SAN ANTONIO -- AT&T Inc. (NYSE: T) announced today that its subsidiary, AT&T Corp., has agreed to acquire privately held USinternetworking, Inc. ("USi"), a leading independent Applications Service Provider (ASP) — for approximately $300 million in cash and assumed debt.

The transaction, which is expected to close in the fourth quarter, is designed to enhance AT&T's enterprise service offerings.

It strategically aligns USi's software and eBusiness management services and consulting expertise with AT&T's existing portfolio of enterprise hosting and managed services. These value-added growth services and capabilities are in high demand by companies that are increasingly using enterprisewide software applications to reduce costs, while looking for the expertise of a hosting and applications management provider that can help them deliver consistent solutions at scale and globally.

IT market research and advisory firm IDC estimates that application management services represented a $21.5 billion market worldwide and a $9 billion market in the U.S. in 2005, and expects both markets to continue to experience growth. (Source: IDC, Worldwide and U.S. Application Management Services 2006-2010 Forecast, April 2006).

USi is a leading global independent ASP specializing in managed enterprise software solutions and on-demand services. USi provides software management and outsourcing services for widely used popular business software from companies like Oracle, PeopleSoft, Siebel, Microsoft, IBM WebSphere and Ariba. The company also develops, hosts and manages customized eCommerce solutions.

Following the acquisition, the company will operate as a wholly owned subsidiary and business unit within AT&T's existing enterprise services organization, which is led by Group President Forrest Miller. AT&T expects to retain USi's team and its domestic and international operations.

"The addition of USi's technology and expertise in applications management to AT&T's global reach, networking expertise and extensive hosting capabilities will broaden the range of solutions for our customers," said Miller.

"Our enhanced capabilities will enable businesses around the globe to more efficiently and effectively manage their core operations, enhance their productivity and derive further business value from their relationship with AT&T," Miller said.

"The USi team is excited to be joining forces with AT&T," said Andrew A. Stern, USi's chairman and chief executive officer. "Over the past eight years, USi has developed an unmatched ability to deliver enterprise-scale applications as fully integrated, on-demand services. Combining our capabilities with AT&T's global footprint creates an unparalleled opportunity for growth and the basis for continued market leadership for years to come."

AT&T Inc. (NYSE: T)

USinternetworking Inc. (USi) (Nasdaq: USIX)