AT&T, Microsoft Announce Agreements to Accelerate Deployment of Broadband Services to Millions of Consumers
NEW YORK/REDMOND, Wash.--(BUSINESS WIRE)--May 6, 1999--
Agreements Include Investment in AT&T, Purchase of Advanced
Set-Top Device Technology and Showcase of New Digital Services in
Three U.S. Cities
AT&T and Microsoft Corp. today announced a series of agreements
in which the companies will work together to accelerate the deployment
of next-generation broadband and Internet services to millions of
American homes.
Under the agreements, Microsoft will purchase $5 billion of AT&T
securities, AT&T will increase its use of Microsoft's TV software
platform in advanced set-top devices, and both companies will work
together to showcase new digital cable services in two U.S. cities.
"We're gratified that Microsoft shares our strategy of using
broadband cable to bring a new generation of digital communications,
information and entertainment services to millions of American
families," said AT&T Chairman and CEO C. Michael Armstrong. "We look
forward to expanding our relationship with Microsoft and adding its
creativity and technical know-how to our own. This will accelerate the
work we're already doing with many other software and hardware
companies."
"Our agreement today represents an important step in Microsoft's
vision of making the Web lifestyle a reality," said Microsoft Chairman
and CEO Bill Gates. "Working with AT&T, a leader in the delivery of
cable and telephony technologies, we will expand access to an even
richer Internet and television experience for millions of people."
AT&T said it will increase its use of Microsoft's Windows
CE-based operating system software in its digital set-top devices,
which enable applications from a number of companies to deliver
communications, entertainment and information services. AT&T currently
has a commitment to use the Windows CE-based system in 5 million
set-top devices. Under the non-exclusive agreement announced today,
AT&T will expand its Windows CE-based license to cover an additional
2.5 million to 5 million set-top devices.
Upon the completion of AT&T's proposed merger with MediaOne and
following the previously announced cable swaps and sales negotiated
with Comcast, AT&T's owned and operated systems will pass
approximately 25 million homes. The company has said that it intends
to use set-top software from multiple suppliers.
AT&T will also license Microsoft client/server software that
supports a range of digital services such as email and interactive
television entertainment. The two companies plan to deploy Microsoft's
client/server TV software in two showcase cities by the second quarter
of 2000. AT&T also plans to use Microsoft's client software in
conjunction with third-party server software in an additional city.
Microsoft's software provides an open platform designed to work with a
wide variety of hardware devices and support a rich array of
applications and services.
Microsoft will pay $5 billion for newly issued AT&T convertible
trust preferred securities and warrants. The preferred securities,
which will have a face value of $5 billion and be priced at $50 per
security, will make a quarterly payment of 62.5 cents per security.
The preferred securities, which will be convertible into 66.7 million
shares of AT&T common stock at a price of $75 per share, will have a
maturity of 30 years, and the conversion feature can be terminated,
under certain conditions, after three years. The warrants will be
exercisable in three years to purchase 40 million AT&T common shares
at a price of $75 per share.
AT&T will use the proceeds to fund working capital and capital
expenditures.
In addition, as part of these agreements, Microsoft will purchase
MediaOne's 29.9 percent interest in Telewest Communications plc
through a tax-free exchange of Microsoft shares, subject to certain
approvals.
AT&T was advised by Goldman, Sachs & Co., Credit Suisse First
Boston and Merrill Lynch and Co. Microsoft was advised by Donaldson,
Lufkin & Jenrette.
AT&T (NYSE: T)(www.att.com) is the world's premier provider of
voice and data communications, with more than 80 million customers,
including businesses, government and consumers. AT&T runs the world's
largest, most powerful long-distance network and the largest wireless
network in North America. The company is a leading supplier of data
and Internet services for businesses and the nation's largest direct
Internet service provider to consumers. AT&T also provides local
telephone service to a growing number of businesses.
Founded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide
leader in software for personal computers. The company offers a wide
range of products and services for business and personal use, each
designed with the mission of making it easier and more enjoyable for
people to take advantage of the full power of personal computing every
day.
NOTE TO FINANCIAL MEDIA: AT&T and Microsoft will host a two-way
conference call for analysts and reporters at 10:00 a.m. Eastern
Daylight Time, Thursday, May 6. From the U.S., callers should dial
1-800-700-8174 to access the call. Callers outside the U.S. should
dial 612-332-0430.
An audio replay of the conference call will be available beginning at
1:30 p.m. today for 48 hours. Callers in the U.S. can listen to the
replay by calling 800-475-6701, access code 448582. Callers from
outside the U.S. can dial 320-365-3844, access code 448582.
CONTACT:
Adele Ambrose Eileen M. Connolly
AT&T AT&T
908-221-6900 908-221-6731
aambrose@att.com econnolly@att.com
Tom Pilla Sue Barnes
Microsoft Corporate PR Waggener Edstrom Public Relations
425-936-0756 408-986-1140
tpilla@microsoft.com sueb@wagged.com |
