Slow Revenue Growth, Cost-Cutting and Labor Difficulties, and Increased Competition Plaguing Wireline Telecom Companies, Says S&P Equity Research Longer-term Forecast More Optimistic NEW YORK, Aug. 26 /PRNewswire/ -- Facing increased competition and sluggish revenue growth, wireline telecommunications carriers will be continue to be challenged in their cost-reduction efforts, and labor-related issues will increase throughout 2004, says Standard & Poor's Equity Research in a semiannual study of the industry. The survey, Industry Survey on Telecommunications: Wireline, is published twice yearly by Standard & Poor's, the leading provider of independent investment research, ratings and indices. "We expect wireline telecom companies' difficulties to continue through the remainder of 2004," says Todd Rosenbluth, Integrated Telecommunications Services Equity Analyst with Standard & Poor's Equity Research Services and author of the report. "The regional Bells should see access line declines of at least 4%, as wireless, cable, and Internet telephony make greater inroads into U.S. households. Also, with the Bells having entered long-distance markets, pricing pressures are not likely to ease." "Although the present environment is contentious, we believe that the Baby Bells are well positioned to remain among the leading forces in the industry for years to come, due to the strengths of their existing customer relationships and their network quality," We also expect that the telecom carriers will benefit from their wireless and broadband offerings," continues Rosenbluth. Standard & Poor's Equity Research Services holds a positive outlook on the Integrated Telecommunications Services (wireline) sub-industry. Year to date through August 20, the wireline carriers were up 0.3%, versus a 1.0% decline in the S&P 1500 Index. The telecom services sector has tended to be a strong performer as economic expansions mature with the recovery of business spending. "In recent months, dividends and free cash flow growth have moved into the spotlight, with some carriers establishing relatively large dividend payouts. With a more defensive view toward U.S. equities, Standard & Poor's believes investors should focus on integrated telecoms that have consolidated revenue and earnings growth to support capital spending as well as dividend increases," concludes Rosenbluth. Standard & Poor's Industry Survey on Telecommunications: Wireline looks at the issues affecting the main segments of the industry. These include competition from cable and wireless providers, the eroding difference between local and long-distance carriers, continued Merger and acquisition activity, and labor issues. In addition there is a look at key players in the wireline telecommunications industry such as AT&T (NYSE:T), SBC Communications (NYSE: SBC), and Verizon (NYSE:VZ). About Standard & Poor's Industry Surveys Industry Survey on Telecommunications: Wireline is part of the Standard & Poor's Industry Surveys series, produced by its senior equity analysts, that keeps a watchful eye on 52 U.S. industries, offering insights into trends and conditions that affect leading companies' market performance. Covering 1,500 U.S. stocks, Standard & Poor's equity analysts have the largest U.S.-based equity research coverage. Standard & Poor's Industry Surveys provide a broad and fundamental overview of each industry's structure, its recent performance, and an analysis of trends that will influence it in the future. Each survey is organized into the following sections: Current Environment, Industry Profile/Industry Trends, How the Industry Operates, Key Industry Ratios and Statistics, How to Analyze a Company, Industry References, Comparative Company Analysis, and a Glossary of terms used in that industry. Both text and data are provided, as are references to additional sources of industry information. Two surveys on each industry are published each year. Readers can purchase Standard & Poor's Industry Surveys three ways: Online for immediate download at http://sandp.ecnext.com/ , by telephone at 800-221-5277, or via e-mail order sent to . Members of the media can request a copy from the communications contact listed at the end of this release. To view a video clip of Standard & Poor's equity analyst Todd Rosenbluth discussing the sector, go to http://www.standardandpoors.com/industrysurveys (Viewing the video clip requires Windows Media Player capability). About Standard & Poor's Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the foremost provider of independent credit ratings, indices, risk evaluation, investment research, data and valuations. With 5,000 employees located in 20 countries, Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com/. The analyst quoted above is a Standard & Poor's equity analyst. He has no affiliation with any company he covers, nor any ownership interest in any company he covers. Affiliates of Standard & Poor's Securities, Inc. (SPSI) received non-investment banking compensation from AT&T, SBC, and Verizon during the past 12 months. AT&T Corp. is a client of SPSI and during the past 12 months, SPSI received compensation from this company for the provision of brokerage execution services. The equity research reports and recommendations provided by Standard & Poor's Equity Research Services are prepared separately from any other analytic activity of Standard & Poor's. In this regard, Standard & Poor's Equity Research Services has no access to non-public information received by other units of Standard & Poor's. Standard & Poor's does not trade for its own account. For further information contact: John Piecuch Communications Manager Standard & Poor's Tel.: 212-438-1102 DATASOURCE: Standard & Poor's CONTACT: John Piecuch Communications Manager Standard & Poor's Tel.: 212-438-1102 Web site: http://www.standardandpoors.com/

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