SAN ANTONIO -- In a speech today at Lehman Brothers' annual CEO Summit in Arizona, Edward E. Whitacre Jr., chairman and chief executive officer of SBC Communications Inc. (NYSE:SBC - News), sided with policy-makers who recognize the need to reform the industry's UNE-P rules and pricing, and said that he expects SBC will gain regulatory approvals to offer long-distance service in California before year's end and in the SBC Ameritech states in 2003. Whitacre said that while SBC works with regulators to reform UNE-P, it continues to execute with intensity, focusing on cost discipline and marketing initiatives - particularly long distance and DSL -- that will make the company stronger once the industry moves beyond the current environment. In the third quarter, SBC expects to lose about three-quarters of a million customer lines to competitors using UNE-P lines from SBC, the largest single quarterly line loss to UNE-P in the company's history. Competitors now use about 4.2 million UNE-P lines from SBC, with one-third of those lines being added in the second and third quarters of 2002. Whitacre said that the telecommunications industry continues to move through a demanding period of transition and that UNE-P reform is an important key to returning the industry to stability and growth. "UNE-P is not real competition," Whitacre said. "It is simply a subsidy for companies like WorldCom and AT&T that is totally dependent on companies like SBC being able and willing to make all the capital investment and absorb all the profit margin pressure. True competition invests in facilities. True competition innovates and provides a differentiated product to customers. True competition cares about service. UNE-P is simply false competition. It relies on subsidies, invests nothing, builds nothing and ultimately hurts everyone's ability to raise capital and invest." In addition, Whitacre said he is comfortable with analysts' consensus estimate for full-year 2002 of $2.26 per diluted share, before special items, which is at the low end of the range the company provided in the second quarter, due to pressure from UNE-P regulation. SBC said the seasonality of its directory business, which traditionally records about half of its annual income in the fourth quarter, results in a greater spread between the third and fourth quarters than is currently reflected in consensus estimates. SBC also reaffirmed that it expects full-year 2002 capital expenditures of below $8 billion and is targeting capital expenditures of $5 billion in 2003. SBC Communications Inc.