With FCC’s Approval, AT&T Completes BellSouth Buyout

AT&T Inc. completed its $86 billion buyout of BellSouth Corp. yesterday shortly after the Federal Communications Commission unanimously approved the deal.

The FCC action came a day after AT&T offered concessions for consumers and competitors.

The combination is the largest telecommunications merger in U.S. history.

The buyout will give AT&T complete control over Cingular Wireless, the nation’s largest wireless telecommunications provider, which it owns in partnership with BellSouth.

AT&T promised to observe “network neutrality” – not to favor Internet content providers who pay the company more money – and to offer a $19.95-per-month stand-alone DSL service. AT&T also will divest some wireless spectrum.

AT&T offered the concessions after a little more than a week of marathon negotiations with lawyers who work for the two Democrats on the commission, Michael Copps and Jonathan Adelstein. The commissioners had opposed the merger.

Adelstein said yesterday that he was pleased with the agreement.

“We got substantial concessions that are going to mitigate a lot of the harms that would otherwise have resulted from this merger,” he said.

Consumer advocates had opposed the merger from the beginning, but yesterday they put the best face on the compromise.

Mark Cooper, research director for the Consumer Federation of America, said AT&T has pledged to protect “the free and open Internet.” He called it a win for the public and said he will continue to work for federal legislation on network neutrality in the New Year.

When SBC bought AT&T Corp. to become AT&T Inc. and when Verizon Communications Inc. bought Virginia-based MCI, they promised to uphold certain principles of net neutrality, but that promise expires next year. AT&T is now offering to go even further and to refrain from offering any service that prioritizes or degrades any Internet data based on its source, ownership or destination. That would apply for two years after merger.

Under the agreement, BellSouth shareholders will receive 1.325 shares of AT&T stock for every share of BellSouth stock. In March, when the buyout was announced, it was valued at $67 billion. Because of a more than 25 percent increase in the value of AT&T’s stock, the deal is valued around $86 billion.

Shares of both companies set 52-week highs during the trading day before finishing the day off those peaks. AT&T stock closed at $35.75, up 25 cents. BellSouth shares rose 31 cents to $47.11.

The Justice Department approved the merger Oct. 11 and attached no conditions.

The combination of San Antonio-based AT&T and Atlanta-based BellSouth will have operations in 22 states. AT&T estimates that about 10,000 jobs will be phased out over three years.

Combined, the companies generate about $117 billion in revenue and operate 68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest.

ILLUSTRATION: CHART

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