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To: Rob Riordan who wrote (13633)	10/13/1999 12:58:00 PM
From: pat mudge	Respond to of 18016

From today's IBD, this interview with SBC Communication's president, Royce Caldwell, may be of interest. There's also an article on SBC's cable position: investors.com >>>> SBC-Ameritech No 'Baby' Bell As Giant Telecom Firm Forms SBC Looks To Save And Spend After Completing Ameritech Purchase Date: 10/13/99 Author: Reinhardt Krause Calling SBC Communications Inc. a Baby Bell just doesn't work anymore. San Antonio-based SBC created the largest U.S. local phone company when its $61 billion deal to buy Ameritech Corp. closed last week. (See related story, this page.) SBC earlier snapped up Pacific Telesis Group and Southern New England Telecommunications Corp. And its deal-making is far from over. SBC's goal is to emerge as one of a handful of global telecom players. On the heels of the Ameritech merger, some news reports say SBC is in talks with Germany's Deutsche Telekom AG about an alliance. Royce Caldwell, the No. 2 executive at the regional Bell, spoke last week with Investor's Business Daily about SBC's long-term view. IBD: How much money do you expect to save as a result of buying Ameritech? Caldwell: About $1.4 billion, round numbers. In our industry, when you put together companies there's a big opportunity for efficiencies. You can manage a lot more customers and a lot more access lines with not much more overhead. We're already getting large concessions from equipment vendors for prices they charge us, because the size of our orders is bigger. The economies of scale will enable us to invest so much faster and more significantly in new technologies, redefine our network and go into new lines of products quicker. IBD: Is there much synergy in terms of voice and data traffic going back and forth between Ameritech's and SBC's regions of coverage? Caldwell: They have some dynamic markets up there (in the Midwest). Obviously, Chicago has a tremendous amount of traffic to everywhere. Illinois, Texas and California (two SBC regions) are probably three of the four or five premier business areas in volume of calls. Plus, our regions are contiguous. You also have to consider Ameritech's investment in Bell Canada. IBD: Ameritech has lagged other Bells in investing in digital cellular and upgrading phone lines for high-speed Internet access. Will you spend more money to improve its network? Caldwell: Yes. It'll be easier for us as a combined company to do that than it would have been for Ameritech by itself. We'll invest much faster in technology in Ameritech's territory than they were able to over the last few years. We're going to be making some significant announcements for our investment plans in their region and other places. IBD: WorldCom Inc. waited a year after its MCI purchase before making its bid to buy Sprint Corp. earlier this month. Will SBC wait that long before making other major acquisitions? Caldwell: We wouldn't feel real inhibited about making another deal. I don't think we have another blockbuster deal poised to be announced, but Ameritech is a well-run company that comes from the same roots. It's not a big culture difference. I don't anticipate anything that would prevent us from doing something else pretty fast. IBD: How would you prioritize SBC's needs? Caldwell: The next deals we would be looking at would be strategic in nature, as opposed to trying to get more access lines. You could look at the data side, the long-distance side and international as some areas. We're closer than some people think to having a total (national) wireless network footprint. But you could see us look at wireless opportunities. IBD: As a condition to get the merger approved, SBC agreed to pay stiff penalties if it doesn't expand services to 30 markets outside those already covered by it and Ameritech. Could buying a local upstart be a quick solution, or will SBC build its own networks? Caldwell: You'll find us doing a little of everything. It depends on the market landscape. We're going to invest a lot of capital; we know how to do that. It will be logical for us to look at buying some facilities that are already in place. We'll be looking at that, too. Mainly the emphasis will be on owning our own network, being facility-based, being in control, protecting our brand image. IBD: Some critics have argued that mostly business, as opposed to consumers, will benefit from your local plans. Will you serve residential customers, too? Caldwell: Our intent to service residential customers is, I think, greater than anybody else's. We don't want to be just a residential local phone company, though. We'll work on businesses, too. That's what all our competitors are doing. It's illogical to argue that the business market is open and the (local phone company) won't let me into the residential market. But that's what some (new entrants) argue. We'll offer residential service more than anybody. >>>>>