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AT&T Is Said to Be Near Deal for BellSouth
by Splitpair 06:37AM Sunday Mar 05 2006
March 5, 2006

AT&T Is Said to Be Near Deal for BellSouth

By KEN BELSON

AT&T Corp. is planning to acquire BellSouth Corp., according to several people familiar with the negotiations who asked not to be identified because of the sensitivity of the talks.

A merger of two of the four remaining Bell phone companies would represent a huge step toward recreating the monopoly that existed in the phone business before the old AT&T was broken up in 1984.

The companies are expected to announce a deal as early as Monday.

AT&T is expected to pay about $65 billion for BellSouth, the country's third largest phone company, which operates in a nine-state region in the Southeast. The price represents a 25 percent to 30 percent premium for BellSouth shareholders.

The combined company would have more than $125 billion in sales, 70 million local-line phone customers and nearly 10 million broadband subscribers.

Spokesmen for AT&T and BellSouth declined to comment.

A deal between AT&T, formerly known as SBC Communications, and BellSouth has been talked about for months. Together, the companies own Cingular Wireless, the country's largest cellphone carrier, and they jointly own Yellowpages.com, an online directory business.

In November, SBC became the country's largest phone company when it acquired AT&T and took its name. BellSouth has largely avoided mergers and acquisitions in recent years.

Any deal would have to be approved by regulators. That process would most likely take about one year to complete.

Though the combined company would dwarf its next nearest competitor, Verizon Communications Inc., regulators have shown growing tolerance in recent years for ever-larger mergers. In addition to SBC's purchase of AT&T, Verizon beat out Qwest Communications for control of MCI Inc. in a protracted fight last year.

Regulators approved both deals with relatively few restrictions attached, despite growing concerns among consumer groups and independent phone companies that competition is being stifled.

A deal between AT&T and BellSouth could pressure Verizon to consider buying Qwest, the last of the four big Bell companies.

Even with more heft, a combined AT&T and BellSouth would face stiff pressure from the cable industry and other companies that are fast moving into the phone business. The increasing use of e-mail, cellphones and other technology continues to erode the number of traditional phone lines in use.

And while Verizon and AT&T are slowly moving into the television business, the construction of the networks to carry their programming is proving expensive to build.

A deal between AT&T and BellSouth may also hurt telecommunications equipment makers like Lucent Technologies and Nortel, which have longstanding relationships with old-line phone companies.



Copyright 2006The New York Times Company

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