San Antonio, Texas and San Jose, Calif., December 17, 2002 - SBC Communications Inc. (NYSE: SBC) and Cisco Systems Inc. (NASDAQ: CSCO) today announced a new strategic marketing and sales agreement. This relationship is focused on accelerating the delivery of a new class of managed business services, combining Cisco's leading-edge equipment and SBC's state-of-the-art transport and networking services. SBC also plans to use select Cisco technology in its core network infrastructure to deliver emerging services.

The agreement is designed to address one of the most pressing dilemmas faced by businesses today - the need to expand and upgrade communications technology to stay competitive, while at the same time, conserving scarce financial resources. Although advanced, flexible data and voice services are as critical as ever to success, most businesses today are looking for service options that minimize capital funding requirements and ongoing operating and management burdens.

SBC and Cisco are meeting this demand by combining Cisco's industry-leading IP and data networking technologies with SBC's expertise in design, delivery and management of business communications services and networks. The agreement will enable Cisco and SBC affiliates, and their partners, to deliver powerful and flexible business services in a fully managed environment, enabling customers to cost-effectively outsource these functions, with SBC service centers serving as a single point of contact.

"Managed services has tremendous growth potential, as businesses look for ways to expand services and adopt new technologies, while also working within increasingly tight capital budgets," said Sandra Palumbo, analyst, telecommunications strategies, The Yankee Group. "The combination of Cisco equipment and SBC's managed services experience could create a compelling outsourcing option."

The relationship calls for Cisco to become the preferred provider for specific SBC managed service products, including Internet Protocol (IP) telephony, network and customer premises equipment (CPE)-based IP virtual private networks (IP-VPN), security, storage networking, hosting, and wireless local area networks (WLANS) (see SBC-Cisco Agreement Managed Services Fact Sheet and graphic for details). The managed service products, some of which are available now and others which will be deployed in 2003 and 2004, are designed to help customers maximize returns on existing network investments by enabling consolidation and upgrade of multi-platform networks. These services ultimately will be made available through direct and indirect channels.

"The combination of SBC and Cisco products and services has been instrumental in helping us reach our technology goals," said Dan Weatherman, Director of Information Technology at Mathis Brothers Furniture. "Our IT infrastructure, which utilizes SBC services and Cisco equipment, allows us to combine voice, data and video over one robust network throughout our multiple locations. This platform has improved our order cycle times, internal communications, customer service, efficiency and ultimately our profitability. We look forward to the potential for even greater value through an enhanced agreement between the two companies."

SBC subsidiaries also plan to use Cisco optical networking, Ethernet transport and network-based IP-VPN technology in their core network infrastructure. This will enable SBC companies to accelerate development and deployment of high-speed networking solutions such as Optical Ethernet and Multi-Protocol Label Switching (MPLS) in 2003. An SBC company also is using Cisco 12000 Series routers within its national OC-192 IP backbone network, which will be completed in 2003 (see SBC's National Data Strategy fact sheet).

"In today's economy, businesses need the capabilities of advanced communications services more than ever, and managed services options provide the opportunity to maximize reliability while minimizing expense and risk," said Ray Wilkins Jr., group president - Marketing and Sales, SBC Communications. "The combined offer of SBC and Cisco products are answering this business need by delivering managed, packaged services that combine the best of technology, services and ongoing customer service from two world-class companies."

Building on a Strong Relationship

The new three-and-a-half-year SBC and Cisco agreement is a natural progression in the already strong relationship between the two companies. SBC's broadband data capabilities and large service area, along with Cisco expertise in data networking, IP innovation, and carrier-grade networking infrastructure, closely unite the two companies.

SBC currently is one of the largest Cisco service provider channel partners; since 2000, SBC companies have processed nearly 19,000 business customer orders involving Cisco equipment. Additionally, SBC has more than 5,000 highly trained sales and technical personnel devoted to sales and support of network and managed services incorporating Cisco equipment. Nearly 3,000 SBC technicians hold advanced Cisco certifications for data and voice equipment.

"We continue to build momentum around our long-term relationship with SBC, this time collaborating to deliver customized solutions for our mutual customers," said Charlie Giancarlo, senior vice president and general manager of product development for Cisco Systems, Inc. "The goal is to help our mutual customers increase their productivity and create a competitive edge by providing them with complete network technology and support, saving them time and resources and freeing them to focus on their core business and operations."

Sales Collaboration

Customers will further benefit from a strong collaboration between SBC and Cisco sales forces. The companies plan to work jointly to sell and support managed service offerings.

"This agreement takes Cisco and SBC to new levels of sophistication in their go-to-market strategies for delivering managed services," said Paul Mountford, vice president worldwide channels at Cisco Systems. "Our sales force will work in conjunction with SBC's to collaborate on joint account and sales planning, joint development of an indirect sales strategy as well as deployment of services."

"SBC and Cisco will work together, directly with our business customers to design, implement and manage packaged solutions and as needed, customized services that squarely address customers' unique, specific needs," said Chuck Rudnick, senior vice president - Business Marketing, SBC. "We'll bundle equipment, transport and services and manage those packaged or tailored solutions on an end-to-end basis for customers."

SBC Communications Inc. (www.sbc.com) is one of the world's leading data, voice and Internet services providers. Through its world-class networks, SBC companies provide a full range of voice, data, networking and e-business services, as well as directory advertising and publishing. A Fortune 30 company, America's leading provider of high-speed DSL Internet Access services, and one of the nation's leading Internet Service Providers, SBC companies currently serve 58 million access lines nationwide. In addition, SBC companies own 60 percent of America's second-largest wireless company, Cingular Wireless, which serves more than 22 million wireless customers. Internationally, SBC companies have telecommunications investments in 25 countries.