AT&T Information Session

1. AT&T Information Session

2. Today’s Topics • AT&T Company Overview • Our Vision • AT&T Today • Traditional AT&T Service Regions • Industry Leader • Community Commitment • AT&T Information Technology Overview • IT Distribution • Support of Brand Strategy • Alignment with the Business • IT Operations Breakdown and Scope • Why did AT&T make this decision? • Human Resources Presentation • In-Scope Employee Information • AT&T Job Offer Overview • AT&T Compensation Overview • AT&T Benefits Overview • Timeline • Sources • Questions and Answers Session

3. Our Vision We let people choose how, when and where they communicate. Our global network delivers a seamless world of communications to our customers. Connect people with their world, everywhere they live and work, and do it better than anyone else. We’ll set the pace for progressive innovationand unmatchedcustomer experience.

4. AT&T Today Premier communicationscompany in the U.S. and world Employees in every U.S. stateand in more than 60 countries One of very top Fortune 500companies One of 30 companies comprising the Dow Jonesindustrial average AT&T is growing – organically and by acquisition Our customers feel thedifference and have known and trusted our name for more than 130 years

5. Traditional AT&T Service Regions Wisconsin Michigan Connecticut Nevada Ohio Indiana Illinois California Missouri Kansas Kentucky North Carolina Tennessee Oklahoma South Carolina Arkansas Alabama Georgia Mississippi Texas Louisiana Florida

6. Industry Leader Voice services, the nation’s leading provider of local and long distance voice services Wireless serviceswith 72.9 million* subscribers Broadband, or High Speed Internet, with more than 14.7 million* lines in service Businessvoice and data services IP-based services, one of the world’s leading providerswith more than 549 thousand* U-Verse TV subscribers * As of end of Q208

7. Community Commitment Fortune magazine has ranked us as the most admired telecom company in the U.S. and the world We’ve been recognized on many occasions for our commitment to diversity AT&T and the AT&T Foundation, the corporate philanthropy organization of AT&T, combine more than$1.8 billion of historic charitable commitment to communities Nearly 350,000 employees and retireesserve their communities through the AT&T Pioneers organization

8. IT Overview . . . the success of our new combined corporation is directly linked to how effectively we join together to integrate functions and further leverage the strengths of the combined IT organization to enable our corporate priorities. . . Thaddeus Arroyo - CIO

9. Over 40,000 IT Resources are located in ~307 cities across the US and internationally Over 90% of IT employees are located in 23 cities; 64% are within 6 major metro areas

10. Operational Environment Scope 50 Mainframes with over 85,000 MIPS ~24,000 Midrange Systems (e.g., Sun, IBM , HP) ~26,000 Windows Servers (application & infrastructure) ~454,000 desktops/laptops ~5,200 Applications ~50+ Petabytes of Raw Storage; 60-70% SAN based ~70,000+ network elements ~1.8 Million Sq Ft of Internal Conditioned Computer Space 38 IT Managed Data Centers

11. How does IT fit into the corporate organizational scheme? v

12. IT Alignment with the Business IT Functional Organization Business Aligned Enterprise Information Technology Consumer Information Technology Mobility Information Technology Corporate Systems and Applications IT Shared Services Architecture, Planning, & Integration Information Technology Operations Billing Operations Portfolio & Process Management Sourcing & Centralized Development

13. ITO Relationships ENTERPRISE CONSUMER MOBILITY CORPORATE Rick Felts, Sr. Vice President - IT Operations SERVICE DEVELOP- MENT SERVICE FACTORY SERVICE MANAGE- MENT SERVICE TRANS- FORMATION SERVICE IMPROVE- MENT APPLICATION SERVICES HOSTING SERVICES* NETWORK / FIELD SERVICES* PETERS ECKER WATSON BRICKHAUS LIDDELL RAMIEREZ SOUTHWICK

14. Why did AT&T make this decision? • We have constructed a delivery model that strategically combines internal and external sourcing • Midrange Operations is an area that AT&T wants to retain and grow the knowledge base Note: This is not a decision based on IBM’s performance. IBM is still considered a valuable supplier to our business.

15. HR Presentation

16. In-Scope Employee Information Today’s presentation will give you the foundation of information necessary to make your individual employment decision with AT&T Other information available: • In-Scope Employee shared drive (available 10/1 end of day) • In-Scope Employee Email Address (m59384@att.com) • AT&T Staffing Manager Contact • AT&T Job Offer Package The specific contact information will be provided at the end of this presentation.

17. In-Scope Employee Information This piece of the presentation will cover the following topics: • AT&T Job Offer • AT&T Compensation • AT&T Benefits • Timeline of Upcoming Events • Reference Sources

18. In-scope Employee Classifications If you accept an AT&T Job Offer, your hire or rehire with AT&T will be in one of the following employee categories: Rehired Retiree - IBM employees who were eligible for Legacy AT&T post-retirement benefits at the time they were outsourced by AT&T Rehired Employee - IBM employees who have prior Legacy AT&T service and were not eligible for Legacy AT&T post-retirement benefits at the time they were outsourced by AT&T New Hire -IBM employees with no prior Legacy AT&T service

19. AT&T Job Offer

20. AT&T Job Offer If you accept an AT&T job offer, you will transition to AT&T employment which includes the following: Your Current Annual Base Salary AT&T Annual Bonus Award Eligibility An AT&T Work Location Recognition of prior Legacy AT&T service and IBM service through the date of transition to employment with AT&T, if service was continuous Eligibility in applicable AT&T Benefit Plans • (Consistent with AT&T new hire and rehire policies)

21. AT&T Job Offer Job Offer will be emailed to your work email address on Wednesday, October 1, 2008. The email will be sent from an AT&T Recruiter. Response Date of Friday, October 10, 2008 (5:00pm CST) After October 10, 2008 your “accept” or “decline” decision will be irrevocable. Your position will be transferred to AT&T. If you do not reply on, or before, October 10, 2008, AT&T will assume you have declined the AT&T job offer and your position will transfer to AT&T. If you decline and subsequently wish to re-apply for a position with AT&T, you will not be eligible for the same terms and conditions as those outlined in your offer letter dated October 1, 2008. If you accept the AT&T Job Offer, your effective date with AT&T will be January 1, 2009.

22. AT&T Job Offer - continued Job Offers • Offer Letters will be emailed from AT&T Recruiter to IBM Employee's work email on October 1, 2008 between 4:00pm – 5:00pm CST. The subject line will read: AT&T Job Offer • Response due back to Recruiter via email no later than October 10, 2008 5:00 CST. • Fax signed offer letter per instructions (flows into a secure electronic storage system so personal info remains confidential) Job Offer Components/Action Items • Need to sign all pages including: • Job Offer Letter • Employee Confidentiality, Invention and Nonsolicitation Agreement • Former Employer Proprietary Information Form • Intellectual Property Assignment Agreement (must be witnessed - must be dated by both employee and witness) • Upon acceptance of the AT&T Job Offer, a new hire I-9 process must be completed as soon as possible.This process is detailed on the Employee Shared Drive and in the AT&T Job Offer packet.

23. AT&T Compensation

24. AT&T Compensation • Total Compensation • AT&T Compensation Components • Management Level and Bonus Award Targets • IT Tech Trak

25. AT&T Compensation – Total Compensation If you accept the AT&T Job Offer by October 10, 2008 (5:00pm CST), your total compensation will consist of: Annual Base Salary • Same as your current annual base salary AT&T Annual Bonus Award • Percentage of base pay for 2009 Performance Year payable in 2010 • Percentage is based on the management level of your AT&T position • Discretionary – requires approval of AT&T Board of Directors Benefits • Described in more detail on upcoming slides

26. AT&T Compensation – Components

27. Base Salary Market Adjustment (BSMA) • Provides annual process to review base salaries • Reflects both market value of position and individual contribution • Typically is effective 3/1 of each year Annual Bonus • Target is calculated as a percentage of base salary, by level • Based upon achievement of team measurements and approval of Board of Directors • Annual calculation typically paid March of the following year for the prior performance year

28. AT&T Compensation Management Level and Associated Annual Bonus Target

29. AT&T Compensation – IT Tech Trak IT Tech Trak documents job descriptions and career paths for management employees in Information Technology job disciplines. IT Tech Trak is structured into nine functional job families. These job families represent career paths for each functional area. They include: • Application Development • Computer Operations • User Administration & Asset Management • Communications & Network Services • Infrastructure Architecture & Management • Data Resource Management • Corporate Information Security • Operations Management • Program and Project Management Each position has a unique job description, job title and job key within market

30. AT&T Benefits

31. AT&T Benefits – Recognition of Service • If you accept the AT&T job offer, and you have prior Legacy AT&T Service which was recognized by IBM, AT&T will immediately recognize the prior AT&T and IBM service through the date of transition of employment with AT&T towards establishment of your AT&T Net Credited Service date. • If you accept the AT&T job offer, and you have prior Legacy AT&T Service which was not recognized by IBM or was not continuous with your IBM service, AT&T will recognize your IBM service, and you may be eligible to have your previous service bridged based on the provisions of the AT&T Pension Benefit Plan. Upon hire by AT&T, you should contact that Pension Service Center (contact information contained on the shared drive)

32. AT&T Benefits - Eligibility If you accept the AT&T Job Offer, you will be eligible for the following benefits: • Medical • Dental • Vision • Basic and supplemental life insurance • Long-term care • Pension • Savings

33. AT&T Benefits - Eligibility In addition, you will have eligibility to the following benefit plans: • Short and Long Term Disability • Flexible Spending Accounts • Health Savings Accounts • CarePlus • Adoption Reimbursement • EAP (Employee Assistance Program) • Employee Concessions and Discounts • Management Paid Time Off • Leaves of Absence

34. AT&T Benefits – Eligibility for Rehire Retirees* If you accept the AT&T Job Offer and had previously retired from AT&T, your rehire will not impact your Legacy AT&T retiree benefits or contributions paid for those benefits as a retiree. • You will continue to be eligible for the following retiree benefits: • medical (including prescription drug and mental health/substance abuse) • careplus • dental • vision • basic and supplemental life insurance • long-term care NOTES: 1.) For all other benefits, Rehired Retirees will follow the active employee eligibility terms. 2.) Additional details are on the Shared drive. Please review the information carefully.

35. Today’s presentation focuses on three major benefits • Medical • Pension • Savings

36. AT&T Medical PlanOur Goals for Medical Coverage • Comprehensive coverage • AT&T offers coverage to 1 in every 300 Americans • AT&T spends $5.5 billion annually and costs are escalating • Competitive within our industry • Focuses on engaging participants in their health care management

37. Medical Plan Components and Approach • Integrated coverage under a single plan • Medical / surgical • Prescription drugs • Mental health / chemical dependency • No or nominal monthly contributions • Preventive services covered at 100 percent • Costs distributed based on usage

38. No (nominal) Monthly Contributions

39. Focus on Preventive Care • No deductibles • No coinsurance • No annual cap Examples:- annual routine physical - immunizations - mammograms - cholesterol screenings - well-baby and well-child care

40. Annual Deductibles • You pay for nonpreventive services until annual deductible is met

41. Out-of-Pocket Annual Maximums • Financial safety net • Plan pays 100 percent above out-of-pocket maximum • Automatically reduced for those making less than $50K/year • Options to lower maximums via higher contributions

42. Health Savings Account Contributions $3,000 individuals $5,950 with eligible dependents Contributions are tax-advantaged Functions like a bank account Funds roll over Yours to keep Establish and adjust anytime Accounts held at financial institution Contribute via payroll deduction Flexible Spending Account Tax-advantaged savings Up to $10,000 per year Payroll deduction Year-end balances forfeited If You Have Both and HSA and an FSA: FSA must be “limited” Vision and dental only If you choose both during enrollment, FSA is automatically limited Two Ways to Save for the AT&T Medical Plan

43. AT&T Retirement Plans • Pension • Savings

44. AT&T Pension Benefit Plan-Management Cash Balance Program • 100% funded by AT&T • Basic credits: 1.75%-4.0% of pay based on age • Supplemental credits – 2% of pay over SSN wage base • Interest credits – 4.5% times cash balance account • Participation requires one year of service • Contributions subject to 3 year vesting • Please refer to the Shared Drive for additional details

45. AT&T Savings Plan • Provides participants with opportunity to save for retirement and receive employer matching contributions –Immediate eligibility for contributions and company match • Company match -- match on 80% of the first 6% you contribute – match provided in AT&T stock • Employee contributions of 1% - 50% of salary • Before-tax, after-tax, Roth, and catch-up contributions • Twenty investment options are available • Provides for automatic enrollment at 3%

46. AT&T Paid Time Off Policy Vacation Eligibility In addition to Vacation Days, after 1 year of service, full-time Employees will be eligible for Personal Days (PDO’s) equivalent to 8 days (64 hours) for the Calendar Year. We also have 6 Company Paid Holidays. These dates can be found on the Shared Drive.

47. Timeline for Upcoming Events

48. Sources In-scope Employee Shared Drive \\Txdlls2cdfile11.itservices.sbc.com\itomidrange NOTE: Additional Benefits information and FAQ’s will be on the Shared Drive. In-scope Employee Email Box m59384@att.com - a response should be received within 3 business days AT&T Staffing Representative A Staffing contact will be listed on your Job Offer Package

49. Questions and Answers ?