UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended March 31, 2006
or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the transition period from to

Commission file number 001-31673

Cingular Wireless LLC

Formed under the laws of the State of Delaware

I.R.S. Employer Identification Number 74-2955068

5565 Glenridge Connector, Atlanta, Georgia 30342

Telephone Number: (404) 236-6000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filers” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

TABLE OF CONTENTS


PART I: FINANCIAL INFORMATION
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	25

PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults upon Senior Securities	26
Item 4.	Submission of Matters to a Vote of Security Holders	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signature		28
EX-31.1 CERTIFICATION OF PRESIDENT AND CEO
EX-31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER
EX-32.1 CERTIFICATION OF PRESIDENT AND CEO
EX-32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CONSOLIDATED STATEMENTS OF OPERATIONS


			Three Months
			Ended
			March 31,

			2005			2006

Operating revenues:
	Service revenues		$	7,419		$	8,005
	Equipment sales			810			975

		Total operating revenues		8,229			8,980

Operating expenses:
	Cost of services (excluding depreciation, included below, of $1,080 and $1,145, respectively)			2,144			2,320
	Cost of equipment sales			1,295			1,327
	Selling, general and administrative			3,001			2,846
	Depreciation and amortization			1,675			1,680

		Total operating expenses		8,115			8,173

Operating income				114			807

Other income (expenses):
	Interest expense			(338	)		(297	)
	Minority interest in earnings of consolidated entities			(16	)		(41	)
	Equity in net income of affiliates			2			—
	Other, net			20			9

		Total other income (expenses)		(332	)		(329	)

Income (loss) before provision for income taxes				(218	)		478
Provision for income taxes				22			124

Net income (loss)			$	(240	)	$	354

See accompanying notes.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions) — (Continued)

Item 1. Financial Statements (Unaudited)

CONSOLIDATED BALANCE SHEETS


			December 31,			March 31,
			2005			2006

			(Audited)
ASSETS
Current assets:
	Cash and cash equivalents		$	472		$	218
	Accounts receivable, net of allowance for doubtful accounts of $286 and $256			3,622			3,707
	Inventories			536			668
	Prepaid assets			320			495
	Current deferred tax assets			767			980
	Other current assets			332			345

		Total current assets		6,049			6,413
Property, plant and equipment, net				21,745			21,817
Licenses, net				25,242			25,243
Goodwill				22,359			22,355
Customer relationship intangibles, net				2,998			2,641
Other intangible assets, net				174			166
Other assets				752			709

		Total assets	$	79,319		$	79,344


LIABILITIES AND MEMBERS’ CAPITAL
Current liabilities:
	Debt maturing within one year		$	2,036		$	2,193
	Accounts payable			1,920			1,530
	Due to affiliates, net			54			37
	Advanced billing and customer deposits			946			998
	Accrued liabilities			5,052			4,698

		Total current liabilities		10,008			9,456
Long-term debt:
	Debt due to members			6,717			6,717
	Other long-term debt, net of premium			12,623			12,589

		Total long-term debt		19,340			19,306
Deferred tax liabilities, net				3,086			3,404
Other noncurrent liabilities				1,364			1,272

		Total liabilities		33,798			33,438
Commitments and contingencies
Minority interests in consolidated entities				543			574
Members’ capital:
	Members’ capital			44,988			45,342
	Accumulated other comprehensive loss, net of taxes			(10	)		(10	)

		Total members’ capital		44,978			45,332

		Total liabilities and members’ capital	$	79,319		$	79,344

See accompanying notes.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions) — (Continued)

Item 1. Financial Statements (Unaudited)

CONSOLIDATED STATEMENTS OF CASH FLOW


				Three Months
				Ended
				March 31,

				2005			2006

Operating activities
Net income (loss)				$	(240	)	$	354
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation and amortization				1,675			1,680
	Provision for doubtful accounts				118			73
	Minority interest in earnings of consolidated entities				16			41
	Equity in net income of affiliates				(2	)		—
	Amortization of debt discount (premium), net				(60	)		(52	)
	Deferred income taxes				14			104
	Changes in operating assets and liabilities:
		Accounts receivable			110			(157	)
		Inventories			205			(132	)
		Other current assets			28			(222	)
		Accounts payable and other current liabilities			(565	)		(810	)
		Pensions and post-employment benefits			19			47
	Other, net				1			5

		Net cash provided by operating activities			1,319			931

Investing activities
Construction and capital expenditures					(971	)		(1,441	)
Receipts from (investments in) equity affiliates, net					(199	)		6
Proceeds from dispositions of assets					2,949			103
Deposits for license purchase					(143	)		—
Investment in qualified trust designated for future capital expenditures					(2,145	)		—
Other					50			(3	)

			Net cash used in investing activities		(459	)		(1,335	)

Financing activities
Net (repayments) borrowings under revolving credit agreement					(993	)		1,165
Repayment of long-term debt and capital lease obligations					(6	)		(1,003	)
Net distributions to minority interests					(4	)		(12	)

			Net cash (used in) provided by financing activities		(1,003	)		150

Net decrease in cash and cash equivalents					(143	)		(254	)
Cash and cash equivalents at beginning of period					352			472

Cash and cash equivalents at end of period				$	209		$	218

See accompanying notes.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions) — (Continued)

Item 1. Financial Statements (Unaudited)

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL &

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF CHANGES IN MEMBERS’ CAPITAL


Three Months Ended March 31, 2006:
Balance at December 31, 2005		$	44,978
	Net income		354

Balance at March 31, 2006		$	45,332

Three Months Ended March 31, 2005:
Balance at December 31, 2004		$	44,536
	Net loss		(240	)
	Other, net		(2	)

Balance at March 31, 2005		$	44,294

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


		Three Months
		Ended
		March 31,

Comprehensive Income:		2005			2006

Net income (loss)		$	(240	)	$	354
Other comprehensive loss:
	Foreign currency translation adjustment, net of taxes of ($3)		(4	)		—

Total comprehensive income (loss)		$	(244	)	$	354

See accompanying notes.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	Summary of Significant Accounting Policies


	*Basis of Presentation*

Cingular Wireless LLC (the Company) is a Delaware limited liability company formed in 2000 by SBC Communications Inc. (SBC)* and BellSouth Corporation (BellSouth) as the operating company for their U.S. wireless joint venture. AT&T and BellSouth, through their wholly-owned subsidiaries, respectively, own approximate 60% and 40% economic interests in the Company. Cingular Wireless Corporation (the Manager), which is directed equally by AT&T and BellSouth, acts as the Company’s manager and controls the Company’s management and operations. The Company provides wireless voice and data communications services, including local, long-distance and roaming services using both cellular and personal communications services (PCS) frequencies licensed by the Federal Communications Commission (FCC), and equipment to customers in 46 states, including service to all 100 of the largest U.S. metropolitan areas. All of the Company’s operations, which primarily serve customers in the U.S., are conducted through subsidiaries or joint ventures. Through roaming arrangements with other carriers, the Company provides its customers service in regions where it does not have network coverage and is thus able to serve customers in virtually the entire U.S. and over 180 foreign countries.

In October 2004, the Company acquired AT&T Wireless Services, Inc. (AT&T Wireless) for aggregate consideration of approximately $41,000 in cash. AT&T Wireless, which has been renamed New Cingular Wireless Services, Inc., will continue to be referred to herein as AT&T Wireless and is now a direct wholly-owned subsidiary of the Company. The operations of AT&T Wireless are integrated with those of the Company, and the business is conducted under the “Cingular” brand name.

The consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) that permit reduced disclosure for interim periods. Management believes the consolidated financial statements include all adjustments (consisting only of normal recurring accruals) necessary to present fairly the results for the interim periods shown. The results for the interim periods are not necessarily indicative of results for the full year. These interim financial statements should be read in conjunction with the consolidated financial statements of the Company and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005.


	*Income Taxes*

The Company is not a taxable entity for federal income tax purposes. Rather, federal taxable income or loss is included in the Company’s respective members’ federal income tax returns. However, the Company’s provision for income taxes includes federal and state income taxes for certain of its corporate

* On November 18, 2005, SBC acquired through merger AT&T Corp. and changed the name of the surviving entity to AT&T Inc. When used herein, “AT&T” will refer to the surviving entity and, prior to November 18, 2005, to SBC. AT&T Corp. will be referred to as “Old AT&T” prior to November 18, 2005. In March 2006, AT&T and BellSouth agreed to merge. The transaction has been approved by the Board of Directors of each company. It is subject to approval by the shareholders of each of AT&T and BellSouth, review by the U.S. Department of Justice (DOJ), approval by the Federal Communications Commission (FCC) and other regulatory authorities and satisfaction of other conditions.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

subsidiaries, as well as for certain states which impose income taxes upon non-corporate legal entities. After the acquisition, AT&T Wireless contributed the majority of its assets and liabilities to Cingular Wireless II, LLC (CW II), which it owns jointly with Cingular Wireless LLC. In exchange for the assets and liabilities contributed to CW II, AT&T Wireless received a 43% ownership interest in CW II, from which any income (loss) is allocated and is subject to federal and state income taxes. The remaining income (loss) from CW II is allocated to the Company and flows through to the members who are taxed at their level pursuant to federal and state income tax laws.

The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities, applying enacted statutory rates. The Company provides valuation allowances for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

The Company’s effective tax rate for the three months ended March 31, 2006 was 25.9%. This rate varies from the expected federal statutory rate of 35% primarily as a result of the exclusion from the Company’s income tax provision of operating results which are wholly allocated to its respective members’ federal income tax returns. The income tax provision for the three months ended March 31, 2006 also includes provisions for income taxes in certain state and local jurisdictions.

The Company incurred income tax expense in the quarter ended March 31, 2005 despite a pre-tax loss as a result of the exclusion from the Company’s income tax provision of operating losses which are wholly allocated to its respective members’ federal income tax returns. Income was generated at certain taxable subsidiaries during the first quarter of 2005. The income tax provision for the three months ended March 31, 2005 also includes income tax expense related to state income tax law changes and the establishment of valuation allowances.


2.	Intangible Assets

Summarized below are the carrying values for the major classes of intangible assets:


						(Audited)
						December 31, 2005					March 31, 2006

						Gross					Gross
						Carrying		Accumulated			Carrying		Accumulated
				Useful Lives		Amount		Amortization			Amount		Amortization

Intangible assets subject to amortization:
	Customer relationship intangibles				5 years	$	5,316	$	(2,318	)	$	5,003	$	(2,362	)
	Other intangibles				1-18 years		306		(134	)		301		(137	)

			Total			$	5,622	$	(2,452	)	$	5,304	$	(2,499	)

Intangible assets not subject to amortization:
		FCC (U.S.) licenses				$	25,242	$	—		$	25,243	$	—
		Goodwill				$	22,359	$	—		$	22,355	$	—

The changes in the carrying value of goodwill for the quarter ended March 31, 2006, which totaled $6, are largely attributable to adjustments to purchase price allocation of AT&T Wireless assets and liabilities

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table presents current and estimated amortization expense for each of the following periods:


Aggregate amortization expense:
	For the three months ended March 31, 2006		$	365

Estimated amortization expense:
	For the remainder of 2006		$	950
	For the years ending December 31, 2007			955
		2008		603
		2009		237
		2010 and thereafter		60

			$	2,805

For the three months ended March 31, 2005, amortization expense was $506.

In addition to the intangible assets noted above, the Company had $2 of intangible assets at December 31, 2005 and March 31, 2006 in connection with the recognition of an additional minimum liability for its bargained pension plan and/or other unqualified benefit plans as required by SFAS No. 87, Employers’ Accounting for Pensions, (SFAS 87).


3.	Salmon PCS LLC

In November 2000, the Company and Crowley Digital Wireless, LLC (Crowley Digital) entered into an agreement, pursuant to which Salmon PCS LLC (Salmon) was formed to bid as a “very small business” for certain 1900 MHz band PCS licenses auctioned by the FCC. The Company granted Crowley Digital the right to put its approximate 20% economic interest in Salmon to the Company at a cash price equal to Crowley Digital’s initial investment plus a specified rate of return. The Company’s maximum liability for the purchase of Crowley Digital’s interest in Salmon under this put right is $225. The fair values of this put obligation, estimated at $172 and $176 as of December 31, 2005 and March 31, 2006, respectively, are included in “Accrued liabilities” in the consolidated balance sheets for the respective periods. Crowley Digital has exercised its put right pursuant to which the Company expects to pay approximately $186 should the put close in October 2006, as the Company anticipates.


4.	Debt


	*Revolving Credit Agreement*

Under a revolving credit agreement, AT&T and BellSouth provide the Company unsubordinated short-term financing on a pro rata basis at an interest rate of LIBOR plus 0.05% for the Company’s ordinary course operations based upon the Company’s budget and forecasted cash needs. The revolving credit agreement provides that in the event that the Company has available cash (as defined) on any business day, such amount shall first be applied to the repayment of the revolving loans, and any remaining excess shall then be applied to the repayment of the Subordinated Notes (member loans) from AT&T and BellSouth at month end if the Company does not then require a cash advance under the agreement. As of December 31, 2005 and March 31, 2006, the Company had an outstanding balance of $511 and $1,676, respectively, under the revolving credit agreement.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	*Debt Repayment*

The Company repaid $1,000 of 7.35% AT&T Wireless Services, Inc. unsecured and unsubordinated Senior Notes on the maturity date, March 1, 2006.


5.	Related Party Transactions

These consolidated financial statements include charges from AT&T and BellSouth for certain expenses pursuant to various agreements.

In addition to the affiliate transactions described elsewhere in these consolidated financial statements, other significant transactions with the Company’s members are as follows:


	Three Months
	Ended
	March 31,

Type of Services(1)	2005		2006

Agent commissions and compensation	$	20	$	14
Interconnect and long distance		282		464
Telecommunications and other services		57		107


(1)	See Note 11 to the Company’s audited consolidated financial statements included in Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 for a further description of services.

The Company had receivables from affiliates of $156 and $160 and payables to affiliates of $210 and $197 at December 31, 2005 and March 31, 2006, respectively.


6.	Acquisition-Related and Integration Costs

The Company is executing plans to exit certain activities and dispose of certain assets of AT&T Wireless to fully integrate the acquired operations with those of the Company. These plans affect many areas of the combined company, including sales and marketing, network, information technology, customer care, supply chain and general and administrative functions. In connection therewith, the Company expects to continue to incur significant costs over the next several quarters associated with such integration activities. Plans affecting the Company’s integration of retail stores, administrative space and the network have been completed and approved by management, resulting in adjustments to the purchase price allocation for the acquired assets and assumed liabilities of AT&T Wireless and the need to shorten the useful lives of certain network and other property, plant and equipment.


	*Network Integration Plan — Phase I*

In June 2005, the Company finalized a portion of its plan to integrate certain acquired network assets of AT&T Wireless. The plan primarily addressed certain TDMA network equipment in locations where the Company and AT&T Wireless had overlapping TDMA network assets and AT&T Wireless’ UMTS (Universal Mobile Telephone Service) assets. The plan included decommissioning TDMA assets (approximately 85% former AT&T Wireless assets and 15% legacy Cingular assets) and replacing former AT&T Wireless UMTS assets by the end of 2005.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company also determined to decommission and replace certain vendor-specific Cingular network assets in three markets as part of its overall network integration efforts, resulting in a net increase of $257 in depreciation expense for 2005, including $35 for the three months ended March 31, 2005. The net increase for the three months ended March 31, 2006 was $15.


	*Network Integration Plan — Phase II*

In October 2005, the Company approved the second and final phase of its network integration plan. This plan complemented the activities undertaken in June 2005 to eliminate redundant network facilities that arose upon the purchase of AT&T Wireless. In connection with the second phase of the network integration plan, the Company is integrating its GSM (Global System for Mobile Communication) networks, decommissioning redundant cell sites and core network elements and swapping vendor equipment in various markets to have like equipment in each operating market. The plan is anticipated to result in decommissioning approximately 7,600 cell sites, of which approximately 5,700 were acquired from AT&T Wireless. Certain legacy Cingular assets that will be decommissioned as a result of the second phase of the network integration plan were depreciated on an accelerated basis beginning in the fourth quarter of 2005. For the three months ended March 31, 2006, the related incremental depreciation associated with those legacy assets amounted to $75. The Company has currently executed approximately 50% of the activities associated with its network integration plans and expects to be substantially completed by December 31, 2006. During the first quarter of 2006, the Company recorded immaterial expenses related to revised integration estimates.


	*Retail Stores and Administrative Space Integration Plans*

The Company also finalized plans to integrate the retail stores and administrative space requirements for the sales/distribution and corporate real estate functions in June 2005. Legacy Cingular assets affected by the integration plans are depreciated on an accelerated basis through their estimated remaining lives. The impact on depreciation expense is not material. As of March 31, 2006, these plans are substantially completed.


	*Exit Costs Recorded Under Integration Plans*

In addition to the revaluation of assets, the Company incurred and recorded certain costs and accruals associated with the integration plans in accordance with the requirements of Emerging Issues Task Force Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination (EITF 95-3), Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146), and SFAS No. 112, Employers’ Accounting for Postemployment Benefits (SFAS 112).

The costs presented in the table below were recorded under EITF 95-3 to exit certain AT&T Wireless activities and resulted in adjustments to the purchase price allocation for assets acquired and liabilities assumed in the acquisition of AT&T Wireless. The majority of the costs recognized related to termination fees associated with leases, equipment removal costs, other contractual arrangements and employee termination benefits related to former AT&T Wireless employees.

Similar integration costs incurred related to legacy Cingular activities were recorded under SFAS 146 and SFAS 112 as “Cost of services” and “Selling, general and administrative” in the consolidated statements

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of income. Under SFAS 146, expenses are recognized when those costs have been incurred, while expenses are recognized under SFAS 112 when such costs are probable and estimable. See the SFAS 146 table below for respective balances and activity.

In connection with the integration of AT&T Wireless, the Company identified approximately 2,400 legacy Cingular employees and 2,200 former AT&T Wireless employees to be terminated during 2005 and 2006 of which approximately 2,100 and 1,800 of these employees, respectively, left their positions as of March 31, 2006.

The following table displays the current period activity and balances recorded under EITF 95-3, which are reflected in “Accrued liabilities” in the consolidated balance sheets. Due to ongoing monitoring of the integration plan, the Company recorded additional accruals for extended lease notification periods and accrual reductions related to the ongoing contract termination progress. The impact of increases to the accrual and adjustments decreasing the accruals in the table below are reflected as expense in the current period Consolidated Statement of Operations and goodwill in the Consolidated Balance Sheet, respectively.


	December 31,										March 31,
EITF 95-3 Summary	2005		Accruals		Payments			Adjustments			2006

Lease terminations	$	262	$	21	$	(8	)	$	(17	)	$	258
Severance		15		—		(4	)		—			11
Equipment removal costs		185		—		(10	)		—			175
Other		3		—		—			—			3

Total	$	465	$	21	$	(22	)	$	(17	)	$	447

A summary of total expected costs to be incurred under SFAS 146 for the integration plans, and the amounts incurred through and for the three months ended March 31, 2006, is presented in the table below. The estimate of costs expected to be incurred and current period costs reflect a $7 reduction due to the impact of contract termination negotiations.


	Estimate of Expenses		Cumulative Expenses		Expenses		Cumulative Expenses
	Expected to be		Incurred through		Incurred		Incurred through
Summary of SFAS 146 Costs	Incurred		December 31, 2005		During 2006		March 31, 2006

Contract termination costs:
Lease terminations	$	131	$	36	$	12	$	48
Agent terminations		10		—		4		4
Other contract terminations		6		—		—		—
Equipment removal costs		126		15		3		18
Other		4		3		2		5

Total	$	277	$	54	$	21	$	75

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table displays the SFAS 146 activity and balances of the restructuring liabilities associated with the integration plans which are reflected in “Accrued liabilities” on the consolidated balance sheet. Activity under SFAS 112 for the three months ended March 31, 2006 was immaterial.


	SFAS 146

Balance at December 31, 2005	$	37
Additions		21
Payments		(6	)

Balance at March 31, 2006	$	52


7.	Commitments and Contingencies


	*Commitments*

The Company has unconditional purchase commitments for advertising and marketing, computer equipment and services, roaming, long distance services, network equipment and related maintenance and software development and related maintenance. These commitments totaled approximately $1,403 at March 31, 2006. Included in this amount are commitments aggregating $109 to AT&T, BellSouth and their affiliates for telecommunications and other services.

In connection with the termination of the Company’s GSMF network infrastructure joint venture with T-Mobile, the Company made a $1,200 commitment to purchase a minimum number of minutes from T-Mobile over a four-year transition period. This commitment became effective in January 2005, and approximately $409 of the purchase commitment remained outstanding as of March 31, 2006. The Company believes that the rates reflected in this purchase commitment are indicative of market rates based upon the volume of the commitment and the length of the transition period.

See Note 15 to the Company’s audited consolidated financial statements included in Item 8 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 for a further description of these commitments.


	*Contingencies*

In a jury trial, Freedom Wireless, Inc. (Freedom) was awarded damages jointly against the Company and Boston Communications Group, Inc. (BCGI) in the aggregate amount, including prejudgment interest, of approximately $165 for alleged past infringement of two patents allegedly owned by Freedom and used by BCGI to provide to the Company and other carriers a prepaid wireless telephone service technology platform. The court also enjoined the Company’s continued use of the BCGI platform, but the U.S. Court of Appeals for the Federal Circuit issued a stay of the injunction, and the Company and BCGI are appealing the entire case. BCGI has agreed to indemnify the Company with respect to the claims asserted in this litigation and has escrowed $41 for that purpose. However, if BCGI were to commence a bankruptcy proceeding, which is possible, the $41 may not be available to cover any of the Company’s liability. As a result of this arrangement and based upon the Company’s anticipated prospects on appeal, the Company does not believe the ultimate disposition of this case will have a material impact on its operations, cash flows or financial position beyond the $20 accrued in its consolidated financial statements.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 1.	Financial Statements (Unaudited)

CINGULAR WIRELESS LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Several class-action lawsuits have been filed against Old AT&T asserting claims under the federal securities laws. The complaints assert claims that Old AT&T made material misstatements concerning earnings and financial condition, while omitting other material information, allegedly to maximize proceeds from the offering of AT&T Wireless Group tracking stock in April 2000 and/or to avoid paying a cash guarantee in connection with its MediaOne acquisition. In April 2006, the plaintiffs and AT&T reached a tentative settlement of this case for $150. In connection with the split-off of AT&T Wireless from Old AT&T, the Separation Agreement between AT&T Wireless and Old AT&T provides for the allocation to AT&T Wireless of 70% of any liabilities arising out of these actions. Management’s estimation of the potential loss from this and other preacquisition liabilities from AT&T Wireless was previously recorded in the purchase price allocation to AT&T Wireless’ assets acquired and liabilities assumed. The settlement, if approved by the court, will not result in the accrual of any additional liabilities by the Company.

The Company is subject to claims arising in the ordinary course of business involving allegations of personal injury, breach of contract, anti-competitive conduct, employment law issues, regulatory matters and other actions. To the extent that management believes that a loss arising from litigation or regulatory proceedings is probable and can reasonably be estimated, an amount is accrued on the financial statements for the estimated loss. As additional information becomes available, the potential liability related to the matter is reassessed and the accruals are revised, if necessary. While complete assurance cannot be given as to the outcome of any legal claims, the Company believes that any financial impact would not be material to its business, financial position or cash flows.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following should be read in conjunction with the December 31, 2005 Cingular Wireless LLC audited consolidated financial statements and accompanying notes, related information and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2005.

Introduction

This management’s discussion and analysis of financial condition and results of operations is intended to provide investors with an understanding of our past performance, financial condition and prospects. The following will be addressed:


•	Overview of Business

•	Industry and Operating Trends

•	Selected Financial and Operating Data

•	Consolidated Results of Operations

•	Liquidity and Capital Resources

•	Critical Accounting Policies and Estimates

•	Related Party Transactions


	*Overview of Business*

We earn revenues and generate cash primarily by offering a comprehensive variety of high-quality wireless voice and data communications services and products. Our services are available in a variety of postpaid pricing plans and prepaid service arrangements. Our voice and data offerings are tailored to meet the communications needs of targeted customer segments, including youth, family, active professionals, local and regional businesses and national corporate accounts.

At March 31, 2006, we served 55.8 million voice and data subscribers over our cellular and PCS networks and were the largest provider of wireless voice and data communications services in the U.S., based on both the number of wireless subscribers and revenues. We had access to FCC licenses to provide cellular or PCS wireless communications services covering 296 million POPs, or approximately 99% of the U.S. population, including all of the 100 largest U.S. metropolitan markets.


	*Industry and Operating Trends*

We compete for customers based principally on our reputation, network quality, customer service, price and service offerings. We face substantial and increasing competition in all aspects of our business. Our competitors are principally three national (Verizon Wireless, Sprint Nextel and T-Mobile) and a large number of regional providers of cellular, PCS and other wireless communications services, as well as resellers. In addition, we may experience significant competition from companies that provide similar services using other current or future communications technologies and services. Competition and the high rate of wireless service penetration may continue to adversely impact gross additions, revenue growth, expenses and margins.

Our management focuses on key wireless industry drivers — subscriber penetration, average revenue per user (ARPU), operating income, OIBDA (defined as operating income before depreciation and amortization) and reputation within the wireless industry — to evaluate our performance.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


•	Subscriber Penetration — The wireless telecommunications industry is continuing to grow. A high degree of competition exists among the current four national carriers, their affiliates and the smaller regional carriers. This competition and other factors will continue to put pressure on pricing, margins and subscriber churn as the carriers compete for customers. Future carrier revenue growth is highly dependent upon the number of net subscriber additions a carrier can achieve and the ARPU derived from its subscribers. For the three months ended March 31, 2006, net subscriber additions increased 22.8% on a year-over-year basis.

•	ARPU — The quarterly ARPU continued to decline slightly on a year-over-year basis as we were successful in attracting new customers by offering plans that;


	•	add incremental revenue but at a lower rate than our primary plans, such as FAMILYTALK(R), prepaid plans and/or plans offered through reseller arrangements;

	•	allow customers to carry over unused minutes to succeeding months (ROLLOVER(R) plans), which reduces overage revenues;

	•	include no roaming or long distance charges; and

	•	allow our customers to call each other for free.

These plans effectively position Cingular to compete for customers and add incremental revenue, though they may negatively affect ARPU. Our ARPU is also adversely affected by the general competitive environment and increasing wireless penetration, which puts pressure on the prices we can charge. In addition, we added a disproportionately higher percentage of lower-ARPU prepaid and reseller subscribers than postpaid subscribers during the fourth quarter of 2005 and first quarter of 2006. Therefore, ARPU will continue to be under pressure. These pressures are offset in part by incremental revenue drivers related to data products, such as ringtones and messaging.


•	Operating Income — Our operating results for the three months ended March 31, 2006 were significantly higher than the comparable period in 2005 as our operating expenses remained essentially flat while our revenues rose over 9%.

•	OIBDA — Our OIBDA margin continued to strengthen as our merger integration initiatives progressed and was higher in the three months ended March 31, 2006 than in the corresponding prior year period.

•	Reputation — We continue to strive to be the most highly regarded wireless company in the industry with a driving focus on best of class sales and service. We primarily use subscriber churn to evaluate our reputation within the wireless industry.

We expect cost of services to increase due to higher network system usage and higher costs as we integrate AT&T Wireless’ network and operations, as discussed below. Also, we will continue to incur redundant expenses related to operating multiple networks as our subscriber base transitions from our TDMA and analog networks to our GSM network. If we are successful in increasing the growth rate of gross subscriber additions, our subscriber acquisition costs will also increase because of sales commissions and handset subsidies. We also expect increased costs to maintain and support our growing subscriber base and for customer care initiatives to improve our level of service to our combined subscriber base and to retain existing subscribers. We expect to incur higher depreciation costs as a result of the enhancement of the network coverage in our footprint and installation of high-speed 3G UMTS/ HSDPA technology in our network infrastructure, together with the accelerated depreciation of our TDMA network.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


	*Integration of AT&T Wireless*

We acquired AT&T Wireless in late 2004, and are in the process of disposing of certain of its acquired assets, including redundant and sub-optimal network facilities, sales locations, and administrative space, and integrating its assets and operations, including sales and marketing, network, information technology, customer care, supply chain and general and administrative functions. In connection therewith, we expect to continue to incur significant costs over the next several quarters associated with such dispositions and integration activities. We expect to substantially complete activities associated with our network integration plans by December 31, 2006. We have begun to realize cost savings and improvements in the operating performance of our combined operations. We expect these savings to partially offset integration costs as well as higher depreciation and amortization expense and contribute to higher operating margins during 2006.

For the three months ended March 31, 2006, our operating income was negatively impacted by $234 of integration costs, which were primarily reflected in our Consolidated Statements of Operations within “Depreciation and amortization” expenses and “Selling, general and administrative” expenses. Integration costs impacting “Depreciation and amortization” expenses primarily included accelerated depreciation of $170. Integration costs impacting “Selling, general and administrative” of $46 and “Cost of services” of $18 were primarily comprised of: sales and distribution related expenses, as we continued efforts to integrate our sales processes and rationalize our distribution channels; administrative real estate consolidation; and, network and systems integration costs. Lastly, for the three months ended March 31, 2006, our operating income was negatively impacted by approximately $359 of non-cash amortization expenses related to amortizable intangible assets that were recorded with the acquisition.

Selected Financial and Operating Data


	Three Months Ended
	March 31,

	2005			2006

Construction and capital expenditures	$	971		$	1,441
Licensed cellular/ PCS POPs (in millions) (end of period)(1)		293			296
Total cellular/ PCS subscribers (in millions) (end of period)(2)		50.4			55.8
Net additions, cellular/ PCS subscribers (in millions)		1.4			1.7
Cellular/ PCS subscriber churn(3)		2.2	%		1.9	%
Average cellular/ PCS revenue per user (ARPU)(4) (Actual dollars)	$	49.60		$	48.48
OIBDA(5)	$	1,789		$	2,487
OIBDA margin(6)		24.1	%		31.1	%


(1)	Licensed POPs refers to the number of people residing in areas where we have licenses to provide cellular or PCS service.

(2)	Cellular/ PCS subscribers include subscribers of other carriers served through reseller agreements.

(3)	Cellular/ PCS subscriber churn is calculated by dividing the aggregate number of cellular/ PCS subscribers who cancel service during each month in a period by the total number of cellular/ PCS subscribers at the beginning of each month in that period.

(4)	ARPU is defined as cellular/ PCS service revenues during the period divided by average number of cellular/ PCS subscribers during the period. For discussion of ARPU and a reconciliation to its most comparable measure under U.S. generally accepted accounting principles (GAAP), see “ARPU Discussion” below.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


(5)	OIBDA is defined as operating income before depreciation and amortization. For discussion of OIBDA, including reasons we believe its presentation is useful and a reconciliation to its most comparable measure under GAAP, see “OIBDA Discussion” below.

(6)	OIBDA margin is defined as OIBDA divided by service revenues.

OIBDA Discussion. OIBDA is defined as operating income before depreciation and amortization. OIBDA margin is calculated as OIBDA divided by services revenue. These are non-GAAP financial measures. They differ from operating income and operating margin, as calculated in accordance with GAAP, in that they exclude depreciation and amortization. They differ from net income, as calculated in accordance with GAAP, in that they exclude, as presented in our Consolidated Statements of Income: (i) depreciation and amortization, (ii) interest expense, (iii) minority interest in earnings of consolidated entities, (iv) equity in net income of affiliates, (v) other, net, and (vi) provision for income taxes. We believe these measures are relevant and useful information to our investors as they are an integral part of our internal management reporting and planning processes and are important metrics that our management uses to evaluate the operating performance of our consolidated operations. They are used by management as a measurement of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect our ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing our performance with that of many of our competitors. The components of OIBDA include the key revenue and expense items for which our operating managers are responsible and upon which we evaluate their performance. Lastly, we use this measure for planning purposes and in presentations to our board of directors, and we use multiples of this current or projected measure in our discounted cash flow models to determine the value of our licensing costs and our overall enterprise valuation.

OIBDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. OIBDA excludes other, net, minority interest in earnings of consolidated entities and equity in net income of affiliates, as these do not reflect the operating results of our subscriber base and our national footprint that we utilize to obtain and service our customers. Equity in net income of affiliates represents our proportionate share of the net income of affiliates in which we exercise significant influence, but do not control. As we do not control these entities, our management excludes these results when evaluating the performance of our primary operations. OIBDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capitalization and tax structures. Finally, OIBDA excludes depreciation and amortization, in order to eliminate the impact of capital investments.

We believe OIBDA as a percentage of service revenues to be a more relevant measure of our operating margin than OIBDA as a percentage of total revenue. We generally subsidize a portion of our handset sales, all of which are recognized in the period in which we sell the handset. This results in a disproportionate impact on our margin in that period. Management views this equipment subsidy as a cost to acquire or retain a subscriber, which is recovered through the ongoing service revenue that is generated by the customer. We also use service revenues to calculate margin to facilitate comparison, both internally and externally with our competitors, as they calculate their margins using services revenue as well.

There are material limitations to using these non-GAAP financial measures. OIBDA and OIBDA margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, the fact that these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income of affiliates, that directly affect our net income. Management compensates for these limitations by carefully analyzing how our competitors present performance measures that are similar in nature to OIBDA as we

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. OIBDA and OIBDA margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

ARPU Discussion. ARPU is defined as cellular/ PCS service revenues during the period divided by average cellular/ PCS subscribers during the period. This metric is used to compare the recurring revenue amounts generated on our cellular/ PCS network to prior periods and internal targets. Our ARPU calculation excludes Mobitex data revenues from a business we sold in late 2004 and thereby makes our metric more comparable with other wireless carriers, which we believe makes it more useful to investors.


	*Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.*


		Three Months
		Ended March 31,

		2005			2006

Net income (loss)		$	(240	)	$	354
	Plus: Interest expense		338			297
	Plus: Minority interest in earnings of consolidated entities		16			41
	Plus: Equity in net income of affiliates		(2	)		—
	Plus: Other, net		(20	)		(9	)
	Plus: Provision for income taxes		22			124

Operating income			114			807
	Plus: Depreciation and amortization		1,675			1,680

OIBDA		$	1,789		$	2,487

Service revenues		$	7,419		$	8,005
Less: Mobitex data revenues			18			14

Service revenues used to calculate ARPU		$	7,401		$	7,991

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Consolidated Results of Operations


	*Three Months Ended March 31, 2005 Compared with the Three Months Ended March 31, 2006*


	*Subscriber Base*


			Three Months
			Ended March 31,						Change

			2005			2006			Fav(Unfav)			%

			(In thousands)
Beginning of Period				49,132			54,144			5,012			10.2	%
Net Additions (Losses)
	Postpaid			1,063			900			(163	)		-15.3	%
	Prepaid			(87	)		147			234			NM
	Reseller			391			632			241			61.6	%

		Total Net Additions		1,367			1,679			312			22.8	%
Other Adjustments				(149	)		(13	)		136			-91.3	%

End of Period				50,350			55,810			5,460			10.8	%

Gross Additions
	Postpaid			3,539			3,132			(407	)		-11.5	%
	Prepaid			740			953			213			28.8	%
	Reseller			393			652			259			65.9	%

		Total Gross Additions		4,672			4,737			65			1.4	%

NM — Not Meaningful

We had 55.8 million cellular/ PCS subscribers at March 31, 2006. We added approximately 1.7 million subscribers, net of disconnections, to our subscriber base during the three months ended March 31, 2006, up from 1.4 million additions in the corresponding prior year period, and our gross subscriber additions for the three months ended March 31, 2006 totaled over 4.7 million. The slight increase in total gross subscriber additions was primarily driven by new prepaid offerings launched in mid 2005 and strong reseller additions.

For the three months ended March 31, 2006, our monthly cellular/ PCS churn rate was 1.9%, down from 2.2% in the prior year. Postpaid churn for the three months ended March 31, 2006 was 1.6%, down from 1.9% in the corresponding prior year period. The decline in our churn was driven by a 7.5% reduction in disconnections, which we believe is attributed to better network quality and coverage, a more positive overall customer experience, more attractive rate plans, exclusive devices and free mobile-to-mobile calling to over 55.8 million Cingular subscribers.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations


	*Historical Consolidated Data — For the three months ended March 31, 2005 and 2006.*


			Three Months
			Ended March 31,						Change

			2005			2006			$			%

Operating revenues
	Local service revenue — voice		$	6,179		$	6,518		$	339			5.5	%
	Data revenue			570			873			303			53.2

		Total local service revenue		6,749			7,391			642			9.5
	Incollect roamer revenue			303			264			(39	)		(12.9	)
	Long distance			114			126			12			10.5

		Subscriber revenue		7,166			7,781			615			8.6
	Outcollect revenue			164			171			7			4.3
	Other revenue			89			53			(36	)		(40.4	)

		Other service revenue		253			224			(29	)		(11.5	)

	Service revenue			7,419			8,005			586			7.9
	Equipment sales			810			975			165			20.4

Total operating revenues				8,229			8,980			751			9.1

Operating expenses
	Cost of services (excluding depreciation)			2,144			2,320			176			8.2
	Cost of equipment sales			1,295			1,327			32			2.5
	Selling, general and administrative			3,001			2,846			(155	)		(5.2	)
	Depreciation and amortization			1,675			1,680			5			0.3

		Total operating expenses		8,115			8,173			58			0.7

Operating income				114			807			693			607.9

Other income (expenses):
	Interest expense			(338	)		(297	)		41			(12.1	)
	Minority interest in earnings of consolidated entities			(16	)		(41	)		(25	)		156.3
	Equity in net income of affiliates			2			—			(2	)		(100.0	)
	Other, net			20			9			(11	)		(55.0	)

		Total other income (expenses)		(332	)		(329	)		3			(0.9	)

Income (loss) before provision for income taxes				(218	)		478			696			NM
Provision for income taxes				22			124			102			NM

	Net income (loss)		$	(240	)	$	354		$	594			NM	%

NM — Not Meaningful


	*Operating Revenues*

Total operating revenues increased $751, or 9.1%, to $8,980 for three months ended March 31, 2006 when compared with the corresponding prior year period. The 9.1% growth resulted primarily from the increase

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

in subscribers during this and the previous three quarters. Equipment sales contributed $165 of the increase in total operating revenues when compared with the corresponding prior year period. The components of the change in service revenues are described as follows:

Service revenue. Service revenue increased $586, or 7.9%, for the three months ended March 31, 2006 over the corresponding prior year period. This increase was primarily due to the increases in local service voice and data revenues, partially offset by decreases to incollect roamer and other revenues. The local service-voice component of total service revenues includes recurring monthly access charges, airtime usage, including prepaid service, and charges for optional features and services, such as voice mail, mobile-to-mobile calling, roadside assistance, caller ID and handset insurance. Local service-voice revenues also include billings to our customers for the USF and other regulatory fees and taxes.

The key driver of the increase in local service-voice revenues for the three months ended March 31, 2006 was an increase of 10.5% in the average number of cellular/ PCS subscribers over the prior year period. The increase in local service voice revenues due to increased subscribers was partially offset by a 2.3% decline in our ARPU, which is primarily attributable to an increased percentage of reseller subscribers in our subscriber base versus the prior year, which generate lower revenues than our postpaid subscribers, as well as an increase in the number of our subscribers on plans allowing free mobile-to-mobile minutes. Data revenues, which increased by $303 over the corresponding prior year period, partially offset the decline in ARPU, driven by greater data service penetration and usage of SMS messaging and other data services by our cellular/ PCS subscribers.

Incollect roaming revenues decreased when compared with the amounts from the corresponding prior year period and continue to be unfavorably impacted by the bundling of “free” roaming minutes with all-inclusive regional and national rate plans.

Long distance revenues for the three months ended March 31, 2006 increased $12 from the corresponding prior year period due primarily to an increase in domestic long distance revenues.

Equipment Sales. These sales are comprised of product, accessory and upgrade revenues. Equipment sales increased $165, or 20.4%, to $975 for the three months ended March 31, 2006 compared to $810 for the corresponding prior year period. This increase is primarily driven by higher priced handsets, including exclusive devices, despite lower postpaid gross additions and upgrade volumes compared to the prior year.


	*Operating Expenses*

Cost of services (exclusive of depreciation). Total cost of services, excluding depreciation, increased $176, or 8.2%, to $2,320 for the three months ended March 31, 2006, compared with $2,144 for the corresponding prior year period. The increase resulted from equal increases for the local systems cost and third-party network system cost components.

The local systems costs component of cost of services resulted primarily from gross increases in interconnection fees associated with a 22.8% growth in system minutes of use; higher facilities related costs resulting from an increase in cell sites; an increase in local network system costs of $40 primarily related to increased system usage and associated expansion costs, and including $15 in integration costs. These gross increases were offset by decreases of $21 for reseller services expenses and $37 from USF fees. The reseller services expense decrease resulted from a 43% decrease in minutes of use on the T-Mobile network, while a decreased contribution rate partially contributed to the USF decrease.

The third-party network system costs component of cost of services includes incollect roaming and long distance costs. The $88 increase resulted from increases of $48 and $40, respectively for incollect roaming

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

and long distance. Both increases were driven by higher minutes of use resulting from the increased number of average subscribers, partially offset by rate reductions from AT&T and BellSouth.

Cost of equipment sales. For the three months ended March 31, 2006, the $32 increase in cost of equipment sales resulted primarily from the net product cost increase of $27 from the corresponding prior year period. This $27 increase, net of freight, vendor credits and other product cost savings, resulted primarily from a 13.3% increase in the average cost per unit sold, driven by higher-end handsets, including exclusive devices, despite a lower volume of postpaid gross additions as compared to the prior year.

Selling, general and administrative expenses. Selling, general and administrative expenses (SG&A) for the three months ended March 31, 2006 decreased $155, or 5.2%, when compared with the corresponding prior year period. For the three months ended March 31, 2005 and 2006, SG&A included $102 and $46, respectively, of integration costs, primarily related to employee termination benefits for former Cingular employees, systems integration costs, sales distribution rationalization, and administrative real estate consolidation.

Selling expenses, which include sales, marketing, advertising and commission expenses, for the three months ended March 31, 2006 decreased $32, or 2.5%, when compared with the corresponding prior year period, primarily attributable to a $29 decrease in integration costs.

Costs for maintaining and supporting our subscriber base for the three months ended March 31, 2006 decreased $73, or 6.2%, when compared with the corresponding prior year period. Excluding integration costs, the decrease was $59, or 5.1%. This decrease was primarily due to a decrease in bad debt expense of $45, primarily resulting from improved collections, which resulted in lower net account write-offs, and from a decrease in customer service costs of $46 due to reduced outsourced professional services at certain call centers.

Other administrative costs for the three months ended March 31, 2006 decreased $50, or 8.9%, when compared with the corresponding prior year period. Excluding integration costs, the decrease was $37, or 7.3%, which primarily resulted from reduced headcount.

Depreciation and amortization. Depreciation and amortization expense for the three months ended March 31, 2006 was essentially flat with the prior year period. Increases of $146 in depreciation are largely attributable to increased network investment and shortening of the estimated useful lives of our legacy TDMA and acquired AT&T Wireless assets, substantially offset by reductions to depreciation expense associated with the revaluation of acquired AT&T Wireless assets pursuant to the network rationalization plans approved in 2005. Intangibles amortization expense for the three months ended March 31, 2006 totaled $365 representing a decrease of $141 when compared with the corresponding prior year period, primarily due to declining amortization of the customer relationship intangible assets recorded with the AT&T Wireless acquisition. The decrease also resulted from other intangible assets that became fully amortized in 2005.


	*Other Income (Expenses)*

Interest Expense. For the three months ended March 31, 2006, interest expense totaled $297 and represented a decrease of $41 when compared with the corresponding prior year period. The decrease mainly resulted from the repayment of $2,911 of member loans during 2005.

Minority interest in earnings of consolidated entities. For the three months ended March 31, 2006, minority interest in earnings of consolidated entities totaled $41 and represented an increase of $25 over the corresponding prior year period. The increase primarily resulted from increased partnership net income in the three months ended March 31, 2006.

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

Equity in net income of affiliates. For the three months ended March 31, 2006, equity in net income of affiliates decreased $2 over the corresponding prior year period due to an equity investment sale in 2005.

Other, net. For the three months ended March 31, 2006, other, net totaled $9 and represented a decrease of $11 when compared with the corresponding prior year period. The decrease resulted from higher interest income earned in the three months ended March 31, 2005, primarily attributable to cash proceeds received from the sale of certain network assets to T-Mobile in January 2005.


	*Provision for Income Taxes*

Provision for income taxes. For the three months ended March 31, 2006, the provision for income taxes was $124, representing an increase of $102, as compared with the corresponding prior year period. The higher provision for income taxes resulted from higher taxable income versus the prior year period.

Liquidity and Capital Resources


	*Cash Flow Analysis*


	Cash Flows for the Three Months Ended March 31, 2005 Compared with the Three Months Ended March 31, 2006


	Three Months Ended
	March 31,						Change

	2005			2006			$			%

Net cash provided by operating activities	$	1,319		$	931		$	(388	)		-29.4	%
Net cash used in investing activities		(459	)		(1,335	)		(876	)		190.8	%
Net cash (used in) provided by financing activities		(1,003	)		150			1,153			NM

Net decrease in cash and cash equivalents		(143	)		(254	)		(111	)		77.6	%
Cash and cash equivalents at beginning of period		352			472			120			34.1	%

Cash and cash equivalents at end of period	$	209		$	218		$	9			4.3	%

NM — Not Meaningful

Net cash provided by operating activities. For the three months ended March 31, 2006, cash provided by operating activities was $931, a decrease of $388 from the three months ended March 31, 2005. Although we experienced a $698 increase in operating income, excluding depreciation and amortization, this was offset by decreases of cash generated from working capital. This working capital decrease was primarily attributable to the following increases in uses of cash associated with accounts receivable ($267); inventories ($337); other current assets ($250); and accounts payable and other current liabilities ($245) when comparing activity in the three months ended March 31, 2006 versus the prior corresponding period.

Net cash used in investing activities. For the three months ended March 31, 2006, cash used in investing activities was $1,335, an increase of $876 from the corresponding prior year period. This increase was primarily the result of increased capital expenditures that exceeded the prior year period by $470. In addition, the three months ended March 31, 2005 included proceeds from certain one-time transactions that were not present in the three months ending March 31, 2006. These one-time transactions included $2,482 of proceeds from the sale of our California and Nevada network assets to T-Mobile in January 2005; $262 of proceeds from the sale of wireless properties, including those that we were required to divest; and $180 from the sale of spectrum to T-Mobile. These proceeds were primarily offset by the investment of the net proceeds of $2,145 from the sale of our network assets to T-Mobile as designated

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

funds for capital expenditures; the $200 payment we were required to make to GSMF prior to its dissolution; and $143 of deposits made for license acquisitions during the three months ended March 31, 2005.

Net cash (used in) provided by financing activities. For the three months ended March 31, 2006, cash provided by financing activities totaled $150 as compared with the use of $1,003 for the three months ended March 31, 2005. For the three months ended March 31, 2006, we made net draws of $1,165 under our revolving credit agreement. This increase in cash was offset by our $1,000 repayment of the 7.35% AT&T Wireless Services, Inc. unsecured and unsubordinated Senior Notes on the maturity date, March 1, 2006. For the three months ended March 31, 2005, the primary use of cash was the $993 of repayments to our members under our revolving credit agreement.


	*Sources of Liquidity*

Under a revolving credit agreement, AT&T and BellSouth provide unsubordinated short-term financing on a pro rata basis at an interest rate of LIBOR plus 0.05% for our ordinary course operations based upon our budget and forecasted cash needs. The revolving credit agreement provides that in the event that we have available cash (as defined) on any business day, such amount shall first be applied to the repayment of the revolving loans, and any remaining excess then shall be applied to the repayment of the Subordinated Notes (member loans) from AT&T and BellSouth at month end if we do not then require a cash advance under the agreement. For the three months ended March 31, 2006, we made net draws of $1,165. In addition, at March 31, 2006, we had $1,676 outstanding under the revolving credit agreement.

As of March 31, 2006, we had cash and cash equivalents totaling $218. We expect to fund our remaining capital requirements for at least the next 12 months by using existing cash balances, cash generated from operations and, if necessary, draws under our revolving credit agreement with AT&T and BellSouth.


	*Cash Requirements*

Our operating cash requirements during 2006 will be driven primarily by capital expenditures associated with our network enhancement and integration activities, interest payments and costs associated with acquiring and retaining new and existing subscribers. During 2006, we expect to make tax distributions to our members in amounts sufficient to permit members to pay the tax liabilities resulting from allocations of income tax items from us.

Network Upgrades, Integration and Expansion. The upgrade, integration and expansion of our GSM/GPRS/EDGE networks, the continued installation of UMTS/ HSDPA technology in a number of markets and the construction and upgrade of network facilities in California and Nevada following the sale of facilities to T-Mobile upon the termination of our GSMF network infrastructure joint venture will require substantial amounts of capital over the next several quarters. For the three months ended March 31, 2006, we spent $1,441 for network and non-network capital expenditures. We expect our capital expenditures in 2006 to be in the $7,000 to $7,500 range.

Spectrum Auction. The FCC has scheduled an auction of 90MHz of spectrum in the 1700 and 2100 MHz frequency bands to begin in June 2006. Our cash requirements may increase if we participate in the auction and are successful in our bidding.

Integration of AT&T Wireless. For the three months ended March 31, 2006, we incurred $64 of integration costs, which are included primarily in “Selling, general and administrative” expenses and “Cost of services” expenses in our consolidated income statements. We expect to continue to incur significant costs associated with integration activities.

Contractual Obligations. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K for the year ended

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

December 31, 2005 and Note 7 within Item 1. Financial Statements of this Report for a description of our contractual obligations.

Debt Service. As of March 31, 2006, we had $19,833 of consolidated indebtedness and capitalized lease obligations, excluding unamortized premiums/discounts and interest rate swap fair value adjustments but including the acquired AT&T Wireless debt obligations. This debt includes: $2,000 in unsecured Senior Notes of Cingular Wireless LLC; $8,250 in unsecured Senior and Senior Subordinated Notes of AT&T Wireless; $6,717 in unsecured, subordinated member loans from AT&T and BellSouth; $1,156 in capital lease obligations (excluding executory costs and imputed interest); and $34 in other debt. As of March 31, 2006, we had $1,676 in outstanding borrowings under the revolving credit agreement. During the first quarter of 2006, we repaid $1,000 of 7.35% AT&T Wireless Services, Inc. unsecured and unsubordinated Senior Notes on the maturity date, March 1, 2006. Additional capital lease obligations for the three months ending March 31, 2006 were $11. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations” in our Annual Report on Form 10-K for the year ended December 31, 2005 for our debt service requirements.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reflected in the consolidated financial statements and accompanying notes. We base our estimates on historical experience, where applicable and other assumptions that we believe are reasonable under the circumstances. Actual results may differ from those estimates under different assumptions or conditions. There have not been any material changes in Critical Accounting Policies and Estimates from those reported in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2005.

Related Party Transactions

See Related Party Transactions in Note 5 to our consolidated financial statements included in Item 1, “Financial Statements”.

Off-Balance Sheet Arrangements

As of March 31, 2006, we had no material off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The majority of our financial instruments are medium- and long-term fixed rate notes and member loans. Fluctuations in market interest rates can lead to significant fluctuations in the fair values of these fixed rate instruments. In addition, we are exposed to market risks, primarily from changes in interest rates. To manage exposure to these fluctuations, manage capital costs, control financial risks and maintain financial flexibility over the long term, we engage from time to time in hedging transactions that have been authorized by the board of directors of our manager. We do not anticipate any significant changes in our objectives and strategies with respect to managing such exposures. We do not use derivatives for trading purposes, to generate income or to engage in speculative activity.

At March 31, 2006, we had outstanding an aggregate of $6,717 in unsecured, subordinated member loans from AT&T and BellSouth with a fixed interest rate of 6.0% and a stated maturity of June 30, 2008. In addition, as of March 31, 2006, we had outstanding $10,250 of unsecured senior notes with fixed interest

CINGULAR WIRELESS LLC

PART I — FINANCIAL INFORMATION (Dollars in Millions)

Item 3. Quantitative and Qualitative Disclosures About Market Risk — (Continued)

rates ranging from 5.625% to 8.75% with maturity dates between 2006 and 2031. As of March 31, 2006, we had $250 of fixed-to-floating interest rate swaps related to our five-year unsecured senior notes. A change in interest rates of 100 basis points would change our interest expense as a result of the swaps as of March 31, 2006 by approximately $3 per annum. We also have capital leases outstanding of $1,156 with fixed interest rates ranging from 5.72% to 9.6%.

As of March 31, 2006, we had $1,694 of floating rate borrowings. These borrowings primarily include amounts outstanding under our revolving credit agreement with AT&T and BellSouth, which carry an interest rate of LIBOR plus 0.05%. A change in interest rates of 100 basis points would change our interest expense on floating rate debt balances as of March 31, 2006 by approximately $17 per annum.

The risk management discussion above, related to our market risks, contains forward-looking statements and represents, among other things, an estimate of possible changes in fair value that would occur assuming changes in interest rates. Future impacts of market risk would be based on actual developments in the financial markets. See Cautionary Language Concerning Forward-Looking Statements immediately following Part II, Item 6 of this Quarterly Report.

Item 4. Controls and Procedures

(a) We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports filed under the Securities Exchange Act of 1934, as amended (Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

As of March 31, 2006, management, including our President and Chief Executive Officer and Chief Financial Officer, completed its evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our President and Chief Executive Officer and our Chief Financial Officer concluded that we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. We also have investments in certain unconsolidated entities. As we do not control or manage these entities, our disclosure controls and procedures with respect to such entities are necessarily more limited than those we maintain with respect to our consolidated subsidiaries.

(b) During the evaluation referred to in Item 4 (a) above, we have identified no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

CINGULAR WIRELESS LLC

PART II — OTHER INFORMATION


Item 1.	Legal Proceedings

See Contingencies in Note 7 to our consolidated financial statements included in Item 1, Financial Statements of this Report for information on legal proceedings. Except as noted, there are no material changes in the status of our legal proceedings from those described in our Annual Report on Form 10-K for the year ended December 31, 2005.

Item 1A. Risk Factors

See “Risk Factors” in Part I — Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2005 for information on risk factors. There are no material changes in the status of our risk factors from those described in our Annual Report on Form 10-K for the year ended December 31, 2005.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

None.


Item 3.	Defaults upon Senior Securities

None.


Item 4.	Submission of Matters to a Vote of Security Holders

None.


Item 5.	Other Information

None.


Item 6.	Exhibits

(a) Exhibits


Number			Title

	31	.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31	.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32	.1*	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
	32	.2*	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.


*	This exhibit is hereby furnished to the SEC as an accompanying document and is not to be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933.

CINGULAR WIRELESS LLC

PART II — OTHER INFORMATION

CAUTIONARY LANGUAGE CONCERNING FORWARD-LOOKING STATEMENTS

In addition to historical information, this document contains forward-looking statements regarding events, financial trends, critical accounting policies, contractual obligations and estimates that may affect our future operating results, financial position and cash flows. These statements are based on assumptions and estimates and are subject to risks and uncertainties.

There are possible developments that could cause our actual results to differ materially from those forecasted or implied by our forward-looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which are current only as of the date of this filing. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

While the below list of cautionary statements is not exhaustive, some factors, in addition to those contained throughout this document, that could affect future operating results, financial position and cash flows and could cause actual results to differ materially from those expressed or implied in the forward-looking statements are:


•	the pervasive and intensifying competition in all markets where we operate;

•	failure to quickly realize capital expense and operational synergies from the acquisition of AT&T Wireless as a result of mechanical, technical, logistical, regulatory and other factors;

•	delays or inability of vendors to deliver hardware, software, handsets or network equipment, including failure to deliver such equipment free of claims, including patent claims, of other parties;

•	problems associated with the transition of our network to higher speed technologies;

•	slow growth of our data services due to a lack of popular applications, terminal equipment, advanced technology and other factors;

•	sluggish economic and employment conditions in the markets we serve;

•	the final outcome of FCC proceedings, including rulemakings and judicial review, if any, of such proceedings;

•	enactment of additional state and federal laws, regulations and requirements pertaining to our operations; and

•	the outcome of pending or threatened complaints and litigation.

CINGULAR WIRELESS LLC

PART II — OTHER INFORMATION

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	Cingular Wireless LLC


	By:	Cingular Wireless Corporation,


	as Manager


	By:	/s/ Peter A. Ritcher



	Peter A. Ritcher
	Chief Financial Officer
	(Principal Financial Officer)

Date: May 3, 2006

CINGULAR WIRELESS LLC

PART II — OTHER INFORMATION

Exhibit Index

(Exhibits Physically Filed Herewith)


Number		Title

	31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.
	32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.

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CINGULAR WIRELESS LLC 10-Q