Revenues were $387.9 million for the three months ended March 31, 2001,

up $23.8 million from first quarter 2000 and up $1.6 million sequentially from

fourth quarter 2000. Excluding long distance, our revenues from local, data,

Internet, and E-Business Solutions and other services, represent 55% of the

total revenue base versus 51% in first quarter 2000.

Local revenues increased by over 15% from the same quarter in 2000, while

Data, Internet and E-Business Solutions revenues increased by 20% from the

first quarter of 2000. Revenue from long distance services decreased by 2.5%

from the same period last year. Long distance revenues in the first quarter

of 2001 included revenue generated from new contracts such as the Navigator

agreement with the Toronto Dominion Bank Financial Group, that combines long

distance as a part of a greater suite of higher value added services.

The Company’s EBITDA (earnings before interest, taxes, depreciation and

amortization) for the first quarter totaled a record $31.6 million, an

increase of $20.5 million or 185% from fourth quarter 2000. EBITDA improvement

in the first quarter was the result of a decrease in service costs from

changes to the contribution regime that became effective January 1 of this

year, and a decrease in SG&A, primarily the result of lower bad debt expense.

Local access lines in service at March 31, 2001 were 460,706, an increase

from the prior quarter of 16,073. The majority of the new local access lines

installed during the quarter were on-net, with an increasing number coming

from small and medium sized businesses. Migrations of existing access lines

from resale to on-net status, also contributed to the increase in on-net

lines. The total number of lines installed that are either on-net or on-switch

now represent 55% of total linecount. At March 31, 2001, the company also had

an additional 7,840 local access lines that had been sold but not yet

installed. During the quarter the company continued efforts begun in fourth

quarter 2000, to disconnect lines with distressed and/or bankrupt customers

primarily in the wholesale and Internet Service Provider (ISP) sectors. This

contributed to a reduction in overall net line installations within the

quarter.

This is the first quarter that our EBITDA reflects the significant

impact of the cost savings promised under last year’s regulatory change to the

contribution subsidy regime. The margins in our long distance services

business have been dramatically enhanced, and we expect savings from the new

contribution system to be at least $60-80 million for the full year. During

the quarter the CRTC dismissed the incumbents’ appeals to the new contribution

mechanism, signaling its full commitment to implement the decision in the form

and timeframes envisioned. We applaud the regulator for an important initial

step in promoting a more balanced approach to collecting the subsidy and for a

decision that supports sustainable competition in Canadian

telecommunications, said John McLennan, Vice Chairman and CEO of AT&T Canada.

McLennan continued, Also during the quarter we successfully raised

US$500 million, bringing our available liquidity position to over $1 billion,

and funding our business plan to the end of 2002. In these times of volatile

capital markets, access to capital is certainly a competitive advantage. We

are very pleased with the confidence the capital markets have shown in AT&T

Canada in confirming our strong funding position.