AT&T CORP, S-3, 2000-02-02

AT&T CORP
S-3, 2000-02-02
TELEPHONE COMMUNICATIONS (NO RADIOTELEPHONE)

Previous: AMERICAN GREETINGS CORP, SC 14D1/A, 2000-02-02

Next: ANALYSTS INTERNATIONAL CORP, SC 13G/A, 2000-02-02

<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 2000

REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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

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>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1) PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Wireless Group Common Stock, par value $1.00 per
share................................................. $100,000,000 $26,400
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Includes shares of Wireless Group Common Stock that may be sold pursuant to
the Underwriters' over-allotment options.

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

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 one to be used in a
concurrent international offering outside the United States. 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).

i
<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 FEBRUARY 2, 2000

[AT&T LOGO]

WIRELESS GROUP COMMON STOCK
-------------------------

AT&T Corp. is offering shares of a new class of its common stock 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 $ and $ 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 shares in the United States. In addition, shares
are being offered outside the United States in an international offering.

We intend to list AT&T Wireless Group tracking stock on the ,
under the symbol " ."

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, to the Company................... $ $
</TABLE>

AT&T has granted the U.S. and international underwriters options to
purchase up to an additional 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.

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

, 2000
<PAGE> 4

ALTERNATE COVER PAGE FOR INTERNATIONAL PROSPECTUS
PROSPECTUS

SUBJECT TO COMPLETION, DATED FEBRUARY 2, 2000

[AT&T LOGO]

WIRELESS GROUP COMMON 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 shares outside the United States. In addition,
shares are being offered in the United States.

We intend to list AT&T Wireless Group tracking stock on the ,
under the symbol " ."

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

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

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

AT&T has granted the U.S. and international underwriters options to
purchase up to an additional 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.

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

, 2000
<PAGE> 5

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..................... 27
Dividend Policy..................... 27
Capitalization of the AT&T Wireless
Group............................. 28
Selected Historical Financial Data
of the AT&T Wireless Group........ 29
AT&T Wireless Group Management's
Discussion and Analysis of
Financial Condition and Results of
Operations........................ 31
Description of Business............. 48
Management of the AT&T Wireless
Group............................. 80
Description of AT&T Capital Stock... 81
Relationship Between the AT&T Common
Stock Group and the AT&T Wireless
Group............................. 93
Certain Material U.S. Federal Tax
Considerations.................... 102
Underwriting........................ 106
Legal Matters....................... 108
Other Information................... 109
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.

ii
<PAGE> 6

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 111. 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 approximately $5.5 billion in revenues for the nine
months ended September 30, 1999. Including its partnership markets, the AT&T
Wireless Group had approximately 12 million total subscribers as of September
30, 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
September 30, 1999. As of September 30, 1999, the AT&T Wireless Group's built
network, including partnership and affiliate markets, covered 64% 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 September 30, 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. Currently, over 73% 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.

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> 8

- 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 over 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 -- 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
3
<PAGE> 9

refer to the assets and businesses whose economic performance is reflected by
the AT&T common stock as the AT&T Common Stock Group.

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 DISTRIBUTION

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 follow the initial public offering with a distribution to holders of
AT&T common stock of new shares of AT&T Wireless Group tracking stock. These
shares would represent the economic performance of the AT&T Wireless Group not
represented by the shares of tracking stock that we issue in the offering. The
exact method and timing of this distribution has not yet been determined.
Following the distribution, 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. We currently expect to complete the distribution at
some time after the offering and after we complete our pending merger with
MediaOne Group, Inc. There is no guarantee, however, that the distribution 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.
4
<PAGE> 10

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,

- 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 the business of the AT&T Wireless Group
and an investment in the AT&T Wireless Group tracking stock offered through this
prospectus.
5
<PAGE> 11

THE OFFERING

Unless we specifically state otherwise, the information in this prospectus
does not take into account the possible issuance of up to
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 shares of AT&T
Wireless Group tracking stock outstanding following this offering.

AT&T Wireless Group tracking
stock offered:

U.S. offering............. shares
International offering.... shares
Total................ shares

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

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

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

Proposed symbol...... " "

Use of proceeds................ The net proceeds from this offering, estimated
to be $ , will be used to .
See "Use of Proceeds" for additional
information on our intentions with respect to
the proceeds of 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, if
any, as determined by our board of directors subsequent to the offering.

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.
6
<PAGE> 12

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 111.

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, 1998 and at and for the nine-month periods ended September
30, 1999 and 1998. We derived the consolidated income statement data below for
each of the three years ended December 31, 1998, and the consolidated balance
sheet data at December 31, 1998 and 1997, 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 nine months ended September 30,
1999 includes $0.8 billion of net nonoperational charges, primarily including 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, and gains on the sale of
businesses. Income from continuing operations for the nine months ended
September 30, 1998 and for the year ended December 31, 1998 includes net
nonoperational charges of $1.3 billion and $1.1 billion, respectively, including
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
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> 13

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

<TABLE>
<CAPTION>
AT OR FOR
THE NINE
MONTHS ENDED
SEPTEMBER 30, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------ -----------------------------------------------
1999(1) 1998 1998 1997 1996 1995 1994
-------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................. $ 46,057 $39,695 $53,223 $51,577 $50,688 $48,449 $46,063
Operating income......................... 8,418 4,301 7,487 6,836 8,709 5,169 7,393
Income from continuing operations........ 3,479 3,247 5,235 4,249 5,458 2,981 4,230
Income from continuing operations --
attributable to AT&T common
shareowners............................ 4,297 3,247 5,235 4,249 5,458 2,981 4,230
Weighted average AT&T common shares and
potential common shares................ 3,140 2,715 2,700 2,683 2,651 2,612 2,571
Per AT&T common share -- basic:
Income from continuing operations(2)... $ 1.41 $ 1.21 $ 1.96 $ 1.59 $ 2.07 $ 1.15 $ 1.65
Per AT&T common share -- diluted:
Income from continuing operations(3)... 1.39 1.20 1.94 1.59 2.07 1.14 1.64
Cash dividends declared per AT&T common
share.................................. .66 .66 .88 .88 .88 .88 .88
Loss from continuing operations available
to Liberty Media Group shareowners..... 818
Weighted average Liberty Media Group
shares................................. 1,257
Liberty Media Group loss per
share -- basic......................... .65
Liberty Media Group loss per
share -- diluted....................... .65
Cash dividends declared per Liberty Media
Group share............................ --
BALANCE SHEET DATA:
Total assets............................. $161,806 $58,318 $59,550 $61,095 $57,348 $62,864 $57,817
Long-term debt........................... 22,073 6,079 5,556 7,857 8,878 8,913 9,138
Shareowners' equity...................... 74,763 24,164 25,522 23,678 21,092 17,400 18,100
</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. Certain 1999 amounts for AT&T
have been reclassified to conform with the current presentation.

(2) Basic earnings per share from continuing operations of AT&T common stock
prior to the three-for-two stock split for the five years ended December 31,
1998 through December 31, 1994 were $2.93, $2.39, $3.10, $1.72 and $2.48,
respectively.

(3) Diluted earnings per share from continuing operations of AT&T common stock
prior to the three-for-two stock split for the five years ended December 31,
1998 through December 31, 1994 were $2.91, $2.38, $3.09, $1.71 and $2.47,
respectively.
8
<PAGE> 14

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, 1998 and at and for the nine-month periods
ended September 30, 1999 and 1998. We derived the combined income statement data
below for each of the three years ended December 31, 1998, and the combined
balance sheet data at December 31, 1998 and 1997, 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, 1998
for purposes of the 1998 information provided and on January 1, 1999 for
purposes of the 1999 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 AT OR FOR
THE NINE THE NINE
MONTHS MONTHS AT OR FOR THE
ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ---------------------------
1999 1998 1998 1997 1996
------------- ------------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Services revenues............................... $ 4,928 $3,472 $ 4,779 $ 4,249 $ 3,887
Equipment revenues.............................. 562 425 627 419 359
-------- ------ ------- ------- -------
Total revenues.................................... 5,490 3,897 5,406 4,668 4,246

Operating Expenses:
Network and other costs of services............. 2,743 1,662 2,428 1,770 1,629
Depreciation and amortization................... 917 802 1,079 826 660
Selling, general and administrative............. 1,833 1,550 2,122 1,982 1,723
Asset impairment and restructuring charges...... -- 60 120 160 --
-------- ------ ------- ------- -------
Total operating expenses.......................... 5,493 4,074 5,749 4,738 4,012

Operating (loss) income........................... (3) (177) (343) (70) 234
Other income, net................................. 180 705 764 288 346
Interest expense.................................. 102 85 120 -- --
-------- ------ ------- ------- -------
Income before income taxes........................ 75 443 301 218 580
Provision for income taxes........................ 31 197 137 93 263
-------- ------ ------- ------- -------
Net income........................................ 44 246 164 125 317
Dividend requirements on preferred stock held by
AT&T, net....................................... 41 41 56 56 56
-------- ------ ------- ------- -------
Net income attributable to AT&T's residual
interest........................................ $ 3 $ 205 $ 108 $ 69 $ 261

CASH FLOW DATA:
Net cash provided by (used in) operating
activities...................................... $ 527 $ (96) $ 414 $ 1,338 $ 1,183
Capital expenditures.............................. (1,376) (439) (1,219) (1,931) (1,832)
Net acquisitions of licenses...................... (32) (24) (65) (443) (327)
Net dispositions of businesses.................... 244 -- 324 -- 156
Equity investments contributions and purchases.... (172) (20) (156) (84) (32)
</TABLE>

9
<PAGE> 15

<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
THE NINE THE NINE
MONTHS MONTHS AT OR FOR THE
ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ---------------------------
1999 1998 1998 1997 1996
------------- ------------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Property, plant and equipment, net................ 6,143 5,182 5,073
Licensing costs, net.............................. 8,366 7,928 8,403
Investments....................................... 4,477 3,795 3,233
Total assets...................................... 22,856 19,460 19,040
Total debt(1)..................................... 3,341 2,589 2,447
Preferred stock held by AT&T...................... 1,000 1,000 1,000
Total shareowner's equity......................... 13,818 11,532 11,187

OTHER:
EBITDA(2)......................................... $ 914 $ 625 $ 736 $ 756 $ 894
EBITDA (excluding asset impairment and
restructuring charges).......................... 914 685 856 916 894
Proportionate EBITDA from partnerships and
affiliates...................................... 322 354

OTHER OPERATING DATA:
(in thousands)
Consolidated subscribers.......................... 9,129 6,791 7,174 5,964 5,032
Consolidated digital subscribers.................. 6,709 3,585 4,354 1,746 909
Total subscribers(3).............................. 11,883 9,130 9,649 8,133 6,966
Total digital subscribers(4)...................... 8,351 4,195 5,299 n/a n/a
Covered population(5)............................. 120,994
Licensed population(5)............................ 180,198
850 megahertz markets........................... 75,312
1900 megahertz markets.......................... 104,886

AT&T WIRELESS GROUP PRO FORMA FOR VANGUARD ACQUISITION:
Revenues.......................................... $ 5,647 $4,251 $ 5,868 $ 5,084
EBITDA(2)......................................... 923 742 883 879
EBITDA (excluding asset impairment and
restructuring charges).......................... 923 802 1,003 1,039
Net income........................................ 14 383 254 112
Capital expenditures.............................. (1,409) (638) (1,223) (1,787)
Subscribers (in thousands)........................ 9,880 7,414 7,838 6,609
</TABLE>

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

(1) Includes $4 million of long-term debt that is included in other long-term
liabilities at September 30, 1999.

(2) EBITDA is defined as earnings before interest, 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) Digital subscriber data not available for partnership markets for 1997 and
1996.

(5) 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> 16

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, 1998 for income
statement purposes, and as of September 30, 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.

We have included detailed unaudited pro forma financial statements starting
on page F-34 of this prospectus.

AT&T WIRELESS GROUP

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

BALANCE SHEET DATA:
Total assets................................................ $22,856
Long-term debt due to AT&T.................................. 1,200
Preferred stock held by AT&T................................ 3,000
Total shareowner's equity................................... 15,818
</TABLE>

11
<PAGE> 17

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, 1998 for income statement
purposes, and as of September 30, 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, 1998 for income statement purposes and, as if
the MediaOne merger had been completed on September 30, 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-39 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 FOR THE
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------------- ------------
<S> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................................... $ 43,662 $56,975
Operating income............................................ 7,392 6,421
Income from continuing operations -- attributable to AT&T
common shareowners........................................ 4,408 4,050
Weighted average AT&T common shares diluted................. 3,911 3,874
Per AT&T common share -- basic.............................. $ 1.16 $ 1.08
Per AT&T common share -- diluted............................ 1.14 1.05
Cash dividends declared per AT&T common share............... .66 .88

BALANCE SHEET DATA:
Total assets................................................ $197,587
Long-term debt.............................................. 29,518
Total shareowners' equity................................... 62,529
</TABLE>

12
<PAGE> 18

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> 19

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 distribution 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 distribution, will equal or exceed the
market value of AT&T common stock held prior to the initial public offering or
the distribution, as applicable. In addition, during the period following the
initial public offering and before the distribution, the market value of AT&T
Wireless Group tracking stock could be adversely affected by the anticipated
distribution. 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 distribution 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> 20

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. As proposed, this provision would be effective on the date of
its enactment by the U.S. Congress. If this or a similar proposal is enacted,
AT&T could be subject to tax on an issuance of AT&T Wireless Group tracking
stock after the date of enactment. Legislation proposed in the U.S. House of
Representatives and the U.S. Senate does not contain any such proposal. We
cannot predict, however, whether the Clinton Administration's proposal will be
enacted by the U.S. Congress and, if enacted, whether it will be in the form
proposed.

15
<PAGE> 21

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. The proposal of the Clinton Administration would
be such an adverse development if it were enacted in its proposed form.

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 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,

16
<PAGE> 22

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

17
<PAGE> 23

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 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.

18
<PAGE> 24

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 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

19
<PAGE> 25

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 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, distribution 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.

20
<PAGE> 26

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 $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

21
<PAGE> 27

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. 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.

22
<PAGE> 28

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 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
Mobile Systems Inc./GTE Corporation/Vodafone Group Public Limited
Company/AirTouch Communications, Inc., 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.

23
<PAGE> 29

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 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.

24
<PAGE> 30

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 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.

25
<PAGE> 31

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.

26
<PAGE> 32

USE OF PROCEEDS

The net proceeds from this offering, estimated to be $ , after
deducting underwriting discounts and commissions and estimated offering expenses
of approximately $ , will be used to . 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).

27
<PAGE> 33

CAPITALIZATION OF THE AT&T WIRELESS GROUP

The following table sets forth as of September 30, 1999: (a) the historical
consolidated capitalization of the AT&T Wireless Group; (b) the consolidated
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 (c) the consolidated capitalization of the AT&T Wireless
Group on a pro forma basis, as adjusted to give effect to 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>
SEPTEMBER 30, 1999
------------------------------------
PRO FORMA
HISTORICAL PRO FORMA AS ADJUSTED
---------- --------- -----------
(in millions)
<S> <C> <C> <C>
Cash and cash equivalents................................... $ 16 $ 16 $
======= ======= =======
Debt maturing within one year (includes current maturities
of long term debt).......................................... $ 137 $ 137 $
Long-term debt:
Long-term debt due to AT&T................................ 3,200 1,200
Other(1).................................................. 4 4
------- -------
Total long-term debt................................... 3,204 1,204
Preferred stock held by AT&T................................ 1,000 3,000
AT&T's residual interest.................................... 12,799 12,799
Accumulated other comprehensive income...................... 19 19
------- ------- -------
Total capitalization................................... $17,159 $17,159 $
======= ======= =======
</TABLE>

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

28
<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)

29
<PAGE> 35

<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
THE NINE THE NINE
MONTHS MONTHS AT OR FOR THE
ENDED ENDED YEAR ENDED DECEMBER 31,
SEPTEMBER 30, SEPTEMBER 30, ---------------------------
1999 1998 1998 1997 1996
------------- ------------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CASH FLOW DATA:
Net cash provided by (used in) operating
activities...................................... $ 527 $ (96) $ 414 $ 1,338 $ 1,183
Capital expenditures.............................. (1,376) (439) (1,219) (1,931) (1,832)
Net acquisitions of licenses...................... (32) (24) (65) (443) (327)
Net acquisitions (dispositions) of businesses..... 244 -- 324 -- 156
Equity investments contributions and purchases.... (172) (20) (156) (84) (32)

BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 16 $ 27 $ 6
Working capital................................... (284) (388) (506)
Property, plant and equipment, net................ 6,143 5,182 5,073
Licensing costs, net.............................. 8,366 7,928 8,403
Investments....................................... 4,477 3,795 3,233
Goodwill, net and other assets.................... 2,364 1,317 1,355
Total assets...................................... 22,856 19,460 19,040
Total debt(1)..................................... 3,341 2,589 2,447
Preferred stock held by AT&T...................... 1,000 1,000 1,000
Total shareowner's equity......................... 13,818 11,532 11,187

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

(1) Includes $4 million of long-term debt that is included in other long-term
liabilities at September 30, 1999.

(2) EBITDA is defined as earnings before interest, 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) Digital subscriber data not available for partnership markets for 1997 and
1996.

30
<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 approximately $5.5 billion in revenues for the nine
months ended September 30, 1999. Including its partnership markets, the AT&T
Wireless Group had approximately 12 million total subscribers as of September
30, 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 September 30, 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. Currently, over 73% 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 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.

31
<PAGE> 37

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 growth in subscribers, especially
from AT&T Digital One Rate service subscriber additions. 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 revenues per user (ARPU). Digital customers also have demonstrated
reduced churn. 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 costs 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 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 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.

32
<PAGE> 38

The AT&T Wireless Group's results below do not include aviation
communications, earnings (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>
NINE MONTHS ENDED
SEPTEMBER 30, 1999
------------------------
850 1900
MEGAHERTZ MEGAHERTZ
--------- ---------
(AMOUNTS IN MILLIONS,
EXCEPT WHERE NOTED)
<S> <C> <C>
Revenues:
Services...................................... $4,077 $ 781
Equipment..................................... 448 104
------ ------
Total Revenues.................................. 4,525 885
EBITDA.......................................... 1,074 (121)
Capital Expenditures............................ 803 523
Subscribers..................................... 7.9 1.2
ARPU (in dollars)............................... $ 61.8 $ 93.8
Licensed POPs................................... 75.3 104.9
</TABLE>

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. We list the key
partnerships and affiliates under "Description of
Business -- Strategy -- Continue the aggressive build out and expansion of its
TDMA network."

The AT&T Wireless Group's proportionate share of EBITDA for these key
partnerships and affiliates was $354 million for the year ended December 31,
1998 and $322 million for the nine months ended September 30, 1999.

The AT&T Wireless Group's proportionate share of debt for these key
partnerships and affiliates was $145 million at December 31, 1998 and $372
million at September 30, 1999.

In August 1999, the AT&T Wireless Group completed its acquisition of
Honolulu Cellular, 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,
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, adding approximately 45,000 subscribers.

OPERATING RESULTS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE AND NINE
MONTHS ENDED SEPTEMBER 30, 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

33
<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 network as well as charges billed to
other wireless providers for roaming on the AT&T network.

Total revenues for the three and nine months ended September 30, 1999 were
$2,049 million and $5,490 million, respectively. This was an increase of $628
million, or 44.2%, for the three months ended September 30, 1999, and an
increase of $1,593 million, or 40.9%, for the nine months ended September 30,
1999, compared with the same periods in 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, revenues for the three and
nine months ended September 30, 1999 were $1,925 million and $5,285 million,
respectively, representing growth of 40.9% and 41.1%, respectively, compared
with the same periods in 1998. These revenue increases were driven primarily by
consolidated subscriber growth and rising ARPU.

Total revenues for the three and nine months ended September 30, 1999
within the AT&T Wireless Group's 850 megahertz markets were $1,673 million and
$4,525 million, respectively. This was an increase of $452 million, or 37.0%,
for the three months ended September 30, 1999, and an increase of $1,073
million, or 31.1%, for the nine months ended September 30, 1999, compared with
the same periods in 1998. Total revenues for the three and nine months ended
September 30, 1999 within the AT&T Wireless Group's 1900 megahertz markets were
$359 million and $885 million, respectively. This was an increase of $242
million, or 206.8%, for the three months ended September 30, 1999, and an
increase of $681 million, or 333.8%, for the nine months ended September 30,
1999, compared with the same periods in 1998.

These revenue increases in both the 850 megahertz and 1900 megahertz
markets were driven primarily by consolidated subscriber growth and rising ARPU.
As of September 30, 1999, ending subscribers within the 850 megahertz markets
increased by 25.0% compared with 1998, while ending subscribers within 1900
megahertz markets increased by 166.6% 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 September 30, 1999, the number of
subscribers using AT&T Digital One Rate service was 1.6 million, an increase of
1.1 million, or 219.9%, compared with September 30, 1998, of which 82.0% were
new subscribers to the AT&T Wireless Group.

Services revenues for the three and nine months ended September 30, 1999
were $1,867 million and $4,928 million, respectively. This was an increase of
$602 million, or 47.6%, for the three months ended September 30, 1999, and an
increase of $1,456 million, or 41.9%, for the nine months ended September 30,
1999, compared with the same periods in 1998. These increases were driven
primarily by consolidated subscriber growth and rising ARPU.

Services revenues for the three and nine months ended September 30, 1999
within the 850 megahertz markets were $1,525 million and $4,077 million,
respectively. This was an increase of $424 million, or 38.5%, for the three
months ended September 30, 1999, and an increase of $970 million, or 31.2%, for
the nine months ended September 30, 1999, compared with the same periods in
1998. Services revenues for the three and nine months ended September 30, 1999
within the 1900 megahertz markets were $326 million and $781 million,
respectively. This was an increase of $240 million, or 279.1%, for the three
months ended September 30, 1999, and an increase of $642 million, or 461.9%, for
the nine months ended September 30, 1999, compared with the same periods in
1998.

As of September 30, 1999, the AT&T Wireless Group had 9.1 million
consolidated subscribers, an increase of 34.4% compared with the prior year, of
which 73.5% were digital subscribers, up from

34
<PAGE> 40

52.8% as of September 30, 1998. Included in these figures were approximately
700,000 subscribers from our acquisition of Vanguard in May 1999 and
approximately 125,000 subscribers from our acquisition of Honolulu Cellular in
August 1999. Including the AT&T Wireless Group's partnership markets,
approximately 8.4 million of the approximately 12 million total subscribers were
digital subscribers as of September 30, 1999. Segmented by market, as of
September 30, 1999, 7.9 million of the consolidated subscribers were within the
850 megahertz markets, of which 69.5% were digital subscribers, and 1.2 million
of the consolidated subscribers were within the 1900 megahertz markets. As of
September 30, 1999, penetration in the 850 megahertz markets was 10.5% compared
with 9.4% as of September 30, 1998, based on licensed POPs. As of September 30,
1999, penetration in the 1900 megahertz markets was 1.7% compared with 0.6% in
1998, based on licensed POPs.

The AT&T Wireless Group's ARPU in the 850 megahertz markets for the nine
months ended September 30, 1999 was $61.8, an increase of $5.6, or 10.0%,
compared with the same period in 1998. The AT&T Wireless Group's ARPU in the
1900 megahertz markets for the nine months ended September 30, 1999 was $93.8,
an increase of $26.3, or 39.0%, compared with the same period in 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.

Equipment revenues for the three and nine months ended September 30, 1999
were $182 million and $562 million, respectively. This was an increase of $26
million, or 16.7%, for the three months ended September 30, 1999, and an
increase of $137 million, or 32.2%, for the nine months ended September 30,
1999, compared with the same periods in 1998. These increases were primarily due
to the increase in gross consolidated subscriber additions of 28.1%. 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.

Equipment revenues for the three and nine months ended September 30, 1999
within the 850 megahertz markets were $148 million and $448 million,
respectively. This was an increase of $28 million, or 23.3%, for the three
months ended September 30, 1999, and an increase of $103 million, or 29.9%, for
the nine months ended September 30, 1999, compared with the same periods in
1998. Equipment revenues for the three and nine months ended September 30, 1999
within the 1900 megahertz markets were $33 million and $104 million,
respectively. This was an increase of $2 million, or 6.5%, for the three months
ended September 30, 1999, and an increase of $39 million, or 60.0%, for the nine
months ended September 30, 1999, compared with the same periods in 1998. These
increases were due primarily to increased migration of customers from analog to
digital service, and increased gross consolidated subscribers as a result of the
success of AT&T Digital One Rate service.

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 our 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 three and nine months
ended September 30, 1999 were $993 million and $2,743 million, respectively.
This was an increase of $352 million, or 54.9%, for the three months ended
September 30, 1999, and an increase of $1,081 million, or 65.0%, for the nine
months ended September 30, 1999, compared with the same periods in 1998. The
increases were 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
242.6% for the nine months

35
<PAGE> 41

ended September 30, 1999, compared with the same period in 1998, coupled with
the costs of handsets provided to subscribers.

Roaming expenses continued to negatively impact results for the three and
nine months ended September 30, 1999, but to a lesser extent compared to earlier
quarters, as the AT&T Wireless Group introduced initiatives to aggressively
migrate more minutes onto the AT&T Wireless Group network as well as reduce
roaming rates. The AT&T Wireless Group continues to seek to decrease roaming
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 10% in the average roaming rate per minute paid to other
carriers for the nine months ended September 30, 1999, compared with the same
period in 1998. Compared to the third quarter of 1998, the average roaming rate
per minute improved by approximately 20%.

Depreciation and amortization. Depreciation and amortization expenses for
the three and nine months ended September 30, 1999 were $333 million and $917
million, respectively. This was an increase of $53 million, or 18.9%, for the
three months ended September 30, 1999, and an increase of $115 million, or
14.3%, for the nine months ended September 30, 1999, compared with the same
periods in 1998. These increases 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 three and nine months ended September 30, 1999 were $655
million and $1,833 million, respectively. This was an increase of $119 million,
or 22.2%, for the three months ended September 30, 1999, and an increase of $283
million, or 18.3%, for nine months ended September 30, 1999, compared with the
same periods in 1998. These increases were due to the greater marketing and
selling costs and customer care associated with the higher growth of subscriber
additions.

For the three months ended September 30, 1999, SG&A expenses as a percent
of total revenue were 32.0%, a 5.7 point improvement compared with the same
period in the prior year. For the nine months ended September 30, 1999, SG&A
expenses as a percent of total revenue were 33.4%, a 6.4 point improvement
compared with the same period in the prior year. These reductions are due to
expense leveraging primarily within general and administrative expenses.

Asset impairment and restructuring charges. There were no asset impairment
and restructuring charges for the three months ended September 30, 1998 or for
the three and nine months ended September 30, 1999. Asset impairment and
restructuring charges for the nine months ended September 30, 1998 were $60
million, which represented the costs associated with the write-down of the
remaining assets associated with the AT&T Wireless Group's investment in its
two-way messaging business.

Other (expense) income, net. Other (expense) 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 (expense) income, net for the three and nine months
ended September 30, 1999 was ($4) million and $180 million, respectively. Other
(expense) income, net for the three and nine months ended September 30, 1998 was
$56 million and $705 million, respectively. The decrease for the three months
ended September 30, 1999 compared to the same period in 1998 was primarily due
to a decrease in net equity earnings. The decrease for the nine months ended
September 30, 1999 compared to the same period in 1998 was due 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.

36
<PAGE> 42

Interest expense. Interest expense consists primarily of interest on
intercompany debt due to the AT&T Common Stock Group. Interest was charged at
7.75% per annum for the three and nine months ended September 30, 1998 and 7.25%
per annum for the three and nine months ended September 30, 1999. Interest
expense for the three and nine months ended September 30, 1999 was $32 million
and $102 million, respectively. The decrease of $2 million, or 5.9%, for the
three months ended September 30, 1999 compared with the same period of 1998 was
the result of a lower interest rate in 1999, which was partially offset by a
lower level of interest capitalized in 1999 since assets were placed into
service as network build out was completed in certain markets. The increase of
$17 million, or 20.0%, for the nine months ended September 30, 1999, compared
with the same period in 1998 was the result of a lower level of interest
capitalized in 1999 since assets were placed into service as network build out
was completed in certain markets, partially offset by the impact of the lower
rate charged by AT&T in 1999.

Provision (benefit) for income taxes. The provision for income taxes for
the three and nine months ended September 30, 1999 was $14 million and $31
million, respectively, compared with a tax benefit of $6 million and a tax
provision of $197 million for the three and nine months ended September 30,
1998, respectively. The effective tax rate for the nine months ended September
30, 1999 and 1998, was 41.3% and 44.5%, respectively. These decreases were due
primarily to the change in the valuation allowance and other estimates between
periods.

Dividend requirements on preferred stock. The AT&T Wireless Group has $1.0
billion of preferred stock held by AT&T that pays dividends at 9% per annum.
Dividend requirements on this preferred stock for the three and nine months
ended September 30, 1999 were $14 million and for the three and nine months
ended September 30, 1998 were $41 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 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.

37
<PAGE> 43

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.

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

38
<PAGE> 44

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. Asset impairment and
restructuring charges for the year ended December 31, 1998, were $120 million, a
decrease of $40 million, or 25.0%, compared with 1997. 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 (expense) income, net. Other (expense) 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 (expense) 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.

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. 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.

39
<PAGE> 45

YEAR ENDED DECEMBER 31, 1997 COMPARED WITH YEAR ENDED DECEMBER 31, 1996

Revenues. Total revenues for the year ended December 31, 1997 were $4,668
million, an increase of $422 million, or 9.9%, compared with 1996. In December
1996, the AT&T Wireless Group sold wireless properties in Arkansas. Adjusted for
the impact of this disposal, the 1997 growth rate would have been 12.5%. Total
revenues for the year ended December 31, 1997 within the 850 megahertz markets
were $4,374 million, an increase of $426 million, or 10.8%, compared with 1996.
The rate of growth in the 850 megahertz markets was impacted as new PCS
competitors entered a number of the 850 markets. Total revenues for the year
ended December 31, 1997 within the 1900 megahertz markets were $17 million, as a
result of the market launches late in that year.

Services revenues for the year ended December 31, 1997 were $4,249 million,
an increase of $362 million, or 9.3%, compared with 1996. The increase in
services revenues primarily was driven by consolidated subscriber growth of
18.5% (as adjusted for the sale of the Arkansas properties). Partially
offsetting this increase was a decrease in ARPU. Service revenues within the 850
megahertz markets were $3,994 million in 1997, an increase of $379 million, or
10.5%, compared with 1996.

As of December 31, 1997, the AT&T Wireless Group had 6.0 million
consolidated subscribers, an increase of 0.9 million, or 18.5%, compared with
December 31, 1996, of which 29.3% were digital subscribers, an increase of
18.1%. Including partnership markets, the AT&T Wireless Group had 8.1 million
total subscribers as of December 31, 1997, an increase of 1.2 million, or 16.8%,
compared with the number of total subscribers as of December 31, 1996. These
consolidated subscribers were almost exclusively within the 850 megahertz
markets, with 1900 megahertz market subscribers totaling less than 0.1 million
as of December 31, 1997. As of December 31, 1997, penetration in the 850
megahertz markets was 8.9%, compared with 7.6% as of December 31, 1996, based on
licensed POPs.

The AT&T Wireless Group's ARPU in the 850 megahertz markets for the year
ended December 31, 1997 was $59.7, a decrease of $6.9, or 10.4%, compared with
1996. Although declines in ARPU were experienced throughout the wireless
industry primarily as a result of lower prices from increased competition from
new market entrants, the AT&T Wireless Group's ARPU remained significantly above
the industry average during 1997, excluding AT&T Wireless Group.

Equipment revenues for the year ended December 31, 1997 were $419 million,
an increase of $60 million, or 16.7%, compared with 1996. This increase
primarily reflected the growth in gross consolidated subscriber additions of
9.3%, and the commencement of large scale migration of customers from analog to
digital service. Equipment revenues also increased as a result of increased
sales of higher-priced handsets compared with 1996. Equipment revenues within
the 850 megahertz markets totaled $380 million in 1997, an increase of $47
million, or 14.1%, compared with 1996. Equipment revenues within the 1900
megahertz markets were only $12 million in 1997.

Network and other costs of services. Network and other costs of services
expenses for the year ended December 31, 1997 were $1,770 million, an increase
of $141 million, or 8.7%, compared with 1996. The increase was due primarily to
increased costs of handsets and accessories from the increase in gross
subscriber additions and customer migrations from analog to digital service. In
addition, expenses to operate and maintain our network increased as a result of
higher calling volumes. These increases were partially offset by a reduction in
roaming fraud costs from approximately $55 million in 1996 to $10 million in
1997, as improved fraud management controls were implemented during 1997.

Depreciation and amortization. Depreciation and amortization expenses for
the year ended December 31, 1997 were $826 million, an increase of $166 million,
or 25.2%, compared with 1996.

40
<PAGE> 46

This increase reflects a partial year of depreciation on assets placed in
service associated with the launch of new 1900 megahertz markets during the
latter half of 1997.

Selling, general and administrative. SG&A expenses for the year ended
December 31, 1997 were $1,982 million, an increase of $259 million, or 15.0%,
compared with 1996. Nearly half of the increase in 1997 was due to spending to
acquire new subscribers, including additional marketing expenses related to the
launching of the 1900 megahertz markets. The remaining increase was attributable
to costs incurred to maintain computer systems and to support a large and
growing subscriber base.

For the year ended December 31, 1997, SG&A expenses as a percent of total
revenue were 42.5%, a 2.0 point increase compared with 1996. The increase was
associated primarily with sales and marketing costs related to the 1900
megahertz markets.

Asset impairment and restructuring charges. Asset impairment and
restructuring charges for the year ended December 31, 1997 were $160 million,
related to the decision to discontinue pursuing 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. There were no asset impairment or restructuring charges in 1996.

Other (expense) income, net. Other (expense) 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 (expense) income, net for the year ended December 31, 1997 was $288
million, a decrease of $58 million, or 16.8%, compared with 1996. The decrease
was due primarily to the 1996 pretax gains from the sale and exchange of certain
cellular properties with SBC of $131 million, as well as a pretax gain of $28
million from the sale of our equity investment in Movitel. This was partially
offset by a 1997 pretax gain of $45 million on the sale of a portion of our
investment in SmarTone, a $25 million pretax distribution from a nonconsolidated
investment, and higher net equity earnings from investments.

Interest Expense. Interest expense consists primarily of interest on
intercompany debt due to AT&T Common Stock Group. Interest was charged at 7.75%
per annum. In 1997 and 1996, the AT&T Wireless Group capitalized all interest
expense due to continuing significant build out, particularly in 1900 megahertz
markets.

Provision for income taxes. The provision for income taxes for the year
ended December 31, 1997 was $93 million, a decrease of $170 million, or 64.6%,
compared with 1996 due to higher amounts of pretax income in 1996. The effective
tax rate was 42.7% and 45.3% for the years ended December 31, 1997 and 1996,
respectively. The decrease in the effective tax rate was due primarily to the
impact of the change in valuation allowance and other estimates in 1997 as
compared with 1996 offset by the impact of unutilized foreign losses.

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 year. Dividend requirements on this preferred stock for the
year ended December 31, 1997 and 1996 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

41
<PAGE> 47

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. 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 nine months ended
September 30, 1999 was $527 million compared with a $96 million use of cash in
the same period of 1998. The difference was due to increased EBITDA excluding
asset impairment and restructuring charges, lower payments of accounts payable
and decreases in compensation and other operating accruals. Net cash used in
investing activities for the nine months ended September 30, 1999 was $1,158
million compared with $667 million of net cash provided by investing activities
for the same period in 1998. The difference was due primarily to lower cash
proceeds from the sales of equity investments and higher capital expenditures to
upgrade and increase capacity in existing markets as well as to expand the
national footprint. Net cash provided by financing activities for the nine
months ended September 30, 1999 was $620 million compared with $533 million of
cash used for the same period in 1998. The difference was due primarily to
increased debt financing from AT&T to fund the higher capital expenditures and
decreased transfers to AT&T as compared to 1998 because of lower equity
investment distributions and sales in 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 increased
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 AT&T 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 AT&T in order to fund the investing activities for that year.

Net cash provided by operating activities for the year ended December 31,
1997 was $1,338 million, an increase of $155 million compared with 1996 due
primarily to a lower increase in accounts receivable and an increase in accounts
payable. Net cash used in investing activities for the year ended December 31,
1997 was $2,164 million, an increase of $305 million from the $1,859 million of
cash used in 1996 due to cash generated from dispositions of business in 1996
coupled with increased acquisitions of licenses in 1997, and higher capital
expenditures in 1997 associated with the build out of the new 1900 megahertz
markets. These were partially offset by higher proceeds from the sales of and
distributions from equity investments in 1997 as compared with 1996. Net cash
provided by financing activities for the year ended December 31, 1997 was $742
million, an increase of $32 million compared with $710 million of cash provided
in 1996 due primarily to cash received from minority partners in 1996 to help
fund the build out for markets that were launched in 1997.

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

42
<PAGE> 48

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
network. Concurrently, the AT&T Wireless Group records roaming charges paid to
other providers as network and other cost of service.

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 1998 and 1999. EBITDA and EBITDA margins were also favorably
impacted for the three and nine months ended September 30, 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 three and nine months ended September 30, 1999 was $401
million and $914 million, respectively. This was an increase of $157 million, or
64.3%, for the three months ended September 30, 1999 and an increase of $289
million, or 46.2%, for the nine months ended September 30, 1999 compared with
the same periods in 1998. Excluding a pretax asset impairment and restructuring
charge of $60 million in 1998, the increase was $229 million for the nine months
ended September 30, 1999. The EBITDA growth rate during the three month period
increased compared with the year-to-year EBITDA growth rate recorded during the
nine months ended September 30, 1999.

Within the 850 megahertz markets, EBITDA for the three and nine months
ended September 30, 1999 was $422 million and $1,074 million, respectively. This
was an increase of $86 million, or 25.5%, for the three months ended September
30, 1999, and an increase of $66 million, or 6.5%, for the nine months ended
September 30, 1999, compared with the same periods in 1998.

Within the 1900 megahertz markets, EBITDA for the three and nine months
ended September 30, 1999 was ($6) million and ($121) million, respectively. This
was an improvement of $83 million, for the three months ended September 30,
1999, and an improvement of $188 million, for the nine months ended September
30, 1998, compared with the same periods in 1998.

Excluding the aforementioned pretax asset impairment and restructuring
charge of $60 million in 1998, EBITDA margins were 16.6% for the nine months
ended September 30, 1999, compared with 17.6% for the same period in 1998.
EBITDA margins within the 850 megahertz markets were 23.7% for the nine months
ended September 30, 1999, compared with 29.2% for the nine months ended
September 30, 1998. EBITDA margins within the 1900 megahertz markets were
(13.7%) for the nine months ended September 30, 1999, compared to (151.5%) for
the nine months ended September 30, 1998.

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.

43
<PAGE> 49

EBITDA for the year ended December 31, 1997 was $916 million compared with
$894 million in 1996, excluding the pretax asset impairment and restructuring
charge of $160 million in 1997.

EBITDA for the year ended December 31, 1997 within the 850 megahertz
markets was $1,179 million, an increase of $186 million, or 18.7%, compared with
1996. Within the 1900 megahertz markets, EBITDA was ($212) million in 1997,
compared with ($63) million in 1996.

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 and 21.1% in 1996. EBITDA margins within the 850
megahertz markets were 26.6% in 1998, compared with 27.0% in 1997 and 25.2% in
1996.

Capital expenditures for the nine months ended September 30, 1999 were
$1,393 million. This represented an increase of $826 million, or 145.7%,
compared with the same period in 1998. Capital expenditures within the 850
megahertz markets, including spending associated with administrative functions,
totaled $803 million during the nine months ended September 30, 1999, an
increase of 164.1%, compared with the same period in 1998. Network capital
expenditures within the 1900 megahertz markets totaled $523 million during the
nine months ended September 30, 1999, an increase of 181.2%, compared with the
same period in 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. 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. This decrease resulted from significant spending in 1997
associated with the 1900 megahertz market launches. Network capital expenditures
were $384 million in the 1900 megahertz markets during 1998, a reduction of $428
million, or 52.7%, compared with 1997.

Capital expenditures for the year ended December 31, 1997 were $1,650
million, a decrease of $356 million, or 17.7%, compared with 1996. Decreased
capital expenditures in the 850 megahertz markets were partially offset by
spending for the build out of the 1900 megahertz markets. Capital spending for
the 850 megahertz markets, including spending associated with administrative
functions, declined to $701 million in 1997 from $1,071 million in 1996, a
reduction of 34.5%. Conversely, 1900 megahertz market network spending increased
to $812 million in 1997 from $632 million in 1996, an increase of 28.5%.

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
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 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

44
<PAGE> 50

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 $22,856 million as of September 30, 1999, an increase of
$3,396 million, or 17.5%, compared with December 31, 1998, due primarily to
increases in goodwill, licensing costs and property, plant and equipment
associated with our acquisitions of Vanguard, Honolulu Cellular and Bakersfield
Cellular. In addition, higher nonconsolidated investments primarily as a result
of our investment in Rogers Cantel and increased accounts receivable associated
with higher revenues also contributed to the increase in total assets.

Total liabilities were $8,961 million as of September 30, 1999, an increase
of $1,138 million, or 14.5%, compared with December 31, 1998, primarily as a
result of debt due to the AT&T Common Stock Group, increases in operating
accruals and higher deferred income taxes.

Total preferred stock held by AT&T was $1.0 billion at both September 30,
1999, and December 31, 1998. Dividends payable on the preferred stock was paid
at 9% per annum.

Total shareowner's equity was $13,818 million as of September 30, 1999, an
increase of $2,286 million, or 19.8%, compared with December 31, 1998, due
primarily to increased transfers from the AT&T Common Stock Group.

Total assets were $19,460 million as of December 31, 1998, an increase of
$420 million, or 2.2%, compared with December 31, 1997, due primarily to
increased investments in nonconsolidated investments and increased accounts
receivable due to growth in revenues. These increases were partially offset by
declines in licensing costs due to the contribution of certain licenses as part
of the investments in nonconsolidated subsidiaries, the disposition of certain
licenses and the amortization for the period.

Total liabilities were $7,823 million as of December 31, 1998, an increase
of $135 million, or 1.8%, compared with December 31, 1997, primarily as a result
of an increase in accounts payable.

Total shareowner's equity was $11,532 million as of December 31, 1998, an
increase of $345 million, or 3.1%, compared with December 31, 1997, due
primarily to transfers from AT&T that represents the net balance of intercompany
transactions between the AT&T Wireless Group and AT&T in 1997.

RECENT ACCOUNTING PRONOUNCEMENT

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
statement of financial position 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.

45
<PAGE> 51

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. The issue the Y2K program addressed was the use of a two-digit year
field instead of a four-digit year field in computer systems. If computer
systems cannot distinguish between the year 1900 and the year 2000, system
failures or other computer errors could result. To date, the AT&T Wireless Group
is not aware of the occurrence of any significant Y2K problems being reported.

As of September 30, 1999, AT&T expended approximately $675 million since
inception in 1997 on all phases of the Y2K project, of which approximately $61
million represented the AT&T Wireless Group's portion of those costs. This
figure includes about $76 million of costs for all of AT&T incurred during the
third quarter of 1999, of which about $5 million pertain to the AT&T Wireless
Group. Of the total AT&T third-quarter costs, approximately $11 million
represented capital spending for upgrading and replacing non-compliant computer
systems and network components. Less than half of the total AT&T 1999 costs
incurred to date represent information technology resources that have been
redeployed from other projects and are expected to return to those projects upon
completion of the Y2K project. AT&T anticipates remaining Y2K costs for 1999,
inclusive of approximately $3 million projected expenditures for the AT&T
Wireless Group, will be approximately $64 million. This projection includes
approximately $21 million of capitalized costs for all of AT&T, of which less
than $1 million pertain to the AT&T Wireless Group. The remaining projected
expenditures primarily will consist of continued independent verification and
validation, contingency planning testing, assurance of "clean management"
disciplines, completion of document retention requirements, and continued
communications expansion and enhancement.

SUBSEQUENT EVENTS

On October 6, 1999, AT&T and Dobson announced the signing of a definitive
agreement to acquire American Cellular through a newly created joint venture for
$2.32 billion. This joint venture interest will be included in the AT&T Wireless
Group. 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. The acquisition will be funded with non-recourse bank debt
by the joint venture and cash equity contributions of up to approximately $370
million from each of the two partners. The boards of AT&T, Dobson and American
Cellular have approved the transaction. The acquisition, which is expected to
close in the first quarter of 2000, is subject to federal regulatory approval
and certain other conditions.

On October 1, 1999, CMT Partners distributed certain assets including its
ownership interest in Kansas City, Missouri and Dallas, Texas to its partners.
Through this distribution, the AT&T Wireless Group received ownership of the
Dallas, Texas market and Vodafone Airtouch obtained ownership of the Kansas
City, Missouri market. The AT&T Wireless Group is now the sole owner of the
market in Dallas, Texas. The AT&T Wireless Group continues to hold a 50% equity
and voting interest in the remaining assets of CMT Partners.

The AT&T Wireless Group also acquired other cellular markets in California,
Idaho and Louisiana. These acquisitions were accounted for under the purchase
method. The pro forma operating results of these acquisitions are not material
to the overall operating results of the AT&T Wireless Group.

Subsequent to September 1999, the AT&T Wireless Group purchased minority
interests in several of their markets that they did not wholly own. These
purchases totaled $61 million.

46
<PAGE> 52

The AT&T Wireless Group has a signed agreement to sell one of its equity
investments for an expected gain of approximately $40 million. This transaction
is expected to close in the first quarter of 2000.

Asset impairment charges of $531 million were recorded primarily resulting
from the planned disposal of wireless network equipment in conjunction with a
program to increase the capacity and operating efficiency of the wireless
network. As part of this multi-vendor wireless program recently announced by the
AT&T Wireless Group contracts are being executed with certain vendors to replace
significant portions of the wireless infrastructure equipment in the Western
United States and New York markets. The program will provide the AT&T Wireless
Group with the newest technology available and allow it to seamlessly evolve to
new third generation digital technology, which will provide high-speed data and
global roaming capabilities. We anticipate the migration to be significantly
completed by the end of 2000.

The planned disposals of the existing assets and imminent move to the next
generation technology are events that require 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." As a result, a non-cash
charge of $531 million ($328 million after tax) will be taken in the fourth
quarter of 1999 to write these assets down to their estimated fair market value.
Since there is no readily available fair market value, discounted net cash flows
were used to determine fair market value. As the assets will remain in service
for some time prior to actual disposition, the AT&T Wireless Group will
accelerate the recognition of depreciation expense on these assets over their
shortened remaining service life.

47
<PAGE> 53

DESCRIPTION OF BUSINESS

OVERVIEW

48
<PAGE> 54

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
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.

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,

49
<PAGE> 55

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 10.5 million in 1998 at the same time as
penetration grew from 6.2% to 25.3%, 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

50
<PAGE> 56

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.

51
<PAGE> 57

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
entered into agreements to acquire additional portions of the radio spectrum in
the 2.3 gigahertz range.

The 850 megahertz wireless markets originally used analog based systems,
although digital technology has been introduced in most markets. As of September
30, 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
September 30, 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.

52
<PAGE> 58

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 175 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 entered into agreements 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

53
<PAGE> 59

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 September 30, 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, 1996, 1997 and
1998, capital expenditures for build out of owned and operated 1900 megahertz
licenses totaled $632 million, $812 million and $384 million, respectively. In
addition, during those periods, capital expenditures to increase capacity,
improve quality and upgrade to digital in 850 megahertz markets totaled $1,070
million, $701 million and $645 million, respectively. The AT&T Wireless Group
expects that 1999 capital expenditures will total $2.3 billion. As of September
30, 1999, the AT&T Wireless Group had upgraded 98% of its 850 megahertz markets
to digital based systems. As of September 30, 1999, TDMA systems covering 48% 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 September 1999. 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.

54
<PAGE> 60

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, 1900 3.1 19.9%
Wireless, LLC Wireless, LLC Ohio
Telecorp PCS, Inc. Telecorp PCS, Inc. Markets in Puerto Rico 1900 16.5 17.6%
and 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 21.4%
Kentucky, Tennessee,
Alabama and Georgia,
including Jackson,
Vicksburg, Nashville,
Knoxville, Clarksville,
Chattanooga, Dalton,
Huntsville, Mobile,
Montgomery, Birmingham,
Louisville and Lexington
</TABLE>

55
<PAGE> 61

- ------------------------
* As of October 1, 1999.
** Under contract to be formed in 2000.

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.

56
<PAGE> 62

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 1.4 million per month as of October 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 September 30, 1999, more than 1.6 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

57
<PAGE> 63

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 though 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

58
<PAGE> 64

attractive and unique bundled offers of wireless with long distance, local
telephony, broadband and Internet services designed for targeted markets.

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

59
<PAGE> 65

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.

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 markets for deployment in the
third quarter of 2000 and, depending upon market acceptance, may spend as

60
<PAGE> 66

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.

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

61
<PAGE> 67

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.

- 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

62
<PAGE> 68

"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 expects to introduce AT&T PocketNet service for businesses.
This service will allow 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 and
Microsoft Corporation. These applications open up the 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

63
<PAGE> 69

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.

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 7,000 customer care
representatives located in 12 call centers and contracts for outsourced customer
care service with 1,500 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.

64
<PAGE> 70

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 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.

65
<PAGE> 71

International

The AT&T Wireless Group's most significant international interest is the
33.3% equity stake in Rogers Cantel it holds jointly with British
Telecommunications. The AT&T Wireless Group 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.

The AT&T Wireless Group is the operating partner in wireless ventures in
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>
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 September 30, 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. As of August 31, 1999, ACD's North American
installed customer base represented 1,481 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 338 commercial
aircraft. Through its general aviation segment, ACD provides digital telephone
service to operators of private aircraft. ACD currently has its system installed
on 373 general aviation aircraft.

ACD's North American Terrestrial System network of 151 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

66
<PAGE> 72

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 September 30, 1999, the AT&T Wireless Group's built
network, including partnership and affiliate markets, covered 64% 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 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. At the present
time, over 73% 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.

67
<PAGE> 73

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
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.

68
<PAGE> 74

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, also known as GSM++, 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, NTT Mobile
Communications Network, Inc. and Rogers Cantel Mobile Communications 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 without modification.
With EDGE, these applications are expected to operate at higher speeds and in
more places. In addition, all of the backbone network in place for CDPD today
will be reused in the future EDGE network, furthering the economic advantages of
this approach.

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
first half of 2000.

69
<PAGE> 75

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 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.

70
<PAGE> 76

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 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 September 30, 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.

71
<PAGE> 77

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 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

72
<PAGE> 78

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.

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

73
<PAGE> 79

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 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

74
<PAGE> 80

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

75
<PAGE> 81

universal service order was modified on appeal in the U.S. Court of Appeals for
the Fifth Circuit. 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

76
<PAGE> 82

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.

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

77
<PAGE> 83

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.

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 do 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.

78
<PAGE> 84

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.

79
<PAGE> 85

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 & Chief Executive Officer
Daniel R. Hesse 46 Executive Vice President
Michael G. Keith 51 Executive Vice President
Mohan Gyani 48 Executive Vice President and Chief Financial Officer
</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.

Dan Hesse was named Executive Vice President of the AT&T Wireless Group in
1999. Since 1997, Mr. Hesse has been President and Chief Executive Officer of
AT&T Wireless Services, the mobility unit. Prior to that, Mr. Hesse served as
Vice President and General Manager for the AT&T Online Services Group. Between
1991 and 1995, Mr. Hesse was President and Chief Executive Officer of AT&T
Network Systems International, managing all AT&T Network Systems activities (now
known as Lucent Technologies) in Europe, the Middle East and Africa.

Michael G. Keith was named Executive Vice President 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.

Mohan Gyani was named Executive Vice President and Chief Financial Officer
of the AT&T Wireless Group 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.

80
<PAGE> 86

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 111. 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 8.85
billion shares of capital stock, consisting of 100 million shares of AT&T
preferred stock and 8.75 billion shares of common stock, of which 6 billion are
shares of AT&T common stock, 2.5 billion are shares of Class A Liberty Media
Group tracking stock and 250 million are shares of Class B Liberty Media Group
tracking stock. As of January 21, 2000, 3,195,043,656 shares of AT&T common
stock, no shares of AT&T preferred stock, 1,185,189,035 shares of Class A
Liberty Media Group tracking stock and 103,117,226 shares of Class B Liberty
Media Group tracking stock were issued and outstanding.

We will hold a special meeting of shareholders on March 14, 2000 to amend
our charter to authorize six billion common shares of AT&T Wireless Group
tracking stock.

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 in 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

81
<PAGE> 87

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

82
<PAGE> 88

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 unaudited

83
<PAGE> 89

combined financial statements of the AT&T Wireless Group, dated September 30,
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,

84
<PAGE> 90

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

- 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

85
<PAGE> 91

tracking stock, including any distribution of AT&T Wireless Group tracking stock
to holders of AT&T common stock.

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.

86
<PAGE> 92

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 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.

87
<PAGE> 93

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.

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

88
<PAGE> 94

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 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

89
<PAGE> 95

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 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

90
<PAGE> 96

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, 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

91
<PAGE> 97

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.

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.

92
<PAGE> 98

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 111. 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

93
<PAGE> 99

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. 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.

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

94
<PAGE> 100

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.

95
<PAGE> 101

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.

96
<PAGE> 102

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

97
<PAGE> 103

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

98
<PAGE> 104

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 $3.0 billion of
AT&T Wireless Group indebtedness, 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 $3.0 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, each with an issue price equal
to its face amount, for federal, state and local income tax purposes.

99
<PAGE> 105

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.

100
<PAGE> 106

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.

101
<PAGE> 107

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

102
<PAGE> 108

satisfy certification requirements in order to claim a reduced rate of
withholding under an applicable income tax treaty.

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

103
<PAGE> 109

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.

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

104
<PAGE> 110

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.

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.

105
<PAGE> 111

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>

--------
Total..................................................
========
</TABLE>

The representatives of the U.S. underwriters are __________________.
_______________________________________________. 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.

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
__________________________________________________________________________

___________________________________________________________. 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 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
additional shares at the public offering

106
<PAGE> 112

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 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 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 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
under the symbol " ."

In connection with this offering, AT&T Corp. has agreed that, without the
prior written consent of on behalf of the underwriters, it will not,
during the period ending 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 may not apply in some
circumstances.

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

107
<PAGE> 113

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 $ .

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.

108
<PAGE> 114

ALTERNATE "UNDERWRITING" SECTION FOR INTERNATIONAL PROSPECTUS

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>

--------
Total..................................................
========
</TABLE>

The representatives of the International underwriters are _____________
___________________________________________. 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 ____________________________________________________________
_____________________________________________________________. We refer to the
International underwriters and the U.S. underwriters as the underwriters.

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
additional shares at the public

106
<PAGE> 115
ALTERNATE "UNDERWRITING" SECTION FOR INTERNATIONAL PROSPECTUS

offering price set forth on the cover page of this prospectus, less underwriting
discounts and 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 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 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.

We intend to list the AT&T Wireless Group tracking stock on the
under the symbol " ."

The restrictions described in the preceding list may not apply in some
circumstances.

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

107
<PAGE> 116
ALTERNATE "UNDERWRITING" SECTION FOR INTERNATIONAL PROSPECTUS

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 $ .

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.

108
<PAGE> 117

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,

109
<PAGE> 118

- 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 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 1998 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/A, filed on July 12, 1999, for the year ended December 31, 1998, 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, 1998 and 1997 and for each of the three years in the period ended December
31, 1998 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 consolidated balance sheets of TCI and subsidiaries as of December 31,
1998 and 1997, and the related consolidated statements of operations and
comprehensive earnings, stockholders' equity, and cash flows for each of the
years in the three-year period ended December 31, 1998, which appear in the
Current Report on Form 8-K, dated March 22, 1999, of AT&T, have been
incorporated by reference herein in reliance upon the report, dated March 9,
1999, 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 combined balance sheets of Liberty/Ventures Group as of December 31,
1998 and 1997, and the related combined statements of operations and
comprehensive earnings, equity, and cash flows for each of the years in the
three-year period ended December 31, 1998, which appear in the Current Report on
Form 8-K, dated March 22, 1999, of AT&T have been incorporated by reference
herein in reliance upon the report, dated March 9, 1999, of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
110
<PAGE> 119

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, 1998, have been audited by Arthur Andersen 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 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/A......... Year ended December 31, 1998 (as amended on March 23, 1999
and July 12, 1999)
Quarterly Reports on Form 10-Q....... Quarters ended March 31, 1999, June 30, 1999 and September
30, 1999
Current Reports on
Form 8-K........................... Filed on January 8, 1999 (as an amendment to a report
dated October 16, 1998), January 8, 1999, January 27,
1999, March 9, 1999, March 10, 1999, March 22, 1999, May
3, 1999, May 7, 1999, September 2, 1999, October 29, 1999,
November 22, 1999, December 6, 1999 and January 6, 2000
Proxy Statements..................... Dated March 25, 1999 and January 26, 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

111
<PAGE> 120

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

112
<PAGE> 121

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 Income for the years ended December
31, 1998, 1997 and 1996................................ F-3
Combined Balance Sheets as of December 31, 1998 and
1997................................................... F-4
Combined Statements of Changes in Shareowner's Equity for
the years ended December 31, 1998, 1997 and 1996....... F-5
Combined Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996....................... F-6
Notes to Combined Financial Statements.................... F-7
Unaudited Combined Statements of Income for the three and
nine months ended September 30, 1999 and 1998.......... F-25
Unaudited Combined Balance Sheets as of September 30, 1999
and December 31, 1998.................................. F-26
Unaudited Combined Statements of Changes in Shareowner's
Equity for the nine months ended September 30, 1999 and
1998................................................... F-27
Unaudited Combined Statements of Cash Flows for the nine
months ended September 30, 1999 and 1998............... F-28
Notes to Unaudited Combined Financial Statements.......... F-29

PRO FORMA FINANCIAL STATEMENTS
AT&T WIRELESS GROUP
Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-34
Unaudited Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1998................... F-35
Unaudited Pro Forma Condensed Combined Statement of Income
for the nine months ended September 30, 1999........... F-36
Unaudited Pro Forma Condensed Combined Balance Sheet as of
September 30, 1999..................................... F-37
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-38
AT&T COMMON STOCK GROUP
Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-39
Unaudited Pro Forma Condensed Combined Statement of Income
for the year ended December 31, 1998................... F-40
Unaudited Pro Forma Condensed Combined Statement of Income
for the nine months ended September 30, 1999........... F-41
Unaudited Pro Forma Condensed Combined Balance Sheet as of
September 30, 1999..................................... F-42
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements............................................. F-44
</TABLE>

F-1
<PAGE> 122

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 income 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, 1998 and 1997, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1998, 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

January 6, 2000

F-2
<PAGE> 123

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------------
1998 1997 1996
------ ------ ------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
REVENUES
Services revenues........................................... $4,779 $4,249 $3,887
Equipment revenues.......................................... 627 419 359
Total revenues.............................................. 5,406 4,668 4,246
OPERATING EXPENSES
Network and other costs of services......................... 2,428 1,770 1,629
Depreciation and amortization............................... 1,079 826 660
Selling, general and administrative......................... 2,122 1,982 1,723
Asset impairment and restructuring charges.................. 120 160 --
Total operating expenses.................................... 5,749 4,738 4,012
OPERATING (LOSS) INCOME..................................... (343) (70) 234
Other income, net........................................... 764 288 346
Interest expense............................................ 120 -- --
Income before income taxes.................................. 301 218 580
Provision for income taxes.................................. 137 93 263
NET INCOME.................................................. 164 125 317
Dividend requirements on preferred stock held by AT&T,
net....................................................... 56 56 56
NET INCOME ATTRIBUTABLE TO AT&T'S RESIDUAL INTEREST......... $ 108 $ 69 $ 261
</TABLE>

The notes are an integral part of these combined financial statements.
F-3
<PAGE> 124

AT&T WIRELESS GROUP

COMBINED BALANCE SHEETS

<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1998 1997
-------- --------
DOLLARS IN MILLIONS
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 27 $ 6
Accounts receivable, less allowances of $74 and $74......... 885 638
Inventories................................................. 206 189
Deferred income taxes....................................... 91 107
Prepaid expenses and other current assets................... 29 36
TOTAL CURRENT ASSETS........................................ 1,238 976
Property, plant and equipment, net.......................... 5,182 5,073
Licensing costs, net of accumulated amortization of $1,290
and $1,083................................................ 7,928 8,403
Investments................................................. 3,795 3,233
Goodwill, net and other assets.............................. 1,317 1,355
TOTAL ASSETS................................................ $19,460 $19,040
LIABILITIES
Accounts payable............................................ $ 628 $ 476
Payroll and benefit-related liabilities..................... 202 242
Debt maturing within one year............................... 89 47
Other current liabilities................................... 707 717
TOTAL CURRENT LIABILITIES................................... 1,626 1,482
Long-term debt due to AT&T.................................. 2,500 2,400
Deferred income taxes....................................... 3,662 3,771
Other long-term liabilities................................. 35 35
TOTAL LIABILITIES........................................... 7,823 7,688
MINORITY INTEREST........................................... 105 165
SHAREOWNER'S EQUITY
Preferred stock held by AT&T................................ 1,000 1,000
AT&T's residual interest.................................... 10,535 10,139
Accumulated other comprehensive income...................... (3) 48
TOTAL SHAREOWNER'S EQUITY................................... 11,532 11,187
TOTAL LIABILITIES AND SHAREOWNER'S EQUITY................... $19,460 $19,040
</TABLE>

The notes are an integral part of these combined financial statements.
F-4
<PAGE> 125

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CHANGES IN SHAREOWNER'S EQUITY

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
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............................ 10,139 9,433 8,697
Net income attributable to AT&T's residual interest..... 108 69 261
Transfers from parent, net.............................. 288 637 475
------- ------- -------
Balance at end of year.................................... 10,535 10,139 9,433
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of year............................ 48 64 70
Other comprehensive income (net of taxes of $31, $10,
$4).................................................. (51) (16) (6)
------- ------- -------
Balance at end of year.................................... (3) 48 64
------- ------- -------
TOTAL SHAREOWNER'S EQUITY................................. $11,532 $11,187 $10,497
======= ======= =======
SUMMARY OF TOTAL COMPREHENSIVE INCOME:
Net income attributable to AT&T's residual interest..... $ 108 $ 69 $ 261
Dividend requirements on preferred stock held by AT&T,
net.................................................. 56 56 56
------- ------- -------
Net income.............................................. 164 125 317
Other comprehensive income.............................. (51) (16) (6)
------- ------- -------
TOTAL COMPREHENSIVE INCOME................................ $ 113 $ 109 $ 311
======= ======= =======
</TABLE>

The notes are an integral part of these combined financial statements.
F-5
<PAGE> 126

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
1998 1997 1996
-------- -------- --------
DOLLARS IN MILLIONS
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................................ $ 164 $ 125 $ 317
Adjustments to reconcile net income to net cash provided
by operating activities:
Gains on sale/exchange of wireless investments.......... (600) (57) (159)
Asset impairment and restructuring charges.............. 120 80 --
Depreciation and amortization........................... 1,079 826 660
Undistributed equity earnings........................... (114) (222) (205)
Minority interest in consolidated subsidiaries.......... (35) 11 18
Provision for uncollectibles............................ 99 116 106
Increase in accounts receivable......................... (307) (90) (163)
Increase in accounts payable............................ 174 152 97
Net (increase) decrease in other operating assets and
liabilities.......................................... (143) 82 62
Other adjustments, net.................................. (23) 315 450
NET CASH PROVIDED BY OPERATING ACTIVITIES................. 414 1,338 1,183
INVESTING ACTIVITIES
Capital expenditures...................................... (1,219) (1,931) (1,832)
Acquisitions of licenses.................................. (65) (443) (327)
Equity investment distributions and sales................. 1,354 294 176
Equity investment contributions and purchases............. (156) (84) (32)
Net dispositions of businesses............................ 324 -- 156
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES....... 238 (2,164) (1,859)
FINANCING ACTIVITIES
Increase (decrease) in short-term borrowings.............. 43 -- (4)
Increase in long-term debt due to AT&T.................... 100 200 200
Dividend requirements on preferred stock, net............. (56) (56) (56)
Transfers (to) from parent, net........................... (694) 611 476
Other financing activities, net........................... (24) (13) 94
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES....... (631) 742 710
Net increase (decrease) in cash and cash equivalents...... 21 (84) 34
Cash and cash equivalents at beginning of year............ 6 90 56
Cash and cash equivalents at end of year.................. $ 27 $ 6 $ 90
</TABLE>

The notes are an integral part of these combined financial statements.
F-6
<PAGE> 127

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. 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 financial position, results of operations 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 have been 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 $2,500, $2,400 and $2,200 in intercompany indebtedness at December
31, 1998, 1997 and 1996, respectively, paying annual interest at 7.75%. 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 non-affiliate 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 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

F-7
<PAGE> 128
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

anticipated to be converted into $2 billion of 9% cumulative preferred stock.
Interest expense presented is net of $75, $178 and $163 amounts capitalized for
the years ended December 31, 1998, 1997 and 1996, 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 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.

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.

F-8
<PAGE> 129
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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 is an annual
increase in depreciation expense of approximately $42 and an annual reduction in
net income of approximately $26.

The AT&T Wireless Group capitalizes costs associated with software
development in accordance with Statement of Financial Accounting Standards
(SFAS) No. 86, "Accounting for Costs of Capitalized Software to be Sold, Leased
or Otherwise Marketed" and related guidance. In accordance with this standard,
the AT&T Wireless Group 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.

In 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use." Among other provisions, the SOP
requires that entities capitalize certain internal-use software costs once
certain criteria are met. The SOP is effective for financial statements for
fiscal years beginning after December 15, 1998, though early adoption is
encouraged. The AT&T Wireless Group elected to early adopt this SOP in 1998. The
annual impact of this adoption 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.

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 ranging from 35 to 40 years.

CAPITALIZED INTEREST

The AT&T Wireless Group capitalizes interest which is applicable to the
construction of significant additions to property, plant, and equipment and with
the acquisitions of licenses until the assets are placed into service. These
costs are amortized over the related assets' estimated useful lives.

F-9
<PAGE> 130
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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
cost and are adjusted for the AT&T Wireless Group's share of earnings or losses,
contributions and distributions. The excess of the investment over the
underlying book value of the investees' net assets is being amortized over
periods ranging from 35 to 40 years.

Investments covered under the scope of SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," are classified as "available
for sale" and are carried at fair value with any unrealized gain or loss, net of
tax, being included as a component of 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 $344, $305 and $288 in 1998, 1997 and 1996,
respectively.

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 for income taxes is based upon its
contribution to the overall income tax liability or benefit of AT&T and its
affiliates.

F-10
<PAGE> 131
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

GAINS ON SALES OF STOCK OF SUBSIDIARIES

The AT&T Wireless Group accounts for gains on the sales of the common stock
by its nonconsolidated subsidiaries as equity transactions.

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 two major suppliers. Additionally, two primary
vendors provide the multi-network handsets. Further, the AT&T Wireless Group
relies primarily 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 PRONOUNCEMENT

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 statement of financial position 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.

3. ACQUISITIONS AND DIVESTITURES

During 1998, 1997 and 1996, 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
$600, $57 and $159 in 1998, 1997 and 1996, respectively. The pretax

F-11
<PAGE> 132
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

gains and losses from the sale and exchange transactions are included in other
income, net in the accompanying combined statements of income. A summary of the
significant transactions follows:

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 and
recognized 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 a portion 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, Inc. The AT&T Wireless Group
subsequently contributed its investment in the preferred stock of Metrocall to
AT&T. A pretax loss of $5 was recognized on this transaction.

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.

During 1996, the AT&T Wireless Group closed transactions with SBC
Communications, Inc related to the sale and exchanges of several wireless
properties. The AT&T Wireless Group sold its interest in Little Rock Cellular
for cash. In addition, the AT&T Wireless Group exchanged assets, including
licenses in several of their cellular markets, in exchange for cash and two 1900
megahertz PCS licenses. The above transactions resulted in a pretax gain of
$131.

Also during 1996, the AT&T Wireless Group sold for cash its equity
investment in Movitel Del Noroeste, S.A. and recognized a pretax gain of $28.

4. ASSET IMPAIRMENT AND RESTRUCTURING CHARGES

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 non-strategic 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-12
<PAGE> 133
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,
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
INCLUDED IN DEPRECIATION AND AMORTIZATION
Amortization of licensing costs............................. $210 $184 $170
Amortization of goodwill.................................... 33 33 33
OTHER INCOME
Interest income............................................. $ 15 $ 9 $ 9
Minority interests in consolidated subsidiaries............. 35 (11) (18)
Net equity earnings from investments........................ 114 222 205
Sale/exchange of wireless investments....................... 600 57 159
Miscellaneous, net.......................................... -- 11 (9)
Total other income -- net................................... $764 $288 $346
</TABLE>

SUPPLEMENTARY BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------
1998 1997
------- -------
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT
Wireless communications systems and other equipment......... $ 7,658 $ 6,912
Land, buildings and improvements............................ 222 203
Total property, plant and equipment......................... 7,880 7,115
Accumulated depreciation.................................... (2,698) (2,042)
Property, plant and equipment, net.......................... $ 5,182 $ 5,073
GOODWILL AND OTHER ASSETS
Goodwill.................................................... $ 1,312 $ 1,320
Accumulated amortization.................................... (118) (88)
Goodwill, net............................................... $ 1,194 $ 1,232
Other assets................................................ 123 123
Goodwill, net and other assets.............................. $ 1,317 $ 1,355
INCLUDED IN OTHER CURRENT LIABILITIES
Advertising and promotion accruals.......................... $ 94 $ 100
Business taxes accrued...................................... 127 88
</TABLE>

SUPPLEMENTARY CASH FLOW INFORMATION

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
----------------------
1998 1997 1996
---- ----- -----
<S> <C> <C> <C>
Interest payments, net of amounts capitalized............... $120 $ -- $ --
Income tax payments (refunds)............................... 177 (161) (137)
</TABLE>

F-13
<PAGE> 134
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, 1998 and 1997, the AT&T Wireless Group had equity method
investments of $3,766 and $3,128, respectively. Amortization of excess carrying
value of $52, $66 and $62 in 1998, 1997 and 1996, respectively, is reflected as
a component of other income, net in the accompanying combined statements of
income. At December 31, 1998 and 1997, the carrying value of investments
accounted for under the equity method exceeded our share of the underlying
reported net assets by approximately $511 and $2,041, respectively.

Ownership of significant equity investments is as follows:

<TABLE>
<CAPTION>
AT DECEMBER 31,
----------------------
1998 1997
--------- ---------
<S> <C> <C>
AB Cellular............................................. 55.62%(1) N/A
CMT Partners............................................ 50.00%(2) 50.00%(2)
Triton PCS Holdings, Inc................................ 18.66%(3) N/A
Telecorp PCS, Inc....................................... 17.28%(4) N/A
Cincinnati Bell Wireless, LLC........................... 19.90%(5) N/A
Houston Cellular Telephone Company...................... N/A 56.25%(1)
Los Angeles Cellular Telephone Company.................. N/A 39.90%(1)
</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 the new company, however, is 50% and
therefore this investment is accounted for under the equity method. Voting
interest in both Houston Cellular and LA Cellular was 50% at December 31,
1997.

(2) Ownership percentages reflect voting and equity interests in a partnership
which owns and operates several licenses in Northern California, including
San Francisco/San Jose, and Kansas City, Missouri, and also owns a minority
interest in Dallas, Texas. See Note 13 regarding subsequent transactions
associated with 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

F-14
<PAGE> 135
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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 ownership of
common stock, assuming conversion of all currently convertible preferred
shares to common. In addition, the AT&T Wireless Group holds redeemable
preferred shares in these investments, which are not currently convertible
to common. The 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 U.S. 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. See Note 13 regarding
subsequent transactions associated with Telecorp. Ownership percentage
reflects the AT&T Wireless Group ownership of common stock, assuming
conversion of all currently convertible preferred shares to common. In
addition, the AT&T Wireless Group holds redeemable preferred shares in these
investments, which are not currently convertible to common. The preferred
shares have certain liquidation preference rights.

(5) 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 a portion 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.

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,
--------------------------
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Revenues.................................................... $1,717 $1,712 $1,647
Operating income............................................ 477 560 546
Net income.................................................. 464 571 560
</TABLE>

F-15
<PAGE> 136
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

CONDENSED BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
AS OF
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Current assets.............................................. $1,782 $ 342
Noncurrent assets........................................... 4,990 1,311
Current liabilities......................................... 562 293
Noncurrent liabilities...................................... 811 18
Net equity.................................................. 5,399 1,342
</TABLE>

Current assets are comprised primarily of cash and accounts receivable.
Noncurrent assets are comprised 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-16
<PAGE> 137
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,
------------------------
1998 1997 1996
----- ----- ------
<S> <C> <C> <C>
U.S. federal statutory income tax rate...................... 35% 35% 35%
Federal income tax at statutory rate........................ $ 105 $ 76 $ 203
State and local income taxes, net of federal income tax
effect.................................................... 12 9 20
Dividends received deduction................................ (2) (6) (8)
Amortization of intangibles................................. 12 14 15
Unutilized foreign equity losses............................ 34 10 13
Change in valuation allowance and other estimates........... (17) (13) 25
Other differences -- net.................................... (7) 3 (5)
Provision for income taxes.................................. $ 137 $ 93 $ 263
Effective income tax rate................................... 45.5% 42.7% 45.3%
PROVISION FOR INCOME TAXES
CURRENT
Federal..................................................... $ 152 $(149) $ (143)
State and local............................................. 25 (12) 6
$ 177 $(161) $ (137)
DEFERRED
Federal..................................................... $ (39) $ 229 $ 369
State and local............................................. (1) 25 31
$ (40) $ 254 $ 400
Provision for income taxes.................................. $ 137 $ 93 $ 263
</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-17
<PAGE> 138
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,
------------------
1998 1997
------- -------
<S> <C> <C>
LONG-TERM DEFERRED INCOME TAX LIABILITIES
Property, plant and equipment and licenses................ $(2,817) $(2,662)
Investments............................................... (731) (901)
Other..................................................... (174) (267)
Total long-term deferred income tax liabilities............. $(3,722) $(3,830)
LONG-TERM DEFERRED INCOME TAX ASSETS
Net operating loss/credit carryforwards................... $ 75 $ 69
Valuation allowance....................................... (15) (10)
Total net long-term deferred income tax assets.............. $ 60 $ 59
Net long-term deferred income tax liabilities............... $(3,662) $(3,771)
CURRENT DEFERRED INCOME TAX LIABILITIES
Total current deferred income tax liabilities............... $ -- $ --
CURRENT DEFERRED INCOME TAX ASSETS
Employee benefits......................................... 10 11
Reserves and allowances................................... 77 90
Other..................................................... 4 6
Total current deferred income tax assets.................. $ 91 $ 107
Current deferred income tax assets.......................... $ 91 $ 107
</TABLE>

At December 31, 1998, the AT&T Wireless Group had net operating loss
carryforwards for federal and state income tax purposes of $34 and $614,
respectively, expiring through 2018. AT&T Wireless 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 $31 in 1998, $32 in 1997 and $23 in 1996.

9. STOCK-BASED COMPENSATION PLANS

Under the AT&T 1997 Long-Term Incentive Program, which was effective June
1, 1997, AT&T grants stock options, performance shares, restricted stock and
other awards. There are 150 million

F-18
<PAGE> 139
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

shares of common stock available for grant with a maximum of 22.5 million common
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 ten years
from the date of grant. Under the AT&T 1987 Long-Term Incentive Program, which
expired in April 1997, AT&T granted the same awards, and on January 1 of each
year 0.6% of the outstanding shares of AT&T's common stock became available for
grant.

Under the AT&T 1997 Long-Term Incentive 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 as measured
against a peer group of industry competitors. Under the AT&T 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 535 thousand shares to the AT&T Wireless Group
employees in 1998, approximately 600 thousand shares in 1997 and approximately
300 thousand in 1996.

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 its
stock-based compensation plans other than for our performance-based and
restricted stock awards, SARs, and prior to July 1, 1996, for the stock purchase
plan for former McCaw Cellular Communications, Inc. employees. Compensation
costs charged against the AT&T Wireless Group's net income were not material in
1998, 1997 or 1996.

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
1998, 1997 and 1996, consistent with the provisions of SFAS No. 123, the AT&T
Wireless Group's net income would have been adjusted to reflect additional
compensation expense to the following pro forma amounts:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
--------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net income....................................... $127 $107 $303
</TABLE>

Effective on the dates of spin-off of Lucent Technologies Inc. and NCR
Corp., AT&T stock options held by Lucent and NCR employees were canceled. For
the holders of unexercised AT&T stock options, the number of options were
adjusted and all exercise prices were decreased

F-19
<PAGE> 140
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

immediately following each spin-off date to preserve the economic values of the
options that existed prior to those dates.

The pro forma effect on net income for 1998, 1997 and 1996 may not be
representative of the pro forma effect on net 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 1998, 1997 and 1996 were $41.86, $27.31 and $31.17, respectively.

The weighted-average fair values at date of grant for options granted to
AT&T Wireless Group employees during 1998, 1997 and 1996 were $9.80, $6.37 and
$9.17, respectively, and were estimated using the Black-Scholes option-pricing
model. The weighted average risk-free interest rates applied for 1998, 1997 and
1996 were 5.27%, 6.14% and 5.35%, respectively. The following assumptions were
applied for 1998, 1997, and periods subsequent to the Lucent spin-off through
December 31, 1996, respectively: (i) expected dividend yields of 2.1%, 2.2% and
2.8% (ii) expected volatility rates of 23.8%, 21.8% and 21.0%, and (iii)
expected lives of 4.5 years.

10. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents, accounts receivable and
accounts payable 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, 1998. 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 2032. Rental expense under
operating leases was $181 in 1998, $149 in 1997 and $103 in 1996. The following
table shows the future minimum lease payments due under noncancelable operating
leases at December 31, 1998.

<TABLE>
<CAPTION>
1999 2000 2001 2002 2003 LATER YEARS
---- ---- ---- ---- ---- -----------
<S> <C> <C> <C> <C> <C>
$135 $122 $104 $81 $63 $471
</TABLE>

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.

F-20
<PAGE> 141
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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. See Note
13 for subsequent transactions regarding commitments.

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 9% cumulative preferred stock held by AT&T and
intercompany debt due to AT&T. Preferred stock was reflected at $1 billion and
the dividend requirements were $56 for each of the years ended December 31,
1998, 1997 and 1996, 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 $2,500, and $2,400 at
December 31, 1998 and 1997. Intercompany interest was $190, $178 and $163, in
1998, 1997, and 1996, respectively, of which $75, $178, and $163, 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,
1998, 1997 and 1996, these amounts totaled $65, $58 and $67 respectively, and
are reflected within network and other costs of services expenses in the
accompanying combined statements of income.

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 $42, $47 and $41 for the years
ended December 31, 1998, 1997 and 1996, respectively which are included within
selling, general and administrative expenses in the accompanying combined
statements of income.

Also included in selling, general and administrative expenses are charges
received from AT&T related to our 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 $65, $36
and $12 for the years ended December 31, 1998, 1997 and 1996, 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 $50, $33, and $41 as of December 31, 1998, 1997 and 1996,
respectively. Accounts payable in the accompanying combined balance sheets
include $12 and $28, as of December 31, 1998 and 1997, 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
includes $59 and $11, as of December 31, 1998 and 1997, respectively, associated
with receivables from AT&T for these bundled customers. Selling, general and
administrative expenses include $39 and $6, for the years ended December 31,
1998 and 1997, respectively, for the billing and collection fees charged by
AT&T. Additionally, selling, general and administrative expenses include
reimbursement to the AT&T Wireless Group from AT&T

F-21
<PAGE> 142
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

totaling $26, $37, and $26 for the years ended December 31, 1998, 1997 and 1996,
respectively, for costs incurred by the AT&T Wireless Group to develop bundled
billing systems.

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 $12 to AT&T for reimbursement of their costs associated with these
services for the year ended December 31, 1998.

13. SUBSEQUENT EVENTS (UNAUDITED)

On October 6, 1999, AT&T and Dobson Communications Corporation announced
the signing of a definitive agreement to acquire American Cellular Corporation
through a newly created joint venture for $2.32 billion. AT&T will attribute its
interest in this joint venture interest to the AT&T Wireless Group. If the joint
venture defaults in its obligations to close the American Cellular acquisition,
the joint venture will be liable for damages incurred by American Cellular up to
$500. The AT&T Wireless Group will be required to pay its share of any damages
that the joint venture may be required to pay to American Cellular. 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. The
acquisition will be funded with non-recourse bank debt by the joint venture and
cash equity contributions of up to approximately $370 from each of the two
partners. To the extent that Dobson is unable to obtain funding for its equity
contribution to the joint venture, the AT&T Wireless Group has committed to fund
the shortfall through an investment in Dobson. The boards of AT&T, Dobson, and
American Cellular have approved the transaction. The acquisition, which is
expected to close in the first quarter of 2000, is subject to federal regulatory
approval and certain other conditions.

On October 1, 1999, CMT Partners distributed certain assets including its
ownership interest in Kansas City, Missouri and Dallas, Texas to its partners.
Through this distribution, the AT&T Wireless Group received CMT Partners'
ownership interest in Dallas, Texas and Vodafone Airtouch obtained ownership of
Kansas City, Missouri. The AT&T Wireless Group continues to hold a 50% equity
and voting interest in the remaining assets of CMT Partners.

In August 1999, AT&T and British Telecommunications plc jointly acquired a
33.3% ownership interest in Rogers Cantel Mobile Communications Inc. in Canada
for approximately $934 in cash. AT&T contributed its interest in Rogers Cantel
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.

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.

F-22
<PAGE> 143
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

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 will be amortized
over periods of ten to 40 years.

The following pro forma consolidated results of operations for the years
ended December 31, 1998 and 1997 assume the Vanguard acquisition occurred as of
January 1, 1997:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
----------------
1998 1997
------ ------
<S> <C> <C>
Revenues.................................................... $5,868 $5,084
Net income.................................................. 254 112
Capital expenditures........................................ 1,223 1,787
</TABLE>

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 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.

The following is a summary of all consideration paid for the completed
acquisitions through November 30, 1999, including the acquisition of Vanguard:

<TABLE>
<S> <C>
Fair value of AT&T stock issued............................. $ 531
Cash paid by AT&T........................................... 926
Liabilities assumed......................................... 555
Fair value of cellular markets exchanged.................... 51
Total purchase price........................................ $2,063
</TABLE>

The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary and

F-23
<PAGE> 144
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

subject to adjustments during the first year following the acquisitions. The
initial allocations were as follows:

<TABLE>
<S> <C>
License costs............................................... $ 856
Goodwill.................................................... 994
Other intangibles........................................... 100
Property, plant and equipment............................... 365
Net current assets.......................................... 4
Deferred tax liabilities.................................... (256)
Total purchase price........................................ $2,063
</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 for cash and preferred stock. This transaction resulted in a pretax
gain of $11.

In January 1999, the AT&T Wireless Group entered into a venture with Tritel
PCS, Inc. to build a digital wireless network across parts of the southeastern
United States. The AT&T Wireless Group contributed licenses in exchange for
preferred stock. This transaction resulted in a reclassification of license
balances of approximately $94 to investments.

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 AT&T Wireless Group has a signed agreement to sell one of its equity
investments for an expected gain of approximately $40. This transaction is
expected to close in the first quarter of 2000.

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
satisfaction of this commitment.

As part of a multi-vendor program, the AT&T Wireless Group finalized its
plans during the fourth quarter of 1999 to replace significant portions of its
wireless infrastructure equipment in the western United States and in the
metropolitan New York area. The replacement of this wireless infrastructure
equipment is intended to increase the capacity and operating efficiency of the
wireless network and is anticipated to be significantly completed by December
31, 2000.

The planned disposals of the existing wireless infrastructure equipment
require an evaluation of asset impairment in accordance with SFAS 121. As a
result, a charge of $531 ($328 after tax) will be recorded during the fourth
quarter of 1999 to write these assets down 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 remaining net
book value of the assets will be depreciated over this period.

F-24
<PAGE> 145

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------- ----------------
1999 1998 1999 1998
------ ------ ------ ------
DOLLARS IN MILLIONS
<S> <C> <C> <C> <C>
REVENUES
Services revenues.................................. $1,867 $1,265 $4,928 $3,472
Equipment revenues................................. 182 156 562 425
Total revenues..................................... 2,049 1,421 5,490 3,897
OPERATING EXPENSES
Network and other costs of services................ 993 641 2,743 1,662
Depreciation and amortization...................... 333 280 917 802
Selling, general and administrative................ 655 536 1,833 1,550
Asset impairment and restructuring charges......... -- -- -- 60
Total operating expenses........................... 1,981 1,457 5,493 4,074
OPERATING INCOME (LOSS)............................ 68 (36) (3) (177)
Other (expense) income, net........................ (4) 56 180 705
Interest expense................................... 32 34 102 85
Income (loss) before income taxes.................. 32 (14) 75 443
Provision (benefit) for income taxes............... 14 (6) 31 197
NET INCOME (LOSS).................................. 18 (8) 44 246
Dividend requirements on preferred stock held by
AT&T, net........................................ 14 14 41 41
NET INCOME (LOSS) ATTRIBUTABLE TO AT&T'S RESIDUAL
INTEREST......................................... $ 4 $ (22) $ 3 $ 205
</TABLE>

The notes are an integral part of these combined financial statements.
F-25
<PAGE> 146

AT&T WIRELESS GROUP

COMBINED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
DOLLARS IN MILLIONS
<S> <C> <C>
ASSETS
Cash and cash equivalents................................... $ 16 $ 27
Accounts receivable, less allowances of $98 and $74......... 1,223 885
Inventories................................................. 109 206
Deferred income taxes....................................... 126 91
Prepaid expenses and other current assets................... 32 29
TOTAL CURRENT ASSETS........................................ 1,506 1,238
Property, plant and equipment, net.......................... 6,143 5,182
Licensing costs, net of accumulated amortization of $1,459
and $1,290................................................ 8,366 7,928
Investments................................................. 4,477 3,795
Goodwill, net and other assets.............................. 2,364 1,317
TOTAL ASSETS................................................ $22,856 $19,460
LIABILITIES
Accounts payable............................................ $ 502 $ 628
Payroll and benefit-related liabilities..................... 231 202
Debt maturing within one year............................... 137 89
Other current liabilities................................... 920 707
TOTAL CURRENT LIABILITIES................................... 1,790 1,626
Long-term debt due to AT&T.................................. 3,200 2,500
Deferred income taxes....................................... 3,922 3,662
Other long-term liabilities................................. 49 35
TOTAL LIABILITIES........................................... 8,961 7,823
MINORITY INTEREST........................................... 77 105
SHAREOWNER'S EQUITY
Preferred stock held by AT&T................................ 1,000 1,000
AT&T's residual interest.................................... 12,799 10,535
Accumulated other comprehensive income...................... 19 (3)
TOTAL SHAREOWNER'S EQUITY................................... 13,818 11,532
TOTAL LIABILITIES AND SHAREOWNER'S EQUITY................... $22,856 $19,460
</TABLE>

The notes are an integral part of these combined financial statements.
F-26
<PAGE> 147

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CHANGES IN SHAREOWNER'S EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
--------------------
1999 1998
-------- --------
DOLLARS IN MILLIONS
<S> <C> <C>
PREFERRED STOCK HELD BY AT&T................................ $ 1,000 $ 1,000
AT&T'S RESIDUAL INTEREST
Balance at beginning of year.............................. 10,535 10,139
Net income attributable to AT&T's residual interest....... 3 205
Transfers from (to) parent, net........................... 2,261 (373)
------- -------
Balance at end of period.................................... 12,799 9,971
ACCUMULATED OTHER COMPREHENSIVE INCOME
Balance at beginning of year.............................. (3) 48
Other comprehensive income (net of taxes of $(14), $31)... 22 (51)
------- -------
Balance at end of period.................................... 19 (3)
------- -------
TOTAL SHAREOWNER'S EQUITY................................... $13,818 $10,968
======= =======
SUMMARY OF TOTAL COMPREHENSIVE INCOME:
Net income attributable to AT&T's residual interest....... $ 3 $ 205
Dividend requirements on preferred stock held by AT&T,
net.................................................... 41 41
------- -------
Net income................................................ 44 246
Other comprehensive income................................ 22 (51)
TOTAL COMPREHENSIVE INCOME................................ $ 66 $ 195
======= =======
</TABLE>

The notes are an integral part of the combined financial statements.
F-27
<PAGE> 148

AT&T WIRELESS GROUP

COMBINED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
-------------------
1999 1998
-------- -------
DOLLARS IN MILLIONS
<S> <C> <C>
OPERATING ACTIVITIES
Net income.................................................. $ 44 $ 246
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Gains on sale/exchange of wireless investments............ (99) (552)
Asset impairment and restructuring charges................ -- 60
Depreciation and amortization............................. 917 802
Undistributed equity earnings............................. (69) (128)
Minority interest in consolidated subsidiaries............ (10) (21)
Provision for uncollectibles.............................. 137 65
Increase in accounts receivable........................... (375) (154)
Decrease in accounts payable.............................. (169) (357)
Net increase (decrease) in other operating assets and
liabilities............................................ 213 (76)
Other adjustments, net.................................... (62) 19
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES......... 527 (96)
INVESTING ACTIVITIES
Capital expenditures...................................... (1,376) (439)
Net acquisitions of licenses.............................. (32) (24)
Equity investment distributions and sales................. 178 1,150
Equity investment contributions and purchases............. (172) (20)
Net dispositions of businesses including cash acquired in
acquisitions........................................... 244 --
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES......... (1,158) 667
FINANCING ACTIVITIES
Increase in short-term borrowings........................... 48 41
Increase (decrease) in long-term debt due to AT&T........... 700 (100)
Dividend requirements on preferred stock, net............... (41) (41)
Transfers to parent, net.................................... (71) (414)
Other financing activities, net............................. (16) (19)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES......... 620 (533)
Net (decrease) increase in cash and cash equivalents........ (11) 38
Cash and cash equivalents at beginning of year.............. 27 6
Cash and cash equivalents at end of period.................. $ 16 $ 44
</TABLE>

The notes are an integral part of these combined financial statements.
F-28
<PAGE> 149

AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)

(a) BASIS OF PRESENTATION

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 $3,200 and $2,500 in intercompany indebtedness at September 30, 1999
and December 31, 1998, respectively, paying annual interest at 7.25% and 7.75%
in 1999 and 1998, respectively. 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
non-affiliate 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 approval of the AT&T Wireless Group capital stock
committee, is redeemable at the option of AT&T. At the time of the initial

F-29
<PAGE> 150
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

public offering, $2 billion of the intercompany indebtedness is anticipated to
be converted into $2 billion of 9% cumulative preferred stock.

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 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 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.

(b) ACQUISITIONS AND DIVESTITURES

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

The following unaudited pro forma consolidated results of operations for
the nine months ended September 30, 1999 and 1998 assume the Vanguard
acquisition occurred as of January 1, 1998:

<TABLE>
<CAPTION>
FOR THE NINE
MONTHS ENDED
SEPTEMBER 30,
----------------
1999 1998
------ ------
<S> <C> <C>
Revenues.................................................... $5,647 $4,251
Net income.................................................. 14 383
Capital expenditures........................................ 1,409 638
</TABLE>

In addition to the acquisitions of Vanguard, Honolulu Cellular and
Bakersfield Cellular, the AT&T Wireless Group acquired other cellular markets in
Utah and Oregon. 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.

The following is a summary of all consideration paid for the completed
acquisitions through September 30, 1999, including the acquisition of Vanguard:

<TABLE>
<S> <C>
Fair value of AT&T stock issued............................. $ 489
Cash paid by AT&T........................................... 839
Liabilities assumed......................................... 555
Fair value of cellular markets exchanged.................... 51
Total purchase price........................................ $1,934
</TABLE>

The assets and liabilities of the acquired entities were recorded at their
estimated fair market values at the dates of acquisition. The initial
allocations of fair market values are preliminary and

F-31
<PAGE> 152
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

subject to adjustments during the first year following the acquisitions. The
initial allocations were as follows:

<TABLE>
<S> <C>
License costs............................................... $ 727
Goodwill.................................................... 979
Other intangibles........................................... 100
Property, plant and equipment............................... 359
Net current assets.......................................... 10
Deferred tax liabilities.................................... (241)
Total purchase price........................................ $1,934
</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 January 1999, the AT&T Wireless Group entered into a venture with Tritel
PCS, Inc. to build a digital wireless network across parts of the Southeastern
U.S. The AT&T Wireless Group contributed licenses in exchange for preferred
stock. This transaction resulted in a reclassification of license balances of
approximately $94 to investments.

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
September 30, 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
currently provided for would not be material to our combined financial
statements.

The AT&T Wireless Group has various purchase commitments for materials,
supplies and other items incidental to the ordinary course of business which are
not significant individually, nor in the aggregate.

F-32
<PAGE> 153
AT&T WIRELESS GROUP

NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(d) SUBSEQUENT EVENTS

On October 6, 1999, AT&T and Dobson Communications Corporation announced
the signing of a definitive agreement to acquire American Cellular Corporation
through a newly created joint interest venture for $2.32 billion. AT&T will
attribute its interest in this joint venture interest to the AT&T Wireless
Group. If the joint venture defaults in its obligations to close the American
Cellular acquisition, the joint venture will be liable for damages incurred by
American Cellular up to $500. The AT&T Wireless Group will be required to pay
its share of any damages that the joint venture may be required to pay to
American Cellular. 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. The acquisition will be funded with non-recourse bank
debt by the joint venture and cash equity contributions of up to approximately
$370 from each of the two partners. To the extent that Dobson is unable to
obtain funding for its equity contribution to the joint venture, the AT&T
Wireless Group has committed to fund the shortfall through an investment in
Dobson. The boards of AT&T, Dobson and American Cellular have approved the
transaction. The acquisition, which is expected to close in the first quarter of
2000, is subject to federal regulatory approval and certain other conditions.

On October 1, 1999, CMT Partners distributed certain assets including its
ownership interest in Kansas City, Missouri and Dallas, Texas to its partners.
Through this distribution, the AT&T Wireless Group received CMT Partners'
ownership interest in Dallas, Texas and Vodafone Airtouch obtained ownership of
Kansas City, Missouri. The AT&T Wireless Group continues to hold a 50% equity
and voting interest in the remaining assets of CMT Partners.

During November 1999, the AT&T Wireless Group also acquired other cellular
markets in California, Idaho and Louisiana. These acquisitions were accounted
for under the purchase method. The pro forma operating results of these
acquisitions are not material to the overall operating results of the AT&T
Wireless Group.

Subsequent to September 1999, the AT&T Wireless Group purchased minority
interests in several of their markets that they did not wholly own. These
purchases totaled $61.

The AT&T Wireless Group has a signed agreement to sell one of its equity
investments for an expected gain of approximately $40. This transaction is
expected to close in the first quarter of 2000.

F-33
<PAGE> 154

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

The unaudited pro forma information set forth below have been prepared
assuming the AT&T Wireless Group was a separate group as of January 1, 1998 for
income statement purposes, and as of September 30, 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 September 30, 1999 or to project the financial position for any future
date. The unaudited pro forma condensed combined statements of income for the
year ended December 31, 1998 and the nine-month period ended September 30, 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,
1998 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-34
<PAGE> 155

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
TWELVE MONTHS ENDED DECEMBER 31, 1998
(MILLIONS)

<TABLE>
<CAPTION>
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
GROUP(1) ADJUSTMENTS GROUP
-------- ----------- -------------
<S> <C> <C> <C>
REVENUES.......................................... $5,406 -- $5,406
OPERATING EXPENSES
Network and other costs of services............... 2,428 -- 2,428
Depreciation and amortization..................... 1,079 -- 1,079
Selling, general and administrative............... 2,122 -- 2,122
Asset impairment and restructuring charges........ 120 -- 120
------ ---- ------
Total operating expenses.......................... 5,749 -- 5,749
OPERATING LOSS.................................... (343) -- (343)
Other income, net................................. 764 -- 764
Interest expense.................................. 120 $(94)(2) 26
Income before income taxes........................ 301 94 395
Provision for income taxes........................ 137 36(3) 173
------ ---- ------
NET INCOME........................................ 164 58 222
Dividend requirements on preferred stock held by
AT&T, net....................................... 56 111(2) 167
------ ---- ------
NET INCOME ATTRIBUTABLE TO AT&T'S RESIDUAL
INTEREST........................................ $ 108 $(53)(2) $ 55
====== ==== ======
</TABLE>

See Notes to Unaudited Pro Forma AT&T Wireless Group
Condensed Combined Financial Statements.
F-35
<PAGE> 156

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1999
(MILLIONS)

<TABLE>
<CAPTION>
AT&T PRO FORMA
WIRELESS PRO FORMA AT&T WIRELESS
GROUP(1) ADJUSTMENTS GROUP
-------- ----------- -------------
<S> <C> <C> <C>
REVENUES.......................................... $5,490 -- $5,490
OPERATING EXPENSES
Network and other costs of services............... 2,743 -- 2,743
Depreciation and amortization..................... 917 -- 917
Selling, general and administrative............... 1,833 -- 1,833
------ ---- ------
Total operating expenses.......................... 5,493 -- 5,493
OPERATING LOSS.................................... (3) -- (3)
Other income, net................................. 180 -- 180
Interest expense.................................. 102 $(68)(2) 34
Income before income taxes........................ 75 68 143
Provision for income taxes........................ 31 26(3) 57
------ ---- ------
NET INCOME........................................ 44 42 86
Dividend requirements on preferred stock held by
AT&T, net....................................... 41 84(2) 125
------ ---- ------
NET INCOME (LOSS) ATTRIBUTABLE TO AT&T'S RESIDUAL
INTEREST........................................ $ 3 $(42) $ (39)
====== ==== ======
</TABLE>

See Notes to Unaudited Pro Forma AT&T Wireless Group
Condensed Combined Financial Statements.
F-36
<PAGE> 157

AT&T WIRELESS GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 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......................... $ 16 -- $ 16
Accounts receivable, net.......................... 1,223 -- 1,223
Other current assets.............................. 267 -- 267
------- -------
TOTAL CURRENT ASSETS.............................. 1,506 -- 1,506
Property, plant and equipment, net................ 6,143 -- 6,143
Licensing cost, net............................... 8,366 -- 8,366
Investments....................................... 4,477 -- 4,477
Goodwill, net and other assets.................... 2,364 -- 2,364
------- -------
TOTAL ASSETS...................................... $22,856 -- $22,856
======= ======= =======
LIABILITIES:
Accounts payable.................................. $ 502 -- $ 502
Debt maturing within one year..................... 137 -- 137
Other current liabilities......................... 1,151 -- 1,151
------- -------
TOTAL CURRENT LIABILITIES......................... 1,790 -- 1,790
Long-term debt due to AT&T........................ 3,200 $(2,000)(2) 1,200
Deferred income taxes............................. 3,922 -- 3,922
Other long-term liabilities....................... 49 -- 49
------- ------- -------
TOTAL LIABILITIES................................. 8,961 (2,000) 6,961
MINORITY INTEREST................................. 77 -- 77
SHAREOWNER'S EQUITY:
Preferred stock held by AT&T...................... 1,000 2,000(2) 3,000
AT&T's residual interest.......................... 12,799 -- 12,799
Accumulated other comprehensive income............ 19 -- 19
TOTAL SHAREOWNER'S EQUITY......................... 13,818 2,000 15,818
------- ------- -------
TOTAL LIABILITIES AND SHAREOWNER'S EQUITY......... $22,856 -- $22,856
======= ======= =======
</TABLE>

See Notes to Unaudited Pro Forma AT&T Wireless Group
Condensed Combined Financial Statements.
F-37
<PAGE> 158

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 and
preferred stock dividends.

3. Reflects the federal statutory and blended state tax effect on the pro forma
adjustments.

F-38
<PAGE> 159

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, 1998 for income statement purposes, and as of September
30, 1999 for balance sheet purposes, subject to the assumptions and adjustments
in the accompanying notes to the pro forma information. The AT&T Common Stock
Group will continue to have 100% legal ownership of the AT&T Wireless Group.
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 September 30,
1999 or to project the AT&T Common Stock Group financial position for any future
date. The unaudited pro forma condensed combined statements of operations for
the year ended December 31, 1998 and the nine-month period ended September 30,
1999 does not purport to represent what the AT&T Common Stock Group operations
actually would have been had the AT&T Wireless Group been a separate group on
January 1, 1998 or to project operating results for any future period.

F-39
<PAGE> 160

AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(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................................. $62,308 $5,406 73(3) $56,975
OPERATING EXPENSES
Access and other interconnection......... 15,328 -- -- 15,328
Network and other costs of services...... 13,855 2,428 66(3) 11,493
Depreciation and amortization............ 8,805 1,079 27(5) 7,753
Selling, general and administrative...... 15,581 2,122 7(3) 13,466
Asset impairment and restructuring
charges................................ 2,514 120 120(7) 2,514
------- ------ ---- -------
Total operating expenses................. 56,083 5,749 220 50,554
OPERATING INCOME (LOSS).................. 6,225 (343) (147) 6,421
Other income, net........................ 4,512 764 56(4) 4,070
190(4)
111(6)
(155)(6)
120(7)
Interest expense......................... 3,233 120 190(4) 3,319
16(5)
Income from continuing operations before
income taxes........................... 7,504 301 (31) 7,172
Provision for income taxes............... 3,269 137 (76)(8) 3,056
------- ------ ---- -------
INCOME FROM CONTINUING OPERATIONS........ 4,235 164 45 4,116
Dividend requirements on preferred
stocks,
net.................................... 66 56 56(4) 66
------- ------ ---- -------
INCOME FROM CONTINUING OPERATIONS AFTER
CONSIDERATION OF DIVIDEND REQUIREMENTS
ON PREFERRED STOCKS.................... $ 4,169 $ 108 (11) $ 4,050
======= ====== ==== =======
AT&T EARNINGS PER SHARE (EPS)
CALCULATION:
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 4,169 $ 4,050
Weighted average shares outstanding
(basic)................................ 3,760 3,760
Basic EPS................................ $ 1.11 $ 1.08
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 4,169 $ 4,050
Weighted average shares outstanding
(diluted).............................. 3,874 3,874
Diluted EPS.............................. $ 1.08 $ 1.05
</TABLE>

See Notes to Unaudited Pro Forma AT&T Common Stock Group
Condensed Combined Financial Statements.
F-40
<PAGE> 161

AT&T COMMON STOCK GROUP

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 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................................. $49,000 $5,490 $ 152(3) $43,662
OPERATING EXPENSES
Access and other interconnection......... 11,054 -- -- 11,054
Network and other costs of services...... 11,783 2,743 152(3) 9,192
Depreciation and amortization............ 7,046 917 -- 6,129
Selling, general and administrative...... 11,026 1,833 -- 9,193
Asset impairment and restructuring
charges................................ 702 -- -- 702
------- ------ ----- -------
Total operating expenses................. 41,611 5,493 152 36,270
OPERATING INCOME (LOSS).................. 7,389 (3) -- 7,392
Other income, net........................ 2,356 180 41(4) 2,347
155(4)
84(6)
(109)(6)
Interest expense......................... 2,291 102 155(4) 2,285
(59)(5)
Income from continuing operations before
income taxes........................... 7,454 75 75 7,454
Provision for income taxes............... 3,062 31 (19)(8) 3,012
------- ------ ----- -------
INCOME FROM CONTINUING OPERATIONS........ 4,392 44 94 4,442
Dividend requirements on preferred
stocks................................. 34 41 41(4) 34
------- ------ ----- -------
INCOME FROM CONTINUING OPERATIONS AFTER
CONSIDERATION OF DIVIDEND REQUIREMENTS
ON PREFERRED STOCKS.................... $ 4,358 $ 3 $ 53 $ 4,408
======= ====== ===== =======
AT&T EARNINGS PER SHARE (EPS)
CALCULATION:
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 4,358 $ 4,408
Weighted average shares outstanding
(basic)................................ 3,791 3,791
Basic EPS................................ $ 1.15 $ 1.16
Income from continuing operations
attributable to AT&T common
shareowners............................ $ 4,423 $ 4,473
Weighted average shares outstanding
(diluted).............................. 3,911 3,911
Diluted EPS.............................. $ 1.13 $ 1.14
</TABLE>

See Notes to Unaudited Pro Forma AT&T Common Stock Group
Condensed Combined Financial Statements.
F-41
<PAGE> 162

AT&T COMMON STOCK GROUP

UNITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
SEPTEMBER 30, 1999

<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
------------- -------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents......... $ 777 $ 16 -- $ 761
Receivables, net.................. 11,040 1,223 $ 86(3) 9,903
Other current assets.............. 3,251 267 -- 2,984
-------- ------- ------ --------
TOTAL CURRENT ASSETS.............. 15,068 1,506 86 13,648
Property, plant and equipment,
net............................. 41,265 6,143 82(5) 35,204
Franchise costs, net.............. 53,124 -- -- 53,124
Licensing cost, net............... 8,353 8,366 13(5) --
Goodwill, net..................... 31,691 2,364 -- 29,327
Preferred stock investment in AT&T
Wireless Group.................. -- -- 1,000(4) 3,000
2,000(6)
Receivable from AT&T Wireless
Group........................... -- -- 3,200(4) 1,200
(2,000)(6)
Investments....................... 42,394 4,477 -- 37,917
Other assets...................... 8,611 -- -- 8,611
Assets held for sale.............. 15,556 -- -- 15,556
-------- ------- ------ --------
TOTAL ASSETS...................... $216,062 $22,856 $4,381 $197,587
======== ======= ====== ========
</TABLE>

See Notes to Unaudited Pro Forma AT&T Common Stock Group
Condensed Combined Financial Statements.
F-42
<PAGE> 163
AT&T COMMON STOCK GROUP

UNITED PRO FORMA CONDENSED COMBINED BALANCE SHEET -- (CONTINUED)
SEPTEMBER 30, 1999

<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
------------- -------- ----------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C>
LIABILITIES
Accounts payable.................. $ 6,240 $ 502 $ 86(3) 5,824
Debt maturing within one year..... 29,312 137 -- 29,175
Other current liabilities......... 9,740 1,151 -- 8,589
-------- ------- ------ --------
TOTAL CURRENT LIABILITIES......... 45,292 1,790 86 43,588
Long-term debt.................... 29,518 3,200 3,200(4) 29,518
Deferred income taxes............. 46,849 3,922 -- 42,927
Other long-term liabilities and
deferred credits................ 8,144 49 -- 8,095
-------- ------- ------ --------
TOTAL LIABILITIES................. 129,803 8,961 3,286 124,128
MINORITY INTEREST................. 3,562 77 -- 3,485
Company-obligated convertible
quarterly income preferred
securities of subsidiary trust
holding solely subordinated debt
securities of AT&T.............. 4,697 -- -- 4,697
Subsidiary-obligated mandatorily
redeemable preferred securities
of subsidiaries holding solely
subordinated debt securities of
subsidiaries.................... 2,698 -- -- 2,698
Preferred stock subject to
mandatory redemption............ 50 -- -- 50
Total Shareowners' Equity......... 75,252 13,818 1,000(4) 62,529
95(5)
TOTAL LIABILITIES AND SHAREOWNERS'
EQUITY.......................... $216,062 $22,856 $4,381 $197,587
======== ======= ====== ========
</TABLE>

See Notes to Unaudited Pro Forma AT&T Common Stock Group
Condensed Combined Financial Statements.
F-43
<PAGE> 164

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, 1998
for income statement purposes, and as if the MediaOne merger had been
completed on September 30, 1999 for balance sheet purposes. AT&T's historical
balance sheet at September 30, 1999 includes the merger with TCI which
occurred on March 1, 1999 for accounting purposes. 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% in both periods 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 nine months ended September 30, 1999 and 7.75%
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. Reflects reclassifications made to the stand-alone financial statements of
the AT&T Wireless Group, which need to be adjusted to reflect the AT&T Common
Stock Group appropriately.

8. Reflects the statutory tax effect on the pro forma adjustments.

F-44
<PAGE> 165

[AT&T LOGO]
<PAGE> 166

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........................................ $26,400
NASD filing fee............................................. 30,500
listing fee.......................................... *
Printing expenses........................................... *
Legal fees and expenses..................................... *
Accounting fees and expenses................................ *
Blue sky fees and expenses.................................. *
Transfer agent and registrar fees and expenses.............. *
Miscellaneous............................................... *
-------
Total.................................................. $ *
=======
</TABLE>

---------------------------------
* To be completed by amendment.

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

II-1
<PAGE> 167

extend to any situation where a judgment or other final adjudication adverse to
such person 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 Exhibits 1.1 and 1.2 hereto.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
1.1* Form of U.S. Underwriting Agreement between AT&T Corp. and
the U.S. underwriters.
1.2* Form of International Underwriting Agreement between AT&T
Corp. and the international 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 KPMG LLP
23.6 Consent of Arthur Andersen
24.1 Powers of attorney executed by the officers and directors of
the Registrant who signed this Registration Statement.
</TABLE>

- -------------------------
* To be filed by amendment.

(b) Financial Statement Schedules

None

II-2
<PAGE> 168

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 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> 169

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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 2nd day of
February, 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
Registration Statement has been signed by the following persons in the
capacities indicated on February 2, 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> 170

<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 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 January 25, 1999
relating to the consolidated financial statements, which appears in the AT&T
Corp. 1998 Annual Report to Shareholders, which is incorporated by reference in
its Annual Report on Form 10-K/A filed on July 12, 1999, for the year ended
December 31, 1998. We also consent to the incorporation by reference of our
report dated January 25, 1999 relating to the financial statement schedule,
which appears in such Annual Report on Form 10-K/A. 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
January 31, 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 January 6, 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
January 31, 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 March 9, 1999, relating to the
consolidated balance sheets of Tele-Communications, Inc. and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of
operations and comprehensive earnings, stockholders' equity, and cash flows for
each of the years in the three-year period ended December 31, 1998, which report
appears in the Current Report on Form 8-K of AT&T Corp., dated March 22, 1999,
and to the reference to our firm under the heading "Experts" in the registration
statement.

/s/ KPMG LLP

KPMG LLP

Denver, Colorado
January 31, 2000

<PAGE> 1

EXHIBIT 23.5

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 March 9, 1999, relating to the
combined balance sheets of Liberty/Ventures Group as of December 31, 1998 and
1997, and the related combined statements of operations and comprehensive
earnings, equity, and cash flows for each of the years in the three-year period
ended December 31, 1998, which report appears in the Current Report on Form 8-K
of AT&T Corp., dated March 22, 1999, and to the reference to our firm under the
heading "Experts" in the registration statement.

/s/ KPMG LLP

KPMG LLP

Denver, Colorado
January 31, 2000

<PAGE> 1

EXHIBIT 23.6

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 18, 1999 (except with respect to the matters discussed in Note 22, as
to which the date is March 22, 1999) included in MediaOne Group, Inc.'s
consolidated financial statements for the year ended December 31, 1998, filed in
AT&T Corp.'s Form 8-K dated September 2, 1999.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Denver, Colorado,
January 31, 2000.

<PAGE> 1
Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, AT&T CORP., a New York corporation (hereinafter referred to as
the "Company"), proposes to file with the Securities and Exchange Commission,
under the provisions of the Securities Act of 1933, as amended, a registration
statement on Form S-3 with respect to the issuance of a new class of common
stock designed to reflect the economic performance of the Company's wireless
services businesses; and

WHEREAS, the undersigned is both a director and an officer of the Company,
as indicated below his signature;

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as both a director and an
officer of the Company, to execute and file such registration statement
with respect to the above-described common shares, and thereafter to
execute and file any amended registration statement or statements with
respect thereto, hereby giving and granting to said attorneys, and each of
them, full power and authority to do and perform each and every act and
thing whatsoever requisite and necessary to be done in and about the
premises, as fully, to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do, or cause to be done, by
virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Michael Armstrong
________________________________________
C. Michael Armstrong
Chairman and Chief Executive Officer
<PAGE> 2
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as an officer of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Charles Noski
___________________________________
Charles Noski
Senior Executive Vice President
and Chief Financial Officer
<PAGE> 3
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as an officer of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Nicholas S. Cyprus
___________________________________
Nicholas S. Cyprus
Vice President and Controller
<PAGE> 4
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Kenneth T. Derr
___________________________________
Kenneth T. Derr
Director
<PAGE> 5
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for her and in her
name, place and stead, and in her capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as she might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ M. Kathryn Eickhoff
___________________________________
M. Kathryn Eickhoff
Director
<PAGE> 6
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 21st day of January, 2000.

/s/ Walter Y. Elisha
___________________________________
Walter Y. Elisha
Director
<PAGE> 7
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of January, 2000.

/s/ George M.C. Fisher
___________________________________
George M.C. Fisher
Director
<PAGE> 8
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Donald V. Fites
___________________________________
Donald V. Fites
Director
<PAGE> 9
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Amos B. Hostetter, Jr.
___________________________________
Amos B. Hostetter, Jr.
Director
<PAGE> 10
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Ralph S. Larsen
___________________________________
Ralph S. Larsen
Director
<PAGE> 11
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ John C. Malone
___________________________________
John C. Malone
Director
<PAGE> 12
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Donald F. McHenry
----------------------------------
Donald F. McHenry
Director
<PAGE> 13
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Michael I. Sovern
----------------------------------
Michael I. Sovern
Director
<PAGE> 14
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 1st day of February, 2000.

/s/ Sanford I. Weill
----------------------------------
Sanford I. Weill
Director
<PAGE> 15
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is a director of the Company, as indicated below
his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as a director of the Company, to
execute and file such registration statement with respect to the
above-described common shares, and thereafter to execute and file any
amended registration statement or statements with respect thereto, hereby
giving and granting to said attorneys, and each of them, full power and
authority to do and perform each and every act and thing whatsoever
requisite and necessary to be done in and about the premises, as fully, to
all intents and purposes, as he might or could do if personally present at
the doing thereof, hereby ratifying and confirming all that said attorneys
may or shall lawfully do, or cause to be done, by virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of January, 2000.

/s/ Thomas H. Wyman
----------------------------------
Thomas H. Wyman
Director
<PAGE> 16
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS:

WHEREAS, the undersigned is an officer and director of the Company, as
indicated below his signature:

WHEREAS, the undersigned hereby constitutes and appoints Charles Noski
and Marilyn J. Wasser, and each of them, as attorneys for him and in his
name, place and stead, and in his capacity as an officer and director of
the Company, to execute and file such registration statement with respect
to the above-described common shares, and thereafter to execute and file
any amended registration statement or statements with respect thereto,
hereby giving and granting to said attorneys, and each of them, full
power and authority to do and perform each and every act and thing
whatsoever requisite and necessary to be done in and about the premises,
as fully, to all intents and purposes, as he might or could do if
personally present at the doing thereof, hereby ratifying and confirming
all that said attorneys may or shall lawfully do, or cause to be done, by
virtue hereof.

IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
this 19th day of January, 2000.

/s/ John D. Zeglis
----------------------------------
John D. Zeglis
President and Director