Aug 31, 2021
The deal must be approved by regulators. They could also request certain divestitures. Michael Powell, the outgoing chairman, of the Federal Communications Commission indicated last week that there would be no resistance to the acquisition.
SBC was formerly known under the name Southwestern Bell. It was one of AT&T’s oldest affiliates. The company was one of seven regional Baby Bells after AT&Ts monopoly collapsed.
SBC will now be the countrys largest long-distance carrier, and also the largest provider of data and phone services to corporations. SBC provides local phone service in more than 50 states to its customers and has a 60% stake in Cingular Wireless. This is the largest mobile phone company in the country.
SBC will take over AT&Ts $22 Billion corporate phone and data business. This will provide a new source of revenue to offset the declining residential phone business that has been shrinking due to the advent of the Internet.
SBC will be able to sell services outside of its region with AT&Ts network. This includes California, Texas, and Illinois. This could make the Bells direct competitors, rather than opportunistic partners who teamed up to defeat regulators and other forces trying to weaken their hold on local service in their respective regions.
The other Bells might consider purchasing MCI or Sprint to counter SBCs aggressive strategy. These companies also sell services for large corporations.
Robert Rock, a telecommunications analyst from John Hancock Mutual Funds, Boston said that "In some aspects, what the Bells do is defensive." The important thing is to be the primary contractor when selling to companies. You cant do this unless you have global connectivity. If they wait to purchase a long-distance carrier, they could be afraid of missing out.
The Bells want to stay one step ahead of the cable industry, which has expanded rapidly into the consumer and data markets but is still relatively small in the enterprise market. you can Configure SBCGlobal Email Account On IPhone
Although the companies have been in negotiations for days, AT&T has had discussions with BellSouth, SBC, and other companies for many years. To reduce losses and ease antitrust concerns, Dorman has reduced AT&Ts debts and eliminated tens of thousands of jobs in his efforts to sell the company.
AT&T also spent billions to improve its extensive fiber-optic networks, which carry data and make phone calls.
SBC tried to enter the corporate services market by establishing operations in 30 metropolitan areas other than the 13 states it currently operates.
However, its business is only a fraction of AT&T and SBC does not have a network abroad, making it difficult for them to get contracts from the largest companies in America.
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SBC may also attempt to direct its newly found corporate customers towards Cingular. SBC holds 60% of Cingular, BellSouth the remainder.
The Bells are expanding beyond their traditional boundaries in search of new revenue. This has blurred the lines that have defined their roles over the past two decades. These companies own stakes in national mobile telephone companies. SBC is likely to court American companies, which could strain its relationship with BellSouth. Cingular Wireless is owned by both companies.
AT&T, as it was once known, will be a forgotten company amid all the chaos. The roots of the company date back to 1876, three decades before Thomas A. Edison invented his incandescent lamp.
From 1913 to 1984, AT&T ran a government-sanctioned monopoly that had a mandate to provide universal service. It was also the most popular stock on Wall Street; many brokers recommended it to "widows orphans" due to its stability.
AT&T was a shell over the past few years due to years of competition, misguided strategies, and new technologies that had eroded its purpose. It is still the largest long-distance provider, but it now holds only 23 percent of the market, compared to 85 percent in 1984.
SBC and Verizon now hold 12.8 percent each of the market, shares they have accumulated since entering the market in late 1990.
Ma Bells status deteriorated further when Verizon took over AT&T in 2003 in the Dow Jones industrial average. This is the ultimate status symbol for American companies.
SBC was represented by Evercore Partners, Lehman Brothers, and Rohatyn Associates. AT&T was represented by Credit Suisse First Boston and Morgan Stanley.
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