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AT&T Nears Deal to Buy BellSouth for $64 Billion

I have been speculating about SBC buying BellSouth for awhile and in various audiences.  It was evident that BellSouth was going to be an eventual casualty in the telecom war between SBC and Verizon.  BellSouth isn’t in expansion mode, and is not currently large enough to be able to wage war head on with SBC or Verizon.  Sure, BellSouth’s recent tech innovations shoudl drive new business (or rather serve as a quick tourniquet to the delicing number of POTS subscribers).  BellSouth’s partnership with SBC into Cingular kind of signalled what was on the horizon. 

ATLANTA – AT&T Inc. said Sunday it will acquire smaller rival BellSouth Corp. for $67 billion in stock, in an apparent bid for total control of their growing joint venture, Cingular Wireless LLC.

The deal would substantially expand the reach of AT&T, already the country’s largest telecommunications company by the number of customers served.

AT&T will pay 1.325 of its own shares for each BellSouth share. Based of Friday’s closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the Atlanta-based company.

BellSouth has been aggressively investing in areas of technology ranging from VOIP to IPTV.  This will be really interesting to see what impact this “merger” has on BellSouth’s innovation path, whether it is slowed, accelerated, or unhindered. 

Of course, those of us who habitually slow down on the highway to witness the carnage are already wondering what will become of BellSouth post “merger”.

The combined company will be based in San Antonio, and Ed Whitacre, AT&T’s chairman and chief executive, will keep those positions. His counterpart at BellSouth, Duane Ackerman, 63, will run BellSouth’s operations in a “transition period” after the merger.

Cingular’s headquarters will stay in Atlanta, as will the headquarters for the former BellSouth region.

Odd phrase that, “transition period”.  Will Whitacre oust ol’ buddy Ackerman, or will Ackerman join the leadership team to manage AT&T’s metrics

With Verizon’s recent purchase of MCI, we were unlikely to see Verizon coming in hard after BellSouth, especially while the ink is still drying on the MCI deal.  As much as those of us in the South would like to see Verizon-style innovation with fiber-to-the-premises instead of eeking out every last bit of revenue from the old copper lines.

A quick survey of the remaining players shows Qwest left teetering in the West.  Qwest bid on MCI, and Verizon trumped the offer.  There’s no way Qwest is going to be able to buy Verizon or SBC at this point… which leaves Qwest as the next sitting duck as takeover target.  The question is who will buy what part of Qwest and what type of advantage they are trying to build with that purchase.