AT&T, BellSouth to merge in $67 billion stock deal.
The merger, one of the largest in U.S. history, would bring Cingular Wireless under AT&T's umbrella. Cingular is the nation's largest wireless company. Before the deal, AT&T owned 60 percent of Cingular, and BellSouth owned the remaining 40 percent.
Executives for the companies said the merger, which still requires state and federal regulatory approval, will create "a more effective and efficient provider in the wireless, broadband, video, voice and data markets" and streamline management operations. It also will make AT&T the largest telecommunications company in the world.
The deal is set to close in about a year.
An AT&T spokesman in Little Rock said the job cuts would eliminate redundant positions in the two companies. Those positions will be phased out over about three years and happen mostly through attrition, the spokesman said, adding that the company's normal attrition rate runs about 1,200 jobs a month.
AT&T is the largest local exchange carrier in Arkansas.
Per the deal, BellSouth shareholders will receive 1.325 shares of AT&T common stock for each BellSouth common share.
For customers in Arkansas, the deal means the possibility of more one-stop shopping for some of the companies' services.
"This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," AT&T Chairman and CEO Edward E. Whitacre Jr. said in a news release about the merger. "It will benefit customers through new services and expanded service capabilities."
The Wall Street Journal and CBS MarketWatch speculated the deal might spark a new round of consolidation in the telecommunications industry. Again, Alltel Corp., which is spinning off its wireline business to become a pure wireless player, surfaced as a possible acquisition target by AT&T rival Verizon Wifeless.
The Journal says this about a possible Verizon-Alltel deal:
"Another wireless option Verizon could dial up is Alltel Corp., which has a market value of about $25 billion. The company, based in Little Rock, Ark., serves about 10 million customers, mostly in rural areas and small cities, and competes directly with Cingular in many places. Alltel is in the process of splitting off its less-desirable wireline operations in a deal expected to close this summer. But some observers think its customer base isn't attractive to Verizon."
Alltel executives have said the company is not for sale.
At midweek, Forbes.com reported analysts saying that Alltel shares appear "fully valued" and it's unlikely that the Little Rock telecommunications firm will be taken over in the near term.
Earlier, Morgan Stanley analysts downgraded shares of Alltel to "equal-weight" from "overweight."
Forbes reported that the firm downgraded the shares citing a rally in the stock on takeover rumors spurred by the AT&T/BellSouth merger.
Industry watchers now think Verizon will seek the minority stake in Verizon Wireless owned by Vodafone and that Sprint will focus on other integration, Forbes said.
The BellSouth merger comes on the heels of SBC Communication Corp.'s purchase last year of AT&T. SBC took AT&T's name in the $16 billion deal and relaunched the brand this year with a large advertising and marketing campaign.
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|Date:||Mar 13, 2006|
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