Said to Be Near Deal for BellSouth
By Ken Belson
New York Times
Sunday, March 5, 2006
AT*&T Corp. is planning to acquire BellSouth Corp.,
according to several people familiar with the negotiations
who asked not to be identified because of the sensitivity of
A merger of two of the four remaining Bell phone companies
would represent a huge step toward recreating the monopoly
that existed in the phone business before the old AT&T was
broken up in 1984.
The companies are expected to announce a deal as early as
AT&T is expected to pay about $65 billion for BellSouth, the
country's third largest phone company, which operates in a
nine-state region in the Southeast. The price represents a
25 percent to 30 percent premium for BellSouth shareholders.
The combined company would have more than $125 billion in
sales, 70 million local-line phone customers and nearly 10
million broadband subscribers.
Spokesmen for AT&T and BellSouth declined to comment.
A deal between AT&T, formerly known as SBC Communications,
and BellSouth has been talked about for months. Together,
the companies own Cingular Wireless, the country's largest
cellphone carrier, and they jointly own Yellowpages.com, an
online directory business.
In November, SBC became the country's largest phone company
when it acquired AT&T and took its name. BellSouth has
largely avoided mergers and acquisitions in recent years.
Any deal would have to be approved by regulators. That
process would most likely take about one year to complete.
Though the combined company would dwarf its next nearest
competitor, Verizon Communications Inc., regulators have
shown growing tolerance in recent years for ever-larger
mergers. In addition to SBC's purchase of AT&T, Verizon
beat out Qwest Communications for control of MCI Inc. in a
protracted fight last year.
Regulators approved both deals with relatively few
restrictions attached, despite growing concerns among
consumer groups and independent phone companies that
competition is being stifled.
A deal between AT&T and BellSouth could pressure Verizon to
consider buying Qwest, the last of the four big Bell
Even with more heft, a combined AT&T and BellSouth would
face stiff pressure from the cable industry and other
companies that are fast moving into the phone business. The
increasing use of e-mail, cellphones and other technology
continues to erode the number of traditional phone lines in
And while Verizon and AT&T are slowly moving into the
television business, the construction of the networks to
carry their programming is proving expensive to build.
A deal between AT&T and BellSouth may also hurt
telecommunications equipment makers like Lucent Technologies
and Nortel, which have longstanding relationships with
old-line phone companies.