AT&T to Acquire USi - Leading Global Independent Application Service Provider

SAN ANTONIO, Sept. 12 /PRNewswire-FirstCall/ -- AT&T Inc. (NYSE: T) announced today that its subsidiary, AT&T Corp., has agreed to acquire privately held USinternetworking, Inc. ("USi"), a leading independent Applications Service Provider (ASP) -- for approximately $300 million in cash and assumed debt.

The transaction, which is expected to close in the fourth quarter, is designed to enhance AT&T's enterprise service offerings.

It strategically aligns USi's software and eBusiness management services and consulting expertise with AT&T's existing portfolio of enterprise hosting and managed services. These value-added growth services and capabilities are in high demand by companies that are increasingly using enterprisewide software applications to reduce costs, while looking for the expertise of a hosting and applications management provider that can help them deliver consistent solutions at scale and globally.

IT market research and advisory firm IDC estimates that application management services represented a $21.5 billion market worldwide and a $9 billion market in the U.S. in 2005, and expects both markets to continue to experience growth. (Source: IDC, Worldwide and U.S. Application Management Services 2006-2010 Forecast, April 2006).

USi is a leading global independent ASP specializing in managed enterprise software solutions and on-demand services. USi provides software management and outsourcing services for widely used popular business software from companies like Oracle, PeopleSoft, Siebel, Microsoft, IBM WebSphere and Ariba. The company also develops, hosts and manages customized eCommerce solutions.

Following the acquisition, the company will operate as a wholly owned subsidiary and business unit within AT&T's existing enterprise services organization, which is led by Group President Forrest Miller. AT&T expects to retain USi's team and its domestic and international operations.

"The addition of USi's technology and expertise in applications management to AT&T's global reach, networking expertise and extensive hosting capabilities will broaden the range of solutions for our customers," said Miller.

"Our enhanced capabilities will enable businesses around the globe to more efficiently and effectively manage their core operations, enhance their productivity and derive further business value from their relationship with AT&T," Miller said.

"The USi team is excited to be joining forces with AT&T," said Andrew A. Stern, USi's chairman and chief executive officer. "Over the past eight years, USi has developed an unmatched ability to deliver enterprise-scale applications as fully integrated, on-demand services. Combining our capabilities with AT&T's global footprint creates an unparalleled opportunity for growth and the basis for continued market leadership for years to come."

Stern will join AT&T as CEO of USi upon the closing of the transaction.

Today, AT&T is among the leading hosting providers in the United States, and has 30 Internet Data Centers (IDCs) on four continents.

AT&T provides a broad array of hosted managed services capabilities that support the IT operations of customers ranging from small and medium businesses up to the largest global corporations. The company provides managed services that support, for example, corporate Web sites, e-commerce, digital content delivery, multiplayer online gaming, collaborative intranets and extranets, data backup and recovery, and more.

Business customers benefit from access to a single source for Internet data center facilities, IT infrastructure, network, consulting and IT management services. AT&T's Internet data centers are connected by one of the world's most advanced and powerful global backbone networks.

Additionally, the AT&T integrated Global Enterprise Management System (iGEMS) provides sophisticated, end-to-end global network management, enabling AT&T to monitor and manage the performance of customer environments in a proactive, predictive and preventative manner. Enterprise customers also benefit from the industry's most powerful online service portal, AT&T BusinessDirect(R), which provides customized, secure access to information about a customer network environment and enables a range of sales and service functions.

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About USinternetworking ("USi")

USi, the largest independent Application Service Provider, delivers application outsourcing, remote management, professional services, ISV enablement, eBusiness development and hosting, and information security and risk management services to more than 150 world-class organizations in over 30 countries. USi's clients have access to a broad, diversified portfolio of service offerings, including: Ariba(R), IBM(R)WebSphere(R), MarketLive(R), Microsoft(R), Oracle(R), PeopleSoft(R), and Siebel(R), as well as eCommerce solutions developed and delivered by USi. USi's TopLine(ISVTM) program gives Independent Software Vendors (ISVs) the immediate advantage of Software-as-a- Service (SaaS) by delivering their software to a larger client base through USi's hosted model. Additional information about USi and USi's services is available at http://www.usi.com/.

"USi" and the block logo "USi" are the registered trademarks of and the same entity as USinternetworking, Inc. All other trademarks are the property of their respective owners.

About AT&T

AT&T Inc. is one of the world's largest telecommunications holding companies and is the largest in the United States. Operating globally under the AT&T brand, AT&T companies are recognized as the leading worldwide providers of IP-based communications services to business and as leading U.S. providers of high speed DSL Internet, local and long distance voice, and directory publishing and advertising services. AT&T Inc. holds a 60 percent ownership interest in Cingular Wireless, which is the No. 1 U.S. wireless services provider with 57.3 million wireless customers. Additional information about AT&T Inc. and AT&T products and services is available at http://www.att.com/.

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Subsidiaries and affiliates of AT&T Inc. provide products and services under the AT&T brand.