AT&T trying to create a monoply?

[fistfullofsteel]

ATLANTA (AP) - AT&T Inc. (T) is buying BellSouth Corp. (BLS) for $67 billion in stock in a bid that further consolidates the telecommunications industry and would give AT&T total control of their growing joint venture, Cingular Wireless LLC.

The proposed purchase, announced Sunday, also goes a long way toward resurrecting the old Ma Bell telephone system, which was broken apart in 1984.

The merged company would have 70 million local-line phone customers, 54.1 million wireless subscribers and nearly 10 million broadband subscribers in the 22 states where they now operate. The deal appears to be the largest yet among U.S. telecom players.

In 1999, MCI WorldCom Inc. agreed to buy Sprint Corp. for an even larger sum, $115 billion, but that deal was blocked by federal regulators. Internationally, Britain's Vodafone Airtouch PLC paid $180 billion in stock for Mannesmann AG of Germany in 2000.


The sale, which is subject to regulatory and shareholder approvals, would give San Antonio-based AT&T total control over Atlanta-based BellSouth's nine-state network and its share of Cingular. AT&T currently owns a 60 percent share of the nation's No. 1 cell phone provider, while BellSouth has 40 percent.

The deal would substantially expand the reach of AT&T, already the country's largest telecommunications company by the number of customers served.

Together, the three companies employ more than 316,000 people, though that head count may fall as AT&T eliminates redundant operations.

After spending millions of dollars to rebrand AT&T Wireless Services Inc. stores as Cingular stores and hundreds of millions of dollars more on marketing the new Cingular after its $41 billion acquisition of AT&T Wireless in October 2004, Cingular will now become AT&T if the merger with BellSouth is completed.

The BellSouth name also would be absorbed in the deal.


"It's going to be confusing," said industry analyst Jeff Kagan. "This is the reinvention of the telecommunications industry."

AT&T will pay 1.325 of its own shares for each BellSouth share. Based of Friday's closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the company.

AT&T Inc. was formed by SBC's acquisition of AT&T Corp. in November. The deal added a substantial national reach to the former Southwestern Bell's local business, which is concentrated in 13 states, including Texas, California, and the Midwest.

BellSouth is the dominant local telephone provider in the Southeast.

The shift in the U.S. telecom landscape - moving from four to three regional Bell operators - is sure to garner close review from Washington.

"Twenty years after the government broke up Ma Bell, this deal represents a mother and child reunion," said Rep. Ed Markey, the ranking Democrat on the House Subcommittee on Telecommunications and the Internet.

"Our nation's telecommunications markets must be vigorously competitive and open to innovation in order to promote job creation and economic growth," Markey said. "This merger proposal is one that unquestionably merits the utmost scrutiny by government antitrust officials."

The deal furthers the reunification of the Baby Bells, the eight regional telephone operators that were spun off from the old AT&T in 1984 under a federal court order. At that time, and in a different regulatory climate, AT&T was largely a long-distance company.

Cingular spokesman Mark Siegel dismissed the notion there would be public perception issues with the switch back to the AT&T name for the wireless company.

"We built a business," Siegel said. "Is the brand an important part of that business? Yes. But it is a business that is made primarily up of people. None of that changes."

Siegel said sole ownership by AT&T "gives us clarity of decision-making, and that is a good thing."

With cable companies increasingly vying for traditional phone companies' share of local telephone service, such mergers in the industry have been commonplace of late. Kagan, the industry analyst, said more could be on the horizon.

"We're not over it yet," Kagan said.

The combined company will be based in San Antonio, and Ed Whitacre, AT&T's chairman and chief executive, will keep those positions. His counterpart at BellSouth, Duane Ackerman, 63, will run BellSouth's operations in a "transition period" after the merger.

Cingular's headquarters will stay in Atlanta, as will the Southeast regional headquarters for the merged company.

Cingular has grown strongly since it was formed in 2001 by the merger of a number of regional wireless carriers, and there has been speculation that AT&T wanted to assume full control of this growth business, in part to be able to market it under the AT&T name.

The wireless operations will be the growth engine of the new company, and will account for one third of the combined revenue.

AT&T expects the acquisition to save it $2 billion annually, starting the year after the deal closes. About half of the savings would come from reduced advertising expenses and from combining their work forces.

The rest of the savings would come from combining the backbone network and information-technology operations of the two companies.

 

[biteme]

Yes, they are. What do you expect? Corruption is everywhere these days. As long as man exists he will try to screw others and it's only getting worse. There will always be war until mankind is eradicated.

 

[Wynn]

I thought that at first. They are adjusting to the times by closing ranks. Sprint and Nextel just merged as well. All the new competition from internet companies like Vonage the traditional phone companies can't keep up as they are. That is why Verizon is fighting their way into cable tv.

 

[Mr. dB]

AT&T is, in turn, owned by SBC. Look there for your monopoly theory.

 

[Wynn]

I borrowed this from the NY Times:

March 13, 2006
Those Bell Mergers Are Giving Cable Companies Even More to Worry About
By KEN BELSON and GERALDINE FABRIKANT


In the chess game between the cable companies and their nemeses, the Bell phone companies, the Bells may be gaining ground. Phone mergers — including AT&T's recent proposal to take over BellSouth — could give the Bells more power to cut prices, move faster into television and expand their advantage in the wireless market.

Sheer size also helps the Bells throw their weight around in Washington. Last week, lawmakers began drafting a bill to make it easier for the Bell companies to acquire local television franchises, a move that would help speed up their push to sell TV programming over high-speed lines around the country.

"The playing field is being leveled, and it's Comcast's mountain that is getting leveled more than AT&T's," said Leo Hindery Jr., a former cable executive and a partner at the private equity firm InterMedia Partners. "The cable guys are boxed in, and I don't think there's a Hail Mary pass."

The AT&T-BellSouth deal, which is likely to take at least a year to be approved, will significantly alter the competitive landscape for the fragmented cable industry, if not immediately then certainly over the next few years as the Bells offer more — and cheaper — video and Internet services.

For Comcast, the nation's largest cable company, and other cable providers, the longer term presents some difficult business choices for countering the Bells' strategies.

AT&T and Verizon are both spending billions of dollars to build out fiber optic networks to deliver TV programming to rival the cable providers' offerings.

If Congress approves the proposed national franchise legislation, they could offer those services in hundreds of cities years ahead of schedule.

BellSouth, which has not yet announced any plans to offer TV programming, is expected to adopt AT&T's television strategy in the nine Southern states where it operates.

That could force cable providers in those states to drop their prices, which Charter Communications did last year in Texas when Verizon introduced its new television service in some parts of that state.

"The cable companies are now going to face off against a stronger, bigger competitor with a stated strategy of doing television, and I don't see that as a positive," said Richard S. Greenfield, a cable and media analyst at Pali Research.

The Bells may also expand their promotional deals for D.S.L. broadband connections, which are in many cases half the price of cable broadband. That move could force cable companies to drop prices even on higher-speed Internet connections. (Many of the cheaper D.S.L. connections are slower than cable broadband.)

In the past year, AT&T and Verizon have cut their introductory broadband prices to $14.95. The low-cost strategy has worked: in 2005, the Bells added more broadband customers than the cable companies for the first time, according to the Leichtman Research Group.

But at least for now, cable companies are not budging.

"The $14.95 D.S.L. product is so slow that it shouldn't be legal to call it broadband," said Thomas M. Rutledge, Cablevision's chief operating officer. "Cable has already built a network throughout the United States that is vastly superior to what the phone companies can build in a reasonable time."

This heightened competition comes at a bad time for the cable companies. Together, they have spent about $85 billion during the past decade to expand their networks so they can handle more digital and high-definition TV programming, as well as faster broadband connections and Internet phone services.

Under pressure from Wall Street to recoup that investment, the cable industry has tried to avoid price wars with DirecTV and EchoStar, two satellite companies that were dismissed as upstarts 10 years ago. Now they are the second- and third-largest pay-TV providers in the United States, after Comcast.

By 2010, the Bells are expected to add six million video customers for a 5 percent share of the pay-television market, according to Kagan Research. While that is just one-tenth the number of cable subscribers, the Bells' additions will come at cable's expense, Kagan estimates showed.

Cable companies will face different adversaries depending on where they operate. For instance, all of Cablevision's subscribers are in the New York metropolitan area, where Verizon is the primary rival, so the AT&T-BellSouth merger will not affect them. Time Warner Cable, however, has 2.7 million basic cable subscribers on Verizon's turf and 6.7 million in AT&T and BellSouth territory, so it must grapple with two Bell giants, according to Pali Research.

Of course, the cable companies have plenty of firepower to aim at the Bells. In just two years, they and start-ups like Vonage have signed up four million Internet phone customers, and that number should double in 2006, according to Sanford C. Bernstein & Company, a brokerage firm.

Comcast, Cox and others have also been giving consumers hundreds of hours of on-demand movies and TV shows without charge, adding high-definition programming and leasing more advanced digital video recorders, including some that include DVD recorders. They are also starting to sell more telecommunications services to businesses.

The cable providers say these advances will allow them to fend off competition from the Bells, something investors have not fully understood in their rush to sell cable stocks during the past two years.

"When one of your major competitors gets bigger, we have to notice," said Stephen B. Burke, the chief operating officer at Comcast. "But we're so far ahead of them. What is going to be fun is to prove that the market is wrong by putting great numbers on the board."

In addition to the Bell threat, there are other clouds on the horizon. The cable companies are under pressure from consumer advocates to start selling TV channels à la carte.

That would be a setback, particularly for cable companies that also own cable networks, like Time Warner. À la carte sales could make it harder for cable programmers to create new networks, which may not be able to attract big audiences quickly enough to win advertisers.

If channels were sold individually, cable programmers argue that it would be prohibitively expensive for networks to market themselves to every home in America. For cable operators, the possibility that consumers would be allowed to pay for only the channels they want is just one more reason to fret about their future.

 

[justyxxxx]

Yes - and it's scary when you read some of these big companies' statements on charging others for QA bandwidth (such as Google Video) that their end users are already paying for . . . I don't see this as a good thing.

 

[spongebob]

we've gotta do something about this, but what!?!