For AT&T, merging with SBC represents the next step
forward in a series of mergers and break-ups that the
company has been going through since the early 1980s.
For SBC, the combination promises immediate global
leadership in the enterprise segment where corporations
and governments require complex communication
solutions and services and access to advanced national
and global networks. SBC expects the AT&T deal to close
in the first half of 2006 after the US Justice Department,
the Federal Communications Commission, state public
utility commissions and foreign authorities give their
approval.
On January 31, 2005, SBC Communications (SBC) and AT&T announced that they were
merging to create a premier communications company with unmatched global reach. The
transaction seeks to combine AT&T’s global systems capabilities, business and government
customers, and fast-growing Internet Protocol (IP)-based business with SBC’s local exchange, broadband
and wireless solutions. The combined entity believes that it has the assets, the resources and skill sets
to innovate and deliver advanced, integrated IP-based wireline and wireless communication services
to customers across the world.
Since AT&T’s break-up in 1984, the market has been divided into local and long-distance phone
sectors. The merger between SBC and AT&T looks all set to dismantle the telecom industry structure
and trigger off further consolidation in the American telecom industry. AT&T and SBC believe that
the merger will create a fully integrated telecommunications player, a company able to offer a variety
of telephony services to households and businesses worldwide.
Meanwhile, some analysts expressed their concerns about the merger. SBC is a local-access business
in the US, where it operates as a local service provider, while AT&T is a long-distance business with
extensive local coverage outside SBC’s local area. AT&T brings a thinly spread international business
to the table. While AT&T dominates the services business with clients like Citigroup and Barnes &
Noble, SBC is less dependent on the consumer market, where it faces mounting competition from
cable-TV companies such as Comcast. Some analysts commented that the deal would reduce SBC’s
growth prospects since the market for big business services was shrinking by 10% a year, and profit
margins were falling. They opined that SBC is better off, focusing on the integration of the former
AT&T Wireless business into Cingular. |
