Sunday, March 05, 2006

AT&T to pay $67B for BellSouth

Big news this Sunday is the proposed acquisition by AT&T (the artist formerly known as SBC) of BellSouth for a cool 67 billion dollars. According to USA TODAY, the deal is valued at $90 billion and AT&T "would pay $67 billion in stock, about an 18% premium over BellSouth's current share price, and assume about $22 billion in debt. The result would be a telecommunications behemoth with about $120 billion in annual revenue." According to the article, "four of the seven Bells plus AT&T would now be part of the new AT&T," which has the consumer advocates very concerned.

On the mobile side, the article states "the merger would solve the problem of what to do with the nation's largest wireless company, Cingular, which is jointly owned by AT&T and BellSouth. After the AT&T-SBC merger closed, AT&T announced it would sell Cingular services under the AT&T name. That worried BellSouth, which still is selling wireless services under the Cingular name. With total control of Cingular, AT&T is likely to drop that name to have a single AT&T brand."

Roger Entner at Ovum thinks this is a mistake. He said, " "AT&T in wireless is such a wounded name. It gives everybody the creeps who experienced the AT&T Wireless experience."

In the Atlanta Journal-Constitution (registration required), Jeff Kagan said the "AT&T/BellSouth deal would further solidify the nation's phone vs. cable fight. AT&T will be able to supply a vast part of the nation, including Georgia, with an array of services – cellphone, video, Internet, and even good old local land lines."

Roger Entner at Ovum added, "AT&T will be more aggressive in BellSouth's footprint and bring the BellSouth customers more of the innovations that the AT&T customer already is beginning to experience," citing lower prices on high-speed Internet and video services.