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Technology Stocks : Westell WSTL -- Ignore unavailable to you. Want to Upgrade?

To: SteveG who wrote (8863)	1/9/1998 3:07:00 PM
From: SteveG	Read Replies (1) \| Respond to of 21342

<A> With AT&T-Teleport, 3 Cable Cos. Exit Phone Arena By Brian Steinberg NEW YORK (Dow Jones)--The three cable companies that owned the majority of Teleport Communications Group Inc. (TCGI) stock are shedding their direct exposure to the telephone arena in a deal that sends the alternate service provider to AT&T Corp. (T) for $11.3 billion in stock. Now, however, the cable concerns stand to reap rewards from a direct link with AT&T, according to several analysts. More than 60% of Teleport's stock is owned by Cox Enterprises Inc. (COX), Comcast Corp. (CMCSA) and Tele-Communications Inc.'s TCI Ventures Group (TCIVA). TCI Ventures holds 28.5%, Cox owns 22.4%, and Comcast owns 14.7%. The three hold at least 90% of Teleport's voting shares. TCI Ventures Group is essentially a holding company maintained separately from TCI's cable operation. The Ventures Group holds stakes in many companies, including cable-modem provider At Home Corp. (ATHM) and international cable operations. Teleport shareholders are to receive .943 shares of AT&T for every Teleport share held, in a tax-free exchange. As part of Thursday's deal between AT&T and Teleport, the cable companies would receive small stakes in AT&T in exchange for their Teleport holdings. Most analysts believe selling the shares would probably be a mistake for the cable providers. Instead, they said, investors can look for the three entities to draw closer to the phone giant. "Don't look at the money," said Credit Suisse First Boston Corp. analyst Laura Martin. "Look at the fact that (AT&T Chairman and Chief Executive) Mike Armstrong is really a strategist, and this is their first foray into the local loop. The question it begs is: 'What is the second foray?' " Should AT&T be interested in cable or Internet telephony, she added, and tap the companies' extensive local assets or At Home, which is owned by a consortium of the providers, "that would be money flowing into the cable group." "The cable industry is known for making strategic relationships, and this would seem to be one of those," said Tom Wolzien, an analyst with Sanford C. Bernstein & Co. Selling off the shares brings its own problems, both analysts said. "I don't see TCI Ventures selling them off, " noted Wolzien. "Basically, they build their assets, and in some cases where it makes sense, they borrow against those assets to do some other stuff." Cox acts in a similar way, he said. Martin said she believed selling off the AT&T shares could have tricky tax implications for the Ventures entity. More significant, said Furman Selz Inc. analyst Frederick Moran, was the cable group's semi-graceful exit from telephone service. "This does not mean cable will be permanently removed from telephony," he said. "It's just a sign that their efforts going forward will be on a joint-venture level, where they leverage their core cable-television business as opposed to starting new business ventures away from cable properties." Moran suggested cable partners in Sprint Corp.'s (FON) PCS business would let their 60% interest be bought out by Sprint and its international partners.