<TABLE>
                                                                         EX-99.2

                               AT&T WIRELESS GROUP

                        COMBINED STATEMENTS OF OPERATIONS

                              (Dollars in Millions)

                                   (Unaudited)
<CAPTION>
                                                              For the Three             For the Six
                                                              Months Ended              Months Ended

                                                                June 30,                  June 30,
                                                             2000      1999            2000     1999
<S>                                                        <C>       <C>             <C>      <C>
REVENUE
Services revenue                                           $2,240    $1,689          $4,232   $3,061
Equipment revenue                                             237       189             443      380
Total revenue                                               2,477     1,878           4,675    3,441

OPERATING EXPENSES
Costs of services and products                              1,205       940           2,258    1,750
Selling, general and administrative                           763       614           1,513    1,178
Depreciation and amortization                                 402       308             771      584
Total operating expenses                                    2,370     1,862           4,542    3,512

OPERATING INCOME (LOSS)                                       107        16             133      (71)

Other income                                                  227       140             308      184
Interest expense                                               18        38              69       70
Income before income taxes                                    316       118             372       43
Provision for income taxes                                    116        43             146       17

Net income                                                 $  200  $     75          $  226   $   26

Dividend requirements on preferred stock
held by AT&T, net                                              33        13              46       27

Net income (loss) after preferred stock
dividends                                                  $  167    $   62          $  180   $   (1)
<FN>
                   See Notes to Combined Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
                               AT&T WIRELESS GROUP

                             COMBINED BALANCE SHEETS

                              (Dollars in Millions)
<CAPTION>
                                                                   June 30,         December 31,
                                                                     2000              1999
                                                                 (Unaudited)
<S>                                                                <C>                   <C>
ASSETS
Cash and cash equivalents                                          $     6               $     5
Accounts receivable, less allowances of
  $143 and $130                                                      1,606                 1,300
Note receivable from AT&T                                            3,962                     -
Inventories                                                            418                   162
Deferred income taxes                                                  144                   127
Prepaid expenses and other current assets                               65                    34
TOTAL CURRENT ASSETS                                                 6,201                 1,628

Property, plant and equipment, net of
  accumulated depreciation of $4,666 and $4,033                      8,213                 6,349

Licensing costs, net of accumulated amortization
  of $1,614 and $1,519                                               9,994                 8,571

Investments                                                          4,946                 4,502

Goodwill and other assets, net of accumulated
  amortization of $426 and $385                                      3,489                 2,462

TOTAL ASSETS                                                       $32,843               $23,512

LIABILITIES
Accounts payable                                                   $   997               $   921
Payroll and benefit-related liabilities                                292                   291
Debt maturing within one year                                          154                   154
Other current liabilities                                            1,030                   931
TOTAL CURRENT LIABILITIES                                            2,473                 2,297

Long-term debt due to AT&T                                           1,800                 3,400

Deferred income taxes                                                3,881                 3,750

Other long-term liabilities                                            156                    48

TOTAL LIABILITIES                                                    8,310                 9,495

MINORITY INTEREST                                                       11                    20

EQUITY
Preferred stock held by AT&T                                         3,000                 1,000
Combined equity                                                     21,496                12,971
Accumulated other comprehensive income                                  26                    26
TOTAL EQUITY                                                        24,522                13,997

TOTAL LIABILITIES AND EQUITY                                       $32,843               $23,512
<FN>
                   See Notes to Combined Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
                               AT&T WIRELESS GROUP

                    COMBINED STATEMENTS OF CHANGES IN EQUITY
                              (Dollars in Millions)
                                   (Unaudited)
<CAPTION>
                                                                          For the Six Months
                                                                             Ended June 30,
                                                                           2000        1999
<S>                                                                     <C>         <C>
PREFERRED STOCK HELD BY AT&T
  Balance at beginning of period                                        $ 1,000     $ 1,000
  Preferred stock issued to AT&T                                          2,000           -
Balance at end of period                                                  3,000       1,000

COMBINED EQUITY
  Balance at beginning of period                                         12,971      10,535
  Net income (loss) after preferred stock dividends                         180          (1)
  Proceeds attributed from initial public offering                        7,000           -
  Transfers from AT&T, net                                                1,345       1,577
Balance at end of period                                                 21,496      12,111

ACCUMULATED OTHER COMPREHENSIVE INCOME
  Balance at beginning of period                                             26          (3)
  Net revaluation of investments (net of taxes of $12)                        -          21
Balance at end of period                                                     26          18

TOTAL EQUITY                                                            $24,522     $13,129

SUMMARY OF TOTAL COMPREHENSIVE INCOME
  Net income (loss) after preferred stock dividends                     $   180     $    (1)
  Dividend requirements on preferred stock held by AT&T, net                 46          27
  Net income                                                                226          26
  Net revaluation of investments (net of taxes of $12)                        -          21
TOTAL COMPREHENSIVE INCOME                                              $   226     $    47
<FN>
                   See Notes to Combined Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
                               AT&T WIRELESS GROUP

                        COMBINED STATEMENTS OF CASH FLOWS
                              (Dollars in millions)
                                   (Unaudited)
<CAPTION>
                                                                          For the Six Months
                                                                             Ended June 30,
                                                                           2000        1999
<S>                                                                      <C>         <C>
OPERATING ACTIVITIES

Net income                                                               $  226      $   26

Adjustments   to  reconcile  net  income  to  net  cash
provided  by  operating activities:
        Gains on sale/exchange of investments                              (167)        (99)
        Depreciation and amortization                                       771         584
        Deferred income taxes                                               116          13
        Net equity earnings from investments                                (67)        (71)
        Minority interests in consolidated subsidiaries                      (8)        (12)
        Provision for uncollectibles                                        115          88
        Increase in accounts receivable                                    (328)       (210)
        (Increase) decrease in inventories                                 (238)         32
        Decrease in accounts payable                                       (252)       (116)
        Net change in other operating assets and liabilities                 55          42
NET CASH PROVIDED BY OPERATING ACTIVITIES                                   223         277

INVESTING ACTIVITIES
        Net increase in note receivable from AT&T                        (3,962)          -
        Capital expenditures and other additions                         (1,879)       (792)
        Net acquisitions of licenses                                       (105)        (17)
        Equity investment distributions and sales                           245          99
        Equity investment contributions and purchases                       (77)       (134)
        Net (acquisitions) dispositions of businesses
        including cash acquired                                          (2,602)        244
NET CASH USED IN INVESTING ACTIVITIES                                    (8,380)       (600)

FINANCING ACTIVITIES
        Increase in short-term borrowings                                     -          33
        Increase in long-term debt due to AT&T                              400         500
        Proceeds attributed from initial public offering                  7,000           -
        Dividend requirements on preferred stock, net                       (46)        (27)
        Transfers from (to) AT&T, net                                       806         (85)
        Other financing activities, net                                      (2)        (10)
NET CASH PROVIDED BY FINANCING ACTIVITIES                                 8,158         411

Net increase in cash and cash equivalents                                     1          88

Cash and cash equivalents at beginning of year                                5          27

Cash and cash equivalents at end of period                               $    6      $  115
<FN>
                   See Notes to Combined Financial Statements
</FN>
</TABLE>
<PAGE>

                               AT&T WIRELESS GROUP

                     NOTES TO COMBINED FINANCIAL STATEMENTS
                              (Dollars in Millions)
                                   (Unaudited)


(a)      BACKGROUND AND BASIS OF PRESENTATION

         Background

         On April 27, 2000,  AT&T completed an initial public offering of 15.6%,
         or 360 million shares,  of the AT&T Wireless Group tracking stock at an
         initial  public  offering  price of $29.50  per  share.  This  stock is
         designed  to  track  the  performance  of  AT&T's   wireless   services
         businesses.  The AT&T  Wireless  Group  tracking  stock  issued  in the
         initial  public  offering  reflected  only a  portion  of the  economic
         interest  of the AT&T  Wireless  Group.  AT&T  retained  the  remaining
         interest in the economic  performance of the AT&T Wireless Group in the
         form of an inter-group  interest which represented an 84.4% interest as
         of the date of the initial public offering and at June 30, 2000.

         Basis of Presentation

         The AT&T Wireless  Group is a fully  integrated  business unit of AT&T.
         There  are  differences  between  the  results  reported  for the  AT&T
         Wireless Group and the AT&T wireless  segment results reported by AT&T,
         for periods  prior to the initial  public  offering.  The AT&T Wireless
         Group   includes  the  results  of  its  mobility  and  fixed  wireless
         businesses,  as well as its international  operations,  which primarily
         include the  earnings or losses  associated  with equity  interests  in
         international wireless  communications  ventures and partnerships.  The
         combined  financial  statements  reflect  the  results  of  operations,
         financial  position,  changes  in  equity  and  cash  flows of the AT&T
         Wireless  Group  as if it  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 equity and cash flows of the AT&T Wireless  Group
         had  it  been  a  separate,   stand-alone  entity  during  the  periods
         presented.  Additionally,  the combined results for the interim periods
         presented are not necessarily  indicative of results for the full year.
         The combined financial  statements of the AT&T Wireless Group should be
         read in conjunction  with AT&T's  registration  statement filed on Form
         S-3 dated February 2, 2000, including the prospectus filed on April 27,
         2000, related to the initial public offering of the AT&T Wireless Group
         tracking stock. In addition, these combined financial statements should
         be read in  conjunction  with  AT&T's  Form  10-K  for the  year  ended
         December 31, 1999 and AT&T's Form 10-Q for the quarters ended March 31,
         2000, and June 30, 2000.

         The combined financial statements of the AT&T Wireless Group conform to
         generally  accepted  accounting  principles.   The  combined  financial
         statements  reflect  the  assets,  liabilities,  revenue  and  expenses
         directly   attributable   to  the  AT&T  Wireless  Group,  as  well  as
         allocations deemed reasonable by management,  to present the results of
         operations,  financial  position  and cash  flows of the AT&T  Wireless
         Group on a stand-alone  basis. The allocation  methodologies  have been
         described within the notes to the combined  financial  statements where
         appropriate.
<PAGE>
         The initial  public  offering of the AT&T Wireless Group tracking stock
         resulted  in  net  proceeds  to  AT&T,  after  deducting  underwriter's
         discount  and  related  fees  and  expenses,  of  $10.3  billion.  AT&T
         attributed  $7.0 billion of the net proceeds to the AT&T Wireless Group
         in the form of an intercompany note receivable which is included in the
         accompanying  combined  balance  sheet  as of June 30,  2000,  as "Note
         receivable from AT&T". Changes in the note receivable reflect transfers
         between  the AT&T  Wireless  Group and AT&T  subsequent  to the initial
         public offering,  primarily to fund acquisitions and capital expansion.
         Interest on the note  receivable is  calculated  based upon the average
         daily  balance  outstanding  at a rate  equal to the one  month  London
         InterBank Offered Rate (LIBOR) minus 6 basis points, a rate designed to
         be equivalent  to the rate the AT&T Wireless  Group would receive if it
         were a stand-alone entity.

         Prior to the initial public offering, the capital structure of the AT&T
         Wireless  Group had been assumed based upon AT&T's  historical  capital
         ratio  adjusted  for certain  items.  This  resulted in $3.4 billion in
         intercompany  indebtedness at December 31, 1999, paying annual interest
         at 7.25%. In addition, as of December 31, 1999, the AT&T Wireless Group
         had issued and  outstanding,  $1.0 billion of 9%  cumulative  preferred
         stock to AT&T that,  subject to the approval of the AT&T Wireless Group
         capital stock committee, is redeemable at the option of AT&T. On May 1,
         2000,  following the initial public offering of the AT&T Wireless Group
         tracking stock,  $2.0 billion of the AT&T Wireless Group's  outstanding
         intercompany  indebtedness to AT&T was recapitalized into an additional
         $2.0 billion of 9% cumulative  preferred stock. In conjunction with the
         recapitalization,  the  remaining  long  term  debt due to AT&T of $1.8
         billion was  recapitalized  to be 10 year term debt that bears interest
         at a fixed rate of 8.1% per annum.  The interest rate is designed to be
         substantially  equivalent  to the interest  rate 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.

         Changes  in  combined  equity  prior  to the  initial  public  offering
         represented  net transfers to or from AT&T,  after giving effect to the
         net income or loss of the AT&T  Wireless  Group during the period,  and
         were 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  prior to the initial
         public offering.

(b)      RECENT ACCOUNTING PRONOUNCEMENTS

         In December 1999, the Securities and Exchange  Commission  (SEC) issued
         Staff  Accounting  Bulletin  (SAB) No.  101,  "Revenue  Recognition  in
         Financial  Statements".  SAB  No.  101  provides  guidance  on  revenue
         recognition,  including  service  activation  fees, and certain related
         costs,  which  requires  adoption  by the  end  of  fiscal  year  2000.
         Management  is  currently  assessing  the  impact of SAB No. 101 to the
         combined  results of  operations  and  financial  position  of the AT&T
         Wireless Group.
<PAGE>
         In June 1998, the Financial  Accounting  Standards  Board (FASB) 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.

         In June 2000,  the FASB issued SFAS No.  138,  "Accounting  for Certain
         Derivative  Instruments and Certain Hedging Activities" as an amendment
         to SFAS No. 133. This statement  provides  clarification with regard to
         certain  implementation  issues under SFAS No. 133 on specific types of
         hedges.  It is not  expected  to have a  material  impact  on the  AT&T
         Wireless  Group's  results of  operations,  financial  position or cash
         flows.

(c)      ACQUISITIONS AND DIVESTITURES

         On June 19, 2000, the AT&T Wireless Group  announced that it had signed
         definitive  agreements to acquire wireless systems in the San Francisco
         Bay Area,  San Diego and Houston for $3.3 billion in cash.  On June 29,
         2000,  the AT&T Wireless  Group  completed the  acquisition of Vodafone
         Airtouch  plc's 50%  partnership  interest  in CMT  Partners  (Bay Area
         Properties),  which holds controlling interest in five Bay Area markets
         including San Francisco and San Jose, for approximately $1.8 billion in
         cash,  thereby giving the AT&T Wireless Group a 100% ownership interest
         in this  partnership.  The  transaction was recorded under the purchase
         method of accounting.  The excess of aggregate  purchase price over the
         fair value of net  tangible  assets  acquired,  based on a  preliminary
         allocation,  totaled $1,457,  and has been assigned to licensing costs,
         goodwill  and  other  intangible  assets  and is being  amortized  over
         periods of five to 40 years. We may make  refinements to the allocation
         of the  purchase  price in future  periods  as the  related  fair value
         appraisals of certain assets and  liabilities  are finalized.  Prior to
         consummation  of  this  transaction,  the  AT&T  Wireless  Group's  50%
         ownership  interest  in CMT  Partners  was  accounted  for as an equity
         investment.  Accordingly,  as a  result  of the  transaction,  $190 was
         reclassified from investments to goodwill on the accompanying  combined
         balance sheet.  The  transactions  related to the Houston and San Diego
         markets  have been  approved by the boards of directors of AT&T and the
         selling entities,  however,  are subject to certain federal  regulatory
         approvals,  which  the AT&T  Wireless  Group  expects  will  result  in
         ownership adjustments in an existing Houston market. These transactions
         are expected to close by the end of 2000.

         On June 1, 2000, the AT&T Wireless Group  completed its  acquisition of
         the assets of Wireless One Network,  L.P.,  for  approximately  $850 in
         cash,  acquiring  wireless systems in northwest and southwest  Florida.
         The  transaction  was recorded under the purchase method of accounting.
         Accordingly,  the operating results of Wireless One Network, L.P., have
         been included in the accompanying  combined financial  statements since
         the date of  acquisition.  The excess of aggregate  purchase price over

<PAGE>

         the fair value of net tangible assets acquired,  based on a preliminary
         allocation,  totaled  $780 and has been  assigned to  licensing  costs,
         goodwill  and  other  intangible  assets  and is being  amortized  over
         periods of five to 40 years. We may make  refinements to the allocation
         of the  purchase  price in future  periods  as the  related  fair value
         appraisals of certain assets and liabilities are finalized.

         On  February  28,  2000,  AT&T and  Dobson  Communications  Corporation
         (Dobson) acquired American Cellular  Corporation  (American  Cellular),
         through  a  joint  venture,   for  approximately  $2.4  billion.   AT&T
         contributed  its  interest  in the joint  venture to the AT&T  Wireless
         Group as of the date of the  acquisition.  The  acquisition  was funded
         with  non-recourse  bank  debt by the  joint  venture  and cash  equity
         contributions  of  approximately  $400 from  each of the two  partners.
         Dobson is responsible  for day-to-day  management of the joint venture,
         which is equally  owned and jointly  controlled  by Dobson and the AT&T
         Wireless  Group.  Accordingly,  this  investment is accounted for as an
         equity  method  investment  in  the  accompanying   combined  financial
         statements.

         On February 29, 2000, TeleCorp PCS, Inc. announced that it had signed a
         definitive  merger  agreement  with  Tritel,  Inc.  as  part  of  stock
         transaction valued at approximately $5.3 billion. Pursuant to the terms
         of the agreement,  each company will merge with a separate newly formed
         subsidiary  of a new holding  company that will be named  TeleCorp PCS,
         Inc. upon  consummation  of the  transaction.  The AT&T Wireless  Group
         currently  holds equity  interests in each of TeleCorp and Tritel which
         are both  affiliates of the AT&T Wireless Group. In connection with the
         merger,  the AT&T Wireless Group will  contribute to TeleCorp rights to
         acquire   additional   wireless   licenses  in   Wisconsin   and  Iowa,
         approximately $20 in cash and extend the term of its network membership
         license agreement to the merged entity or its operating subsidiaries in
         exchange for approximately  $410 of common shares in the newly combined
         company.  This  transaction will bring the AT&T Wireless Group's equity
         stake  in the  combined  TeleCorp  and  Tritel  to  approximately  23%.
         Additionally, in a separate transaction, the AT&T Wireless Group agreed
         to exchange certain wireless  properties and rights to acquire licenses
         in  Wisconsin  and  Iowa  markets,   as  well  as  a  cash  payment  of
         approximately  $80. In return,  the AT&T  Wireless  Group will  receive
         TeleCorp's  Boston  operating  segment,  which includes PCS licenses in
         several New England markets.  The boards of directors of AT&T, TeleCorp
         and  Tritel  have   approved  the   transactions.   Both  the  exchange
         transactions  and the merger  transactions  are  subject to  regulatory
         approval and are expected to close in the fourth quarter of 2000.

         In June 2000,  the AT&T Wireless  Group sold its interest in two equity
         investments for cash resulting in pretax gains of approximately $141.

(d)      COMMITMENTS

         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 June 30, 2000. The AT&T Wireless Group
         also makes routine filings with the Federal  Communications  Commission
         and the 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 beyond that provided for as
         of June 30,  2000,  would not be  material  to the  combined  financial
         statements.
<PAGE>

         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.  As of June 30, 2000,  the AT&T Wireless Group had fulfilled
         its commitment.

         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.

         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.

(e)      RELATED PARTY TRANSACTIONS

         As discussed in Note (a), AT&T has provided  necessary  working capital
         requirements  to the AT&T Wireless  Group through an  attribution  of a
         portion of the initial public offering proceeds,  intercompany debt and
         preferred stock, as well as capital  contributions prior to the initial
         public  offering.  These  amounts  are  reflected  in the  accompanying
         combined balance sheets as "Note receivable from AT&T", "Long-term debt
         due to AT&T" and "Preferred stock held by AT&T".

         Intercompany  interest income on the note receivable from AT&T for each
         of the three and six month  periods  ended June 30, 2000,  totaled $67.
         The  intercompany   interest  income  was  determined  based  upon  the
         methodology  described in Note (a) and is included  within other income
         in the accompanying combined statements of operations.

         Intercompany  debt and  interest  expense  was  assumed  based upon the
         methodology  discussed  in Note (a).  Intercompany  debt was $1,800 and
         $3,400  at  June  30,  2000  and  December   31,  1999,   respectively.
         Intercompany  interest  expense  was $49 and  $55 for the  three  month
         periods ended June 30, 2000, and 1999,  respectively,  of which $34 and
         $20, respectively,  was capitalized.  Intercompany interest expense was
         $121 and $103 for the six month  periods  ended June 30, 2000 and 1999,
         respectively, of which $58 and $37, respectively, was capitalized.

         The 9% cumulative preferred stock was $3.0 billion as of June 30, 2000,
         and $1.0 billion as of December 31, 1999.  Dividend  requirements  were
         $33 and $13 for the three month  periods  ended June 30, 2000 and 1999,
         respectively,  and $46 and $27 for the six month periods ended June 30,
         2000 and 1999, respectively.

         The  AT&T   Wireless   Group   purchases   long   distance   and  other
         network-related  services  from AT&T at  market-based  prices.  For the
         three month periods ended June 30, 2000 and 1999, these amounts totaled
         $64 and $38,  respectively.  For the six months ended June 30, 2000 and
         1999, these amounts totaled $116 and $72,  respectively.  These amounts
         are reflected within costs of services and products in the accompanying
         combined statements of operations.

         AT&T has  allocated  general  corporate  overhead  expenses,  including
         finance, legal, marketing, use of the AT&T brand, planning and strategy
         and human  resources to the AT&T Wireless  Group,  as well as costs for
         AT&T employees who directly support the AT&T Wireless Group,  amounting
         to $13 and $10 for the three  month  periods  ended  June 30,  2000 and
         1999,  respectively,  and $26 and $20 for the six month  periods  ended
         June 30, 2000 and 1999, respectively. These amounts are included within
         selling,  general  and  administrative  expenses  in  the  accompanying
         combined statements of operations.
<PAGE>
         Also  included in  selling,  general and  administrative  expenses  are
         charges paid to AT&T related to the AT&T Wireless  Group's direct sales
         force who were 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 $7 and $58 for the
         three month periods ended June 30, 2000 and 1999, respectively, and $67
         and $104 for the six  month  periods  ended  June  30,  2000 and  1999,
         respectively.  Effective April 1, 2000, the aforementioned  sales force
         became employees of the AT&T Wireless Group.

         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 $24 and $16 for the three month
         periods ended June 30, 2000 and 1999, respectively, and $48 and $31 for
         the six month periods ended June 30, 2000 and 1999, respectively.

         The  AT&T  Wireless  Group  sells  receivables  to  AT&T  for  wireless
         customers whose wireless  charges are combined  ("bundled")  with their
         long  distance  charges  into  one  bill.  Accounts  receivable  in the
         accompanying combined balance sheets included $90, as of June 30, 2000,
         and $83, as of December 31, 1999, associated with receivables from AT&T
         for  these  bundled  customers.  Selling,  general  and  administrative
         expenses  included $9 and $7 for the three month periods ended June 30,
         2000 and  1999,  respectively,  and  costs  of  services  and  products
         included $9 and $11 for the three month periods ended June 30, 2000 and
         1999,  respectively,  for the billing and  collection  fees  charged by
         AT&T. Selling, general and administrative expenses included $20 and $16
         for the six month periods  ended June 30, 2000 and 1999,  respectively,
         and costs of services  and  products  included  $19 and $16 for the six
         month  periods  ended  June 30,  2000 and 1999,  respectively,  for the
         billing and collection fees charged by AT&T.

         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 $5 and $4, to AT&T for  reimbursement  of its costs
         associated  with these  services for the three month periods ended June
         30, 2000 and 1999,  respectively.  The AT&T Wireless Group paid $10 and
         $8,  to AT&T for  reimbursement  of its  costs  associated  with  these
         services  for the six  month  periods  ended  June 30,  2000 and  1999,
         respectively.

(f)      SUBSEQUENT EVENTS

         On July 24, 2000,  the AT&T  Wireless  Group  announced it had signed a
         definitive   agreement   with  SBC   Communications   to  acquire   its
         Indianapolis  wireless  system  for  approximately  $530 in  cash.  The
         transaction  has been  approved by the boards of  directors of AT&T and
         SBC  Communications,   however,  remains  subject  to  certain  federal
         regulatory approvals and is expected to close by the end of 2000.


<PAGE>
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF

                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

OVERVIEW

On April 27, 2000,  AT&T completed an initial public  offering of 15.6%,  or 360
million  shares,  of the AT&T Wireless Group tracking stock at an initial public
offering  price of  $29.50  per  share.  This  stock is  designed  to track  the
performance  of AT&T's  wireless  services  businesses.  The AT&T Wireless Group
tracking stock issued in the initial public offering reflected only a portion of
the economic  interest of the AT&T Wireless  Group.  AT&T retained the remaining
interest in the economic  performance  of the AT&T Wireless Group in the form of
an inter-group  interest  which  represented an 84.4% interest as of the date of
the initial public  offering and at June 30, 2000. The results  included  herein
represent the AT&T Wireless Group in its entirety for all periods presented. For
the  portion  of the AT&T  Wireless  Group's  results  attributed  to the public
shareholders,  see AT&T's  Form  10-Q.  AT&T  currently  intends to dispose of a
portion of the remaining  interest in the AT&T Wireless Group in the second half
of this year.  Such  disposition  will include a  distribution  in the form of a
dividend  to AT&T  Common  Stock  Group  (which  represents  the results of AT&T
excluding the results  attributable to tracking stocks) shareowners for at least
a portion of such  interest,  but may also include an exchange  offer, a further
sale of the AT&T Wireless  Group tracking  stock or a combination  thereof.  The
method,  timing and sequence of the distribution  options,  which could occur in
stages,  will be based on the AT&T Board of Directors'  assessment of the market
conditions and other circumstances,  as appropriate, with the goal of maximizing
value for all AT&T  shareowners.  Following the  distribution we expect that the
outstanding  shares of the AT&T Wireless  Group tracking stock will reflect 100%
of the economic performance of the AT&T Wireless Group.

The AT&T Wireless  Group is a fully  integrated  business unit of AT&T. The AT&T
Wireless  Group  includes  the  results  of  its  mobility  and  fixed  wireless
businesses, as well as its international operations, which primarily include the
earnings or losses  associated with equity interests in  international  wireless
communications ventures and partnerships.

In June 2000,  the AT&T Wireless  Group closed the  acquisition of the remaining
50%  partnership  interest they previously did not own in CMT Partners (Bay Area
Properties). The Bay Area Properties cover a population base exceeding 7 million
potential  customers  and,  as  of  June  30,  2000,  served  nearly  1  million
subscribers.  The  acquisition of this entity was announced in conjunction  with
the signing of agreements to purchase wireless systems in Houston and San Diego,
which are anticipated to close later this year. The three systems combined cover
a population of approximately 15 million potential customers and, as of June 30,
2000, served more than 1.3 million subscribers.  Also in June, the AT&T Wireless
Group  completed its acquisition of Wireless One Network,  L.P.  (Wireless One).
Wireless  One owns and operates  wireless  systems in  northwest  and  southwest
Florida  covering a population base of 1.6 million  potential  customers and had
approximately  190,000  subscribers as of June 30, 2000. In February 2000,  AT&T
and  Dobson  Communications  Corporation,  through  a  joint  venture,  acquired
American  Cellular  Corporation.  AT&T  contributed  its  interest  in the joint
venture  to the AT&T  Wireless  Group as of the  date of the  acquisition.  This
acquisition  increased the AT&T Wireless  Group's coverage in New York State and
several midwest markets by adding approximately 450,000 subscribers.

<PAGE>

FORWARD-LOOKING STATEMENTS

Except  for  the  historical   statements  and  discussions   contained  herein,
statements herein constitute "forward-looking  statements" within the meaning of
Section 27A of the  Securities  Act of 1933 and  Section  21E of the  Securities
Exchange Act of 1934, including without limitation, statements concerning future
business prospects, revenues, operating performance, working capital, liquidity,
capital needs,  and general  industry growth rates and the AT&T Wireless Group's
performance relative thereto. These forward-looking  statements rely on a number
of assumptions  concerning  future events,  including the AT&T Wireless  Group's
ability  to achieve a  significant  market  penetration  in new  markets.  These
forward-looking  statements are subject to a number of  uncertainties  and other
factors, many of which are outside the AT&T Wireless Group's control, that could
cause  actual  results  to  differ  materially  from such  statements.  The AT&T
Wireless  Group  disclaims  any  intention or obligation to update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.

COMBINED RESULTS OF OPERATIONS

FOR THE THREE AND SIX MONTH  PERIODS ENDED JUNE 30, 2000 COMPARED WITH THE THREE
AND SIX MONTH PERIODS ENDED JUNE 30, 1999
Revenue

Total revenue  includes  wireless voice and data services,  the sale of handsets
and accessories,  and revenue  associated with the aviation  communications  and
fixed wireless  operations.  The AT&T Wireless Group records revenue as services
are provided or when the product is sold.  Services revenue  primarily  includes
monthly recurring charges,  airtime and toll usage charges,  and roaming charges
billed to  subscribers  for usage outside of the AT&T Wireless  Group network as
well as  charges  billed to other  wireless  providers  for  roaming on the AT&T
Wireless Group network.

Total revenue  increased 31.9% to $2,477 million,  and increased 35.9% to $4,675
million for the three and six month periods  ended June 30, 2000,  respectively,
compared  with the  respective  prior year periods.  The AT&T  Wireless  Group's
results  include  the  revenue  associated  with  Vanguard  Cellular  since  its
acquisition  on May 3, 1999.  Total  revenue  increased  29.4% and 31.1% for the
three and six month periods ended June 30, 2000, respectively, compared with the
same  periods for 1999,  adjusted to exclude  Vanguard  Cellular  for the period
January 2000 to April 2000, to correlate  results with 1999, due to the May 1999
acquisition.

The revenue  increases  were  primarily  due to growth in our mobility  business
revenue,  driven by strong  consolidated  subscriber growth and continued rising
average monthly revenue per user (ARPU). AT&T Digital One Rate service continues
to contribute 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 June 30, 2000, the number of  subscribers  using AT&T Digital
One Rate service was 2.4 million,  an increase of 66.2%,  compared with June 30,
1999, of which nearly 73% were new  subscribers  to the AT&T Wireless  Group for
the six months ended June 30, 2000.

Services  revenue for the three month  period  ended June 30,  2000,  was $2,240
million,  an increase of $551 million,  or 32.7%,  compared with the  respective
period in 1999.  Services  revenue for the six month period ended June 30, 2000,
was $4,232 million, an increase of $1,171 million,  or 38.3%,  compared with the
respective period in 1999.
<PAGE>
As of June 30,  2000,  the AT&T  Wireless  Group had 11.7  million  consolidated
subscribers,  an increase of 33.8%, compared with the prior year, of which 85.1%
were digital  subscribers,  up from 69.2% as of June 30, 1999. Included in these
figures were nearly 1 million  subscribers  from our acquisition of the Bay Area
Properties  in  June  2000  (which  were  previously   reported  as  partnership
subscribers)  and  approximately  190,000  subscribers  from our  acquisition of
Wireless One in June 2000. Net consolidated wireless subscriber additions in the
second quarter  totaled  532,000,  a 14.2% increase over the prior year quarter.
AT&T Wireless  Group's  average monthly churn rate in the second quarter of 2000
was 2.7%  compared  with 2.3% in the second  quarter of 1999.  The AT&T Wireless
Group's  average  monthly churn in the first half of 2000 was 2.8% compared with
2.5% in the first half of 1999. Total subscribers, including partnership markets
in which the AT&T  Wireless  Group  does not own a  controlling  interest,  were
nearly 14  million at the end of the second  quarter of 2000,  a 22.3%  increase
over the prior year. Ending total  subscribers  included  approximately  450,000
subscribers  associated with the AT&T Wireless  Group's  acquisition of American
Cellular in February 2000.

The AT&T  Wireless  Group's  ARPU for the three  months  ended June 30, 2000 was
$71.5,  an increase of $4.9, or 7.7%,  compared with the second quarter of 1999,
and for the six months  ended June 30, 2000 was $69.4,  an increase of $5.7,  or
8.9%,  compared with the first half of 1999.  These increases were primarily due
to  increased  minutes of use per  subscriber,  driven in part by the  continued
success  of AT&T  Digital  One Rate  service.  The AT&T  Wireless  Group's  ARPU
remained  significantly  higher than the wireless  industry  average  during the
quarter and half year ended June 30, 2000, excluding the AT&T Wireless Group.

Equipment  revenue  for the three month  period  ended June 30,  2000,  was $237
million, an increase of $48 million, or 25.2%,  compared with the same period in
1999.  Equipment  revenue for the six month period ended June 30, 2000, was $443
million, an increase of $63 million, or 16.6%,  compared with the same period in
1999.  These  increases were primarily due to 30.8% and 29.2% increases in gross
consolidated  subscriber additions in the three and six month periods ended June
30, 2000,  respectively,  compared with the same periods in 1999. As an integral
part of the wireless service  offering,  the AT&T Wireless Group supplies to its
subscribers a selection of handsets at competitive  prices,  which are generally
offered at or below cost.

Costs of services and products

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

Costs of services and products  for the three and six month  periods  ended June
30, 2000,  were $1,205  million and $2,258  million,  respectively.  This was an
increase of $265  million,  or 28.3%,  for the three month period ended June 30,
2000, and $508 million,  or 29.0%, for the six month period ended June 30, 2000,
compared with the same periods in 1999.  These  increases  were due primarily to
increases in the cost of handsets provided to subscribers which was attributable
to a 30.8% and 29.2% increase,  respectively,  in gross subscriber additions for
the three and six month  periods  ended June 30,  2000,  compared  with the same
periods  in the prior  year.  Additionally,  growth in the  subscriber  base and
increased  minutes  of usage  resulted  in an  increase  in the access and other
connection  charges paid to connect calls on other networks,  including AT&T, as
well as the costs to maintain the AT&T Wireless Group's network.

Roaming  expenses  decreased 4.4% for the quarter ended June 30, 2000,  compared
with the same period for 1999,  despite continued growth in off-network  roaming
minutes.  The decrease in roaming expenses was driven primarily by a significant
decrease  in the roaming  rate per minute of usage,  as well as  initiatives  to
aggressively migrate more minutes onto the AT&T Wireless Group's network.
<PAGE>
Selling, general and administrative

Selling,  general and administrative (SG&A) expenses for the three and six month
periods ended June 30, 2000, were $763 million and $1,513 million, respectively,
compared  with  $614  million  and  $1,178  million  for the three and six month
periods ended June 30, 1999.  These  increases  were primarily  attributable  to
higher  marketing and selling costs associated with the increase in consolidated
subscriber additions in the second quarter and first half of 2000, compared with
the respective  periods in 1999. Cost per gross subscriber  addition  (CPGA),
which includes the cost of handset  subsidies  recorded in costs of services and
products in the accompanying combined statement of operations, was $352 and $356
for the three and six month periods ended June 30, 2000,  compared with $338 and
$345 for the three and six month  periods  ended  June 30,  1999.  In  addition,
growth in the wireless  customer  base  resulted in an increase in customer care
and information technology expenses.

Depreciation and amortization

Depreciation and amortization expenses for the three month period ended June 30,
2000, were $402 million, an increase of $94 million, or 30.5%, compared with the
second quarter of 1999. Depreciation and amortization expenses for the six month
period ended June 30, 2000, were $771 million,  an increase of $187 million,  or
31.9%,  compared with the first half of 1999. These increases primarily resulted
from the growth in the AT&T Wireless  Group's  depreciable  asset base resulting
from  capital  expenditures  to increase the capacity of the network and improve
call quality as well as the acquisition of Vanguard  Cellular in May 1999. Total
capital  expenditures  were $1,291  million and $2,123 million for the three and
six month periods ended June 30, 2000.

Other income

Other income primarily includes gains or losses on sales or exchanges of assets,
net equity earnings from investments,  intercompany  interest income on the note
receivable from AT&T, and minority interests in consolidated subsidiaries. Other
income for the three and six month periods ended June 30, 2000, was $227 million
and $308 million, respectively. Other income for the three and six month periods
ended June 30,  1999,  was $140  million  and $184  million,  respectively.  The
increase  for the three and six  month  periods  ended  June 30,  2000,  was due
primarily  to  higher  gains on the  sales  of  assets  as well as  intercompany
interest income on the note receivable from AT&T of $67 million,  related to the
attribution  of $7.0  billion of initial  public  offering  proceeds to the AT&T
Wireless  Group.   Partially  offsetting  these  increases,  were  lower  equity
earnings  primarily as a result of increased  losses  associated  with affiliate
investments.

Interest expense

Interest expense consists primarily of interest on intercompany debt due to AT&T
less interest  expense  capitalized.  Interest expense for the second quarter of
2000, was $18 million,  a decrease of $20 million,  or 51.6%,  compared with the
second  quarter  of 1999.  Interest  expense  for the first half of 2000 was $69
million,  a decrease of $1  million,  or 1.0%,  compared  with the first half of
1999.  The decrease  for the second  quarter of 2000,  compared  with the second
quarter of 1999, was due to higher levels of capitalized interest as a result of
increased capital  expenditures,  as well as lower levels of average outstanding
debt due to AT&T. The decrease in the average  outstanding  debt due to AT&T was
attributable  to the  recapitalization  of $2.0 billion of long term debt due to
AT&T  into 9%  cumulative  preferred  stock  subsequent  to the  initial  public
offering  of the AT&T  Wireless  Group  tracking  stock.  These  decreases  were
partially offset by a higher rate of interest  charged on the intercompany  debt
in the second quarter of 2000 versus the prior year quarter.  For the six months
ended June 30, 2000,  higher  levels of  outstanding  debt,  as well as a higher
interest rate, offset the increase in capitalized interest.
<PAGE>
Provision for income taxes

The  provision  for income taxes for the three and six month  periods ended June
30, 2000,  was $116 million and $146  million,  respectively,  compared with $43
million and $17 million for the same periods in 1999, respectively. The increase
in the  provision  for income taxes was due to higher income before income taxes
and a higher  effective tax rate.  The effective  income tax rates for the three
and six month  periods  ended June 30, 2000 were 36.9% and 39.3%,  respectively,
<PAGE>
compared with 35.5% and 35.3%, for the same periods in 1999,  respectively.  The
effective income tax rate for each of the 2000 periods presented was impacted by
the  amortization  of  intangibles  and  unutilized  equity  investment  losses,
partially  offset  by a  benefit  due to the  disposition  of an  equity  method
investment. The effective income tax rate for each of the 1999 periods presented
was impacted by the benefit from the change in the valuation allowance and other
estimates,  offset by  unutilized  foreign  equity  losses and  amortization  of
intangibles.

Dividend requirements on preferred stock held by AT&T

At June 30, 2000, and December 31, 1999, the AT&T Wireless Group had outstanding
$3.0 billion and $1.0  billion,  respectively,  of preferred  stock held by AT&T
that pays dividends at 9% per annum.  Intercompany  indebtedness of $2.0 billion
was  recapitalized  into an additional  $2.0 billion of 9% cumulative  preferred
stock  following the initial  public  offering.  Dividend  requirements  on this
preferred  stock for the three and six month periods  ended June 30, 2000,  were
$33 million and $46 million,  respectively, and for the corresponding periods in
1999 were $13 million and $27 million,  respectively, net of amounts recorded in
accordance with the tax sharing agreement.

LIQUIDITY AND CAPITAL RESOURCES

The continued expansion of the AT&T Wireless Group's network, footprint and
service offerings, 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 initial public  offering  proceeds  attributed from
AT&T,  intercompany borrowings from AT&T and internally generated funds, as well
as capital contributions from AT&T prior to the initial public offering. Capital
contributions   from  AT&T  prior  to  the  initial  public  offering   included
acquisitions  made by AT&T that have been attributed to the AT&T Wireless Group.
Noncash  capital  contributions  from AT&T to the AT&T Wireless Group related to
acquisitions  and initial  investments  funded by AT&T  totaled $539 million and
$1,662  million  for the six  month  periods  ended  June  30,  2000  and  1999,
respectively.

The initial  public  offering of the AT&T Wireless Group tracking stock resulted
in net proceeds to AT&T after deducting  underwriter's discount and related fees
and expenses of $10.3 billion.  AT&T attributed $7.0 billion of the net proceeds
to the AT&T Wireless Group in the form of an intercompany  note receivable.  Net
transfers to and from the AT&T Wireless Group and AT&T subsequent to the initial
public offering are reflected as changes in the  intercompany  note  receivable.
After the attributed $7.0 billion of initial public offering  proceeds are fully
utilized,  AT&T  intends  to issue  short  term  floating  rate debt to the AT&T
Wireless Group.

On May 1, 2000,  following the initial public offering,  the AT&T Wireless Group
recapitalized $2.0 billion of outstanding intercompany indebtedness to AT&T into
an  additional  $2.0 billion of 9% cumulative  preferred  stock held by AT&T. In
conjunction with the recapitalization,  the AT&T Wireless Group's long term debt
due to AT&T was  recapitalized  to be 10 year term debt that bears interest at a
fixed rate of 8.1% per annum. AT&T has provided  financing at interest rates and
on terms and conditions  that are consistent  with those the AT&T Wireless Group
<PAGE>
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.

Financing  activities  for the AT&T  Wireless  Group  are  managed  by AT&T on a
centralized  basis and are  subject  to the  review of the AT&T  Wireless  Group
capital  stock  committee.  Loans from AT&T 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. 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 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.

Net cash  provided by  operating  activities  for the six months  ended June 30,
2000, was $223 million,  compared with $277 million for the same period in 1999.
The  decrease in cash  provided by operating  activities  was  primarily  due to
increases  in  inventories  and  accounts  receivable,  as well as a decrease in
accounts  payable,  partially offset by increased income excluding  depreciation
and amortization,  resulting from revenue growth and expense  leveraging for the
first  half of 2000  compared  with the  first  half of 1999.  Net cash  used in
investing activities for the six months ended June 30, 2000, was $8,380 million,
compared with $600 million for the six months ended June 30, 1999.  The increase
was due primarily to the issuance of a note receivable  from AT&T,  acquisitions
of the Bay Area Properties and Wireless One, and higher capital  expenditures to
upgrade and increase  network  capacity in existing markets as well as to expand
the national  footprint.  Net cash provided by financing  activities for the six
months ended June 30, 2000, was $8,158  million,  compared with $411 million for
the six months  June 30,  1999.  The  increase  was  primarily  due to  proceeds
attributed  from the initial public offering of the AT&T Wireless Group tracking
stock and increased  transfers from AT&T prior to the initial public offering to
fund acquisitions and higher capital expenditures.

EBITDA,  excluding  other  income,  is the  primary  measure  used by the  chief
operating  decision-makers to measure our ability to generate cash flow. EBITDA,
excluding  other  income,  defined as  operating  income plus  depreciation  and
amortization,  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 accounting principles,  measures of performance or to cash
flows  from  operating,  investing  and  financing  activities  as a measure  of
liquidity.

EBITDA,  excluding other income,  for the three and six month periods ended June
30, 2000,  was $509 million and $904 million,  respectively,  compared with $324
million and $513  million for the same  periods in 1999.  These  increases  were
attributable  to  increases  in total  revenue and an  improving  margin as SG&A
expenses  declined as a  percentage  of  revenues,  primarily  for our  mobility
business.

For our mobility business, EBITDA, excluding other income, for the three and six
month  periods  ended  June  30,  2000,  was  $550  million  and  $981  million,
respectively,  compared  with $347 million and $552 million for the same periods
in 1999.

For our fixed wireless business,  EBITDA,  excluding other income, for the three
and six month periods ended June 30, 2000,  was a deficit of $40 million and $74
million, respectively, compared with deficits of $17 million and $32 million for
the same periods in 1999.
<PAGE>
EBITDA,  excluding  other  income,  margins  were 20.5% and 19.3% for the second
quarter and first half of 2000, respectively,  compared with 17.3% and 14.9% for
the second  quarter and first half of, 1999,  respectively.  The  improvement in
EBITDA,  excluding other income, margins in the second quarter and first half of
2000  compared  with the  respective  periods  in 1999 was driven  primarily  by
revenue growth and expense leveraging,  primarily  off-network roaming expenses,
partially offset by increased  customer  acquisition and customer care costs, as
well as  higher  information  technology  costs  associated  with  growth in the
subscriber base.

EBITDA, excluding other income, margins for our mobility business were 22.2% and
21.0% for the second quarter and first half of 2000, respectively, compared with
18.5% and 16.0% for the second quarter and first half of 1999, respectively. The
improvement in EBITDA, excluding other income, margins in the second quarter and
first  half of 2000  compared  with the  respective  periods  in 1999 was driven
primarily by positive  EBITDA,  excluding  other income,  for the 1900 megahertz
markets for the three and six month periods  ended June 30, 2000,  compared with
losses  for the  respective  periods  in  1999,  as well  as  increased  EBITDA,
excluding other income, margins in the 850 megahertz markets.

FINANCIAL CONDITION

Total  assets were $32,843  million as of June 30,  2000,  an increase of $9,331
million,  or 39.7%,  compared  with  December  31,  1999.  The  increase was due
primarily to the $7.0 billion of initial public offering proceeds  attributed to
the  AT&T  Wireless  Group  from  AT&T  in  the  form  of an  intercompany  note
receivable,   increases  in  goodwill,  licensing  costs,  property,  plant  and
equipment,  and other assets  associated  with the  acquisitions of the Bay Area
Properties  and Wireless One, and increased  property,  plant and equipment as a
result of significant capital spending in the first half of 2000.  Additionally,
non-consolidated investments increased as a result of the investment in American
Cellular during 2000,  partially  offset by the acquisition of the remaining 50%
interest in CMT Partners, which is now consolidated.

Total  liabilities were $8,310 million as of June 30, 2000, a decrease of $1,185
million,  or 12.5%,  compared with December 31, 1999. The decrease was primarily
due to  the  decrease  in  long  term  debt  due  to  AT&T  resulting  from  the
recapitalization  of the AT&T Wireless  Group  subsequent to the initial  public
offering,  partially  offset  by  increases  in  deferred  income  taxes,  other
long-term  liabilities,  and other current  liabilities.  Deferred incomes taxes
increased due to the deferred tax provision  recognized for the six months ended
June 30, 2000. Other long-term liabilities increased due to proceeds received in
consideration for a long-term leasing arrangement, and other current liabilities
increased due to increased business taxes and operating accruals.

Total  preferred  stock held by AT&T increased to $3.0 billion at June 30, 2000,
from $1.0  billion at December  31, 1999,  due to the  recapitalization  of $2.0
billion of  intercompany  debt into  preferred  stock  subsequent to the initial
public  offering.  Dividends  payable on the preferred stock were paid at 9% per
annum.

Total  equity was $24,522  million as of June 30,  2000,  an increase of $10,525
million,  or 75.2%,  compared with December 31, 1999. The increase was primarily
due to increased  combined  equity  associated  with the  attribution of initial
public  offering  proceeds to the AT&T Wireless  Group, as well as net transfers
from AT&T prior to the initial  public  offering to fund capital  expansion  and
acquisitions, and the additional $2.0 billion of preferred stock issued to AT&T.

RECENT ACCOUNTING PRONOUNCEMENTS

In December  1999, the  Securities  and Exchange  Commission  (SEC) issued Staff
Accounting   Bulletin   (SAB)  No.  101,   "Revenue   Recognition  in  Financial
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Statements".  SAB No. 101 provides  guidance on revenue  recognition,  including
service  activation fees, and certain related costs,  which requires adoption by
the end of fiscal year 2000. Management is currently assessing the impact of SAB
No. 101 to the combined results of operations and financial position of the AT&T
Wireless Group.

In June 1998, the Financial  Accounting  Standards Board (FASB) 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
<PAGE>
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.

In June 2000, the FASB issued SFAS No. 138,  "Accounting for Certain  Derivative
Instruments  and Certain  Hedging  Activities"  as an amendment to SFAS No. 133.
This  statement  provides  clarification  with regard to certain  implementation
issues  under SFAS No. 133 on specific  types of hedges.  It is not  expected to
have a material  impact on the AT&T  Wireless  Group's  results  of  operations,
financial position or cash flows.

SUBSEQUENT EVENTS

On July 24, 2000, the AT&T Wireless  Group  announced it had signed a definitive
agreement with SBC  Communications  to acquire its Indianapolis  wireless system
for approximately $530 million in cash. The transaction has been approved by the
boards of directors of AT&T and SBC Communications,  however, remains subject to
certain  federal  regulatory  approvals  and is  expected to close by the end of
2000.