SBC (Quote) is in talks to buy AT&T (Quote) for more than
$15 billion, according to published reports.
The acquisition would elevate SBC from a regional to a national power with a
slew of new enterprise customers for Virtual Private Network (define)
and other managed services.
SBC and AT&T officials would not comment on reports from the Wall Street
Journal and other media outlets.
San Antonio-based SBC offers phone and digital subscriber line (define)
service in 13 states, mostly in the Midwest and West. It's also deploying
fiber-optic cable that will bring those services plus video
content to residential customers.
And along with BellSouth (Quote), it also co-owns Cingular, the
nation's largest wireless carrier.
AT&T has been sliding in recent years because of an erosion of traditional
long-distance customers. In the last 18 months, it has realigned to ink
long-term data services deals with corporate customers.
For example, today it signed a $2.7 million contract with Konica Minolta
Business Solutions for an IP VPN. Earlier this week, it
inked URS for a similar deal worth $6 million.
If SBC and AT&T could hammer out a deal -- and if regulators approve it --
it would put pressure on Verizon (Quote), which is looking to
expand its enterprise business.
On the Verizon's fourth-quarter earnings call today, CEO Ivan Seidenberg said an
SBC-AT&T merger wouldn't immediately impact his company's strategy.
Analysts at Legg Mason said merger talks aren't surprising given the
industry dynamics. They also expect that the combination would pass
regulatory muster. However the review process could take 15 months to 20
months, the firm said in a research note.
"We think AT&T would be an interested seller at the rumored price but remain
unconvinced the transaction, while doable from a regulatory perspective,
would create significant value for SBC shareholders," Legg Mason said.
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