AT&T to buy BellSouth for $67 billion

AT&T said Sunday it will acquire fellow phone company BellSouth in a stock deal worth $67 billion, creating a telecommunications giant that dwarfs its nearest competitor, Verizon Communications.

AT&T became the largest phone company in the United States after local phone company SBC Communications acquired long-distance carrier AT&T last year for $16 billion. The company, which changed its name after the acquisition was completed, serves 13 states, mostly throughout the western and southwestern parts of the country.

AT&T on Monday said it expects to cut some 10,000 jobs between 2007 and 2009, once the acquisition has closed.

Combined with BellSouth, the third-largest local phone company in the country, AT&T will pick up another nine states in the Southeast to provide service in a total of 22 states. The combined company would generate about $130 billion in sales and serve nearly 70 million local phone customers.

In addition, AT&T will take full control of Cingular Wireless, a joint venture owned by AT&T and BellSouth. AT&T already owns 60 percent of Cingular, which is considered the largest cellular phone company in the U.S., providing service to more than 54 million subscribers in the United States.

"The Cingular partnership and the company itself are performing extremely well, particularly after the AT&T Wireless acquisition," AT&T Chairman and CEO Edward E. Whitacre said in a statement. "But no partnership between two independent companies, no matter how well run, can match the speed, effectiveness, responsiveness and efficiency of a solely owned company."

The deal is likely to rattle consumer groups, which opposed the $16 billion merger between SBC and AT&T last year. The fear among these groups is that the telecommunications market is consolidating too much, leaving fewer choices for consumers. But regulators thus far have not bought into this argument.

The main reason for this is that the local phone companies do not compete directly with each other. They operate in different regions of the country. Supporters of the megamergers also argue the phone companies are facing stiff competition from cable companies, which are now offering phone service along with television service and high-speed Internet access.

The competition has gotten so tough between cable operators and the phone companies that AT&T and Verizon, the second-largest phone company in the country, have spent billions of dollars during the past two years upgrading their networks to offer television service. Verizon is already offering TV service to consumers in several communities in Texas, Massachusetts, Virginia, and Florida. AT&T has begun testing its service in Texas and plans to offer it more widely later this year.

Whitacre called the deal "logical" in the company's press release announcing the acquisition.

"This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," Whitacre said. "We are confident that this is a merger we can execute, based on our track record with previous integrations and our experience working closely with BellSouth to create and build Cingular Wireless, and operate Yellowpages.com."

AT&T's latest move will likely have repercussions throughout the industry. For example, it could force Verizon to make a play for Qwest Communications, the fourth surviving Baby Bell operating company.

Verizon announced its bid for long distance carrier MCI last year after SBC had announced its acquisition of AT&T. Verizon entered a bidding war with Qwest Communications , which offers local phone service and high-speed Internet access to customers in 14 western states. Eventually, Verizon paid $8.44 billion for the formerly bankrupt MCI .

AT&T's move to acquire BellSouth could also spur Verizon into action on the wireless front. Currently, it jointly owns Verizon Wireless with European carrier Vodafone. Verizon's CEO has mentioned on several occasions that he is interested in buying Vodafone's 45 percent stake in the wireless company.

Under the terms of the proposed merger, BellSouth shareholders will receive 1.325 shares of AT&T common stock for each BellSouth common share. Based on AT&T's closing stock price on Friday, the deal will be worth about $37.09 for each BellSouth common share. That represents a 17.9 percent premium over BellSouth's closing stock price on Friday, and it puts the current value of the deal at approximately $67 billion.

The merger, which is subject to approval by shareholders of both companies, as well as regulatory authorities, is expected to close within the next 12 months, the company said.

Reuters wire service contributed to this report.

[digitallysick]

ma'bell its back!

now, you have at&t verizon, qwest, now once they buy each other, and end up 1 company, ma'bell

[mikealex80]

About Time

Good! Maybe they'll finally start offering some decent broadband connections from the telco's. They'll have the resources to lay the fiber we've all been promised but only a lucky few are getting.

[phinias_t_buster]

No Consumer Benefit What So Ever

None. Just an ego driven acquisition that makes absolutely zero sense.

[nicmart]

Purchase will help competition

"Consumer Groups," as the media call groups that are fronts for <br />lawyers, are simply groups that detest industry and adore <br />government. You never hear them criticize government <br />monopolies.<br /><br />This will be a good deal for consumers and stockholders. As <br />recent reports indicate VoIP use is skyrocketing, and there will <br />be enormous competition for local phone service. Cable <br />companies, VoIP, and services delivered by power line, are all in <br />play. Additionally, Americans are increasingly ditching their land <br />lines for cell phones, where competition is fierce.<br /><br />The usual suspects will cry wolf, but this will benefit consumers.

you are 100% wrong on that.

That's cool. Everything you said is wrong, a lie. Put "not" in front of every verb, that'll save me a lot of typing.

[jesdog]

What competition? A derugulated monopoly

does not have competition. The only thing derugulation has provided is greater cash flow to the same monoploies. Indeed, if anything, service and quality has deteriorated dramatically leaving a lot of unhappy customers ... especially here in Southern California ... and especially since SBC took over. Verizon, the former GTE, has always been a negative in this area. they still have a lingering bad service reputation predating their mergers and acquisitions and changing their name. but the same monopolies exist, there is no quality control anymore, and the cost of communications service has skyrocketed while service has remained the same in some areas and deteriorated in others. Mr. Martin should have dumped his stock a long time ago...too bad he didn't. However, the hope is the acquisition will increase profits by scooping up more customers, reducing further any so-called competing companies, and ... well absent any significant competition ... the consumer will be victim of the monopoloy in their area. The use of the internet by conmsumers has actually hurt the telecommunications industry more than anything else. (That's why they are , rather belatedly, trying to create a niche in this area). It isn't the "lawyers" (the big lie) or consumer groups trying to get what they're paying for(the bigger Lie), that "detest industry" (you mean like Enron, Qwest, MCI, and a few thousand other US Attorney lawsuits for fraud and deception against Fortune 500 companies). My word, the industry has been deregulated ... state public utility commissions have essentially been defanged ... they've become glorified colloection agencies for the former ma bell's babies, and information collectors. What utter nonsense.

[ericnn24]

Monopoly: The Return

Weren't these companies broken up in the 70s? What's the deal with it buying itself back piece by piece?

[AuriRahimzadeh]

Welcome back to HIGH PRICES and TERRIBLE CUSTOMER SERVICE!

So not only will our government let AT&#38;T get back together, lies about competitiveness and all, we're going to suffer as consumers. Higher prices are already hitting those who have been forced to switch to AT&#38;T. I keep getting notices from AT&#38;T to choose new, more expensive plans for my business. Yet AT&#38;T will promise the FCC this is all good and then they'll start breaking the law and just paying the fines, which are less than the interest they get on the blood-sucking fees they will beat us with.<br /><br />Yuck. Stupid FCC.

[cardinalbird2]

Unfortunately that's the point

It's another way to weaken small businesses in this country. We should never forget that small business has been responsible for the only sustained job growth in the economy for the past 25 years.

[misguidedkid]

RE:

Welcome back? You're obviously not a BellSloth customer now. If anyone has a stranglehold on businesses that rely on their PBX, it's these guys where I am (ATL N METRO). We pay these guys huge amounts of cash and we barely register on their radar unless we have an outage that would require them to pay us money back. And then they're not fast and usually try to blame our side of the connection (which is usually wrong). I can't imagine AT&#38;T being worse, so at the very least I get to roll the dice and hope I get good account reps that can find their ***** with one hand in the dark.

[bob donut]

This is disturbing

I just don't feel comfortable with the way the phone companies are being allowed to run rampant. With all the corporate scandals we just went through, you'd think that the government would show some caution with respect to this kind of thing.

[cardinalbird2]

With who is running the FCC?

These are the same people who approved the merger of Exxon and Mobil.

[ordaj]

SCANDAL

<a class="jive-link-external" href="http://www.teletruth.org/" target="_newWindow">http://www.teletruth.org/</a>

[anarchyreigns]

Protest to your legislator!

Tell them to reject this proposal!

[anarchyreigns]

Protest to your legislators!

Tell them to reject this proposal!

[Jeff Lebowski 63]

Protests will fall on deaf ears

In fact, protests will be met, privately, with riotous laughter in <br />the corporate board rooms and in the halls of the DOJ. We live in <br />times where unapologetic scoundrels rule without fear of <br />reprisal. <br /><br />No doubt, there will be public hearings on this merger. Allow me <br />to sum them up in advance. Here's how the dialog will go:<br /><br />Consumer Groups: "This merger will limit competition, increase <br />prices, hurt consumers, create a huge unregulated monopoly <br />and serve only to enrich a handful of people."<br /><br />Bush's DOJ: "Yeah. So what's your point?"

[mikealex80]

Times have changed

These companies were broken up due to lack of competition. When they were broken up there was no VOIP most poeple could not afford cell phone. Know local phone companies are loosing customers at an extremely high rate to competition. You can get phone service with unlimited long distance for $24.99 from VOIP. You can't do that with the telephone company. They are loosing to the competition. Cable companies are now offering everything you can get from the telco at a very competitive rate and with cell phone starting to offer broadband services, there is plenty of competition to allow these mergers.

[microsoft slayer]

This is really FISHY

I thought we broke up AT&#38;T into baby bells in the 70's AND NOW THEY"RE TRYING TO COME BACK TOGETHER AND CREATE A MONOPOLY??!?!??!?!?!?!?!?!?!

[paulsecic]

$$$$$$$$$

They have made billions &#38; billions billions &#38; billions &#38; billions &#38; billions billions &#38; billions billions &#38; billions &#38; now it's time to put Humpy Dumpty together agian.........BS!

[Stating]

Not Opera Browser Friendly, That's For Sure

Ah yes, Bellsouth ever on the leading edge of technology:<br />"BellSouth.com offers online features that only work with newer browsers. To shop for our products, manage your accounts, find out more about BellSouth, or to contact us online, please choose one of these browsers:<br /> Download Netscape Navigator <br /> Download Internet Explorer <br /><br />If you choose not to upgrade your browser, we regret that our website will not function properly for you at this time."<br /><br />As for the imperialistic AT&#38;T, my prediction is that as these telco behemouths consolidate, a greater and greater amount of money will be spent on advertising and proliferation of retail stores and less and less on actual technology innovation. The ink was barely dry on the AT&#38;T/SBC merger when I received in the mail a glossy, expensively produced AT&#38;T product catalog. Much todo was made of the various bundled plans, none of which really made much sense. And why anybody would want to buy an AT&#38;T branded MP3 player is beyond me.<br /><br />As for the cellular part of this new merger, I just have to chuckle. I have AT&#38;T wireless, which then became Cingular, and is now on its way to becoming AT&#38;T yet again -- full circle in only 2 years. I opted to not "join" the Cingular family a year ago when a hapless rep told me that I would have to apply for a Cingular account just like any stranger on the street, and would have to start a plan term commitment all over again. I now gleefully hope that Cingular customers will be welcomed into the AT&#38;T family and be offered their own new term commitment plan by AT&#38;T with no credit for prior service from Cingular. Don't you just love the square wheels that these folks sell.

[Earl Benser]

WIll the next Worldcom....

....bet AT&#38;T??? Same general corporate mentality - screw the <br />customers, maximize the bonuses, then run like hell.

[supadave]

Monopoly?

Why is everyone crying monopoly? Do those of you know what a monopoly is?<br />"Exclusive control by one group of the means of producing or selling a commodity or service"<br /><br />If AT&#38;T has local, LD and Wireless service they are not a monopoly. They do not control an entire service. We as consumers have choices in who gets our communication business. If you do not like AT&#38;T or Cingular go with T-Mobile, Sprint, or Verizon. Go with your local cable provider or Vonage for your phone service. <br /><br />Bell South local and SBC do not compete. They may compete on the L/D front but there are still L/D choices of you want to go that route.<br /><br />If AT&#38;T and Verizon merged then you would have a monopoly. The environment is completely different than the 70's and ma bell. There was only one choice and it was ma bell. <br /><br />It's understandable to be unhappy with the merger, but these are two independent companies and should be able to merge if they see fit. Competition will still exist and as such we are not in a position to stop it.

[p.shearer]

amen!

at last... a voice of reason!

[Far Star]

So what was the point ...

of the 1984 divestiture ruling? <br /><br />Answer: not much.<br /><br />Arguably it helped cause compition in the telecom marketplace but that was simply a way for the 4 holding companies to get more money. In the heat of the confusion after the divestiture the FCC allowed many to raise local prices under the excuse that they had more costs. When in reality they just wanted higher margins and more profit for what they were already doing.<br /><br />Now we see AT&#38;T buying up 2 of the 4 companies that came out of that landmark (and often referranced) DoJ win. Which will leave us 3 megacorps and an case study of how a win can ultimately be a loss for the general public.<br /><br />As a consumer I wonder just what side is the FCC and the DoJ on?

[p.shearer]

the merger makes sense

We are no longer talking about the days were physical copper going into a home represented a natural monopoly. Between VIOP and wireless traditional voice service is in major decline. AT&#38;T would still face very stiff competition from the cable operaters. For high speed internet there are multiple options available including cable, WIMAX, EVOD, satellite, ect. Its time to get out the markets way and let it do its job!

[Earl Benser]

AT&T plans to cut 10,000 jobs after the merger....

...let's hope that most of those are from the upper management <br />levels. <br /><br />But just you watch. Management will toss 10,000 employees out <br />on the street, and then collect bonuses for cost reductions. And <br />the poor guy on the street gets to apply for welfare- at the <br />government's expense - except that you and I pay that expense <br />with our taxes. <br /><br />Big savings for AT&#38;T, right?

[chuchucuhi]

what many may fail to realize...

Phone companies are not phone companies they are data service companies just like comcast, timewarner, verizon, and possible others that may enter the market like google. The competition is going to grow from new delivery methods of phone, tv, and internet services. At least in this case it was AT&#38;T, formerly SBC, which has been very progressive with their services.

[chaoos]

You must be joking about Progressive!!!

" At least in this case it was AT&#38;T, formerly SBC, which has been very progressive with their services." Are you kidding SBC"at&#38;t" has not had a new product in five years. They have been promoting the same DSL that everyone else has. They Just barely entered the Wifi market by offering their product at McDonalds and at some bookstores. T-mobile has been selling this product for the last four years at least. And now they want to start selling their IPTV service. Good luck competing with Rhupert Murdoc and the cable companies. It is will cost at&#38;t Billions of dollars to deploy their fiber nodes in areas and to deploy a all fiber infrastructure just to be able to sell 900 worthless channels that the cables and direct/dish guys are doing already. Plus if you have not noticed with all these mergers and Wall Street does not bat an eye. SBC at&#38;t or whatever they want to call themselves is still the same disorganized company it is today and will continue to be tommorow. Not to mention that massive amout of debt that the Telco must take on as part of the deal. The only ones who will benefit from this merger is the Mr Whitacre and other top company officials not you the consumer!!

Those screaming "monopoly" really just don't get it

First off, please look at the dictionary definition of "monopoly" again before you spout off. Secondly, how does this merger generate a "monopoloy" in the telecommunications business? Verizon will still be a significant competitor to the new AT&#38;T (and will likely only get bigger itself) and is already pushing its FiOS fiber-to-the-home service into markets that are outside its traditional "Baby Bell" territory. You've got Comcast, Time Warner, Cox, Vonage, and others who now have millions of phone subscribers themselves... oh, and keep in mind that Comcast et al have pipes of their own so there's no worry about AT&#38;T shutting off their access (which is an assanine presumption to begin with). So, please tell me how this new AT&#38;T will possess a "monopoly"?<br /><br />Also, how will this new AT&#38;T "harm" either competition or prices? Actually, it will likely drive prices down... because now you'll have a company of significant heft that can take on a Verizon or a Comcast head-on and drive prices down. Imagine BellSouth trying to compete against 800-pound gorillas like Verizon and AT&#38;T - if BellSouth was forced to lower prices to compete with that they'd go bankrupt! This is one of those markets where it's better to have two 800-pound gorillas duking it out (Verizon vs. AT&#38;T) instead of a couple of itty bitty gorillas trying to pick a fight with the 800-pound one they'll never win.<br /><br />This is all the same BS so-called "consumer groups" use against every large merger or acquisition. It was used against Oracle, too. Someone please tell me how Oracle, with only about 10% of the business apps market before its acquisition spree, would have ever been formidable competition to SAP, the 800-pound gorilla in the space? Would PeopleSoft, Siebel, or JDEdwards have been much of a threat to SAP on their own? Not hardly. So, the market needed another 800-pound gorilla like Oracle to actually give SAP some REAL competition. How are consumers helped when the one fighting on their behalf isn't even big enough to make the market dominator bat an eyelash?<br /><br />I know many of you will scream, "what about Microsoft?" Well, Microsoft was a bit of a different animal in that A) it was an insurmountable obstacle for any logical competitor to achieve heft significant enough to give real competition to Microsoft and B) Microsoft abused its competitive position to INSURE that no logical competitor would ever be able to achieve a market position significant enough to challenge it. In this case, there's no way this new AT&#38;T can be Microsoft... not with other 800-pound gorillas like Verizon and Comcast still in the ring ready to duke it out. Therefore, this merger in the end will only be GOOD for consumers because it will bring reasonable and serious competition to this market.

[chuchucuhi]

here here

and people must understand we don't have monopolies in the U.S. we have oligopolies which can make it more difficult for a smaller individual or company to enter a market but not impossible.