Rumors: AT&T Near $65B Deal to Acquire BellSouth
PHILADELPHIA/WASHINGTON (Reuters)—Telecommunications giant AT&T Inc. is close to an agreement to acquire BellSouth Corp. for about $65 billion, a deal that would recombine Ma Bell with four of the seven original Baby Bells, sources familiar with the situation said on Sunday.
An announcement of the long-expected deal, which would bring the Cingular Wireless joint venture under one roof, is expected later on Sunday, said the sources, declining to be identified by name.
Together, AT&T and BellSouth would have a national long-distance telephone and data network, residential customers stretching from Connecticut to Florida to California and business customers comprising more than half of the Fortune 1000, analysts have said.
AT&T declined to comment, while BellSouth could not be immediately reached for comment. AT&T recently was formed when SBC Communications Inc. acquired AT&T Corp. in a $16 billion deal.
The newly combined company would be trailed by Verizon Communications, which last year bought MCI Inc. Qwest Communications International Inc., the final remaining Baby Bell, covers Minnesota to Washington state.
AT&T owns 60 percent of the No. 1 U.S. wireless carrier Cingular Wireless, while BellSouth owns the remaining 40 percent. A deal would bring that prized asset under one company, which Wall Street analysts have said would streamline management, make Cingular more nimble and allow one parent company to enjoy all of the financial benefit.
As traditional landline telephone businesses have been waning, telephone companies have focused on wireless and data services as new sources of growth.
AT&T and other major telephone companies also have been upgrading their networks to offer subscription-television services to thwart competition from cable TV operators, which are offering phone services. AT&T in January began offering video in Texas and plans to expand service to 21 cities in its home territory this year.
DEAL TO FACE REGULATORY SCRUTINY
Any deal would require approval from antitrust authorities as well as the Federal Communications Commission.
“The deal is likely to be approved,” said Blair Levin, an analyst at Stifel Nicolaus and a former Federal Communications Commission chief of staff. “The government has already given us a road map and it had very few speedbumps and much less brick walls for this kind of transaction.”
He said the government would likely seek similar conditions to this transaction that were placed on the AT&T-SBC deal, which included providing competitors access to some buildings, some price controls, and ensuring customers have unfettered access to the Internet.
Government approval for “this one should be a little bit faster,” Levin said. It took the FCC approximately eight months to review the AT&T-SBC deal.
WHITACRE’S LATEST DEAL
For Edward Whitacre, chairman and chief executive of the new AT&T, a deal would be the latest of a long line of bold acquisitions.
At SBC, Whitacre had acquired regional Baby Bell companies Pacific Telesis and Ameritech Corp. He also helped orchestrate the $41 billion purchase of AT&T Wireless by Cingular Wireless, the No. 1 U.S. wireless carrier.
While at SBC, Whitacre previously had weighed buying BellSouth, but shifted to the purchase of AT&T, sources familiar with the situation had said.




