AT&T, BellSouth Talk Merger: Source
AT&T and BellSouth Holding Merger Talks, Source Says
By JIM KRANE
AP Technology Writer
NEW YORK (AP) -- Long-distance giant AT&T Corp. (NYSE:T - news) is talking to BellSouth Corp. (NYSE:BLS - news) about a possible merger, a move that could reunite it with one of the Baby Bells it was forced to spin off back in 1984, a source familiar with the negotiations said Thursday.
Any such deal would take place only after AT&T spins off its cable business, AT&T Broadband, and involve only its consumer and business telecom divisions said the source, who would speak only on condition of anonymity.
AT&T has also made similar overtures to other, unidentified telephone companies, the source said.
Business Week, which first reported the talks on its Web site Thursday, said that AT&T chief executive Michael Armstrong has characterized the offer as a ``merger of equals'' that could be realized as soon as next month.
Both AT&T and BellSouth declined to comment.
Analysts offered a dim view of such a proposal, saying that local telephone carrier BellSouth is considered a safe haven for investors during an economic downturn. AT&T's business, more dependent on long distance service, has seen declining revenues in the most recent quarter.
Without its broadband division, which AT&T is currently in talks to sell, AT&T's market capitalization would be about half that of BellSouth's $78 billion, analysts estimated.
``A merger of equals? That's laughable,'' said Drake Johnstone, a telecom analyst with Davenport & Co., a brokerage in Richmond, Va. ``They're being wildly optimistic.''
The Atlanta-based BellSouth is the nation's third-largest local phone company behind Verizon Inc. and SBC Communications Inc [NYSE:SBC - news].
Any such deal likely would also face severe regulatory hurdles.
Basking Ridge, N.J.-based AT&T was broken up in 1984 into BellSouth and several other regional Baby Bells, with AT&T retaining long-distance service and the Bells handling local telephone service. A Baby Bell that proposes to offer long-distance service must show it has opened competition in areas where it is the dominant provider, a mandate that has proven to be burdensome.
Only a handful of states, including New York, Texas and Massachusetts have opened their phone markets to competition.
Shares of AT&T were up 77 cents, or 4 percent, to $18.56 in trading on the New York Stock Exchange, while share of BellSouth were off 76 cents to $41.79.
AP Writer Justin Bachman in Atlanta contributed to this report. |
