1

NIBC 2016FIRST ROUND CASE – AT&T

True North Investments

2

Executive Summary

Acquire AMC Networks

Rationale: Penetrate the media market, benefiting from original content production from various popular channels and partnerships, gaining competitive advantage

in the media segment. Growth opportunity as well as diversifying revenue, such as from advertising. AMC Networks is a bargain, trading at lower EV/EBITDA compared to other media companies, fits directly into AT&T’s prospects. Further take integrated solutions to the next step, adding to core business strengths.

Synergies: Accretion/Dilution: with no synergies AMC transaction is accretive at under $110 at 50% debt financing. Cost synergies would increase EV by up to U$785 MM at current trading Multiple and U$1 BN at a 0.3x multiple expansion over NTM multiple.

Financial Capacity: Proposed funding capacity of U$20 BN will be more than sufficient to cover AMC’s market cap and premium.

Partner with Apple and auto makers on Apple CarPlay roll out

Rationale: Capitalize on opportunity to innovate and increase revenue utilizing existing infrastructure. Gain dominant position in Connected Cars market while showcasing wireless coverage to potential customers. Build brand power through association with Apple and luxury car retailers. Use as channel to further Distracted Driving Campaign, be ambassador for safe driving.

Risks Financial risk: manageable as AMC Network company value is no where near debt target. Reputational risk: CarPlay is promising, but if it fails, brand name could be associated with unsuccessful attempt – however, upside if successful is

greater than downside. Regulation: minimum antitrust issue.

AT&T

3

Company Overview

4

Company Overview

AT&T is the most diversified telecommunication company in the U.S. Acquisition of DIRECTV made the company the biggest Pay-TV platform

nationwide Total users of ~ 127 million in the U.S. Leading connectivity provider with cost leadership, offering integrated

solutions to clients Strengths: large size, wide wireless coverage, & diverse segmentation Weaknesses: legacy technology & higher organizational upgrade costs

2015 YTD (as at Sept 30)Revenue $104.7 BN Net Income $9.6 BN

EBITDA $35.1 BN EPS $1.71

Business Model and Operating Analysis

HIGHLIGHTS Q3 2015 REVENUE BY SEGMENTS

DirecTV and U-Verse are currently being integrated with help from Ericsson as part of the cost synergy initiative

PRODUCTS & SERVICES

Wireless CommunicationsData and Internet ServicesVideo ServicesTelecommunications EquipmentWholesale Services

OPERATING REGIONSUnited StatesMexicoLatin America

STRATEGIC FOCUS

Integrated solutionsConnectivity leaderSmart, software-defined networkCost leadershipDeliver financial and operational growth

OPPORTUNITIES

Original content production, vacant over-the-top platforms

Technology innovation / enhancement

Partnership with other industries

Emerging market growth

$17.7 BN45%

$10.9 BN28%

$8.8 BN23%

$1.5 BN4%

Business Segment

Entertainment and Internet Services

Consumer Mobility

International

5

Liquidity and Debt Capacity

All bonds not issued in USD are hedged using cross currency swaps to exchange the future principal and interest payments to USD

70% of outstanding debt is due after 2021

Financial Soundness

DEBT MATURITY PROFILE LIQUIDITY

2015 2016 2017 2018 2019 2020 2021 to 2025

2026 to 2030

≥ 2031U$ BN

U$10 BN

U$20 BN

U$30 BN

U$40 BN

U$50 BN

$0.02

$6$8

$13

$7$10

$33

$5

$45

Outstanding principal amounts converted to USD using Sept 30 2015 FX rates

Floating13%

Zero1% Fixed

86%

Total Outstanding Debt U$126.7 BN

Average Remaining Life of Debt 13.7 years

Average Fixed Coupon Rate 4.8%

Net Debt / EBITDA jumps up in 2015 after taking on DirecTV’s outstanding debt and is forecasted to trend downwards as AT&T’s EBITDA increases at a faster rate than its debt issuance

Although this ratio peaks in 2015 at 2.5x, the integrated telecom average is 2.4x – AT&T is still well positioned to pay off its debt obligations

2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020EU$ BN

U$25 BN

U$50 BN

U$75 BN

U$100 BN

U$125 BN

0.0x

0.6x

1.2x

1.8x

2.4x

3.0x

Net Debt EBITDA Net Debt to EBITDA

Net

Dbe

t and

EB

ITD

A

Net

Deb

t / E

BIT

DA

Rat

io

6

Shareholder OwnershipInvestors Breakdown

Vanguard Group, Inc. (The)

State Street Corporation

Evercore Trust Company, N.A.

BlackRock Institutional Trust Company, N.A.

Capital Research Global Investors

Other Institutions

INSTITUTIONAL HOLDINGS

Institutional Holdings

55%

Others45%

TYPES OF OWNERSHIP

Vanguard Total Stock Market Index Fund

Vanguard 500 Index Fund

Vanguard Institu-tional Index

Fund-Institutional Index Fund

SPDR S&P 500 ETF Trust

Capital Income Builder, Inc.

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000108 MM

70 MM66 MM

60 MM

38 MM

INSTITUTIONAL HOLDINGS

85% of the institutional ownership is from traditional investment managers, with Vanguard leading the large crowd; banks, pension funds, and insurance companies account for 11.5%.

Activist investors make up 0.25% of the total ownership.

The number of institutional investors increasing their positions in AT&T during F2015-Q3 is more than twice that of those decreasing their positions.

7

Industry Overview

The wireless industry is growing as demand for smart phones and data intensive devices increase

Social trends for constant connectivity provides steady source of users going forward

There are regulatory pressures due to the recent string of acquisitions and market consolidation

The market is gradually becoming saturated

Trends

2013 2014 2015 2016 2017 2018 2019 2020$210

$220

$230

$240

$250

$260

$270

$280

$290

US WIRELESS CARRIERS – REVENUE U$ MM US WIRELINE CARRIERS – REVENUE U$ MM

2013 2014 2015 2016 2017 2018 2019 2020$145

$150

$155

$160

$165

$170

$175

$180

$185

+12%

-7%

The wireline industry is declining as customers transition away from stationary communication devices to wireless devices

The traditional wires are also losing competitive edge to fiber optics and VoIP providers

This service is usually sold as a bundle with other more desirable products

8

Competitive AnalysisAT&T has the Best Coverage

9

Direct and Indirect CompetitorsPlayers In The Industry

COMPANY MARKET CAP EBITDA OVERVIEW REVENUE SOURCE

U$ 90.1 BN 20.6 BN Operates globally with partnerships and subsidiaries starting to penetrate the quad-play

trend Acquiring small-medium companies to capture market shares

U$ 19.4 BN 6.2 BN Affordability and flexibility combined with coverage make best provide for low data users Low spectrum market share limits users data transfer capabilities and firms potential

growth

U$ 33.8 BN 7.2 BN Mobile Pure play un-carrier with focus on customer flexibility and affordability Low market share and low margins

U$ 187.9 BN 46.5 BN Largest wireless service provider, second-best wireless coverage Premium products and services, international presence Rapid growth in fiber network

U$ 209.0 BN 30.0 BN Provides integrated solutions Became the largest pay-TV provider in the United States with DirecTV acquisition

U$ 51.9 BN 8.2 BN Second largest cable telecommunications company in the United States Partners with other key players to expand offerings

U$ 28.7 BN 3.0 BN Stresses on offering the best value compared to competitors Third largest pay-TV provider in the United States

U$ 151.2 BN 24.6 BN Strong balance sheet with focus in cable, media, and entertainment industry Driving to improve customer experience

C$ 26.8 BN 4.9 BN Operates in Canada as one of the biggest telecommunications company and owns

sports teams Offers wireless, wireline, cable, and media

C$ 49.3 BN 7.9 BN Offers wireline, wireless, and cable Large infrastructure penetrating residential, business, and wholesale customers

AT&T is an integrated supplier of telecommunications services so it contends with a number of key players within each subsection of the industry.

Wireless Wireline Cable/Satellite/Media

10

Valuation

11

Mar 2011 to Dec 2011

AT&T announced intention to purchase T-Mobile USA for U$39 BN, making AT&T the largest player in the wireless space in the US, share price +10% over a week

DOJ filed antitrust lawsuit seeking to block the merger in August AT&T withdraws bid in December Oct 2013

Crown Castle International acquired 627 of AT&T’s wireless towers and AT&T also agreed to leas up to 9,000 sites to CCI for terms up to 28 years

Combined value of this deal U$4.9 BN

Jul 2012

Increased its wireless spectrum through acquiring NextWave Wireless, Horizon Wi-Com and purchased spectrum from Comcast

The combined spectrum will provide near-nationwide coverage, boosting AT&T’s capacity May 2014

Approached DirecTV for possible acquisition for a deal worth over U$40 BN AT&T to sell stake in America Movil to avoid regulatory conflicts and facilitate

regulatory approval process in Latin America

Oct 2012

Softbank acquired majority stake in Sprint Markets reacted negatively, price decreased by 5%

Nov 2014

Announced acquisition of Mexican wireless provider Iusacell for U$ 2.5BN This network covers 70% of Mexico’s 120 million citizens Share price increased by 5%

Jan 2013 to May 2013

Purchased spectrum from Alltel for U$780 MM and spectrum from Verizon for U$1.9 BN to expand its 4G LTE coverage

Seeking out telecoms to acquire in Europe to offset growth constraints in the US Jan 2015

Plans to acquire Nextel Mexico for U$1.9 BN AT&T intends on integrating Iusacell and Nextel

Jul 2013

Announced intention to acquire Leap Markets had opposing views of on the transactions, share price remained flat

Jan 2015

Spent U$18.2 BN for a nationwide block of AWS-3 spectrum Now covers 96% of the US population with this spectrum

Historical Share Price PerformanceMajor Events

Nov 2010 May 2011 Nov 2011 May 2012 Nov 2012 May 2013 Nov 2013 May 2014 Nov 2014 May 2015 Nov 2015$25

$30

$35

$40

2

37

89 10

1

1

4

2

3

4

5

6

7

8

9

6

5 10

12

Analyst Target

Analyst Scenario Price Range

52 Week Trading Range

EV/Revenue

EV/EBITDA

EV/Revenue

EV/EBITDA

Perpetual Growth

EBITDA Multiple

$15 $25 $35 $45 $55 $65 $75 $85

Valuation OverviewAssessment of Stock Price

Current Price

DC

FC

omps

Pre

cede

nts

Trad

ing

Ana

lysi

s

Worst Case Best Case Range Worst Case Best Case Range

DCF EBITDA Multiple $28.66 $45.70 $17.04 Precedents EV/EBITDA $39.87 $49.73 $9.86

Perpetual Growth $23.19 $81.24 $58.05 EV/Revenue $30.20 $64.66 $34.46

Comps EV/EBITDA $23.04 $36.83 $13.79 Trading Analysis 52-Wk Trading Range $30.97 $36.45 $5.48

EV/Revenue $30.46 $37.86 $7.40 Analyst Scenario Price Range $30.00 $45.00 $15.00

Analyst Target $38.00 $42.00 $4.00

13

Valuation AnalysisFirm

DRIVER RISK SENSITIVITY

OPERATING

Revenue Loss of market share to “Un-carriers” Decrease in ARPU Increase in decline of legacy wireline

EBITDA Margin Fewer synergies with DTV More aggressive pricing in wireless market Relaxed cost controls

FINANCING

CAPEX More infrastructure required to support wireless Segment & DTV

35.3 31.0% 32.0% 33.0% 34.0% 35.0% 36%2.0% $31.0 $32.1 $33.3 $34.5 $35.7 $36.92.5% $31.9 $33.1 $34.3 $35.5 $36.7 $37.93.0% $32.8 $34.0 $35.3 $36.5 $37.7 $39.03.5% $33.7 $35.0 $36.3 $37.5 $38.8 $40.1

EBITDA Margin

Rev

enue

15,000$ 69.97$ 17,000$ 63.21$ 19,000$ 56.44$ 21,000$ 49.67$ 23,000$ 42.90$ 24,000$ 39.52$

Price

CA

PE

X

WACC DRIVERS CAPITAL MARKETS DRIVERS FIRM FACTORS MARKET FORCES

Fed monetary policy / inflation expectations

1. Fed tightening increases cost of debt

2. May be offset by decrease in cost of EQ

Global equity risk premiums

1. Weakness in EM force capital to US lowering coat of equity

Low interest rates pushing down cost of capital

Search for yield causing flows into equities expanding trading multiples for growth firms

USD strength reducing foreign earnings

Continued movement away from wireless equipment subsidies

Cost synergies with DirecTV

Increased cost control measures

End of expansionary CAPEX

Reduction of leverage

Expected increase in domestic income

Increased saturation of connected devices

Trend away from traditional wireline

Continued growth of un-carriers

43.513.5% 36.21$ 14.0% 38.63$ 14.5% 41.04$ 15.0% 43.46$ 15.5% 45.87$ 16.0% 48.29$

Price

Dep

reci

atio

n / C

AP

EX

14

Comparables OverviewKey Metrics

 Market Cap Enterprise Value Net Debt / EV

EV / Revenue EV / EBITDA P / E

NTM NTM NTM

Verizon 187,860 297,407 36.4% 2.3x 6.4x 11.7x

Shaw Communications 9,217 13,401 29.9% 3.2x 7.3x 14.5x

Rogers Communications 20,672 33,811 38.9% 3.3x 8.6x 17.7x

Telus Corporation 19,967 27,069 26.2% 2.8x 7.8x 16.9x

BCE INC. 49,020 64,078 23.2% 3.9x 9.8x 22.4x

Integrated Telecom Average 57,347 87,153 30.9% 3.1x 8.0x 16.6x  

AT&T 204,275 325,759 38.9% 2.0x 6.2x 11.9x

Verizon The dominant telecom in the Northeast, focusing on premium over-the-top strategy Growing FIOS penetration and reduced churn in mobile customers

Shaw Operates in the same business lines except wireless, but more established in the media segment Recent acquisition of ViaWest for expansion into the US to enhance existing Canadian data center business

Rogers Canadian counterpart to AT&T in terms of market share & presence in Canada operating in the same segments Saturated wireless/line environment; growth in expansion of LTE coverage & live 4K TV sports broadcasting

Telus Significant market share in western Canada operating in the wireless and wireline segments Expanding its efficiency initiative to provide annual recurring savings of between C$100 MM to C$125 MM

BCE Operates in same business lines and local environment with comparable products and with larger media presence Saturated wireless and wireline environment, harder to capture market share

15

Comparables OverviewKey Metrics

 Market Cap Enterprise Value Net Debt / EV

EV / Revenue EV / EBITDA P / E

NTM NTM NTMT-Mobile 33,768 52,934 36.2% 1.5x 5.9x 27.2xSprint 19,365 49,020 60.5% 1.5x 6.4x negUS Cellular Corp 3,151 4,103 22.9% 1.0x 6.2x negWireless Average 18,761 35,352 39.9% 1.3x 6.1x 27.2x

CenturyLink Inc. 15,561 36,104 56.9% 2.0x 5.2x 10.8xFrontier Communications 6,121 15,223 59.8% 2.7x 5.2x neg

Consolidated Communications 1,085 2,450 55.5% 3.1x 7.7x 27.2xTelephone and Data Systems 2,857 4,909 31.0% 0.9x 5.3x negComcast 151,218 196,363 22.3% 2.6x 7.6x 17.3xCharter Communications 20,287 41,307 50.9% 4.1x 11.5x 182.9xTime Warner Cable 51,883 74,898 30.7% 3.1x 8.9x 25.8xCablevision Systems Corp 9,071 17,300 47.5% 2.6x 9.5x 38.2xWireline Average 32,261 48,569 44.3% 2.6x 7.6x 50.4x*

Dish / Satellite Average 28,653 33,921 15.4% 2.2x 11.5x 36.7x

Cumulative Average 86,459 102,565 26.9% 3.8x 10.2x 35.9x  AT&T 204,275 325,759 38.9% 2.0x 6.2x 11.9x

Wireless

Wireline

AT&T is the largest and most diversified integrated solutions provider out of all the players in these segments

Other competitors are solely focused on one or two markets

16

Precedents OverviewTop 5 Transactions

The numerous acquisitions in these sectors have drawn increasing scrutiny from the regulators, as consolidations mature None of the target firms have a overall business model and segment distribution that mirrors AT&T in revenue and strategic placement Due to the concentrated nature of many of these sector specific companies, the segmented valuation yield good comparisons

TARGET BUYER VALUATION DESCRIPTION

Cellco Partnership Verizon Communications

U$130 BN 45% Remaining Stake

1.5x EV/Revenue

Verizon buys Vodafone out of the Cellco Partnership (operating as Verizon Wireless) and increases its wireless competitive position

BellSouth Corporation AT&T

U$79.8 BN 4.7x EV/Revenue AT&T expands geographically and increases its market share through its merger with BellSouth

DirecTV AT&T

U$42.7 BN 1.9x EV/Revenue AT&T increases its pay-TV market share (adding to U-verse) and technical capabilities by acquiring DirecTV

America Telecom America Movil

MXN 75.8 BN

2.0x EV/Revenue America Movil increases market share by purchasing fellow Mexican wireless provider America Telecom

NBCUniversal Comcast

U$16.7 BN 49% Remaining Stake

1.7x EV/Revenue

Comcast buys GE out of the NBCUniversal partnership and consolidates its position

Discounted Cash Flow Overview

17

Enterprise Value EBITDA MultipleSensitivity to Expected Exit Multiple

Term

inal

Gro

wth

Rat

e

Enterprise Value Perpetual GrowthSensitivity to WACC and Terminal Growth

Price

EB

ITD

A E

xit M

ultip

le 5.0x $28.665.5x $32.076.0x $35.476.5x $38.887.0x $42.297.5x $45.70

43.33 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0%0.5% $51.58 $44.48 $38.67 $33.83 $29.74 $26.23 $23.191.0% $59.00 $50.29 $43.33 $37.64 $32.90 $28.89 $25.451.5% $68.53 $57.56 $49.04 $42.22 $36.64 $31.99 $28.062.0% $81.24 $66.91 $56.16 $47.81 $41.12 $35.66 $31.10

36.59% CAGR FCF Growth

FCF Driven by utilization of previous Capex to grow earnings

Interest Exp cash effect reduces as AT&T reaches target EBITDA/ Net Debt

Very Sensitive to Terminal Growth and WACC

Current Interest Rates lower Cost of Capital

Free Cash Flow Drivers

WACC

Assumptions

10 Year US Treasury 2.26%

Expected market return 11.80%

Market risk premium 9.53%Beta 0.50

CAPM cost of equity 7.03%Cost of debt 4.70%

Tax rate 35.00%

After tax cost of debt 3.06%Target gearing 35.00%

WACC 6.00%Perpetual grow th of f irm cash f low s (post year 5) 1.00%

FCFF Fair Value Multiple MethodEBITDA Multiple 6.1xLast forecast EBITDA 53,687Terminal Value 327,489Present Value of Terminal Value 242,386Terminal Value as % of Total Value 73.8%Present Value of Forecast FCF 86,238Forecast Period as % of Total Value 26.2%Enterprise Value 328,624

- Debt (hardcoe as of valuation date) (125,446)+ Cash (hardcoe as of valuation date) 6,202

Net Debt (119,244)Equity Value (Market Cap) 209,380Shares outstanding 5,943Fair value share price 35.23

FCFF Fair Value Perpetuity MethodGrow n TV FCFF 19,628Terminal Value 392,552Present Value of Terminal Value 290,541Terminal Value as % of Total Value 77.1%Present Value of Forecast FCF 86,238Forecast Period as % of Total Value 22.9%Enterprise Value 376,779

- Debt (hardcoe as of valuation date) (125,446)+ Cash (hardcoe as of valuation date) 6,202

Net Debt (119,244)Equity Value (Market Cap) 257,535Shares outstanding 5,943Fair value share price 43.33

18

Levered Finance Analysis

19

Leveraged Buy-Out

In situations where AT&T would like to retain the flexibility to enhance its business platform through acquisitions, we would propose to fund U$20 BN additional investments with 54% debt ratio. Revenue and EVITDA profiles have been kept consistent with AT&T's core business assumptions.

Assumptions and Impact

ASSUMPTIONS INCREMENTAL DILUTED SHARES

IMPACT

Purchase Price $20,000

Purchase Price Multiple 8x

EBITDA $2,500

EBITDA Margin 30%

Revenues $8,333

Debt Funding % 54%

Equity Funding % 46%

Cost of Debt 4.7%2016 2017 2018 2019 2020

$0

$1

$2

$3

$4

$5

$6

$7

Free Cashflow per In-cremental Diluted Share

Equity Cashflow per In-cremental Diluted Share

2016 2017 2018 2019 20200%

1%

2%

3%

4%

5%

6%

7%

Incremental RevenueIncremental Free Cash-flows per Share

Purchase Price Multiple of 8.0x and debt funding ratio of 54% have been optimized to maximize the Present Value of Pro-Forma Free Cashflows per Share, while maintaining financial soundness of the company in the forecast.

Pro-Forma Corporate Net Debt / EBITDA ratio forecasts have been kept under 2.50x

More than half of incremental revenue goes to Free Cashflows per Share.

20

Transaction Opportunities

21

Strategic ReviewFocus Is On Execution

Financial & Operational Growth

Cost Leadership

Smart, Software-Defined Network

Connectivity Leader

INTEGRATED SOLUTIONS

•Growth in all around revenues and subscribers

•Growth in Adjusted EPS, FCF and payout ratio

•Fiber infrastructure in United States

•Leading connectivity in Mexico

•Maximize America’s premier integrated solutions

22

Viability of M&AAMC Transaction

STRATEGIC RATIONALE PRODUCT DEVELOPMENT OPERATIONAL / FINANCIAL RATIONALE

• Reduce dependence on consumer Wireless by diversifying revenues

• Regulation limits flexibility in current segments

• Drive brand recognition of premium service provider

• Brand name IP provide platform for OTT Media

• Expanded content for DTV and U-verse• Expand potential subscriber base by

providing premium content other than sports

• Operational synergies from Marketing• Expand trading multiple to fall in line with

telecoms with content providers• Cash position combined with size of

transaction give flexibility over deal structure

23

Potential M&A TargetsAT&T’s Peers

Wireline

Cable, Satellite

Media

Wireless

Declining

Growing

AT&T Potential Acquisitions TargetsAT&T has little presence in the

Media sector/OTT platform

Wireline sector revenue is declining

24

Transaction Recommendations

Signal under valuation to Market

Increasing Shareholders’ Value

Utilize current assets in home equipment

Increase customer retention

Increase ARPU

Divest residential Wireline

Rent out infrastructure

Transition away from legacy industry

Increased contribution from EIS

Transformational Industry Partnership

Gain Dominant position in connected car market

Leverage relationship with Apple to boost brand perception

Strategic Acquisition

Popular IPs from which to launch OTT platform

Diversify revenue stream

Cost synergies

Multiple expansion

Investment in Development of Spectrum Enhancing TechnologySupport Activity:

Transaction Value Added

Share Repurchase

Rent Wireline Equipment

25

Acquire AMC Networks

Acquiring AMC Networks fits into AT&T’s strategic view to become the most diversified telecom providing a holistic array of premium products.

Value added from providing original content can be significant.

Recommendation 1

OPPORTUNITIES

Popular channels with great amount of intellectual properties that can be used to form the base of a premium media provider to AT&T’s vacant over-the-top platforms.

Diversifying revenue by adding advertisements during programming.

AMC EV/EBITDA: 5.85xOther media firms are trading at higher multiples, AMC may be a bargain purchase in the space.

Telecoms with significant media presence such as Comcast, Bell Canada, or Cable vision are trading between 2.6x & 3.9x revenue and 7.6x and 9.8x EBITDA, respectively, showing that investors see value added from these operations.

AMC Networks owns/operates networks that generates original content

26

0.04$ 0.04$ 0% 25% 50% 75% 100%

$81.45 0% $0.0622 $0.0419 $0.0219 $0.0022 ($0.0171)

$85.52 5% $0.0622 $0.0409 $0.0199 ($0.0007) ($0.0210)

$83.89 3% $0.0622 $0.0413 $0.0207 $0.0005 ($0.0195)

$89.60 10% $0.0622 $0.0399 $0.0180 ($0.0036) ($0.0248)

$93.67 15% $0.0622 $0.0389 $0.0160 ($0.0065) ($0.0286)

$97.74 20% $0.0622 $0.0379 $0.0140 ($0.0094) ($0.0325)

$101.81 25% $0.0622 $0.0369 $0.0120 ($0.0123) ($0.0363)

$105.89 30% $0.0622 $0.0359 $0.0101 ($0.0152) ($0.0400)

$109.96 35% $0.0622 $0.0349 $0.0081 ($0.0181) ($0.0438)

Transaction AnalysisAMC Acquisition

Consideration % Stock / Cash

Accretion / Dilution Per Share

AT&T Acquires AMC – 1 YR Accretion / Dilution Schedule

Offer PricePremium

Over Market

Model Assumptions

No Synergistic Revenue No Synergistic Cost Savings AT&T Est(EPS) from DCF AMC Est(EPS) From Cap IQ

27

Transaction Structure $ 7 Billion Purchase of AMC Networks

CAPACITY U$ MM UTILIZED

Cash

Cash on AT&T B/S 8,201

Less AMC WC REQ 2,554

Cash Available 5,647 577

Debt

Pro-Forma EBITDA * 2.85 134,905

Less Existing Debt 125,443

Debt Available 8,817 3,576

Equity 3,000

Total 7,153

6.0x 6.1x 6.2x 6.3x 6.4xU$ BN

U$1 BN

U$2 BN

U$3 BN

U$4 BN

U$5 BN

U$6 BN

0% 5% 10% 15% 20%EV / EBITDA

Impl

ied

EV Current EV

Synergies:

SOURCE OF FUNDS U$ MM %

Cash 577 8%

Debt

Acquisition Financing 1,788 25%

Bonds (10 year) 1,788 25%

Total Debt 3,576 50%

Equity

Shares (Share Exchange) 3,000 42%

Equity42%

Cash8%

Debt50%

28

Strategic Partnership with Apple and Car RetailersRecommendation 2

OPPORTUNITIES

Gain dominant position in Connected Cars market

Build brand power through association with Apple and luxury car retailers

Showcase AT&T wireless coverage to non-customers

Increase revenues while utilizing existing infrastructure

Use as channel to further Distracted Driving Campaign

*Obtained from Apple’s website

Attain strategic objective to provide superior connectivity over a range of platforms.

Innovate and early penetrate a new market by partnering with other industries.

Be an ambassador for safe driving.

29

Other Recommendations

Start divesting residential wireline• Rent out existing infrastructure to diversify revenue• Transition away from legacy industry• Increase contribution from EIS segment

Expand home security and automation system• Utilize current assets in home equipment• Increase customer retention and consumer satisfaction• Increase ARPU

Buy back shares• Signal under valuation to Market

Alternative Transactions

30

Appendix

31

Appendix I: Team Overview

TONY ZHUANGRotman School of ManagementMaster of Finance (Candidate)

University of WaterlooBachelor of MathematicsFinancial Analysis & Risk Management

JOHN MCGLYNNRotman School of ManagementMaster of Finance (Candidate)

University of GuelphBachelor of CommerceAccounting

TRACY CHONGRotman School of ManagementMaster of Finance (Candidate)

University of WaterlooBachelor of MathematicsFinancial Analysis & Risk Management

MICHAEL KRISTANTORotman School of ManagementMaster of Finance (Candidate)

University of WaterlooBachelor of MathematicsActuarial Science with Finance Option

32

Appendix II: DCF – Operating ModelDCF Summary - Operating Model

Cashflow Forecast*All dollar amounts in millions 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020EWireless Revenues 58,500 63,215 66,763 69,899 73,992 73,942 78,625 81,439 84,518 87,902 91,523Wireline Revenues 61,300 60,140 59,567 58,814 58,425 58,425 57,841 58,419 59,588 60,779 61,995DirecTV Revenues - - - - - 6,100 6,283 6,503 6,783 7,156 7,585International Revenues - - - - - 2,000 1,980 2,079 2,225 2,358 2,476Advertising (discontinued) / Other Revenues 4,480 3,368 1,104 39 30 - - - - - -Total Revenues 124,280 126,723 127,434 128,752 132,447 140,467 144,728 148,440 153,112 158,195 163,579Revenue Growth - 2.0% 0.6% 1.0% 2.9% 6.1% 3.0% 2.6% 3.1% 3.3% 3.4%Wireless Expenses (36,185) (41,282) (43,296) (44,508) (48,924) (48,801) (51,499) (52,935) (54,937) (57,136) (58,575)Wireline Expenses (41,879) (41,360) (41,207) (41,638) (42,471) (37,976) (38,175) (39,141) (40,520) (41,938) (43,396)DirecTV Expenses - - - - - (4,880) (4,995) (5,137) (5,324) (5,581) (5,878)International Expenses - - - - - (1,700) (1,673) (1,746) (1,857) (1,957) (2,043)Advertising (discontinued) / Other Expenses (3,889) (3,115) (1,797) (1,545) (257) - - - - - -Total Operating Costs (81,953) (85,757) (86,300) (87,691) (91,652) (93,358) (96,342) (98,960) (102,638) (106,612) (109,892)Wireless EBITDA 22,315 21,933 23,467 25,391 25,068 25,140 27,125 28,504 29,581 30,766 32,948Wireline EBITDA 19,421 18,780 18,360 17,176 15,954 20,449 19,666 19,278 19,068 18,842 18,598DirecTV EBITDA - - - - - 1,220 1,288 1,366 1,458 1,574 1,707International EBITDA - - - - - 300 307 333 367 401 433Advertising (discontinued) / Other EBITDA 591 253 (693) (1,506) (227) - - - - - -Total EBITDA 42,327 40,966 41,134 41,061 40,795 47,109 48,386 49,480 50,475 51,582 53,687

EBITDA Growth - (3.2%) 0.4% (0.2%) (0.6%) 15.5% 2.7% 2.3% 2.0% 2.2% 4.1%EBITDA Margin 34.1% 32.3% 32.3% 31.9% 30.8% 33.5% 33.4% 33.3% 33.0% 32.6% 32.8%Wireless EBITDA Growth (1.7%) 7.0% 8.2% (1.3%) 0.3% 7.9% 5.1% 3.8% 4.0% 7.1%Wireline EBITDA Growth (3.3%) (2.2%) (6.4%) (7.1%) 28.2% (3.8%) (2.0%) (1.1%) (1.2%) (1.3%)DirecTV EBITDA Growth 6.0% 6.8% 8.0% 8.4%International EBITDA Growth 9.2% 8.1%Advertising / Other EBITDA Growth -% -% -% -% -%Wireless EBITDA Margin 38.1% 34.7% 35.1% 36.3% 33.9% 34.0% 34.5% 35.0% 35.0% 35.0% 36.0%Wireline EBITDA Margin 31.7% 31.2% 30.8% 29.2% 27.3% 35.0% 34.0% 33.0% 32.0% 31.0% 30.0%DirecTV EBITDA Margin 20.0% 20.5% 21.0% 21.5% 22.0% 22.5%International EBITDA Margin 15.0% 15.5% 16.0% 16.5% 17.0% 17.5%Advertising / Other EBITDA Margin 13.2% 7.5% (62.8%) (3861.5%) (756.7%) -% -% -% -% -% -%

33

Appendix II: DCF – Capital Structure

DCF Summary - Capital StructureCashflow Forecast

*All dollar amounts in millions 2010 2011 2012 2013 2014 2015E 2016E 2017E 2018E 2019E 2020ETotal EBITDA 42,327 40,966 41,134 41,061 40,795 47,109 48,386 49,480 50,475 51,582 53,687Capex (19,530) (20,110) (19,465) (20,944) (21,199) (22,508) (22,437) (21,902) (22,793) (22,933) (22,976)Tax 1,162 (2,532) (2,900) (9,224) (3,442) (8,585) (7,549) (7,798) (7,980) (8,274) (8,826)Working Capital and Other Adjustments (8,267) (3,954) 3,286 3,501 (1,383) (32,967) (2,295) 38 129 135 (55)Free Cashflows 15,692 14,370 22,055 14,394 14,771 (16,951) 16,106 19,819 19,831 20,511 21,830

Cashflow for Debt Service 15,692 14,370 22,055 14,394 14,771 (16,951) 16,106 19,819 19,831 20,511 21,830Interest Expense (2,994) (3,535) (3,444) (3,940) (3,613) (4,103) (6,272) (6,434) (6,692) (6,700) (6,993)Isssurance / Repayment of Long-term Debt (7,059) 362 4,753 9,138 5,633 24,005 3,227 5,172 164 5,847 3,166Interest Income and Other Items 2,438 1,033 886 1,238 1,827 145 145 145 145 145 145Cashflow Available for Equity Distributions 8,077 12,230 24,250 20,830 18,618 3,096 13,205 18,701 13,448 19,802 18,148Equity Issuance / Repurchase and Equity Items (465) (214) (12,186) (12,663) (3,802) 1,000 150 200 200 200 200Dividends (incl. distributions of cash balance) (9,916) (10,172) (10,241) (9,696) (9,552) (4,498) (9,294) (14,512) (13,954) (17,191) (17,732)Net Cashflows (2,304) 1,844 1,823 (1,529) 5,264 (402) 4,061 4,389 (306) 2,812 616

Ending Cash Balance 1,437 3,045 4,868 3,339 8,603 8,201 12,262 16,651 16,345 19,157 19,773Ending Debt Balance 64,515 64,753 69,843 74,767 82,062 125,446 128,673 133,844 134,008 139,855 143,021Ending Net Debt Balance 63,078 61,708 64,975 71,428 73,459 117,245 116,410 117,193 117,663 120,699 123,248

Net Debt to EBITDA - 1.5 x 1.6 x 1.7 x 1.8 x 2.5 x 2.4 x 2.3 x 2.2 x 2.1 x 2.0 x

Basic shares outstanding (millions) 5,913 5,928 5,801 5,368 5,205 5,924 5,924 5,924 5,924 5,924 5,924Diluted shares outstanding (millions) 5,938 5,950 5,821 5,385 5,221 5,943 5,943 5,943 5,943 5,943 5,943Diluted adjusted earnings (loss) per share 3.91$ 2.91$ 2.96$ 1.94$ 3.26$ 2.63$ 2.31$ 2.39$ 2.44$ 2.54$ 2.71$ Dividend per share(diluted) 1.68$ 1.72$ 1.75$ 1.78$ 1.84$ 0.76$ 1.56$ 2.44$ 2.35$ 2.89$ 2.98$ Free cashflow per share (diluted) 2.28$ 2.27$ 3.35$ 2.17$ 2.49$ 1.45$ 0.99$ 1.57$ 1.50$ 1.62$ 1.76$ Equity cashflow per share (diluted) 2.55$ 2.03$ 4.22$ 3.09$ 3.88$ 1.21$ 2.82$ 4.41$ 4.24$ 5.23$ 5.39$

34

Appendix II: DCF – Valuation

DCF Summary - Valuation ResultsCashflow Forecast

*All dollar amounts in millions 2015E 2016E 2017E 2018E 2019E 2020EFree cash f low s to the f irm (FCFF) 14,402 13,045 15,530 14,586 14,292 14,383

Enterprise Value EBITDA Multiple Method Enterprise Value Perpetual Growth Method WACC AssumptionsEBITDA Multiple 6.1x Perpetual grow th of f irm cash f low s 1.00% Valuation date 01-Nov-15Terminal Year EBITDA 53,687

10-yr US government bond rate2.3%

Present Value of Terminal Value 242,386 Present Value of Terminal Value 290,541 Expected market return 11.8%

Present Value of Forecast FCF 86,238 Present Value of Forecast FCF 86,238 Market risk premium 9.5%Enterprise Value 328,624 Enterprise Value 376,779 Beta 0.50

- Debt (125,446) - Debt (125,446) CAPM cost of equity 7.0%+ Cash 6,202 + Cash 6,202 Cost of debt 4.7%

Equity Value (Market Cap) 209,380 Equity Value (Market Cap) 257,535 Tax rate 35.0%

Shares outstanding 5,943 Shares outstanding 5,943 After tax cost of debt 3.1%Fair value share price $35.23 Fair value share price $43.33 Target gearing 35.0%

WACC 6.0%

35

Appendix II: DCF – AssumptionsOperating AssumptionsAssumption Key Metric Justification Total Revenue(CAGR '15-'20)

3.1% Growth in line with U.S. GDP, bundling opportunities from DirecTV, and increased demand for smartphones & over-the-top media due to higher disposable income

Wireless Revenue(CAGR '15-'20)

3.9% Increased disposable income, and a new iPhone will offset loss of market share from insurgents

Wireline Revenue(CAGR '15-'20)

1.7% Strong demand for broadband, business services, and virtual hosting will more than offset declines in telephony

International Revenue(CAGR '15-'20)

5.7% Successful expansion into Mexico partially offset by MXN/USD exchange rate

DIRECTV Revenue(CAGR '15-'20)

4.8% Increased popularity of NFL in Latin America, cross selling opportunities with other products, and increased disposable income

Total EBITDA(CAGR '15-'20)

2.6% Synergies with DirecTV and movement away from device subsidy models will increase average revenue per user despite pressure from aggressively priced competitors

Wireless EBITDA(CAGR '15-'20)

5.6% Cost controls, shift away from subsidy plans and increased data plan size will offset pressure form aggressively priced competitors

Wireline EBITDA(CAGR '15-'20)

(1.4)% Realized synergies with DirecTV combined with increased cost controls

International EBITDA(CAGR '15-'20)

9.0% Cross selling with DirecTV, cost synergies, and increased disposable income

DIRECTV EBITDA(CAGR '15-'20)

7.3% Cost synergies and increased disposable income

Capex (% of revenue)(Average '15-'20)

14.7% Support wireless infrastructure & accelerated infrastructure growth in Mexico

Valuation AssumptionsAssumption Key Metric Justification

Beta 0.50 Regressions of excess returns against the S&P 500 for 36 months

Risk-free Rate 2.3% 10-year treasury yield

Cost of Debt (pre-tax) 4.7% Yield on most recent long term debt issuance

Perpetual Growth Rate 1.0% U.S. inflation adjusted for deflation in electronic component prices

Exit Multiple 6.1x Current trading multiple

36

Appendix II: Levered Finance – Standalone Cashflow Projections

Standalone Cashflow ProjectionForecast

2015 2016 2017 2018 2019 2020

A. Standalone Cashflows Revenues 8,333 8,500 8,670 8,843 9,020 Operating Costs (5,833) (5,780) (5,809) (5,837) (5,863) EBITDA 2,500 2,720 2,861 3,007 3,157 Revenue Growth 2.0% 2.0% 2.0% 2.0%EBITDA Growth (initial synergies ramp) 8.8% 5.2% 5.1% 5.0%EBITDA Margin 32.0% 33.0% 34.0% 35.0%

Taxes (286) (355) (395) (437) (480) Capex (833) (850) (867) (884) (902) Change in Working Capital (1) (10) (10) (10) (11) Operating Cashflows 1,379 1,506 1,589 1,676 1,765 Interest Expense (432) (432) (432) (432) (432) Principal Repayment - - - - - Debt Issuance Debt 54% 10,800 - - - - Equity Issuance Equity 46% 9,200 - - - - Purchase Price Multiple 8.0x (20,000) - - - - Equity Cashflows 947 1,074 1,157 1,244 1,333 Dividends Paid 947 1,074 1,157 1,244 1,333 Residual Cashflows 1,894 2,148 2,315 2,487 2,665

B. Key Metrics Incremental Debt Opening Balance 10,800 10,800 10,800 10,800 10,800 Incremental Debt Issued - - - - - Incremental Principal Paid - - - - - Incremental Debt Closing Balance 10,800 10,800 10,800 10,800 10,800 Incremental Interest Expense 432 432 432 432 432 Net Debt / EBITDA 4.32x 3.97x 3.77x 3.59x 3.42x

Incremental Diluted Shares Issued (millions) 277 277 277 277 277 Free Cashflow per Share 4.98$ 5.44$ 5.74$ 6.05$ 6.37$ Equity Cashflow per Share 3.42$ 3.88$ 4.18$ 4.49$ 4.81$

37

Appendix II: Levered Finance – Corporate Cashflow ProjectionsCorporate Cashflow Projections

Forecast2015 2016 2017 2018 2019 2020

A. Corporate Cashflow s (Pre-Transaction)

Corporate Revenues 144,728 148,440 153,112 158,195 163,579 Corporate Opex (96,342) (98,960) (102,638) (106,612) (109,892) Corporate EBITDA 48,386 49,480 50,475 51,582 53,687

Corporate Capital Expenditures, Working Capital and Taxes (32,136) (29,517) (30,498) (30,926) (31,712) Corporate Operating Cashflow s 16,251 19,964 19,976 20,656 21,975

Corporate Net Debt Flow s (3,046) (1,262) (6,528) (853) (3,827) Corporate Equity Cashflows 13,205 18,701 13,448 19,802 18,148

B. Corporate Cashflows (Pro-Forma) Corporate Revenues 144,728 148,440 153,112 158,195 163,579 Incremental Revenues 8,333 8,500 8,670 8,843 9,020 Proforma Revenues 153,062 156,940 161,782 167,038 172,599

Corporate EBITDA 48,386 49,480 50,475 51,582 53,687 Incremental EBITDA 2,500 2,720 2,861 3,007 3,157 Proforma EBITDA 50,886 52,200 53,336 54,589 56,844

Corporate Capital Expenditures, Working Capital and Taxes (32,136) (29,517) (30,498) (30,926) (31,712) Incremental Capital Expenditures, Working Capital and Taxes (1,121) (1,215) (1,272) (1,332) (1,393) Proforma Operating Cashflows 17,629 21,469 21,565 22,331 23,739

Corporate Net Debt Flow s (3,046) (1,262) (6,528) (853) (3,827) Incremental Debt Service (432) (432) (432) (432) (432) Combined Debt Flow s (3,478) (1,694) (6,960) (1,285) (4,259)

Proforma Equity Cashflows 14,152 19,775 14,605 21,045 19,480

C. Key Metrics Existing Diluted Shares Outstanding (millions) 5,943 5,943 5,943 5,943 5,943 Free Cashflows per Share (Pre-Transaction) 2.73$ 3.36$ 3.36$ 3.48$ 3.70$ Equity Cashflow s per Share (Pre-Transaction) 2.22$ 3.15$ 2.26$ 3.33$ 3.05$ Incremental Diluted Shares Issued (millions) 277 277 277 277 277 Combined Total Cumulative Diluted Shares Outstanding (millions) 6,220 6,220 6,220 6,220 6,220 Free Cashflows per Share (Pro-Forma) 2.83$ 3.45$ 3.47$ 3.59$ 3.82$ Equity Cashflow s per Share (Pro-Forma) 2.28$ 3.18$ 2.35$ 3.38$ 3.13$ Corporate Net Debt (Closing Balance) 116,410 117,193 117,663 120,699 123,248 Corporate Net Debt / EBITDA Ratio (Pre-Transaction) 2.41x 2.37x 2.33x 2.34x 2.30x Incremental Debt (Closing Balance) 10,800 10,800 10,800 10,800 10,800 Combined Total Corporate Net Debt (Closing Balance) 127,210 127,993 128,463 131,499 134,048 Corporate Net Debt / EBITDA Ratio (Pro-Forma) 2.50x 2.45x 2.41x 2.41x 2.36x

38

Appendix II: Comparables – DatasetCompany Name Market EV (1) Net Debt EV/Revenue (3) EV/EBITDA (3) P/E (3) EBITDA CAGR (3) Revenue CAGR (3) EBITDA WACC

Cap. (1) / EV 2014A LTM NTM 2016E 2014A LTM NTM 2016E 2014A LTM NTM 2016E 3-Yr Hist 2-Yr Fcst 3-Yr Hist 2-Yr Fcst %(all figures presented in USD millions, except per share figures or where noted)

Integrated TelecomVerizon USD 187,860 297,407 36.4% 2.3x 2.3x 2.3x 2.3x 6.9x 6.6x 6.4x 6.4x 19.1x 12.1x 11.7x 11.6x 7.4% 0.9% 4.3% 0.3% 34.5% 5.7%Shaw Communuications CAD 9,217 13,401 29.9% 2.8x 2.9x 3.2x 3.2x 6.5x 6.8x 7.3x 7.3x 13.2x 14.9x 14.5x 14.2x (4.7%) 1.0% (5.2%) 0.3% 43.2% 5.4%Rogers Communications CAD 20,672 33,811 38.9% 2.9x 3.1x 3.3x 3.2x 7.7x 8.2x 8.6x 8.5x 17.9x 18.2x 17.7x 17.5x (7.2%) 2.8% (6.5%) 1.8% 38.1% 4.5%Telus Corporation CAD 19,967 27,069 26.2% 2.5x 2.6x 2.8x 2.7x 7.1x 7.3x 7.8x 7.5x 18.2x 17.3x 16.9x 15.6x (4.5%) 4.9% (4.0%) 3.0% 35.1% 5.2%BCE INC. CAD 49,020 64,078 23.2% 3.4x 3.5x 3.9x 3.9x 8.7x 8.9x 9.8x 9.6x 21.4x 19.8x 22.4x 21.5x (6.3%) 2.7% (6.5%) 1.4% 39.5% 4.9%

Integrated Telecom Average 57,347 87,153 30.9% 2.8x 2.9x 3.1x 3.0x 7.4x 7.6x 8.0x 7.9x 17.9x 16.5x 16.6x 16.1x -3.1%* 2.4% (3.6%) 1.4% 38.1% 5.1%

WirelessT-Mobile USD 33,768 52,934 36.2% 1.8x 1.7x 1.5x 1.5x 9.1x 8.1x 5.9x 5.8x 133.5x 44.2x 27.2x 19.9x 14.3% 20.7% 86.4% 7.4% 20.3% 5.8%Sprint USD 19,365 49,020 60.5% 1.4x 1.5x 1.5x 1.5x 7.2x 13.1x 6.4x 6.4x neg neg neg neg 9.6% 18.8% (0.7%) (1.0%) 11.1% 5.4%US Cellular Corp USD 3,151 4,103 22.9% 1.1x 1.0x 1.0x 1.0x 8.9x 5.5x 6.2x 6.0x neg neg neg neg (3.7%) 5.3% (3.5%) 0.9% 18.9% 7.4%

Wireless Average 18,761 35,352 39.9% 1.4x 1.4x 1.3x 1.3x 8.4x 8.9x 6.1x 6.1x 133.5x 44.2x 27.2x 19.9x 6.7%* 15.0% 27.4% 2.4% 16.8% 6.2%

WirelineCenturyLink Inc. USD 15,561 36,104 56.9% 2.0x 2.0x 2.0x 2.0x 5.3x 5.5x 5.2x 5.4x 20.3x 21.2x 10.8x 11.5x (2.9%) (1.2%) (0.9%) 0.0% 37.1% 5.6%Frontier Communications USD 6,121 15,223 59.8% 3.2x 2.9x 2.7x 2.8x 7.8x 7.7x 5.2x 5.4x 40.3x 32.2x neg neg 1.2% 15.6% 3.6% 14.7% 38.1% 6.1%Consolidated Communications USD 1,085 2,450 55.5% 3.9x 3.4x 3.1x 3.1x 10.2x 9.4x 7.7x 7.8x 61.4x 31.8x 27.2x 26.4x 21.5% 0.5% 18.1% (1.4%) 35.6% 5.6%Telephone and Data Systems USD 2,857 4,909 31.0% 1.0x 1.0x 0.9x 0.9x 7.6x 5.0x 5.3x 5.1x neg neg neg 59.4x (2.2%) 3.9% (1.0%) 1.4% 19.2% 6.4%Comcast USD 151,218 196,363 22.3% 2.9x 2.7x 2.6x 2.5x 8.6x 8.1x 7.6x 7.5x 19.0x 19.2x 17.3x 16.6x 7.2% 5.4% 5.5% 4.5% 33.3% 7.0%Charter Communications USD 20,287 41,307 50.9% 4.5x 4.4x 4.1x 3.9x 13.4x 13.2x 11.5x 11.0x neg neg 182.9x 104.7x 9.0% 9.9% 9.2% 7.8% 33.1% 6.2%Time Warner Cable USD 51,883 74,898 30.7% 3.3x 3.2x 3.1x 3.0x 9.4x 9.3x 8.9x 8.5x 25.4x 25.8x 25.8x 23.5x 2.0% 6.2% 3.5% 5.9% 34.6% 6.2%Cablevision Systems Corp USD 9,071 17,300 47.5% 2.7x 2.7x 2.6x 2.6x 9.6x 9.5x 9.5x 9.2x 27.8x 52.2x 38.2x 35.3x 2.6% 1.6% 2.3% 1.1% 27.8% 4.9%

Wireline Average 32,261 48,569 44.3% 2.9x 2.8x 2.6x 2.6x 9.0x 8.5x 7.6x 7.5x 32.4x* 30.4x* 50.4x* 39.6x* 4.8% 5.2% 5.0% 4.2% 32.3% 6.0%

SatelliteDish USD 28,653 33,921 15.4% 2.3x 2.3x 2.2x 2.2x 11.7x 11.3x 11.5x 11.6x 30.2x 24.9x 36.7x 35.3x 10.6% (1.6%) 4.6% 1.7% 20.2% 7.4%

Satellite Average 28,653 33,921 15.4% 2.3x 2.3x 2.2x 2.2x 11.7x 11.3x 11.5x 11.6x 30.2x 24.9x 36.7x 35.3x 10.6% (1.6%) 4.6% 1.7% 20.2% 7.4%

Cumulative Average 86,459 102,565 26.9% 4.0x 3.9x 3.8x 3.7x 11.9x 11.8x 10.2x 10.0x 45.2x 29.6x 35.9x 28.6x 7.7% 6.1% 8.9% 3.8% 31.1% 6.7%

AT&T USD 204,275 325,759 38.9% 2.5x 2.3x 2.0x 1.9x 8.0x 7.7x 6.2x 6.1x 27.9x 13.3x 11.9x 11.9x 4.5% 7.2% 5.0% 8.1% 30.4% 5.2%

39

Appendix II: Comparables – ValuationSegmented Combined Entity

Company Name EV/Rev Yes EV/EBITDA Yes EV/Rev Yes EV/EBITDA Relevance to Target Valuation

Incl.? NTM Incl.? NTM Incl.? NTM Incl.? NTM

Integrated TelecomVerizon Yes 2.3x Yes 6.4x Premium alternative in Northeast; AT&T imitating strategy w ith low er cost alternative in less aff luent SoutheastShaw Communuications Yes 3.2x Yes 7.3x Operating in the same sectors except w ireless, but is more established in the media segmentRogers Communications Yes 3.3x Yes 8.6x Canadian counterpart to AT&T in terms of market share & presence in Canada; operating in the same segmentsTelus Corporation Yes 2.8x Yes 7.8x Signif icant market share in w estern Canada, operating in the w ireless and w ireline segmentsBCE INC. Yes 3.9x Yes 9.8x Operating in same sectors and local environments w ith comparable products (larger media presence)

WirelessT-Mobile Yes 1.5x Yes 5.9x No 0.0x No 0.0x Segmented, since T-Mobile is a pure play w ireless provider w ith no w ireline or media presenceSprint Yes 1.5x Yes 6.4x No 0.0x No 0.0x A pure play w ireless provider w ith no w ireline or media presenceUS Cellular Corp Yes 1.0x Yes 6.2x No 0.0x No 0.0x A pure play w ireless provider w ith no w ireline or media presence

Wireless Average 1.3x 6.1xAT&T Metric (4) $84,692 $30,405Implied Enterprise Value 113,779 186,867

WirelineCenturyLink Inc. Yes 2.0x Yes 5.2x No 0.0x No 0.0x Comparable to legacy non-retail portion of the w ireline segmentFrontier Communications Yes 2.7x Yes 5.2x No 0.0x No 0.0x Competing w ith AT&T for broadband customers in rural areasConsolidated Communications Yes 3.1x Yes 7.7x No 0.0x No 0.0x Focusing on providing broadband to the commercial segmentTelephone and Data Systems Yes 0.9x Yes 5.3x No 0.0x No 0.0x Services offered are in-line w ith AT&T, although at a much smaller scaleComcast Yes 2.6x Yes 7.6x No 0.0x No 0.0x "Triple Play" cable bundle in direct competition w ith DirecTV (TV) and AT&T (broadband & telephony)Charter Communications Yes 4.1x Yes 11.5x No 0.0x No 0.0x Offers premium alternative to AT&T's broadband productsTime Warner Cable Yes 3.1x Yes 8.9x No 0.0x No 0.0x "Triple Play" provider competes directly w ith DirecTV and AT&T w ith signif icant overlap in customer baseCablevision Systems Corp Yes 2.6x Yes 9.5x No 0.0x No 0.0x Competitor in w ireline and pay TV segment

Wireline Average 2.6x 7.6xAT&T Metric (4) $62,173 $17,732Implied Enterprise Value 164,076 135,533

SatelliteDish Yes 2.2x Yes 11.5x No 0.0x No 0.0x Only comparable f irm to DirecTV as the only other pure play satellite TV provider

Satellite Average 2.2x 11.5xAT&T Metric (4) $16,318 $4,016Implied Enterprise Value 36,084 46,138

Combined Average 3.1x 8.0xAT&T Metric $163,183 $52,152

Total Enterprise Value 313,938 368,538 505,980 417,259- Debt -126,930 -126,930 -126,930 -126,930- Preferred & Other -965 -965 -965 -965+ Cash 6,202 6,202 6,202 6,202

Equity Value 192,245 246,845 384,287 295,566Shares Outstanding (millions) 5,943 5,943 5,943 5,943Fair Value Share Price $32.35 $41.54 $64.66 $49.73

Note: Use "Incl.?" column to indicate whether a company should be included in the valuation [0 - No; 1 - Yes]

40

Appendix II: Precedents – ValuationSegmented Combined Entity

EV/Revenue EV/EBITDA EV/Revenue EV/EBITDATarget Incl.? LTM Incl.? LTM Incl.? LTM Incl.? LTM Relevance to Target Valuation

(all figures presented in USD millions, except per share figures or where otherwise noted)

US WirelessCellco Partnership Yes 1.5x Yes 3.9x Yes 1.5x Yes 3.9x Verizon Wireless operates in the same sphere as AT&T; it also provides w ireline servicesLeap Wireless Yes 1.3x Yes 8.4x No 0.00 No 0.00 Leap Wireless is now part of AT&T; it is not involved in the w ireline sectorClearw ire Yes 6.8x No 0.00 No 0.00 No 0.00 It is a w ireless carrier; its EV/EBITDA multiple of -21.3 is excluded due to its abnormalitySprint Yes 1.1x Yes 8.9x No 0.00 Yes 8.9x It is active in the U.S. w ireless sector; it has small w ireline involvement (higher revenue margin)Alltel Yes 3.2x Yes 8.9x No 0.00 No 0.00 Its w ireless services are similar to those offered by AT&T and other major U.S. carriersSunCom Wireless Yes 2.2x Yes 13.6x No 0.00 No 0.00 It is a pure play w ireless carrier that operates mainly in the U.S.

US Wireless Average 2.7x 8.7xAT&T Metric 72,204 24,643Implied Enterprise Value 194,485 215,402

US WirelineTW Telecom No 0.0x No 0.0x No 0.0x No 0.0x Activities it engages in does not represent a signif icant portion of AT&T's w ireline businessCharter Communications Yes 3.0x Yes 8.6x No 0.0x No 0.0x The stable nature of its cable business ref lects AT&T's involvement in the sectorBresnan Broadband No 0.0x No 0.0x No 0.0x No 0.0x Its services does not represent AT&T's w ireline business w ellVirgin Media Yes 3.6x Yes 9.0x No 0.0x No 0.0x Its services provided are similar to those of AT&T Cable Services, Inc.Atlantic Broadband Finance No 0.0x No 0.0x No 0.0x No 0.0x It does not represent AT&T's w ireline business w ell w ith its large multiplesInsight Communications No 0.0x No 0.0x No 0.0x No 0.0x Its business-class cable services are different from those that AT&T providesQw est Communications Yes 1.8x Yes 5.5x Yes 1.8x Yes 5.5x It is an integrated telecom carrier, present in both the U.S. w ireline and w ireless segmentsBellSouth Corporation Yes 4.7x Yes 11.0x Yes 4.7x Yes 11.0x BellSouth Corporation is now part of AT&T, and is present across AT&T's segmentsVerizon Business Global Yes 0.4x Yes 3.4x No 0.0x No 0.0x Its business includes long distance calls, but not across the segments in AT&T's fashionAT&T Corp. Yes 0.8x Yes 3.5x Yes 0.8x Yes 3.5x Its functions and values closely resembles AT&T

US Wireline Average 2.4x 6.8xAT&T Metric 53,005 14,371Implied Enterprise Value 126,236 98,209

SatelliteDirecTV Yes 1.9x Yes 7.6x No 0.00 No 0.00 DirecTV is now part of AT&THughes Communications Yes 1.8x Yes 9.0x No 0.0x No 0.0x It is a satellite provider that has similarities w ith DirecTV and generates revenue via Dish

US Wireline Average 1.9x 8.3xAT&T Metric 13,912 3,255Implied Enterprise Value 25,953 26,963

Latin America TelecomColumbus Communications Yes 2.2x Yes 5.3x It is an integrated telecom carrier operating in w ireless, w ireline, and other segments like AT&TTelefonos de Mexico Yes 2.6x Yes 6.7x It is an integrated telecom carrier operating in w ireless, w ireline, and other segments like AT&TTele Norte Leste Participacoes S.A. Yes 1.5x Yes 4.1x It is an integrated telecom carrier operating in w ireless, w ireline, and other segments like AT&TAmerica Telecom No 0.00 No 0.00 It is a mainly w ireless carrier and is not comparable w ith AT&T's overall model

TV & MediaAOL No 0.00 No 0.00 Its presence outside of the Media/Tech segment is minimalLIN Media No 0.00 No 0.00 Its presence outside of the Media/Broadcasting segment is minimalAstral Media Inc. No 0.00 No 0.00 Its presence outside of the Media/Broadcasting segment is minimalBelo Corp. No 0.00 No 0.00 Its presence outside of the Media/Broadcasting segment is minimalNBCUniversal Media No 0.00 No 0.00 Its presence outside of the Media/Broadcasting segment is minimal

Combined Average 2.2x 6.1xAT&T Metric 139,121 42,269

Total Enterprise Value $346,674 $340,575 $302,705 $258,624- Debt -126,930 -126,930 -126,930 -126,930- Preferred & Other -965 -965 -965 -965+ Cash 6,202 6,202 6,202 6,202

Equity Value $224,981 $218,882 $181,012 $136,931Shares Outstanding (millions) 5,943 5,943 5,943 5,943Fair Value Share Price $37.86 $36.83 $30.46 $23.04

41

Appendix II: Precedents – Dataset

Target Buyer Transaction

Company Type Company Type EV (1) Date Year Rationale Impl. EV Revenue EBITDA Revenue EBITDA(all figures presented in USD millions, except per share figures or where otherwise noted)

US WirelessCellco Partnership (Verizon Wireless) Wireless Carrier Verizon Integrated Telecom Carrier 297,407 September 2, 2013 2013 partnership buyout 116,959 75,868 29,682 1.5x 3.9xLeap Wireless Wireless Carrier AT&T Integrated Telecom Carrier 278,293 July 12, 2013 2013 increase airw aves licenses 3,923 3,051 467 1.3x 8.4xClearw ire Wireless Carrier Sprint Telecom Carrier 49,020 December 13, 2012 2012 incr market share & synergy 8,604 1,260 (405) 6.8x N/ASprint Telecom Carrier SoftBank Telecom/Media Conglomerate 149,070 October 15, 2012 2012 increase market share 39,819 35,404 4,479 1.1x 8.9xAlltel Wireless Carrier Cellco Partnership Wireless Carrier N/A June 6, 2008 2008 increase customer base 28,505 9,040 3,201 3.2x 8.9xSunCom Wireless Wireless Carrier T-Mobile Wireless Carrier 52,934 September 12, 2007 2007 increase coverage area 2,049 920 151 2.2x 13.6x

US Wireless Average 3.3x 2.5x

US WirelineTW Telecom Alternative Carriers Level 3 Communications Alternative Carriers 28,786 June 16, 2014 2014 add business telecom 7,369 1,591 518 4.6x 14.2xCharter Communications Cable Company Liberty Media Media/Broadcasting 27,009 March 19, 2013 2013 incr cable market share 22,642 7,504 2,644 3.0x 8.6xBresnan Broadband Cable Company Charter Communications OperatingCable Company N/A February 7, 2013 2013 geographic expansion 2,562 509 163 5.0x 15.7xVirgin Media Cable Company Liberty Global Cable Company 84,033 February 5, 2013 2013 increase market share 22,671 6,279 2,532 3.6x 9.0xAtlantic Broadband Finance Cable Company Cogeco Cable Cable Company 4,888 July 18, 2012 2012 geographic expansion 2,028 329 145 6.2x 14.0xInsight Communications Cable Company Time Warner Cable Cable Telecom Company 74,635 August 15, 2011 2011 incr cable market share 4,720 1,064 369 4.4x 12.8xQw est Communications Integrated Telecom Carrier CenturyLink Integrated Telecom Carrier 36,104 April 22, 2010 2010 consolidation 22,194 12,104 4,027 1.8x 5.5xBellSouth Corporation Integrated Telecom Carrier AT&T Integrated Telecom Carrier 278,293 March 6, 2006 2006 merger (geographic/phone) 96,541 20,547 8,772 4.7x 11.0xMCI (Verizon Business Global) Alternative Carriers Verizon Integrated Telecom Carrier 297,407 February 14, 2005 2005 long distance calls coverage 7,136 18,914 2,075 0.4x 3.4xAT&T Corp. Integrated Telecom Carrier SBC Communications Integrated Telecom Carrier N/A January 30, 2005 2005 long distance calls coverage 22,967 30,537 6,507 0.8x 3.5x

US Wireline Average 3.5x 9.8x

SatelliteDirecTV Satellite Service Provider AT&T Integrated Telecom Carrier 278,293 May 18, 2014 2014 incr pay-TV market share 61,879 32,029 8,156 1.9x 7.6xHughes Communications Satellite Service Provider EchoStar Satellite Service Provider 5,045 February 14, 2011 2011 + broadband data services 1,877 1,043 209 1.8x 9.0x

Satellite Average 1.9x 8.3x

Latin America TelecomColumbus Communications Integrated Telecom Carrier Cable & Wireless CommunicationsIntegrated Telecom Carrier 7,732 November 6, 2014 2014 geographic/tech expansion 1,119 505 213 2.2x 5.3xTelefonos de Mexico Integrated Telecom Carrier America Movil Wireless Carrier 95,227 August 1, 2011 2011 consolidation 21,294 8,040 3,193 2.6x 6.7xTele Norte Leste Participacoes Integrated Telecom Carrier Oi Integrated Telecom Carrier 10,592 May 24, 2011 2011 increase market share 27,440 17,810 6,614 1.5x 4.1xAmerica Telecom Wireless Carrier America Movil Wireless Carrier 95,227 November 9, 2006 2006 increase market share 36,305 18,135 5,860 2.0x 6.2x

Latin America Telecom Average 2.1x 5.6x

TV & MediaAOL Media/Softw are Service Verizon Integrated Telecom Carrier 297,407 May 12, 2015 2015 enhance digital sector 2,382 2,569 433 0.9x 5.5xLIN Media Media/Broadcasting Media General Media/Broadcasting 4,141 March 31, 2014 2014 merger 2,411 702 175 3.4x 13.8xAstral Media Media/Broadcasting Bell Media Media/Broadcasting N/A March 16, 2012 2012 incr market share (in media) 3,279 1,033 334 3.2x 9.8xBelo Corp. Media/Broadcasting TEGNA Media/Broadcasting 10,594 June 13, 2013 2013 merger (broadcast industry) 211 719 262 0.3x 0.8xNBCUniversal Media Media/Broadcasting Comcast Cable Company 196,363 February 12, 2013 2013 partnership buyout 40,048 23,812 4,290 1.7x 9.3x

TV & Media Average 1.9x 7.9x

AT&T 2.0x 8.8x

LTM EV/LTM (2)