amended prospectus.

(h) The Company will cause to be made generally available to its
security holders as soon as practicable, but in any event not later
than June 30, 2001, an earnings statement or statements which shall
meet the requirements of Section 11(a) of the Act and Rule 158
promulgated thereunder.

(i) Without the prior written consent of a majority of the
Representatives, the Company will not (a) register for sale or offer,
issue, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of,
directly or indirectly, any shares of Tracking Stock or any securities
convertible into or exercisable or exchangeable for the Tracking Stock
or (b) enter into any swap or other agreement that transfers, in whole
or in part, any of the economic consequences of ownership of the
Tracking Stock, whether any such transaction described in clause (a) or
(b) of this sentence is to be settled by delivery of the Tracking
Stock, or other securities, in cash or otherwise, for a period of 180
days after the date of the Prospectus, other than: (i) the shares of
the Tracking Stock sold pursuant to this Agreement; (ii) any shares of
Tracking Stock issued upon the exercise, exchange or conversion of a
security outstanding on the date hereof; (iii) any shares or options of
Tracking Stock issued pursuant to the AT&T Wireless Group's employee
benefit, director or shareowner plans or other benefit plans in
existence on the date hereof; and (iv) any shares of Tracking Stock
issued as

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<PAGE> 12
consideration in connection with mergers, acquisitions, business
combinations or other similar transactions in the wireless industry
involving the Company or the AT&T Wireless Group, up to an aggregate
amount over the lock-up period equal to 10% of the total number of (A)
shares of Tracking Stock that are outstanding after this offering of
Tracking Stock plus (B) the equivalent number of shares of Tracking
Stock represented by the inter-group interest held by the AT&T Common
Stock Group, provided that control persons who receive such shares of
Tracking Stock as transferees agree in writing to be bound by the
provisions of the restrictions for the remainder of the lock-up period
as if it were AT&T Corp.

(j) The Company hereby agrees that it will ensure that the Directed
Shares will be restricted as required by the NASD or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period
of three months following the date of this Agreement. The Underwriters
will notify the Company as to which individuals will need to be so
restricted. At the request of the Underwriters, the Company will direct
the transfer agent to place a stop transfer restriction upon such
shares for such period of time. Should the Company release, or seek to
release, from such restrictions any of the Directed Shares, the Company
agrees to reimburse the Underwriters for any reasonable expenses
(including, without limitation, legal expense) they incur in connection
with such release.

8. Conditions of the Obligations of the Underwriters. The obligations
of the Underwriters to purchase and pay for the Tracking Stock shall be subject
to the following additional conditions:

(a) At the time of closing no stop order suspending the effectiveness
of the Registration Statement, as amended from time to time, shall be
in effect and no proceedings for that purpose shall be pending before
or threatened by the Commission, and the Representatives shall have
received a certificate dated the day of closing and signed by a Vice
President of the Company to the effect that no such stop order is in
effect and, to the knowledge of the Company, no proceedings for such
purpose are pending before, or threatened by, the Commission.

(b) At or prior to the time of closing, the Representatives shall have
received from Wachtell, Lipton, Rosen & Katz, counsel for the Company,
an opinion, satisfactory to Davis Polk & Wardwell, to the effect that:

(i) the Company is a corporation in good standing, duly
organized and validly existing under the laws of the State of
New York; and is authorized by its Certificate of
Incorporation to

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<PAGE> 13
transact the business in which it is engaged, as set forth in
the Prospectus;

(ii) the Company is duly qualified to transact the
business in which it is engaged, as set forth in the
Prospectus, in each State in the United States in which it
operates;

(iii) the shares of Tracking Stock to be issued and sold by
the Company hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued, fully paid
and non-assessable and free of preemptive rights;

(iv) each of this Agreement and the Tax Sharing Agreement
has been duly authorized, executed and delivered on behalf of
the Company and is valid and binding on the Company, except as
rights to indemnity and contribution hereunder may be limited
under applicable law;

(v) the Tracking Stock conforms in all material respects
to the description thereof contained in the Prospectus;

(vi) all consents, approvals, authorizations or other
orders of U.S. regulatory authorities legally required for the
issuance and sale of the Tracking Stock to the Underwriters
pursuant to the terms of this Agreement, have been obtained,
except such as may be required by the securities or Blue Sky
laws of the various States in connection with the offer and
sale of the Tracking Stock;

(vii) the compliance by the Company with all of the
provisions of the Tax Sharing Agreement will not result in a
breach of (A) any of the terms and provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is
a party or to which it is bound or the Company's Certificate
of Incorporation or By-Laws, or (B) any order, rule or
regulation applicable to the Company of any court, federal or
state regulatory body, administrative agency or other
governmental body having jurisdiction over the Company or its
properties (except for such conflicts, breaches, violations
and defaults as would not have a material adverse effect on
the Company and its subsidiaries taken as a whole); and no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or
body is required for the execution and delivery by the Company
of, compliance by the Company with the provisions of or
consummation of the

13
<PAGE> 14
transactions contemplated by, the Tax Sharing Agreement
(except for such consents, approvals, authorizations, orders,
filings, registrations and qualifications the failure to
obtain which would not have a material adverse effect on the
Company and its subsidiaries taken as a whole); and

(viii) except as to financial statements and schedules and
other financial and statistical information contained therein,
which such opinion need not pass upon, (A) the Registration
Statement when it became effective complied as to form in all
material respects with the requirements of the Act and the
applicable instructions, rules and regulations of the
Commission thereunder; (B) the Registration Statement and the
Prospectus, as amended or supplemented, if applicable, comply,
and at the date thereof complied, as to form in all material
respects with the requirements of the Act and the applicable
instructions, rules and regulations of the Commission
thereunder; (C) each document or portion thereof incorporated
by reference in the Prospectus complied when filed with the
Commission as to form in all material respects with the
requirements of the Exchange Act, together with applicable
instructions, rules and regulations of the Commission
thereunder; and (D) advising that nothing came to such
counsel's attention which would lead such counsel to believe
(x) any part of the Registration Statement at the time it
became effective contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading; and (y) as of the closing date, the Prospectus
contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

The opinions specified in clauses (ii), (vii)(A) and (viii)(C) above
may be delivered by Robert S. Feit, General Attorney and Assistant Secretary of
the Company, in lieu of Wachtell, Lipton, Rosen & Katz.

(c) At or prior to the time of closing, the Representatives shall have
received from Davis Polk & Wardwell an opinion to the effect specified
in clauses (i), (iii), (iv), and (viii)(A), (B) and (D) of subparagraph
(b) above.

(d) At the date hereof and at or prior to the time of closing, the
Representatives shall have received an executed copy of a letter of
PricewaterhouseCoopers LLP, addressed to the Company and to the
Representatives, to the effect that: (i) they are independent public

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<PAGE> 15
accountants as required by the Act and the applicable published rules
and regulations of the Commission thereunder; (ii) the audited
financial statements contained in the Registration Statement comply as
to form in all material respects with the applicable accounting
requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; and (iii) nothing has come to
their attention as the result of specified procedures not constituting
an audit that caused them to believe (A) that there was any change in
the capital stock or increase in long term debt of the Company or the
AT&T Wireless Group, or any decrease in net assets, from the date of
the latest balance sheet which is contained in the Registration
Statement, to a date not more than five days prior to the date of such
letter or (B) that there were any decreases, as compared with the
corresponding period in the preceding year, in total revenues,
operating income or net income from the date of the latest figures for
such items contained in the Registration Statement to the date of the
latest available financial statements of the Company or the AT&T
Wireless Group; provided that, with respect to any of the items
specified in clause (iii), such letter may contain an exception for
matters which the Registration Statement discloses have occurred or may
occur; and provided further, that the letter may vary from the
requirements specified in this subparagraph in such manner as the
Representatives in their sole discretion may determine to be immaterial
or in such manner as may be acceptable to the Representatives.

(e) At the time of closing, the Representatives shall have received an
executed copy of a letter of Arthur Andersen LLP and KPMG LLP,
addressed to the Company and to the Representatives, to the effect
that: (i) each of them are independent public accountants with respect
to MediaOne Group Inc. and Tele-Communications, Inc., respectively, as
required by the Act and the applicable published rules and regulations
of the Commission thereunder and (ii) the audited financial statements
contained in the Registration Statement comply as to form in all
material respects with the applicable accounting requirements of the
Act and the applicable published rules and regulations of the
Commission thereunder.

(f) Except as reflected in or contemplated by the Registration
Statement and the Prospectus, since the respective dates as of which
information is given in the Registration Statement and the Prospectus
there shall not have been, at the time of closing, any material adverse
change, financial or otherwise, in the condition of the Company or the
AT&T Wireless Group from that set forth in the Registration Statement
and the Prospectus; the representations and warranties of the Company
herein shall be true at the time of closing; the Company shall not have
failed, at or prior to the time of closing, to have performed all
agreements herein contained which should have been performed by it at
or prior to such time;

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<PAGE> 16
and the Representatives shall have received, at the time of closing, a
certificate to the foregoing effect dated the day of the closing and
signed by a Vice President of the Company.

(g) The _______________ shall have approved the Tracking Stock for
listing, subject only to official notice of issuance.

In case any of the conditions specified above in this Section 8 shall
not have been fulfilled, this Agreement may be terminated by the Representatives
by delivering written notice of termination to the Company. Any such termination
shall be without liability of any party to any other party except to the extent
provided in subparagraphs (d) and (f) of Section 7 hereof.

The several obligations of the Underwriters to purchase shares of
Additional Tracking Stock hereunder are subject to (i) the delivery to the
Representatives on each Option Closing Date of the relevant documents
contemplated by paragraphs (a), (b), (c), (d) and (e) of this Section 8, in each
case revised to reflect the fact that the shares being purchased are Additional
Tracking Stock and dated the relevant Option Closing date and (ii) the
Additional Tracking Stock shall have been duly listed, subject to notice of
issuance, on the .

9. Conditions of the Company's Obligation. The obligation of the
Company to deliver the Tracking Stock upon payment therefor shall be subject to
the condition that at the time of closing no stop order suspending the
effectiveness of the Registration Statement, as amended from time to time, shall
be in effect and no proceedings for that purpose shall then be pending before,
or threatened by, the Commission.

In case the condition specified above in this Section 9 shall not have
been fulfilled, this Agreement may be terminated by the Company by delivering
written notice of termination to the Representatives. Any such termination shall
be without liability of any party to any other party except to the extent
provided in subparagraphs (d) and (f) of Section 7 hereof.

10. Termination of Agreement. This Agreement may be terminated by the
Representatives by delivering written notice of termination to the Company at
any time prior to the time of closing or Option Closing Date, if after the
signing of this Agreement trading in securities generally on the New York Stock
Exchange shall have been materially suspended or materially limited or minimum
prices shall have been established on such Exchange (which shall not include
trading suspensions or limitations resulting from the operation of General Rules
80A and 80B of such Exchange, as amended or supplemented), or a banking
moratorium shall have been declared by either federal or New York State
authorities.

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<PAGE> 17
A termination of this Agreement pursuant to this Section 10 shall be
without liability of any party to any other party.

11. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold each Underwriter, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, harmless from and against any and all losses, claims, damages, and
liabilities (i) with respect to the Tracking Stock or any other securities of
the Company arising because the Registration Statement, any preliminary
prospectus used in connection with the offering of the Tracking Stock or the
Prospectus (if used within the period set forth in Section 7(g) hereof and if
used, as amended or supplemented by all amendments or supplements thereto which
have been furnished to the Representatives or to such Underwriter) contained or
is alleged to have contained any untrue statement of a material fact or omitted
or is alleged to have omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or (ii) with
respect to the Directed Shares arising out of the supplement or prospectus
wrapper material distributed in connection with the reservation and sale of the
Directed Shares contained or is alleged to have contained any untrue statement
of a material fact or omitted or is alleged to have omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except as to losses, claims, damages or liabilities caused by
any such untrue statement or omission or alleged untrue statement or omission
made in reliance upon information furnished to the Company herein or otherwise
in writing by or on behalf of any Underwriter for use in connection with the
preparation of any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereof, provided that the indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any losses, claims, damages or liabilities arising
from the sale of Tracking Stock to any person if a copy of the Prospectus (as
amended or supplemented by all amendments or supplements thereto which have been
furnished to the Representatives or to such Underwriter, but without exhibits)
shall not have been sent, mailed or given to such person, if required by the
Act, at or prior to the written confirmation of the sale of such Tracking Stock
to such person.

(b) Each Underwriter agrees to indemnify and hold the
Company, its directors, its officers who sign the registration
statement, and each person who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, harmless
from and against any and all losses, claims, damages and liabilities
arising because the Registration Statement or any preliminary
prospectus relating to the Tracking Stock, or the Prospectus or any
amendment or supplement thereto contained or is alleged to have
contained any untrue statement of a material fact or omitted or is
alleged to have omitted to state a material

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<PAGE> 18
fact required to be stated therein or necessary to make the statements
therein not misleading, which untrue statement or omission or alleged
untrue statement or omission was made in any such preliminary
prospectus or in the Registration Statement or Prospectus or any
amendment or supplement thereto in reliance upon information furnished
to the Company herein or otherwise in writing by or on behalf of such
Underwriter for use in connection with the preparation thereof.

(c) The Company and each Underwriter agree that upon the commencement
of any action against it, its directors, its officers who sign the
registration statement, or any person controlling it as aforesaid in
respect of which indemnity may be sought on account of any indemnity
agreement contained herein, it will promptly give written notice of the
commencement thereof to the party or parties against whom indemnity
shall be sought, but the omission so to notify such indemnifying party
or parties of any such action shall not relieve such indemnifying party
or parties from any liability which it or they may have to the
indemnified party or parties otherwise than on account of such
indemnity agreement. In case such notice of any such action shall be so
given, such indemnifying party or parties shall be entitled to
participate at its or their own expense in the defense of such action,
or, if it or they so elect, to assume the defense of such action, and
in the latter event such defense shall be conducted by counsel chosen
by such indemnifying party or parties and satisfactory to the
indemnified party or parties who shall be defendant or defendants in
such action, and such defendant or defendants shall bear the fees and
expenses of any additional counsel retained by them; but if the
indemnifying party or parties shall not elect to assume the defense of
such action, such indemnifying party or parties will reimburse such
indemnified party or parties for the reasonable fees and expenses of
any counsel retained by them. In the event that the parties to any such
action (including impleaded parties) include both the indemnifying
party and the indemnified party and either (i) the indemnifying party
or parties and indemnified party or parties mutually agree or (ii)
representation of both the indemnifying party or parties and the
indemnified party or parties by the same counsel is inappropriate under
applicable standards of professional conduct due to actual or potential
differing interests between them, then the indemnifying party or
parties shall not have the right to assume the defense of such action
on behalf of such indemnified party or parties and will reimburse such
indemnified party or parties for the reasonable fees and expenses of
any counsel retained by them and satisfactory to the indemnifying party
or parties, it being understood that the indemnifying party or parties
shall not in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of

18
<PAGE> 19
attorneys for all such indemnified parties, which firm shall be
designated in writing by the Representatives in the case of an action
in which one or more Underwriters or controlling persons are
indemnified parties and by the Company in the case of an action in
which the Company or any of its directors, officers or controlling
persons are indemnified parties. The indemnifying party or parties
shall not be liable under this Agreement with respect to any settlement
made by any indemnified party or parties without prior written consent
by the indemnifying party or parties to such settlement.

(d) In connection with the offer and sale of the Directed Shares
pursuant to the Directed Share Program, the Company agrees, promptly
upon a request in writing, to indemnify and hold harmless the
Underwriters from and against any and all losses, liabilities, claims,
damages and reasonable expenses incurred by them as a result of the
failure of Directed Share Invitees to pay for and accept delivery of
Directed Shares which, by the end of the first business day following
the date of this Agreement, were subject to a properly confirmed
agreement to purchase.

(e) If the indemnification provided for in subparagraph (a) or (b) of
this Section 11 is unavailable to an indemnified party in respect of
any losses claims, damages, or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses,
claims, damages or liabilities in such proportion as is appropriate to
reflect primarily the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the
Tracking Stock and also to reflect here appropriate the relative fault
of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions or alleged statements or
omissions which resulted in such losses, claims, damages, or
liabilities, as well as any other relevant equitable considerations.
The relative fault of the Company and of the Underwriters shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company or by the Underwriters and the parties, relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this
subparagraph (d) were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this subparagraph (d). The amount

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<PAGE> 20
paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities referred to in this subparagraph (d)
shall be deemed to include, subject to the limitations set forth above
in this Section 11, any legal or other expenses reasonably incurred by
such indemnified party in connection with defending any such action or
claim. Notwithstanding the provisions of this subparagraph (d), no
Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the shares of Tracking Stock
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has
been required to pay, otherwise than pursuant to this subparagraph (d),
by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Underwriter's obligation to contribute pursuant
to this subparagraph (d) is several in an amount which shall bear the
same proportion to the number of shares of Firm Tracking Stock set
forth opposite the name of such Underwriter in Schedule I hereto (plus
any increase in such amount as may be required pursuant to Section 5
hereof).

12. Miscellaneous. This Agreement shall inure to the benefit of the
Company, its directors, its officers who sign the registration statement, the
several Underwriters and each controlling person referred to in Section 11
hereof and their respective successors. Nothing in this Agreement is intended or
shall be construed to give to any other person, firm or corporation any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. The term "successor" as used in this Agreement shall
not include any purchaser, as such purchaser, of any of the Tracking Stock from
any of the several Underwriters.

13. Notices. All communications hereunder shall be in writing, and if
to the Underwriters, unless otherwise provided, shall be mailed or delivered to
the Representatives, in care of Goldman, Sachs & Co., Attention: Donald Hanson
at 85 Broad Street, New York, New York 10004, Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Attention: , World Financial Center , New York, New York
10281 and Salomon Smith Barney Inc., Attention: Seven World Trade Center, New
York, New York 10048, and if to the Company, unless otherwise provided, shall be
mailed or delivered to the Company attention: Chief Financial Officer, 295 North
Maple Avenue, Basking Ridge, NJ 07920.

14. Governing Law. The validity and interpretation of this Agreement
shall be governed by the laws of the State of New York.

15. Survival Clause. Except with respect to any Underwriter who is in
default within the meaning of Section 5 hereof, the indemnity and contribution

20
<PAGE> 21
agreement contained in Section 11 hereof and the representations and warranties
of the Company set forth in this Agreement or in any certificate furnished
pursuant hereto shall remain operative and in full force and effect regardless
of (i) any termination of this Agreement, (ii) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter, or (iii)
acceptance of and payment for the Tracking Stock.

Please sign and return to us the enclosed duplicate of this letter,
whereupon this letter will become a binding agreement between the Company and
the several Underwriters, in accordance with its terms.

Very truly yours,

AT&T CORP.

By:
------------------------
Name:
Title:

The foregoing Agreement is hereby
confirmed and accepted as of the date
first above written.

GOLDMAN, SACHS & CO.
MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED
SALOMON SMITH BARNEY INC.

Acting severally on behalf of themselves and
the several U.S. Underwriters named
in herein.

By:
------------------------
(Goldman, Sachs & Co.)

By: MERRILL LYNCH, PIERCE,
FENNER & SMITH INCORPORATED

By:
- ------------------------

21
<PAGE> 22
Name:
Title:

By: SALOMON SMITH BARNEY INC.

By:
------------------------
Name:
Title:

GOLDMAN SACHS INTERNATIONAL
MERRILL LYNCH INTERNATIONAL LIMITED
SALOMON BROTHERS INTERNATIONAL LIMITED

Acting severally on behalf of themselves and
the several International Underwriters
named in herein.

By: GOLDMAN SACHS INTERNATIONAL

By:
------------------------
Name:
Title:

By: MERRILL LYNCH INTERNATIONAL LIMITED

By:
------------------------
Name:
Title:

By: SALOMON BROTHERS INTERNATIONAL LIMITED

By:
------------------------
Name:
Title:

22
<PAGE> 23
SCHEDULE I

Number of Firm Shares
U.S. Underwriter To Be Purchased
- --------------------------------------------------------------------------------

Goldman, Sachs & Co...........................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated...............................................
Salomon Smith Barney Inc......................................
Credit Suisse First Boston Corporation........................
Lehman Brothers Inc...........................................
Morgan Stanley & Co. Incorporated.............................
Banc of America Securities LLC................................
M.R. Beal & Company...........................................
Bear, Stearns & Co. Inc.......................................
Hambrecht & Quist LLC.........................................
Deutsche Bank Securities Inc..................................
Donaldson, Lufkin & Jenrette Securities
Corporation...................................................
J.P. Morgan Securities Inc....................................
PaineWebber Incorporated......................................
Prudential Securities Incorporated............................
Sanford C. Bernstein & Co., Inc...............................
Thomas Weisel Partners LLC....................................

Total:..................................................... ---------------
---------------

23
<PAGE> 24
SCHEDULE II

Number of Firm Shares
International Underwriter To Be Purchased

- --------------------------------------------------------------------------------

Goldman Sachs International...................................
Merrill Lynch International Limited...........................
Salomon Brothers International Limited........................
ABN AMRO Rothschild, a division of ABN
AMRO Incorporated.............................................
Credit Suisse First Boston (Europe) Limited...................
Deutsche Bank AG London.......................................
UBS AG, acting through its division Warburg
Dillon Read...................................................
Paribas.......................................................
Cazenove & Co. ...............................................
Daiwa Securities SB Capital Markets Europe
Limited.......................................................
Daiwa Securities SB Capital Markets Europe
Limited ......................................................
HSBC Investment Bank plc......................................
ING Barings Limited as agent for ING Bank
N.V., London branch...........................................
Banca d'Intermediazione Mobiliare IMI S.p.A...................

Total:..................................................... ---------------
---------------

<PAGE> 1
EXHIBIT 5.1

March 28, 2000

AT&T Corp.
32 Avenue of the Americas
New York, New York 10013

Dear Sirs:

With reference to the registration statement on Form S-3 (the "Registration
Statement") that AT&T Corp. (the "Company") proposes to file with the Securities
and Exchange Commission under the Securities Act of 1933, as amended, relating
to the shares of Wireless Group common stock, par value $1.00 per share
(the "AT&T Wireless Group tracking stock"), to be issued, I am of the opinion
that:

1. the Company is a duly organized and validly existing corporation under
the laws of the State of New York;

2. the issuance of the AT&T Wireless Group tracking stock has been duly
authorized by appropriate corporate action of the Company; and

3. when the AT&T Wireless Group tracking stock has been issued and
delivered pursuant to a sale in the manner described in the
Registration Statement, such AT&T Wireless Group tracking stock will
be validly issued, fully paid and nonassessable.

I hereby consent to the filing of this opinion with the Securities and
Exchange Commission in connection with the filing of the Registration
Statement. I also consent to the making of the statement with respect to me in
the Registration Statement under the heading "Legal Matters."

Very truly yours,

/s/ Robert S. Feit
----------------------------------------
Robert S. Feit
General Attorney and Assistant Secretary

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in this Form S-3
Registration Statement of AT&T Corp. of our report dated March 9, 2000 relating
to the consolidated financial statements, which appears in the AT&T Corp. 1999
Annual Report to Shareholders, which is incorporated by reference in its Annual
Report on Form 10-K for the year ended December 31, 1999. We also consent to the
incorporation by reference of our report dated March 9, 2000 relating to the
financial statement schedule, which appears in such Annual Report on Form 10-K.
We also consent to the references to us under the heading "Experts" and
"Selected Historical Financial Data" in such Form S-3 Registration Statement.

/s/ PRICEWATERHOUSECOOPERS LLP

--------------------------------------

PricewaterhouseCoopers LLP

New York, New York

March 28, 2000

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in this Form S-3 Registration Statement of
AT&T Corp. of our report dated March 17, 2000 relating to the combined financial
statements of AT&T Wireless Group, which appears in such Form S-3 Registration
Statement. We also consent to the references to us under the heading "Experts"
and "Selected Historical Financial Data" in such Form S-3 Registration
Statement.

/s/ PRICEWATERHOUSECOOPERS LLP
--------------------------------------
PricewaterhouseCoopers LLP

New York, New York

March 28, 2000

<PAGE> 1

EXHIBIT 23.4

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the registration statement
on Form S-3 of AT&T Corp. of our report, dated February 29, 2000, relating to
the combined balance sheets of Liberty Media Group (New Liberty or Successor) as
of December 31, 1999, and of Liberty Media Group (Old Liberty or Predecessor) as
of December 31, 1998, and the related combined statements of operations and
comprehensive earnings, combined equity and cash flows for the period from March
1, 1999 to December 31, 1999 (Successor period) and from January 1, 1999 to
February 28, 1999 and for each of the years in the two-year period ended
December 31,1998 (Predecessor periods),which report appears as an exhibit to the
AT&T Corp. 1999 Annual Report on Form 10-K, dated March 27, 2000, and to the
reference to our firm under the heading "Experts" in the registration statement.

/s/ KPMG LLP

KPMG LLP

Denver, Colorado

March 27, 2000

<PAGE> 1

EXHIBIT 23.5

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement on Form S-3 of our report dated
February 28, 2000 included in MediaOne Group, Inc.'s consolidated financial
statements for the year ended December 31, 1999, filed in AT&T Corp.'s Form 8-K
dated March 27, 2000.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Denver, Colorado,

March 28, 2000.