The company benefits from a large, entrenched customer base and significant scale economies that enable it to generate substantial levels of operating cash flow from the local wireline business. Regulatory relief in many of its states has enabled the company to offer long distance services as an important customer "win-back" vehicle. The geographically diversified customer base benefits the company's overall business profile. The company also benefits from its 60% interest in Cingular wireless, which partially mitigates the risk of wireless substitution. The conservatively capitalized balance sheet provides extremely strong liquidity in the intermediate term. The company has been subject to increasing competition since the beginning of 2002, which has impeded its ability to increase its operating cash flows and has
