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AT&T Reaches Merger Deal with BellSouth

5:30 am on March 6, 2006 | Category: Business, Corporate, Telecom Services, Telephone

A historic deal has been made between US telecom giants, BellSouth and AT&T. Under the terms of the agreement, the newly merged AT&T (formerly SBC) will swallow the smaller BellSouth, and form a new mega-giant of the American telecommunications industry.

The $67 billion deal will largely re-establish the Bell empire, which broke apart in the 1980â€™s to form BellSouth, and several other companies.

The biggest challenge in making this deal a reality will likely be getting all the proper approvals from regulators. A deal of this magnitude will need to be approved by the Department of Justice, the FCC, and local regulators from the nine states in which BellSouth does business.

It might be difficult to convince all these authorities that such another huge merger is good for the industry and wonâ€™t hurt competition, especially so soon after the current AT&T was formed through a merger of the original AT&T long distance provider with SBC Communications.

With combined annual sales figures in the realm of $120 billion, BellSouth and AT&T would be far ahead of the $90 billion in yearly volume driven by #2 industry player, Verizon Communications.

Overall, this massive merger will probably have to be watered down considerably before being accepted by regulators. For the deal to go through, AT&T will likely be forced to sell some local phone assets in BellSouthâ€™s territory, in order to convince authorities that competition wonâ€™t be harmed too severely.

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