AT&T Agrees to $67 Billion Acquisition of BellSouth

Mar 6, 2006  •  Post A Comment

AT&T has reached an agreement to buy rival telephone company BellSouth for $67 billion, turning the telecom industry on its head while at the same time forming an even more formidable rival to cable. AT&T made the announcement Sunday.

If the sale is approved-a process many experts expect won’t be easy given the potential size of the combined company-AT&T would swell into by far the nation’s largest telephone company, with 70 million wire-line customers and 10 million high-speed Internet customers. Annual revenues could top $120 billion.

The deal would create a telephone behemoth that operates in markets stretching across the United States, from Los Angeles to Atlanta, with tentacles in everything from long-distance to voice to high-speed data services. The deal also would put the ownership of Cingular, the nation’s largest wireless provider, under one umbrella.

Under the terms of the deal AT&T, formerly known as SBC Communications before SBC acquired AT&T Corp. last year, would exchange each BellSouth share for 1.325 shares of AT&T, an 18 percent premium over BellSouth’s Friday closing price of $31.46 a share.

The deal would reduce the number of Regional Bell Operating Cos. to three: Verizon Communications, Qwest Communications and AT&T.

The beefed-up AT&T would be a much larger competitor to cable companies such as Comcast and Time Warner Cable, whose voice and data products have hurt the RBOCs’ core wire-line business in recent years.