Posted on 01/31/2005 12:07:45 PM PST by Dan from Michigan
'Unthinkable' deal becomes reality as SBC grabs AT&T
2 hours, 41 minutes ago Business - AFP
NEW YORK (AFP) - In a move dismissed as "unthinkable" a few years ago, SBC Communications said it was buying AT&T in a 16-billion-dollar deal in which "Ma Bell" will be absorbed by one of its offspring.
The deal would create the largest US telecom company and sound the death knell for the company once known as American Telephone and Telegraph, a cultural and business icon that has been in business for some 130 years.
The end for Ma Bell would come, ironically, at the hands of SBC, one of the "Baby Bells" created in the 1980s breakup of the virtual telephone monopoly in the United States.
The announcement followed approval by the boards of directors of both companies. However, it still requires approval by AT&T shareholders and US regulatory authorities.
Because of that, the takeover was expected to be finalized by the first half of 2006, officials pointed out.
The mere idea of such a merger was dismissed in 1997 as "unthinkable" by the head of the Federal Communications Commission (news - web sites). But it seems utterly possible in a new deregulated environment and a rapidly changing technological landscape.
"Today's agreement is a huge step forward in our efforts to build a company that will lead an American communications revolution in the 21st century," Edward Whitacre, SBC chairman and chief executive, said in a statement.
The companies said that despite the purchase, the AT&T brand name would survive.
David Dorman, chairman and CEO of AT&T, said, "From my point of view, this is the beginning of a new era," adding that the combined firm will become "a stronger US-based global competitor."
Nonetheless, the sale is likely to face sharp criticism from consumer groups and some lawmakers who are concerned about consolidation in the domestic phone industry.
San Antonio, Texas-based SBC, one of the so-called "Baby Bell" companies created in the breakup of "Ma Bell" AT&T, operates the second-largest local telephone network stretching from the Midwest into Texas and into the West Coast and thus has control over 52 million access lines.
It is a leading player in high-speed broadband, with 5.1 million DSL Internet lines and a local broadband network covering 77 percent of its local customer locations.
In addition, SBC owns 60 percent of Cingular Wireless, a cellular phone service provider that has 49 million subscribers nationwide.
AT&T for its part has one of the world's most advanced communications networks, spanning more than 50 countries. It serves virtually every member of the Fortune 1000 list of companies.
Although the company has become significantly smaller over recent years, AT&T still controls a network of research laboratories that have secured more than 5,600 patents worldwide, according to company officials.
"We will renew America's leadership in communications technology, with products and services that set the standard for how businesses and individuals communicate," SBC's Whitacre pointed out, showcasing the benefits of the merger.
Under the terms of the agreement, AT&T shareholders will receive 0.77942 shares of SBC common stock for each share of AT&T based on SBC's closing stock price on Friday, or 18.41 dollars per share.
AT&T, which traces its history back to Alexander Graham Bell, has been experiencing steady decline since 1984 when the federal government defined it as a monopoly and ordered its break-up into seven local service providers and one long-distance carrier.
Saddled with growing debt, it has been shedding assets, such as equipment makers NCR and Lucent Technologies in 1996, and AT&T Wireless, which was recently sold to Cingular.
Experts believe the takeover is likely to bring about a realignment in the US telecommunications industry by forcing companies like MCI, Sprint, Verizon and BellSouth to seek alliances of their own to answer SBC's challenge.
Some expect Verizon, the largest of the Bell sisters, will now try to merge with MCI.
Word has it that SBC is going to retain the AT&T name/brand somehow.
Highly paid execs that have nothing better to do then stroke each other's egos as they play monopoly with real companies.
Huge mistake. Ruined AT&T and Bell Labs.
So...SBC is playing grab att?
Ma Bell, resurrected. Rising like the phoenix, from the ashes.
And here we had thought she had gone to eternal rest. Is nothing sacred any more?
SBC will soon be like AT&T and AOL/Time Warner. AT&T and AOL/TW went around like a Pac Man gobbling up different things in 1990's and got too big for their britches. Herego, AOL/TW profits have sunk and AT&T spun off everything it bought in the 1990's and now are being bought by SBC.
"However, it still requires approval by AT&T shareholders..."
This is the true reason right here. Dangle enough profit in front of the shareholder and they'll usually dance to your tune.
I don't blame companies for expanding and growing and gobbling up the competition. Companies are made up of people and it's always about the money. Never forget that.
Part of competition is the ability to buy your competitors, is it not?
Something's fishy here.
worse thing Judge Green ever did was the breakup, recked phone service for ever. Now who else is SBC going to grab?
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Are you kidding? The Judge Green ruling opened up the doors to the competition that drove the cost of a NY-LA cost down to nothing from a dollar a minute, gave us toll-free (a business staple), data beyond "baud" rates and the climate for speed that gave us giga-huge fixed pipes, frame relay, ISDN, SONET, ATM...all of which make the internet (and ld parallel processing) possible. Ma Bell's white socks mentality was inhibiting telcom advances, not producing them. There should be a statue to McGowan somewhere, he fought the Goliath and won, opening the world to tools we take for granted today.
IMHO, technology did that. Not the breakup of AT&T.
I am so glad I did not work for her. There are many who think she ruined Hp.
That plain bites. :-(
Hp used to be the best test equipment on planet earth. I have LOTS of Hp gear in my lab.
Now is made by Agilent. I am not sure of the exact relationship between Hp and Agilent.
You are of course entitled to your opinion. Thefacts remain though that all of these giant steps happened through the efforts of companies that would never have existed without the Green decision. ATT was the epitome of the giant that had no competition to spur it forward. The head in the sand mentality led to a lack of innovation in every area from voice networking (remember the MCI Friends and Family coup---nothing but a down sized VPN) to data (ATT clung to nailed up networks while Sprint, WilTel and MCI were building clouds). They behaved like a dinosaur and got frozen in the cold snap.
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