The US telecommunications landscape was redrawn last night after two of the country's biggest groups joined forces in a US$67bn deal that recreated a monopoly last seen 20 years ago.
AT&T, the number one telecoms operator, is buying BellSouth for US$37.09 per share to expand its foothold in the country's
south-east and give it full control of Cingular Wireless.
The enlarged group will dominate the telecoms industry, fending off the threat of competition from cable groups.
Edward Whitacre, AT&T's chairman and chief executive, said the deal would strengthen Cingular, America's biggest mobile phone carrier, "through unified ownership and a single brand".
Previously BellSouth owned 40 per cent of the mobile operator.
A stronger Cingular, which will be re-branded to take the AT&T name when the deal closes, will pile the pressure on its rival Verizon.
Analysts believe last night's deal could be the catalyst for Verizon, which will be dwarfed by AT&T, to take full control of Verizon Wireless, its joint venture with Vodafone.
Vodafone has a 45 per cent interest in the US's number two mobile carrier but is known to be considering pulling out of the US following calls from investors for it to sell its stake and hand back the cash.
AT&T hopes to achieve annual cost savings of more than US$2bn from the takeover, which is the industry's biggest since Bell Atlantic bought GTE Corp for US$71bn to create Verizon in 2000.
It follows hard on the heels of last year's combination of AT&T and SBC Communications in a US$16bn deal.
Duane Ackerman, chairman and chief executive of BellSouth, said: "Technology changes and convergences are shaping a new competitive dynamic and creating tremendous opportunity.
We're creating a company with much better capabilities to seize these opportunities."Analysts said that AT&T's move has been long expected but warned that it will require regulatory approval from anti-trust authorities as well as from the Federal Communications Commission.
The tie-up is expected to get a green light despite recreating a monopoly that was broken up by the courts in 1984.
The acquisition is the latest in a long line of audacious moves by Mr Whitacre, who hopes to close the deal within the next 12 months.
- INDEPENDENT
