SBC Might Buy AT&T

ChipGuy writes "SBC is in talks to buy AT&T according to Wall Street Journal and New York Times, both reporting price tag to be between $15-and-$16 billion. The news comes close on heels of SBC reported weaker earnings and 7000 job cuts. The New York Times says talks are fluid and sensitive. Wall Street Journal says, "a major acquisition would speak to SBC Chief Executive Edward Whitacre Jr.'s aim of turning the company into a national brand and his desire to do at least one final deal before he retires." Om Malik writes that "buying AT&T will make sense for anyone, and not just SBC. Why? Because AT&T still is the only game in the enterprise markets. MCI is hurting and Sprint clearly wants to focus on wireless. That leaves AT&T in a pretty good shape.""

Comments

Could see more like this in the future

[chris09876]

I wonder if this is just a sign to come. With things like the internet (skype?) hurting the traditional phone companie's revenue streams, and with the slow but steady emergence of VoIP, the big phone companies days are numbered. They will still have a purpose, of course, but they'll have to learn to be more competitive in a more competitive industry.

from marketwatch

[greechneb]

Under such a scenario, pressure would likely intensify on SBC rivals Verizon and BellSouth to obtain bigger access to the corporate-services market, probably through an acquisition of MCI Inc. Shares of MCI rose 71 cents to $19.37.

Sounds like everyone wants to play...

Perspective

[Octagon Most]

Before we get into it about rebuilding the hated Ma Bell of yesteryear, keep this in perspective. SBC is right now one of the four remaining RBOCs, or Baby Bells, formed from the divestiture of AT&T (the original national phone monopoly) in 1984. The RBOCs already provide national long distance service (opened to them following the Telecommunications Act of 1996). AT&T is mostly a pure long distance and data network (WAN) player these days. The Bells have to have network-sharing agreements to provide national LD service. Qwest has an extensive fiber LD network though. So this potential acquisition would add a national long distance and data network to an incumbent local service provider and give it a huge presence in the enterprise market. It would not create a new national phone monopoly or be the Son of Ma Bell. They would be a formidable competitor though.

Re:Breaking up...

[CyberLord Seven]

Check out the Fall 2004 cover for 2600 magazine. Is that prophetic or what?

http://www.2600.com/covers/covers.html

Need 1 More Purchase: Lucent (& Bell Labs)

[reporter]

I am not one to wax nostalgic for technology companies, but I feel that, in the interest of national security, SBC's CEO (Edward Whitacre, Jr.) should do 1 more purchase after AT&T. SBC should buy Lucent, which includes its famed Bell labs that produced more nobel prizes than any other industrial lab. Unfortunately, Lucent cannot really financially support Bell labs and has floated the idea of transferring it to the research triangle in North Carolina, consisting of Duke University, UC-Raleigh, and one other university. As well, I would not want Bell Labs to fall into the hands of, say, Ecoma Enterprises; Ecoma is a Taiwanese company that Washington has penalized (according to page 133 of "The Federal Register" for 2005 January) for assisting Iran in building better missiles with nuclear capability.

Anyhow, the telecommunications industry has changed dramatically since the breakup of AT&T, and the rationale for the breakup no longer exists. These days, cell phones are prevalent; competitors easily enter the market for cell phones, which can be used for local and long-distance calls. A re-united AT&T (SBC + Pacbell, which was purchases by SBC, + AT&T + Lucent, which includes Bell Labs) would not pose a monopolistic threat. Heck, a re-united AT&T would be no more monopolistic than Micro$oft.

Note that even the Internet poses additional competition in the telecommunication market. Many people use the Internet, via VOIP, to make telephone calls although they may not realize that their call is being routed via IP packets.

Why Not?

[sjbe]

Why would you, as SBC, be looking to put out more cash, if you just LOST cash last reporting period?

Depends on why they lost money and what sort of a deal they can get. One down quarter isn't necessarily a big deal. AT&T has a real gem of an asset in their enterprise business and another in their network which I'm sure is why SBC is interested. They've talked before about a merger. BellSouth did too a few years back. But AT&T also has a lot of debt and some rapidly sinking businesses. SBC would have to rework or get rid of this debt for the merger to happen. But if SBC can get a sweetheart deal, it might make sense.

Personally, I think the deal is probably a bad idea. As I mentioned before, AT&T's debt load is a problem. There also are competitive issues. The merger could jeapordize SBC's relationship with BellSouth which jointly owns Cingular with SBC. Plus there is the question of whether it can pass regulatory scrutiny; something that is by no means assured. I don't see any obvious way to fix AT&T's problems but I don't have all the facts either.

Universal free communication

[letdinosaursdie]

If we can get the corporations out of our airwaves and build wireless mesh networks, we won't have to worry about monopolies. That should be the goal.