AT&T To Buy BellSouth

[Buddy Holly]

AT&T is going to buy Atlanta based BellSouth which will give them total access to coverage of the US as well as complete ownage of Cingular.

:fro

[SA210]

:tu

[Buddy Holly]

BellSouth, AT&T formally confirm deal
Blockbuster telecom acquisition worth $89 billion

By SCOTT LEITH
The Atlanta Journal-Constitution

Newly powerful AT&T -- created last year through the combination of SBC Communications and the old AT&T -- has officially set it sights on acquiring BellSouth, the two companies announced Sunday.

The proposed $89 billion deal including stock and debt would would create a new colossus in the U.S. telecommunications industry.

Shareholders of Atlanta-based BellSouth would receive $37.09 a share -- or a 17.9 percent premium -- in an all-stock transaction, the companies said. In addition to paying the $67 billion in stock, San-Antonio-based AT&T would assume $22 billion of BellSouth debt, officials said.

The headquarters of the new company would be San Antonio, where AT&T is currently based, the companies said.

With the acquisition, AT&T would gain access to a new swath of customers that would stretch throughout the Southeast. Just as importantly, such a move would put Atlanta's Cingular Wireless under one owner.

Cingular, the largest cellphone operator in America, currently is a joint venture of AT&T and BellSouth. Cingular's headquarters would remain in Atlanta, and the combined company's Southeast regional telephone company headquarters would be here.

Experts have long questioned whether AT&T, owner of 60 percent of Cingular, would want to take control of the entire business.

Regulatory issues

There are sure to be extensive discussions among regulators about approving a deal that would vault AT&T far ahead of second-place telecom rival Verizon. But officials have generally looked kindly on recent telecom deals, including Verizon's acquisition of MCI and the SBC/AT&T linkup.

For Atlanta, a sale of BellSouth -- which was created in 1984 as part of the breakup of the original AT&T -- could bring massive changes.

The company is among the city's most prominent corporate citizens and is a major employer, with campuses spread across the metro area. BellSouth also has been a force in local business circles, with a powerful lobbying force at the state capitol.

It comes as little surprise, however, that AT&T is making a run at BellSouth. Such a deal had been discussed openly for weeks, and many had widely expected that a bid would be forthcoming sometime this year or in 2007.

The speed of the deal, assuming it is announced, is somewhat of a surprise, however. BellSouth's chairman and CEO, Duane Ackerman, is set to retire in May 2007, and many observers had expected he wouldn't be in charge during a sale to AT&T.

In the past, BellSouth had explored acquisitions of its own, only to remain on the sidelines.

Meanwhile, AT&T's top executive, Ed Whitacre, has steadily boosted the size of what was once Southwestern Bell. Mighty AT&T now has territories stretching from the West Coast to the Midwest and Southwest, plus a hefty presence in serving business customers.

Recreating what was broken up?

Although a combination of AT&T and BellSouth would take a giant step toward recreating the kind of company that raised the ire of regulators who forced the breakup of AT&T in 1984, much has changed in the sector since then - indeed, even in recent months.

Cellphone service is a key part of the industry now, and there are many competitors fighting for business. Cingular and Verizon Wireless, which is partly owned by Verizon, are the top rivals.

Cable companies such as Comcast, Time Warner Cable and Cox Communications also pose a growing threat to telephone companies as they reach further into providing phone service. Telephone and cable companies fight each other for high-speed Internet customers and, in the near future, will likely be greater rivals in providing video.

Such growth has offset many worries about a steady erosion in use of local lines. Many consumers are shunning landlines in favor of cellphones or Voice over Internet Protocol, or VoIP, service offered by cable companies.

[TheTruth]

San Antonio taking over one of Atlanta's biggest employers.

Nice.

[SA210]

Peter to say we are not worthy and another city is better in 3..2..1..

[Buddy Holly]

AT&T to buy BellSouth Corp. in $67 billion stock deal

Web Posted: 03/05/2006 05:41 PM CST

Sanford Nowlin
Express-News Business Writer

San Antonio-based telecommunications giant AT&T Inc. said Sunday it would buy BellSouth Corp. in a $67 billion stock deal that would consolidate its ownership of Cingular Wireless and put it one step closer to reassembling Ma Bell.

The takeover of Atlanta-based regional phone company BellSouth would be one in a long line for the new AT&T, formed in November when SBC Communications Inc. completed its $16 billion takeover of long-distance provider AT&T Inc. The deal would give the merged company control of four of the seven “Baby Bell” phone companies created in 1984 with the federal breakup of the AT&T monopoly.

“This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth,” AT&T Chairman and CEO Edward E. Whitacre Jr. said in a written statement. “It will benefit consumers through new services and expended service capabilities. It will strengthen Cingular through unified ownership and a single brand.”

The merger would give AT&T a local phone and data network stretching to both coasts and a market capitalization of more than $99 billion, analysts said, and enable it to more quickly introduce services that combine its wireless and wire line capabilities.

Under the deal approved by both companies' boards, AT&T would give BellSouth shareholders 1.325 shares of its common stock for each common share they hold of BellSouth. Based on AT&T's closing stock price on March 3, that would be $37.09 per share.

The new AT&T also said it would repurchase at least $10 billion of its own common shares over the next 22 months as part of the deal.

Analysts have long said BellSouth would be AT&T's next big merger target, and people inside AT&T said both had been in serious discussions for about the past two weeks.

AT&T owns 60 percent of Cingular, the nation's No. 1 wireless provider, and analysts said it wanted to buy up BellSouth's stake so it could have sole ownership and streamline operations there. Wireless revenues are growing for AT&T while revenues from its landline operations have faltered. The company also expects to achieve $18 billion in synergies by combining its operations with those of BellSouth.

AT&T expects the deal to close the merger within a year, pending approval from the Federal Communications Commission and the U.S. Justice Department.

Once the deal closes, the merged company will market both its wireless and wire line services under the AT&T brand. The company would remain headquartered in San Antonio with Whitacre as chairman and CEO.

If regulators allow AT&T and BellSouth to merge, it would leave just three large phone companies in the United States. The other two would be Verizon Communications, which last year bought beleaguered long-distance giant MCI, and stand-alone “Baby Bell” Qwest Communications International Inc., which serves the U.S. mountain states .

AT&T spokesman Larry Solomon said he expects an “appropriate amount” of regulatory scrutiny for the deal, adding that AT&T and BellSouth's operations overlap in fewer places than SBC's and the old AT&T's did. The companies don't do business in each other's consumer markets and they already are partners in the wireless business, lessening anti-competitive concerns.

While regulators once thought phone companies like AT&T and BellSouth would be each other's strongest competitors, cable companies like Time Warner have instead become the biggest rivals to big phone carriers, analysts said.

But the prospect of adding one more of the former Baby Bells back to the AT&T fold doesn't sit well with consumer groups, who said the transaction destroys hopes that AT&T and BellSouth could ever compete in each others' markets.

“We thought that these guys were going to compete with each other, but it's apparent that they would rather just merge,” said Mark Cooper, policy analyst for Consumer Federation of America. “If the average consumer is lucky, he or she has two choices now: the phone company or the cable company. And the average consumer knows that two choices is not enough.”

Analysts said the transaction is likely to receive federal approval, but not without conditions. The deal comes on the heels of considerable industry consolidation and during an election year.

“The government has to ask at what point has there been too much consolidation,” said Ben Silverman, analyst for investment newsletter FindProfit.com. “I think we may be reaching the breaking point.”

[email protected]

http://www.mysanantonio.com/business/stories/MYSA030506.att.en.8b168cbf.html

--------------------------------------------

Does that mean Cingular would now be rebranded as AT&T Wireless?

[Hook Dem]

As a retiree of Bell,I am glad to see this! Ma Bell was a good provider all those years. :elephant

[scott]

This will be an interesting case study in anti-trust regulation that could have potentially set a far-reaching precedent. It will be interesting to see if the FTC stays true to the Herfindahl Index.

[KEDA]

Im suprised the FTC hasnt stuck their big ass noses in this.

When ODP tried to buy Staples many years ago the FTC got all pissy and wouldnt approve it. That was pretty small compared to something like this, and they wont say shit.

[Buddy Holly]

Im suprised the FTC hasnt stuck their big ass noses in this.

When ODP tried to buy Staples many years ago the FTC got all pissy and wouldnt approve it. That was pretty small compared to something like this, and they wont say shit.

Thems politics for ya.

However, it's not that big of a deal with both Verizon and Qwest still out there.

[KEDA]

true

but still, the AT&T empire is only getting bigger, which isnt a bad thing for San Antonio, but the gubment is going to put their fat asses in it sooner or later.

[Buddy Holly]

true

but still, the AT&T empire is only getting bigger, which isnt a bad thing for San Antonio, but the gubment is going to put their fat asses in it sooner or later.

Politics my friend... politics. :spin

[scott]

Thems politics got ya.

However, it's not that big of a deal with both Verizon and Qwest still out there.

No, this very much is a big deal as far as anti-trust regulation goes. The telecommunications industry is one of the most concentrated as it is before this deal. This isn't as big a deal as when MCI/WorldCom attempted to acquire Sprint in '99 (rejected by FTC), but its right up there. The Telecom industry Market Cap is somewhere around $330B, the combined Market Cap of the post-deal ATT would be around $160B. Verizon's Market Cap is around $90B, so between the top 2 companies you would have 75% of the entire industry. (Granted, Market Cap is not a true indicator of market power, just using it here for illustrative purposes). 75% between the 2 top companies = extremely high concentration = red flags for FTC and Justice.

The ruling on this merger will have far reaching effects on future deals. The heads of FTC and Justice have been just given the job of potentially reshaping the face of Anti-trust in America.