RSSAT&T to Buy BellSouth for $67 Billion
By Nate Mook | Published March 5, 2006, 3:15 PM
AT&T on Sunday confirmed it plans to acquire BellSouth in a deal valued at close to $67 billion. The newly merged company would become the largest telecommunications service in the United States, surpassing Verizon and giving AT&T full control over Cingular, the largest wireless operator.
Under terms of the deal BellSouth shareholders will receive 1.325 shares of AT&T common stock for each common share of BellSouth. This exchange ratio equals $37.09 per BellSouth share -- a 17.9% premium. AT&T chairman and CEO Edward Whitacre will retain his position and serve as CEO of the new company.
The Wall Street Journal first reported on the merger late Saturday night, prompting the companies to issue an official statement.
The original AT&T was acquired by SBC Communications last year in a deal valued at $16 billion. SBC then changed its name to AT&T in November and kicked off a marketing blitz to breathe life back into the aging, but well recognized, brand.
AT&T says the purchase of BellSouth would result in cost savings of approximately $2 billion. The growth of Cingular Wireless and competition from cable operators are said to be two of the primary reasons behind the merger talks.
"This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," said Whitacre. "It will benefit customers through new services and expanded service capabilities. It will strengthen Cingular through unified ownership and a single brand."
Still, such a deal will require U.S. government approval and it's not clear how many obstacles will arise. Verizon faced a harsh backlash following its proposed purchase of MCI last year, but the deal was eventually approved with few restrictions.
AT&T and BellSouth executives are hopeful that regional separations will aid the process, as the two companies do not directly compete.
"Our focus is on providing great service and innovative, competitively priced products for consumers and businesses throughout the Southeast, the nation and the world," added Whitacre. "Together, we will lead the way into a new era of converged and bundled communications, video and entertainment services while also improving our ability to manage complex networks."
"Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity," said BellSouth CEO Duane Ackerman. "We're creating a company with much better capabilities to seize these opportunities while maintaining its strong focus on customer service and community involvement. This was the right time for this merger."
Maybe service will be better now. Little bit too late though. We gave up our landline for cell phones 2 yrs ago. Half the time the phone didn't work or had so much static you couldn't hear what the person on the other end was saying.
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|They never should have broken up Ma Bell in the first place. It didn't do anything for competition, except maybe in the area of long distance calling. After the breakup you still had no choice as to who your phone company was. What was the point in breaking them up if you still had no choice? It was the RBOC and that was it. They have competition now from wireless and VoIP, but if you want a traditional land line it's still the RBOC with no other choice in most places. And the phones you had to rent from them were the best damn phones in existence. There are a LOT of them which are 30 years old (and older) which are still in use, and probably work better than any phone you could buy today. Those things were built like tanks and could be used as a deadly weapon if you threw them at someone. They were well-built because the phone company owned them, and they didn't want to have to be going out and repairing them all the time. Buy a phone now and you'll be lucky if it lasts 3 to 5 years before it craps out...and then you have to waste more money on a new one.
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|Looks like I'm one of the few that sees this as being a good thing. Instead of having dozens of little companies with no money for building new networks or upgrading to new technology, we have two or three big companies that can actually afford to get something done. Maybe now we can catch up with the rest of the world, at least as far as telecoms is concerned. Not only did they have no money to innovate, they absolutely could not afford to move into areas where another company already had a foothold. I think this will spur growth, innovation, and competition.
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|Why isn't this under FTC investigation for creating a monopoly? Hey W, do something "businessy" and look into this, will ya pardner?
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|I think we should be a little more concerned about this then most are. Yes they have compitition from the cable companies, and VOIP as far as providing the service, but DSL for $12.99 or Cable internet for $59.99 is not really compatition. Also, part of the FCC agreement in allowing SBC and AT&T to merge was not allowing them to charge for VOIP for 2 years after the merger. The CEO of AT&T (Formally SBC) is the largest supporter of charging for VOIP on their networks. And living in Indiana I know, when SBC wants to lobby for something they go whole heartedly. If they want to be able to charge for VOIP they will be able to, it just may not be for the 2 years after the merger. The more things change, the more they stay the same, there was a reason all the bells were broke up, putting them back together is not a good idea.
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|The Comedian Lily Tomlin, began her career on a comedy show back in the late '60's called "Rowan & Martin's Laugh In" where she would regularly do a sketch as "Josephine", a snotty telephone operator.
Sitting at her little station, she would verbally abuse unseen phone customers and she would finish each of these little sketches with the famous line...
"We dont care. We don't have to. We're the phone company."
Also, FYI, back then the ONLY way a consumer could own any type of telephone equipment was to rent it from AT&T. Imagine having to rent your TV set from your cable provider, or the only way to own a PC would be to rent one as part of your ISP contract.
As a result of this buy-back activity, long distance prices will invariably rise, and calling packages will become more restrictive. As those prices rise, VoIP will be able to raise their rates accordingly, even as they continue to offer less expensive fees.
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|Damn... I wish AT&T would buy *ME* for $67 billion... I promise I'd do something to make it worth while! :)
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|Wow, this is great. AT&T gets broken up in 1980 into smaller RBOC's, and one of which is Bellsouth. 26 years late, AT&T is buying back one of its previous baby bell's, I think this is interesting.
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|Great the crappy will just get worse. I am moving!
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|wow, I bet Bellsouth will be soooo upset when you leave -rolling eyes-
Don't let the doorknob hit you on the way out.
BTW, I got news for you, ALL phone companies suck Equally. So you are giving up one problem for another, you will *NEVER* be happy with another carrier. You may be temporarily satisfied, but never happy.
Those that are happy NOW, its only a matter of time.
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|I am guessing that you are to young to recall what happened back in the 80's and haven't paid enough attention to what has been going on with AT&T as of lately. As for me moving, yes it does make a difference, as I am sure that I will not be the only one. As anyone that has dealt with AT&T will too, I am sure. AOL is better than AT&T, and that is saying a lot. I hate my cable company here, but I might may use their crappy internet and VoIP.
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|Wow a Betanews article on a weekend.. I stopped checking Betanews on weekends because nothing ever seemed to be posted. I am sure a lot of people do the same because there are far fewer fileforum posts on weekends and if you post something to fileforum (front page) it will get a lot less attention than on a weekday, and it stay there for Monday because Monday morning everyone posts new releases pushing the weekend release down to nowhere land.
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|I was surprised also. It's my homepage, so when I opened Firefox and saw a new article I was like, 'Whoah!'
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|Same here.
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|At least I'll have much less choice now, if I want to change providers, thereby avoiding the unpleasant surprise of being slammed/disconnected/ripped off by whoever I'm moving to or from.
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|So we broke up the phone companies in the 80s and now we are letting them all reunite.
Whatever.
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|Well, what's even more interesting is WHY they broke up the company in the first place. They were considered "too big" for the time, but years later, there have been much much bigger mergers, i.e. Cingular's purchase of AT&T wireless... at the time when AT&T was broken up, they were the large single utility, and that's why they were broken up.
It did allow other companies to compete, and was the stepping stone for current technlogy..
We probably wouldn't have Verizon making wireless and Blackberry without it...
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|One of the worst things to happen to individual consumers is being reversed by the marketplace.
How novel.
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|i figurre when the dems get in power next election cycle, they'll get broken up, mm, someones gott do it
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|You figure incorrectly, as the Democrats won't win squat. Being against everything the president is for is not a campaign strategy for victory.
Ma Bell is coming back, but that's okay--it'll have to compete against cable companies and VoIP.
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|Just because a person is the President, does not mean they're always correct or do the right things.
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|He's not saying the President is always correct. No one is always correct or always does the right things. He's saying that the Democrat's disagreeing with everything the President does and says, and pointing fingers at everybody is not a valid campaign strategy and is not a strategy that will win them the presidency next go-round. Especially if Clinton runs...
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|What you say is true, but as tubaman pointed out, the party as a whole has a position on what they want. The democratic party, however, only has a position on what they don't want.
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|So Cingular Wireless bought AT&T Wireless, SBC bought AT&T and changed their name to AT&T, and now AT&T will buy bell south, allowing them to control Cingular? What a big loop.
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|67 or 65 billion USD?
http://www.bloomberg.com...03&sid=aQb5B0Bvgv3w
Not that it matters...
Ought it not be illegal for a monopoly that's broken up by the Feds to merge back into the original monopoly?
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|it wont be a monopoly now with all the voip services...
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