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In
one of the biggest-ever M&A deals in the history of the
US telecommunications industry, AT&T (SBC acquired AT&T
in 2005 and adopted its name) and BellSouth are merging, in
an all-stock deal worth $67 bn, to create a giant that would
straddle across the entire telecommunications value chain
including wireless, broadband, video, voice and data markets.
"Technology changes and convergence are shaping a new
competitive dynamic and creating tremendous opportunity,"
said Duane Ackerman, Chairman and CEO of BellSouth. "We're
creating a company with much better capabilities to seize
these opportunities while maintaining its strong focus on
customer service and community involvement." The combine's
complementary strengths "will improve our ability to
provide innovative services to more customers while returning
substantial value to our owners and improving our growth profile,"
announced jubilant Edward E Whitacre Jr., the boss of AT&T,
and the chief architect of the AT&T and SBC deal, a year
ago. "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," added a confident Whitacre.
The
deal, which involves AT&T paying a premium of a 17.9%
over BellSouth's closing stock price on March 3, 2006, comes
close on the heels of two major deals involving the purchase
of AT&T by SBC Communications and the MCI's acquisition
by Verizon. Cheering the deal, many market s expressed
confidence that the deal would sail through. Nonetheless,
some experts and consumer groups feel that the deal is bad
for customers, while employees expressed concerns over possible
job losses. And such fears may not be unfounded as AT&T
has already announced a plan to lay-off ten thousand workers,
post-acquisition. In fact, some industry experts, even express
concern that the deal mania may see the ghost of monopoly
raise its head again. "This merger becomes a critical
flash point in this growing concern about the future of the
Internet in the US," said Jeff Chester, Executive Director
for the Center for Digital Democracy, a Washington, DC-based
nonprofit organization, in an interview with MarketWatch.
"This deal is based on the ability of AT&T to control
a huge sector of the broadband marketplace. we see it as anticompetitive
and undemocratic," he lamented. Meanwhile, some s
even say that the current spate of consolidation means that
consumers will be left with hardly any choice. According to
a report in the Free Press, "The rapidly changing
landscape could leave AT&T and Verizon controlling two-thirds
of all local-phone connections in the US." |
