AT&T WIRELESS GROUP

                        COMBINED STATEMENTS OF OPERATIONS

                              (Dollars in Millions)

                                   (Unaudited)

                                        For the Three           For the Nine
                                        Months Ended            Months Ended
                                        September 30,           September 30,
                                        2000      1999         2000      1999
REVENUE
Services revenue                      $2,509    $1,867       $6,741    $4,928
Equipment revenue                        290       182          733       562
Total revenue                          2,799     2,049        7,474     5,490

OPERATING EXPENSES
Costs of services and products         1,381      993         3,639     2,743
Selling, general and administrative      946      655         2,459     1,833
Depreciation and amortization            445      333         1,216       917
Total operating expenses               2,772    1,981         7,314     5,493

OPERATING INCOME (LOSS)                   27       68           160        (3)
Other income (expense)                    78       (4)          386       180
Interest expense                           4       32            73       102
Income before income taxes               101       32           473        75
Provision for income taxes                80       14           226        31

Net income                            $   21   $   18        $  247    $   44

Dividend requirements on preferred
stock held by AT&T, net                   42       14            88        41

Net (loss) income after preferred stock
dividends                             $  (21)  $    4         $  159   $    3

                   See Notes to Combined Financial Statements

<PAGE>

                               AT&T WIRELESS GROUP

                             COMBINED BALANCE SHEETS

                              (Dollars in Millions)

                                                September 30,      December 31,
                                                    2000              1999
                                                 (Unaudited)
ASSETS
Cash and cash equivalents                        $     5            $     5
Accounts receivable, less allowances
  of $156 and $130                                 1,845              1,300
Note receivable from AT&T                          2,794                  -
Inventories                                          366                162
Deferred income taxes                                145                127
Prepaid expenses and other current assets             68                 34
TOTAL CURRENT ASSETS                               5,223              1,628

Property, plant and equipment, net of
  accumulated depreciation of $4,927 and $4,033    8,654              6,349

Licensing costs, net of accumulated amortization
  of $1,685 and $1,519                            10,457              8,571

Investments                                        4,918              4,502

Goodwill and other assets, net of accumulated
  amortization of $461 and $385                    3,793              2,462

TOTAL ASSETS                                     $33,045            $23,512

LIABILITIES

Accounts payable                                 $   906            $   921
Payroll and benefit-related liabilities              373                291
Debt maturing within one year                        154                154
Other current liabilities                          1,183                931
TOTAL CURRENT LIABILITIES                          2,616              2,297

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

Deferred income taxes                              3,950              3,750

Other long-term liabilities                          176                 48

TOTAL LIABILITIES                                  8,542              9,495

MINORITY INTEREST                                      1                 20

EQUITY

Preferred stock held by AT&T                       3,000              1,000
Combined equity                                   21,491             12,971
Accumulated other comprehensive income                11                 26
TOTAL EQUITY                                      24,502             13,997

TOTAL LIABILITIES AND EQUITY                     $33,045            $23,512
<PAGE>

                   See Notes to Combined Financial Statements
                               AT&T WIRELESS GROUP

                    COMBINED STATEMENTS OF CHANGES IN EQUITY
                              (Dollars in Millions)
                                   (Unaudited)
                                                          For the Nine Months
                                                          Ended September 30,
                                                           2000        1999

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 after preferred stock dividends                159           3
  Proceeds attributed from initial public offering        7,000           -
  Proceeds from shares issued for employee plans             16           -
  Transfers from AT&T, net                                1,345       2,261
Balance at end of period                                 21,491      12,799

ACCUMULATED OTHER COMPREHENSIVE INCOME
  Balance at beginning of period                             26          (3)
  Net revaluation of investments                            (15)         22
Balance at end of period                                     11          19

TOTAL EQUITY                                            $24,502     $13,818
SUMMARY OF TOTAL COMPREHENSIVE INCOME
  Net income after preferred stock dividends            $   159     $     3
  Dividend requirements on preferred stock held
    by AT&T, net                                             88          41
  Net income                                                247          44
  Net revaluation of investments (net of taxes of
    $10 and ($14))                                          (15)         22
TOTAL COMPREHENSIVE INCOME                              $   232     $    66

                   See Notes to Combined Financial Statements
<PAGE>


                               AT&T WIRELESS GROUP

                        COMBINED STATEMENTS OF CASH FLOWS
                              (Dollars in Millions)
                                   (Unaudited)

                                                           For the Nine Months
                                                           Ended September 30,
                                                            2000         1999
Operating Activities

Net income                                                $  247       $   44
Adjustments to reconcile net income to net cash
provided by operating activities:
Gains on sale/exchange of investments                       (167)         (99)
Depreciation and amortization                              1,216          917
Deferred income taxes                                        193          (21)
Net equity earnings from investments                         (72)         (69)
Minority interests in consolidated subsidiaries              (18)         (10)
Provision for uncollectibles                                 200          137
Increase in accounts receivable                             (634)        (375)
(Increase) decrease in inventories                          (186)          84
Decrease in accounts payable                                (195)        (169)
Net change in other operating assets and liabilities         277           88
NET CASH PROVIDED BY OPERATING ACTIVITIES                    861          527

INVESTING ACTIVITIES
         Net increase in note receivable from AT&T        (2,794)           -
         Capital expenditures and other additions         (3,010)      (1,376)
         Net acquisitions of licenses                       (218)         (32)
Equity investment distributions and sales                    319          178
Equity investment contributions and purchases               (122)        (172)
Net (acquisitions) dispositions of businesses
  including cash acquired                                 (3,168)         244
NET CASH USED IN INVESTING ACTIVITIES                     (8,993)      (1,158)

Financing Activities

Increase in short-term borrowings                              -           48
Increase in long-term debt due to AT&T                       400          700
Proceeds attributed from initial public offering           7,000            -
Proceeds from shares issued for employee plans                16            -
Dividend requirements on preferred stock, net                (88)         (41)
Transfers from (to) AT&T, net                                806          (71)
Other financing activities, net                               (2)         (16)
NET CASH PROVIDED BY FINANCING ACTIVITIES                  8,132          620

Net decrease in cash and cash equivalents                      -          (11)

Cash and cash equivalents at beginning of period               5           27

Cash and cash equivalents at end of period                $    5       $   16

                   See Notes to Combined Financial Statements

<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  September  30,  2000.  See  note (f) for
additional  information  on the  exchange  and  distribution  of  the  remaining
interest held by AT&T.

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,  June 30,
2000, and September 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 September 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 does not expect the adoption of SAB No.
101 to  have  a  material  impact  on  the  AT&T  Wireless  Group's  results  of
operations, financial position or cash flows.
<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.  Based on the types of contracts we currently  have,  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.  Based on the types of
contracts we currently have, management does not expect this statement to have a
material impact on the AT&T Wireless  Group's  results of operations,  financial
position or cash flows.

(c)      ACQUISITIONS AND DIVESTITURES

In November 1998,  the AT&T Wireless Group and BellSouth  combined their jointly
owned cellular properties in Los Angeles,  Houston and Galveston,  plus cash, to
form AB Cellular Holding, LLC (AB Cellular), which continues to own, control and
supervise all three  properties.  The AT&T Wireless  Group holds a 55.62% equity
interest in AB Cellular,  however, holds a 50% voting interest,  therefore, this
investment is accounted for under the equity method. Pursuant to the AB Cellular
Limited Liability Company Agreement,  there are redemption provisions that allow
BellSouth,  during the 30-day period commencing  December 13, 2000, to alter the
ownership  structure of AB Cellular  pursuant to one of three options.  The AT&T
Wireless  Group has similar  rights that  commence  December  13,  2001.  Public
documents filed by BellSouth,  reflect that BellSouth  anticipates selecting the
structure that would result in AB Cellular  redeeming the AT&T Wireless  Group's
interest in AB Cellular  in  consideration  of 100% of the net assets of the Los
Angeles  property.  If  this  option  is  selected,   the  AT&T  Wireless  Group
anticipates  that it will recognize a significant  gain on the redemption of its
interest in AB Cellular and is currently  assessing  the impact to its financial
statements as a result of the consolidation of the Los Angeles property.

On September 29, 2000,  AT&T Wireless  Group signed an agreement to exercise its
options to purchase  additional  shares of stock in its 14% equity investment in
Taiwan, Far EasTone  Telecommunications,  ltd. The number of shares received and
the total exercise price are dependent on the number of options exercised by all
optionees,  however the maximum  commitment  for the AT&T Wireless  Group is not
expected to exceed  $250 or to  increase  the AT&T  Wireless  Group's  ownership
interest  above 30%.  The  transaction  is expected  to close  during the fourth
quarter of 2000.
<PAGE>
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 September 29, 2000,  the AT&T
Wireless Group  completed the  acquisition of the wireless  system in San Diego,
for  approximately  $500 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 (the Bay Area  Properties),  which holds a 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.  These  transactions  were  recorded  under  the
purchase method of accounting.  The excess of aggregate  purchase price over the
fair value of net tangible assets  acquired,  based on preliminary  allocations,
totaled  $2,094 and has been  assigned to  licensing  costs,  goodwill and other
intangible  assets and is being amortized over periods of five to 40 years. This
allocation  includes  adjustments made during the third quarter of 2000, related
to valuation adjustments for the Bay Area Properties. We may make refinements to
the  allocations  of the purchase  prices 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 transaction related to
the Houston wireless system has been approved by the boards of directors of AT&T
and the  selling  entity,  however,  is subject to  certain  federal  regulatory
approvals,  which the AT&T  Wireless  Group  expects  will  result in  ownership
adjustments in an existing Houston market. This transaction is expected to close
during the fourth quarter 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 the fair value of net tangible  assets  acquired,
based  on a  preliminary  allocation,  totaled  $792 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,   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.
<PAGE>
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
September 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  September  30,  2000,  would not be  material to the  combined  financial
statements.

The AT&T Wireless Group has a commitment to purchase  handsets  totaling $132 at
September 30, 2000.

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 the three and
nine months ended September 30, 2000,  totaled $60 and $127,  respectively.  The
intercompany interest income was determined based upon the methodology described
in Note (a) and is included  within other income  (expense) 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 September 30,
2000 and December 31, 1999, respectively.  Intercompany interest expense was $37
and $52 for the three months ended  September 30, 2000, and 1999,  respectively,
of which  $36 and $22,  respectively,  was  capitalized.  Intercompany  interest
expense was $158 and $155 for the nine months ended September 30, 2000 and 1999,
respectively,  of  which  $94 and  $59,  respectively,  was  capitalized.  As of
September 30, 2000, $37 of  intercompany  interest  payable was included  within
other current liabilities on the accompanying combined balance sheet.
<PAGE>
The 9% cumulative preferred stock was $3.0 billion as of September 30, 2000, and
$1.0 billion as of December 31, 1999. Dividend requirements were $42 and $14 for
the three months ended  September 30, 2000 and 1999,  respectively,  and $88 and
$41 for the nine months ended September 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 months ended September
30, 2000 and 1999, these amounts totaled $63 and $39, respectively. For the nine
months ended  September 30, 2000 and 1999,  these amounts totaled $179 and $111,
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 $15 and $10 for the three
months ended September 30, 2000 and 1999, respectively,  and $41 and $30 for the
nine months ended September 30, 2000 and 1999,  respectively.  These amounts are
included within selling, general and administrative expenses in the accompanying
combined statements of operations.

Also included in selling,  general and administrative  expenses are charges 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.  Effective April
1, 2000, the  aforementioned  sales force became  employees of the AT&T Wireless
Group.  These charges  amounted to $52 for the three months ended  September 30,
1999,  and $67 and $156 for the nine months ended  September  30, 2000 and 1999,
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 $27 and $19 for the three months ended  September  30, 2000
and 1999, respectively,  and $75 and $50 for the nine months ended September 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  $85, as of  September  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 for both the three months ended
September  30, 2000 and 1999,  respectively,  and costs of services and products
included  $9 and $4 for the three  months  ended  September  30,  2000 and 1999,
respectively,  for the billing and  collection  fees  charged by AT&T.  Selling,
general and  administrative  expenses  included  $29 and $25 for the nine months
ended  September  30, 2000 and 1999,  respectively,  and costs of  services  and
products  included $28 and $20 for the nine months ended  September 30, 2000 and
1999, respectively, for the billing and collection fees charged by AT&T.
<PAGE>
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 $6
and $8, to AT&T for  reimbursement  of its costs  associated with these services
for the three months ended September 30, 2000 and 1999,  respectively.  The AT&T
Wireless Group paid $16, to AT&T for  reimbursement of its costs associated with
these services for each of the nine months ended September 30, 2000 and 1999.

The AT&T  Wireless  Group  incurs  various  operating  expenses  on behalf of LA
Cellular,  which the AT&T Wireless Group owns through its equity  interest in AB
Cellular,  which are reimbursed to the AT&T Wireless Group. Accounts receivable,
on the  accompanying  combined  balance  sheet,  includes  $167 related to these
receivables at September 30, 2000.

(f)      SUBSEQUENT EVENTS

On November  13,  2000,  TeleCorp  PCS,  Inc.  (Telecorp)  completed  its merger
agreement  with Tritel,  Inc., as part of a stock  transaction.  Pursuant to the
terms of the  agreement,  each  company  merged  with a  separate  newly  formed
subsidiary of a new holding company named TeleCorp PCS, Inc., upon  consummation
of the  transaction.  Prior to the merger,  the AT&T Wireless  Group held equity
interests in each of TeleCorp and Tritel which were both  affiliates of the AT&T
Wireless  Group.  In  connection  with  the  merger,  the  AT&T  Wireless  Group
contributed  to  TeleCorp  PCS,  Inc.,  rights to  acquire  additional  wireless
licenses in Wisconsin and Iowa, paid  approximately $20 in cash and extended the
term  of its  brand  license  agreement  through  July  2005,  in  exchange  for
approximately  9.3 million  common shares in the newly  combined  company.  This
transaction  will bring the AT&T Wireless  Group's  equity stake in the combined
company  to  approximately   23%,  assuming  the  conversion  of  all  currently
convertible  preferred  stock to common stock.  In a separate  transaction  with
TeleCorp,  the AT&T  Wireless  Group  completed an exchange of certain  wireless
licenses and rights to acquire  licenses in the Wisconsin  and Iowa markets,  as
well as made a cash payment of approximately  $80. In return,  the AT&T Wireless
Group  received  TeleCorp's  PCS licenses  and  wireless  systems in several New
England  markets.  The AT&T  Wireless  Group  anticipates  it will  recognize  a
significant gain on the transactions.

On October 25, 2000,  AT&T  announced  its intention to dispose of its remaining
interest in the AT&T Wireless Group tracking  stock,  which has been approved by
AT&T's Board of  Directors.  AT&T intends to offer AT&T common  shareowners  the
opportunity  to exchange  AT&T common  stock for AT&T  Wireless  Group  tracking
stock.  AT&T plans to  distribute  its  remaining  interest in the AT&T Wireless
group tracking stock to AT&T common  shareowners in 2001. Upon completion of the
exchange offer and distribution, AT&T intends to convert the AT&T Wireless Group
tracking stock into an asset-based  AT&T Wireless common stock and distribute to
its shareowners.
<PAGE>
On October 2, 2000, the AT&T Wireless Group completed its acquisition of several
equity interests in international  ventures  acquired by AT&T as a result of its
acquisition  of MediaOne in June 2000.  The AT&T Wireless  Group  acquired these
interests from AT&T for  approximately  $1 billion in cash, which was determined
based  upon a third  party  valuation.  Additionally,  the AT&T  Wireless  Group
assumed  deferred  tax  liabilities  totaling   approximately  $220  which  were
transferred from AT&T.

On October 2, 2000,  the AT&T  Wireless  Group  completed its  acquisition  of a
wireless system in Indianapolis for approximately  $530 in cash. The transaction
was recorded under the purchase method of accounting.

<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 September  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.

On October 25, 2000,  AT&T  announced  its intention to dispose of its remaining
interest in the AT&T Wireless Group tracking  stock,  which has been approved by
AT&T's Board of  Directors.  AT&T intends to offer AT&T common  shareowners  the
opportunity  to exchange  AT&T common  stock for AT&T  Wireless  Group  tracking
stock.  AT&T plans to  distribute  its  remaining  interest in the AT&T Wireless
group tracking stock to AT&T common  shareowners in 2001. Upon completion of the
exchange offer and distribution, AT&T intends to convert the AT&T Wireless Group
tracking stock into an asset-based  AT&T Wireless common stock and distribute to
its shareowners.

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.

On September 29, 2000,  the AT&T Wireless group  completed the  acquisition of a
wireless  system  in San  Diego,  which  covers a  population  base of 3 million
potential  customers.  Also,  during the third quarter,  the AT&T Wireless Group
completed  its  acquisition  of a  wireless  system on the Big Island of Hawaii.
Combined,  these two markets  served more than 180  thousand  subscribers  as of
September 30, 2000. In June 2000, the AT&T Wireless Group closed the acquisition
of the  remaining  50%  partnership  interest it  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 the acquisition date, served
nearly 1 million  subscribers.  The  acquisition of the wireless  systems in San
Diego and the Bay Area was  announced  in  conjunction  with the  signing  of an
agreement to purchase a wireless  system in Houston,  which is expected to close
during  the  fourth  quarter  of 2000.  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 thousand  subscribers as of the acquisition date. 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 mid-west markets by adding  approximately 450 thousand subscribers as of
the acquisition date.
<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, revenue, 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 NINE MONTHS ENDED  SEPTEMBER  30, 2000 COMPARED WITH THE THREE
AND NINE MONTHS ENDED SEPTEMBER 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 36.6% to $2,799 million,  and increased 36.2% to $7,474
million for the three and nine months ended  September  30, 2000,  respectively,
compared  with the  respective  prior year periods.  The AT&T  Wireless  Group's
results include the revenue  associated with the Bay Area Properties  since June
29, 2000, and Vanguard  Cellular  Systems,  Inc.  (Vanguard  Cellular) since its
acquisition on May 3, 1999.  Total revenue  increased  29.7% for the nine months
ended  September 30, 2000,  compared with the same period for 1999,  adjusted to
exclude the Bay Area  Properties for the three months ended  September 30, 2000,
and 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  for both the three and nine months ended  September  30,
2000, were primarily due to growth in our mobility business  revenue,  driven by
strong  consolidated  subscriber  growth.  Additionally,  an increase in average
monthly  revenue per user (ARPU) for the nine months ended  September  30, 2000,
compared with the respective prior year period,  contributed to the year-to-date
revenue  growth.  AT&T Digital One Rate service,  including  additional  calling
plans  introduced  in  August  2000 as well as the  AT&T  Regional  and  Digital
advantage  plans  announced  during the second  quarter  of 2000,  continues  to
contribute to growth in subscribers as well as an increase in ARPU.

Services  revenue for the three months  ended  September  30,  2000,  was $2,509
million,  an increase of $642 million,  or 34.3%,  compared with the  respective
period in 1999.  Services  revenue for the nine months ended September 30, 2000,
was $6,741 million, an increase of $1,813 million,  or 36.8%,  compared with the
respective period in 1999.
<PAGE>
As of  September  30,  2000,  the AT&T  Wireless  Group  had over  12.6  million
consolidated subscribers, an increase of 38.4%, compared with the prior year, of
which 87.5% were digital  subscribers,  up from 73.5% as of September  30, 1999.
Included  in  these  figures  were  over  180  thousand   subscribers  from  our
acquisitions  of the San Diego and  Hawaii  wireless  systems  during  the third
quarter of 2000,  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 thousand  subscribers from our acquisition of
Wireless One in June 2000. Net consolidated wireless subscriber additions in the
third  quarter  totaled  750  thousand,  a 195.1%  increase  over the prior year
quarter.  AT&T Wireless  Group's average monthly churn rate in the third quarter
of 2000 was 2.9%  compared  with 2.6% in the  third  quarter  of 1999.  The AT&T
Wireless  Group's  average monthly churn for the nine months ended September 30,
2000,  was 2.8%  compared  with 2.6% in the  respective  period  in 1999.  Total
subscribers, including partnership markets in which the AT&T Wireless Group does
not own a controlling  interest,  were nearly 15 million at the end of the third
quarter of 2000,  a 26.2%  increase  over the prior year  quarter.  Ending total
subscribers included  approximately 450 thousand 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  September 30, 2000,
was $68.5, an increase of $0.3, or 0.4%,  compared with the same period in 1999,
and for the nine months ended September 30, 2000, ARPU was $69.1, an increase of
$3.7, or 5.7%, compared with the same period in 1999. The increase was 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
three and nine months ended  September  30, 2000,  excluding  the AT&T  Wireless
Group.

Equipment  revenue for the three  months  ended  September  30,  2000,  was $290
million, an increase of $108 million, or 59.9%, compared with the same period in
1999.  Equipment  revenue for the nine months ended September 30, 2000, was $733
million, an increase of $171 million, or 30.6%, compared with the same period in
1999.  These  increases were primarily due to 85.5% and 47.4% increases in gross
consolidated  subscriber  additions in the three and nine months ended September
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 nine months ended September 30,
2000, were $1,381 million and $3,639 million, respectively. This was an increase
of $388 million,  or 39.2%,  for the three months ended  September 30, 2000, and
$896 million,  or 32.7%, for the nine months ended September 30, 2000,  compared
with the same periods in 1999.  These  increases were due primarily to increases
in the handsets  provided to subscribers which were attributable to the increase
in gross subscriber additions.  Additionally,  growth in the subscriber base and
increased  minutes of use per  subscriber  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.
<PAGE>
Roaming  expenses  decreased  12.5% and 3.0% for the three and nine months ended
September  30,  2000,  respectively,  compared  with the same  periods 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.

Selling, general and administrative

Selling,  general  and  administrative  (SG&A)  expenses  for the three and nine
months  ended  September  30,  2000,  were  $946  million  and  $2,459  million,
respectively,  compared  with $655 million and $1,833  million for the three and
nine months ended September 30, 1999. These increases were largely  attributable
to higher  marketing and selling costs,  primarily  advertising and commissions,
associated with the increase in gross consolidated  subscriber additions for the
three and nine months  ended  September  30,  2000,  compared to 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 $359 and $357 for the three
and nine months ended  September  30, 2000,  compared with $369 and $353 for the
three and nine months  ended  September  30, 1999.  In  addition,  growth in the
wireless  customer base resulted in an increase in  information  technology  and
customer care related expenses.

Depreciation and amortization

Depreciation and amortization  expenses for the three months ended September 30,
2000, were $445 million,  an increase of $112 million,  or 33.4%,  compared with
the third quarter of 1999.  Depreciation and amortization  expenses for the nine
months  ended  September  30,  2000,  were $1,216  million,  an increase of $299
million, or 32.5%,  compared with the first nine months 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.  Additionally,  amortization expense increased
for  the  nine  months  ended  September  30,  2000,  as a  result  of the  1999
acquisitions of Vanguard Cellular and Honolulu Cellular, and the acquisitions of
the Bay Area  Properties  and Wireless One in 2000.  Total capital  expenditures
were $920  million  and  $3,043  million  for the three  and nine  months  ended
September 30, 2000, respectively.

Other income (expense)

Other income (expense)  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  (expense)  for the  three  and nine  months  ended
September 30, 2000, was $78 million and $386 million, respectively. Other income
(expense) for the three and nine months ended September 30, 1999, was expense of
$4 million and income of $180 million,  respectively. The increase for the three
months  ended  September  30, 2000 was due  primarily to  intercompany  interest
income on the note  receivable from AT&T. The increase for the nine months ended
September 30, 2000,  was due primarily to  intercompany  interest  income on the
note receivable from AT&T, as well as higher gains on the sales of assets.

Interest expense

Interest expense consists primarily of interest on intercompany debt due to AT&T
less interest  expense  capitalized.  Interest  expense for the third quarter of
2000,  was $4 million,  a decrease of $28 million,  or 88.5%,  compared with the
third  quarter of 1999.  Interest  expense for the first nine months of 2000 was
<PAGE>
$73 million, a decrease of $29 million,  or 28.4%,  compared with the first nine
months of 1999.  The decrease for the third  quarter of 2000,  compared with the
third  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 third quarter of 2000 versus the prior year quarter.  For the nine months
ended September 30, 2000, the decrease in interest  expense was due to decreased
levels of outstanding debt, as well as increased capitalized interest, partially
offset by a higher interest rate.

Provision for income taxes

The provision for income taxes for the three and nine months ended September 30,
2000, was $80 million and $226 million, respectively,  compared with $14 million
and $31 million for the same periods in 1999,  respectively.  The  increases for
both the three and nine month periods were due to higher income before taxes and
higher  effective tax rates.  The  effective  income tax rates for the three and
nine month periods ended September 30, 2000 were 78.9% and 47.8%,  respectively,
compared with 49.3% and 41.2%, for the same periods in 1999,  respectively.  The
effective  income tax rate for the three months ended  September  30, 2000,  was
impacted by the increase in the estimated  annual effective tax rate. The annual
estimated  effective  income tax rate of 47.8% increased from the estimated rate
of 39.3% as of June 30, 2000. The annual estimated effective income tax rate was
impacted by  acquisitions  closed  during the quarter as well as foreign  equity
investments.  The  effective  income  tax  rate  for  each of the  1999  periods
presented was impacted by the benefit from a 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 September  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 nine months ended  September  30, 2000,
were  $42  million  and $88  million,  respectively,  and for the  corresponding
periods in 1999 were $14 million and $41 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
$2,332  million  for  the  nine  months  ended  September  30,  2000  and  1999,
respectively.
<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.  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 may issue  short term  floating  rate debt to the AT&T  Wireless
Group.  In addition,  AT&T is  considering  a debt offering by 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.

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.  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,  including  short term floating rate debt from
AT&T and/or third-party debt. 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 nine months ended  September
30, 2000,  was $861  million,  compared with $527 million for the same period in
1999. The increase in cash provided by operating activities was primarily due to
an  increase  in  operating  income  excluding  depreciation  and  amortization,
resulting  from revenue growth and expense  leveraging,  an increase in deferred
income  taxes,   and  an  increase  in  other   operating  and  payroll  related
liabilities,   partially   offset  by  increases  in  inventories  and  accounts
receivable.  Net cash used in  investing  activities  for the nine months  ended
September 30, 2000,  was $8,993  million,  compared with $1,158  million for the
nine months  ended  September  30, 1999.  The increase was due  primarily to the
issuance  of  a  note  receivable  from  AT&T,  acquisitions  of  the  Bay  Area
Properties,  Wireless  One,  and the San  Diego  property,  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 nine months ended  September 30, 2000,  was $8,132  million,
compared with $620 million for the nine months  September 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
<PAGE>
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 nine months ended September
30, 2000, was $472 million and $1,376 million, respectively,  compared with $401
million  and $914  million  for the same  periods in 1999.  The  increases  were
primarily the result of revenue growth and lower  off-network  roaming expenses.
These improvements were partially offset by increased customer acquisition costs
associated with the increase in gross subscriber  additions,  increased  network
costs  attributable  to the growth in subscribers  and their minutes of use, and
increased information technology costs to support growth in the subscriber base.

For our mobility  business,  EBITDA,  excluding other income,  for the three and
nine months  ended  September  30, 2000,  was $522  million and $1,503  million,
respectively,  compared  with $421 million and $973 million for the same periods
in 1999.

For our fixed wireless business,  EBITDA,  excluding other income, for the three
and nine months ended  September 30, 2000, were deficits of $49 million and $123
million, respectively, compared with deficits of $17 million and $49 million for
the same periods in 1999.

EBITDA,  excluding  other  income,  margins  were  16.8% and 18.4% for the third
quarter and first nine  months of 2000,  respectively,  compared  with 19.6% and
16.6% for the third  quarter  and first nine months of 1999,  respectively.  The
decline in EBITDA,  excluding  other  income,  margins for the third  quarter of
2000,  compared to the third  quarter of 1999,  was  primarily  due to increased
customer acquisition costs associated with the 85.5% quarter over quarter growth
in  gross  consolidated  subscriber  additions,  as  well as  increased  cost of
handsets sold,  partially offset by declining roaming expenses.  The improvement
in EBITDA,  excluding  other income,  margins for the first nine months of 2000,
compared  to the first  nine  months of 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 associated with
growth in the subscriber base.

EBITDA, excluding other income, margins for our mobility business were 18.7% and
20.1%  for the  third  quarter  and first  nine  months  of 2000,  respectively,
compared  with 20.5% and 17.7% for the third  quarter  and first nine  months of
1999, respectively.

FINANCIAL CONDITION

Total assets were  $33,045  million as of  September  30,  2000,  an increase of
$9,533 million, or 40.5%,  compared with December 31, 1999. The increase was due
primarily  to  increases  in  goodwill,  licensing  costs,  property,  plant and
equipment,  and other assets  associated  with the  acquisitions of the Bay Area
Properties,  Wireless  One,  and the San  Diego  property,  the  initial  public
offering proceeds attributed to the AT&T Wireless Group from AT&T in the form of
an intercompany note receivable,  and increased property, plant and equipment as
a result of  significant  capital  spending  in the first  nine  months 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.
<PAGE>
Total  liabilities  were $8,542  million as of September 30, 2000, a decrease of
$953  million,  or 10.0%,  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 nine months ended
September  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 September 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  $24,502  million as of  September  30,  2000,  an increase of
$10,505  million,  or 75.1%,  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
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 does not expect the adoption of SAB No.
101 to  have  a  material  impact  on  the  AT&T  Wireless  Group's  results  of
operations, financial position or cash flows.

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.  Based on the types of contracts we currently  have,  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.  Based on the types of
contracts we currently have, management does not expect this statement to have a
material impact on the AT&T Wireless  Group's  results of operations,  financial
position or cash flows.
<PAGE>
SUBSEQUENT EVENTS

On November  13,  2000,  TeleCorp  PCS,  Inc.  (Telecorp)  completed  its merger
agreement  with Tritel,  Inc., as part of a stock  transaction.  Pursuant to the
terms of the  agreement,  each  company  merged  with a  separate  newly  formed
subsidiary of a new holding company named TeleCorp PCS, Inc., upon  consummation
of the  transaction.  Prior to the merger,  the AT&T Wireless  Group held equity
interests in each of TeleCorp and Tritel which were both  affiliates of the AT&T
Wireless  Group.  In  connection  with  the  merger,  the  AT&T  Wireless  Group
contributed  to  TeleCorp  PCS,  Inc.,  rights to  acquire  additional  wireless
licenses  in  Wisconsin  and Iowa,  paid  approximately  $20 million in cash and
extended the term of its brand license  agreement through July 2005, in exchange
for approximately 9.3 million common shares in the newly combined company.  This
transaction  will bring the AT&T Wireless  Group's  equity stake in the combined
company  to  approximately   23%,  assuming  the  conversion  of  all  currently
convertible  preferred  stock to common stock.  In a separate  transaction  with
TeleCorp,  the AT&T  Wireless  Group  completed an exchange of certain  wireless
licenses and rights to acquire  licenses in the Wisconsin  and Iowa markets,  as
well as made a cash payment of approximately  $80 million.  In return,  the AT&T
Wireless Group received  TeleCorp's PCS licenses and wireless systems in several
New England  markets.  The AT&T Wireless  Group  anticipates it will recognize a
significant gain on the transactions.

On October 25, 2000,  AT&T  announced  its intention to dispose of its remaining
interest in the AT&T Wireless Group tracking  stock,  which has been approved by
AT&T's Board of  Directors.  AT&T intends to offer AT&T common  shareowners  the
opportunity  to exchange  AT&T common  stock for AT&T  Wireless  Group  tracking
stock.  AT&T plans to  distribute  its  remaining  interest in the AT&T Wireless
group tracking stock to AT&T common  shareowners in 2001. Upon completion of the
exchange offer and distribution, AT&T intends to convert the AT&T Wireless Group
tracking stock into an asset-based  AT&T Wireless common stock and distribute to
its shareowners.

On October 2, 2000, the AT&T Wireless Group completed its acquisition of several
equity interests in international  ventures  acquired by AT&T as a result of its
acquisition  of MediaOne in June 2000.  The AT&T Wireless  Group  acquired these
interests from AT&T for  approximately  $1 billion in cash, which was determined
based  upon a third  party  valuation.  Additionally,  the AT&T  Wireless  Group
assumed deferred tax liabilities totaling  approximately $220 million which were
transferred from AT&T.

On October 2, 2000,  the AT&T  Wireless  Group  completed its  acquisition  of a
wireless  system in  Indianapolis  for  approximately  $530 million in cash. The
transaction was recorded under the purchase method of accounting.