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To: paul t who wrote (3594)	12/17/1998 12:00:00 PM
From: stock_bull69	Respond to of 11568

NEW YORK, Dec 17 (Reuters) - The U.S. telecommunications industry, which saw a flood of mergers in 1998, will see more consolidation and intense regulatory battles as companies seek approval of their pending acquisitions and push to enter new markets, analysts said. In 1998 the top-tier telecommunications services companies announced several mergers or alliances worth $182.8 billion, with additional, small deals also seen in the wireless and telecommunications equipment industries. "1999 will be the year of the merger review -- of SBC, Bell Atlantic and AT&T's mergers...the issues around the mergers will dominate the year," said Scott Cleland, an industry analyst with Legg Mason Precusor Group. While merger activity in 1999 is not expected to top this year's level, smaller deals may be forged as phone companies look to bolster their data and Internet services through acquisitions of Internet service providers or companies building national, data networks, analysts said. "There will be more deals -- small and large. Consolidation isn't anywhere near over. There will be domestic and international deals, big and small," Cleland said. Companies may be cautious about forging any mega-deals until they see how regulators treat the recently-announced mergers that still await regulatory approval, analysts said. With only five of the original seven Bell companies remaining, SBC Communications Inc.'s <SBC.N> proposed $61 billion acquisition of Ameritech Corp.<AIT.N> and Bell Atlantic Corp.'s <BEL.N> planned $52.8 billion purchase of GTE Corp.<GTE.N> will face intense scrutiny. The deals may face restrictions or may blocked if found to be against the public good; Federal Communications Commission Chairman William Kennard said the companies faced a "heavy burden" to prove their mergers would enhance competition. The review of deals will highlight the already contentious debate on Capitol Hill and throughout the industry over whether the 1996 Telecommunications Act has fulfilled its promise of sparking competition and lowering telephone and cable television rates, analysts said. Some analysts said competition in the consumer local telephone market remains virtually nonexistent and it may be the middle-to-end of 1999 before a Baby Bell has a hope of getting permission to provide long distance service in their home regions. Under the Telecom Act, the Baby Bells can not provide long-distance service in their regions until they open their local telephone markets to competition. The FCC has rejected all five Baby Bell long distance applications. Opponents of the deals said the recent merger rush is not what Congress intended when it passed the Telecom Act. The proposed Bell Atlantic-GTE and SBC-Ameritech deals, for example, would create two industry behemoths controlling two-thirds of the nation's local telephone market. "Next year is not a very promising picture for residential consumers. There will be a lot of squawking and not a lot of competition," said Mark Cooper, director of research for the Consumer Federation of America. AT&T Corp.'s <T.N> proposed acquisition of cable television giant Tele-Communications Inc. <TCOMA.O>, however, has the potential to spark local competition since AT&T aims to provide local telephone service over TCI's cable television wires, analysts said. But the AT&T and TCI still may face tough scrutiny on whether they should open their cable network to competitors and how they package their Internet services. Review of the AT&T-TCI deal will serve as an interesting test for regulators who want to cross-pollinate the telecom and cable industries but also protect competition in the young Internet industry, analysts said. Regulators may do more than just put conditions on the various deals -- as seen when Bell Atlantic bought NYNEX last year for $25.6 billion. Instead, companies may face major concessions or divestitures, analysts said. "They will face tougher scrutiny. The government's attitude now tends to be a little more restrictive. For a while, they (regulators) tended to be looking the other way and let some things slip through. So the ones (deals) out there now will face a tougher test," said Kevin Gooley, a telecommunications analyst with S&P Personal Wealth.