SBC Communications has announced the final closure of its $16.9-billion acquisition of AT&T. The new entity will retain the AT&T name and switch over to its trading identity on the stock markets from SBC to AT&T's ticker identity 'T' from December 1.
SBC Communications Inc. closed its acquisition of AT&T Corp. yesterday (November 18, 2005) as California's regulators approved the transaction - the final approval needed for the merger of the companies' highly complementary networks, product portfolios, capabilities and shared heritage.
"We are hitting the ground running on Day One so that our customers and owners quickly realise the substantial benefits and synergies of this merger," said Edward E. Whitacre Jr., chairman and CEO of AT&T in a statement issued by the company. "The integration teams have been working for months to plan, solicit customer input and develop road maps for a successful transition. Now that the merger is closed, the teams are ready to execute and maximise the potential of this combined company."
The merger, which was announced in January 2005, was originally expected to close in early 2006 and is widely considered a "pivotal event" in the history of the US telecommunications industry.
Twenty-one years after the US Federal Communications Commission forced the old AT&T to split up, Ma Bell has come full circle. After the split, AT&T became a long-distance phone company. Its local phone business was split among several Baby Bells, one of which eventually became SBC. Now the two sides of the business have been reunited, but under a much different set of circumstances.
The US Telecommunications Act of 1996 laid down an elaborate set of rules to increase competition in America's burgeoning telecommunications industry, including competition between the local and long-distance telephone companies, ushering in sweeping changes.
The act allowed the seven regional Baby Bell operating companies to offer long-distance telephone service for the first time since the 1984 break-up of AT&T. At the same time, long distance companies and cable operators were allowed to provide local exchange service in direct competition with the regional Bell operating companies, but the act prohibits cross subsidies from non-competitive services to competitive services.
"The past decade has seen tremendous change in the telecommunications industry, from a regulatory as well as a technology perspective," says independent telecom industry analyst, Jeff Kagan. "The local companies have won that war and are acquiring the long-distance giants."
The Telecommunications Act of 1996 brought in sweeping changes to the earlier Communications Act of 1934 and shaped the new competition in the telephone and high-speed internet access markets (the act did the same for the cable, video and television broadcasting industries). It also brought in its wake several regulatory battles.
The adoption of cell phones and the emergence of new technologies such as voice over internet protocol, have also had an impact on the telecom industry. These changes led to a "commoditisation" of long-distance telephony, ultimately leading to a trend towards consolidation.
"This merger of SBC and AT&T, and the coming merger of Verizon with MCI, are big, big news in the telecom industry," adds Kagan.
Through its subsidiaries and affiliates, the combined AT&T says it is the largest telecommunications company in the US and one of the largest in the world. It also has the largest provider of high speed DSL internet lines in the country and has the largest long-distance network. It also becomes the largest US provider of high-speed DSL internet services and local and long-distance voice services and the leading provider of data services to the Fortune 1000 companies. The new AT&T also owns 60 per cent of Cingular Wireless, which is the No1 US wireless services provider.
With these assets, the company will continue to compete head-to-head with cable operators, not just in the telephony market but also in high-speed internet access and TV.
A press communiqué from SBC (now AT&T) says, "The combined enterprise will immediately begin a well-planned integration process, allowing the new AT&T family of companies to quickly deliver benefits for both customers and stockholders."
"The combination of SBC and AT&T companies gives us the local, global and wireless network resources and the expertise to set the standard for delivering meaningful innovations and making the promise of integrated communications and entertainment a reality for consumers and businesses," Whitacre, is quoted in the communiqué.
It further quotes Whitecare, "The combined company is now poised to lead the industry in one of the most significant shifts in communications technology since the invention of the telephone more than 120 years earlier - the deployment of integrated services based on internet protocol, giving customers access to virtually any services, anytime, anywhere. We are ready to meet the needs of a new generation of customers in a new era of communications and entertainment."
For customers seamless integration will enable them to make a single call for local network access and global backbone connectivity, as well as wireless services.