• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Baby Bell Poised for AT&T Bid

Posted on: Friday, 28 January 2005, 06:00 CST

SBC COMMUNICATIONS, the No 2 US telecoms company, is in talks to acquire the US long-distance carrier AT&T for more than $15bn (pounds 8bn) to bolster its business with large corporations, sources familiar with the talks said yesterday.

Such a deal would likely spell the end for AT&T, the once- ubiquitous "Ma Bell" which was broken into a patchwork of "Baby Bell" local telecoms companies in 1984.

A deal would create a company about the same size as Verizon Communciations, the No 1 US carrier. For SBC's chairman Ed Whitacre, a voracious acquirer during his 15-year tenure at the helm of company, buying AT&T would complete a transformation of SBC from a regional local telephone company into an international force in wireless and wireline communications.

AT&T's history dates back 120 years to the invention of the telephone but like other long-distance companies such as MCI its revenues have been battered as the Baby Bells have begun competing head-to-head in their markets.

In the past year AT&T has seen 14,000 job cuts, a $11.4bn write- down in its assets and a 11.6 per cent drop in full-year revenue. AT&T is attempting to retreat from consumer business to focus on more lucrative business and data contracts. However, it still expects more jobs cuts and a 15 per cent to 18 per cent decline in revenues this year. The company held unsuccessful merger talks with BellSouth in 2003, but the Baby Bell walked away after seeing AT&T's revenue and growth potential shrink daily.

Shares in AT&T surged 6.8 per cent on the New York Stock Exchange yesterday, while SBC stock fell 2.9 per cent.

Spokesmen for SBC and AT&T declined to comment last night. (Reuters)

Source: Independent, The; London (UK)

More News in this Category