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March 06, 2006

Can SBC, er, I mean, AT&T swallow BellSouth?

Last year, San Antonio-based SBC Communications swallowed the much smaller AT&T Corp., but then started using the venerable AT&T brand for the merged company. This year, SBC/AT&T is attempting to eat BellSouth Corp. in an estimated $67 billion deal, which is a much larger acquisition than the SBC-AT&T merger of last year.

The proposed merger continues a trend in the telecommunications industry over the past several years that really is a reaction to what happened in the industry after the court-ordered 1984 breakup of the old AT&T or "Ma Bell." That break-up led to a restructuring of the entire industry and then the landmark 1996 Telecommunications Act enhanced head-to-head competition between phone companies for customers.

Since that time, long-distance phone rates have decreased substantially as consumers have many more options for such service. Meanwhile, cable companies are increasingly offering phone service as part of their consumer packages, declining prices on wireless calling plans have induced some consumers to forego traditional landlines entirely, and broadband connections are generating an entirely new new industry that allows calls to travel over the Internet.

Thus, in the wake of that competition, AT&T CEO Edward Whiteacre justified the new merger because AT&T needs "a bigger footprint. The world is changing. There is more competition." Maybe so, but as with Hewlett-Packard's acquisition of Compaq and Comcast's failed bid for Disney, is the acquisition price for BellSouth so high that -- as Professor Ribstein has observed -- it takes a near-delusional synergy theory for AT&T management to justify it?

Posted by Tom at March 6, 2006 06:29 AM

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Listed below are links to weblogs that reference Can SBC, er, I mean, AT&T swallow BellSouth?:

� Some thoughts on BellSouth-ATT from Ideoblog
Two questions about the ATT/BellSouth deal. First, will it go through? WSJ's Law Blog neatly summarizes the latest thinking. One would think that with all of the changes wrought by satellite, internet, cable and wireless technologies, and the continuou... [Read More]

Tracked on March 6, 2006 12:39 PM

� AT from ProfessorBainbridge.com
Tom Kirkendall and Larry Ribstein opine. Gordon Smith offers some historical background. [Read More]

Tracked on March 6, 2006 01:14 PM

� AT&T + BS - Cingular = ? from The Wired GC
So AT&T is set to acquire BellSouth for $67 billion in stock. I previously thought that eBay wildly overpaid for Skype. But that deal, at a potential $4 billion or so, looks like a steal. There’s something vaguely reminiscent of AOL̵... [Read More]

Tracked on March 6, 2006 03:08 PM

� Product Naming: The Ma Bell Name Just Won't Die from Strategic Name Development Product Naming Blog
"Ma Bell lives". That's what I said in my September 1st blog post of AT&T's decision to call the combined AT&T and SBC merger, AT&T. Of course, I had no idea of AT&T's intention to also acquire BellSouth. It had been called Ma Bell for decades ever sin... [Read More]

Tracked on March 8, 2006 02:07 PM

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