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FT Investing in a Sustainable Future March 24, 2010, New York

Case Study

Driving the Economy:

By AT&T

AT&T is building a more sustainable corporate fleet by using alternative-fuel vehicles

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High gas prices coupled with concerns about climate change have made efficiency a must when it comes to corporate fleets. AT&T is taking steps to address this challenge by introducing alternative-fuel vehicles into its corporate fleet.

Connecting nearly 300 million people around the world daily, the telecommunications network provides service and support requiring a large corporate fleet, which numbers
more than 80,000 vehicles. Maintaining such a fleet requires a strategic approach in order to improve fuel efficiency and environmental impact, while fulfilling a responsibility to shareholders to use resources efficiently.

The vehicles are expected to cut the company's fuel consumption by nearly 34,395 gallons a year.

While they are still more expensive than their traditional counterparts, alternative-fuel vehicles reduce greenhouse gas emissions and thus help AT&T reduce its carbon
footprint, while also lowering operating costs per vehicle and reducing dependency on fossil fuels. It’s the right thing to do for the environment and for business.

In June 2008, AT&T started rolling out 105 alternative-fuel vehicles in more than 30 cities across 17 U.S. states. After careful research of available technologies, three types of vehicles were rolled out: compressed natural gas (CNG) vans, electric hybrid conversion work trucks and electric hybrid original equipment manufacturer (OEM) vehicles. The vehicles are expected to cut the company’s fuel consumption by nearly 34,395 gallons a year, reducing CO2 emissions by more than 300 metric tons. Although the vehicles are still being introduced into the fleet, additional benefits are anticipated.

CNG vans are expected to emit approximately 30 percent less CO2 emissions than traditional gasoline vans. The electric hybrid conversion work trucks could offer a 38 percent improvement in fuel economy and reduce CO2 emissions by 28 percent. The electric hybrid vehicles should offer a 39 percent improvement in fuel economy and reduce CO2 emissions by 29 percent.

As these fleet vehicles become operational, the company will measure and track fuel efficiency, greenhouse gas emissions, operating costs, performance and driver satisfaction.

Recognizing the importance of selecting the right vehicle mix to meet the unique needs of the company, AT&T was selective in picking which types to deploy and where. Early on, the company recognized that because it requires a fleet with multiple vehicle types, no single technology would fit all situations.

For a relatively large number of service vehicles, there are no alternative-fuel choices currently available from U.S. manufacturers. Rather than wait for vehicle technologies to become standard, AT&T is taking steps to address this challenge. It had domestic
suppliers upfit vehicles into alternative-fuel vehicles, hoping to signal a demand to manufacturers to produce a wider variety.

In addition to working with U.S. suppliers, AT&T’s fleet team conducted exhaustive research, weighing benefits and costs. Unlike many companies with large fleets, AT&T doesn’t have large centralized fleet depots and many of its vehicles travel only short distances.

Given that alternative-fuel vehicles are geared toward companies with high-mileage fleets that make many stops, AT&T placed electric hybrid vehicles in locations with excessive stop-and-go traffic.

When the company decided it wanted to deploy CNG vans, it recognized that they require an infrastructure of refueling stations. Therefore, it rolled out its 25 vans in California, which has more CNG refueling stations
than any other state.

AT&T is using its initial deployment of alternative-fuel vehicles as a learning tool to better understand what types work best. It is learning maintenance and the logistics of alternative fuels.

The Road Ahead

Deploying alternative-fuel vehicles is an important step in the right direction. As technologies evolve, AT&T continues to explore if they are right for its business needs. Making real changes to a fleet means more than just putting alternative-fuel vehicles on the road; it also means working to improve fleet management on a daily basis.
The company completed an extensive process to allow residential broadband installations so technicians would not need to travel to every residential location. In addition, AT&T encourages its drivers to avoid fast acceleration and hard breaking, keep tires properly inflated, reduce the weight of loads and avoid unnecessary idling.

Even the smallest improvements in fuel use and efficiency when applied across a large corporate fleet can make a significant impact for the environment and for a company’s business. AT&T is committed to improving fleet efficiency, now and down the road.

AT&T efforts to introduce alternative-fuel vehicles have uncovered some important lessons:

• Do your homework. Research and consultation on available technology is critical to understanding opportunities and costs, as well as determining which vehicles will work best.

• Build internal support. Help management understand the business case as well as the sustainability case for establishing a more fuel-efficient fleet. The decision needs to be one that makes sense.

• Take small steps. Fleets can’t turn green overnight. Develop and implement a strategy, set goals, then work toward that plan. It’s all about heading in the right direction, not determining a one-time, one-size-fits-all solution

AT&T Inc. (NYSE:T) is a premier communications holding company. Its subsidiaries and affiliates, AT&T operating companies, are the providers of AT&T services
in the United States and around the world. Among its offerings are the world’s most advanced IP-based business communications services and the nation’s leading wireless, high-speed Internet access and voice services.

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