US telecommunications giants, ATT and SBC Communications, are weighing a $50 billion merger, the largest such deal in corporate history, the Wall Street Journal reported yesterday.
The transaction would enable the combined company to dominate local phone services in seven of the 10 largest US cities, according to the paper, which said it was therefore likely to face an uphill struggle getting US Justice Department approval.
US anti-trust authorities ordered the breakup of American Telephone and Telegraph in 1984, creating seven local service providers known as the Baby Bells. If the reported merger goes ahead between ATT, the largest US phone company, and SBC, the leading local service operator in Caliofornia and the US southwest, it could go a long way toward re-constituting what had been split up 13 years ago.
"In essence it's a recreation in over two-fifths of the United States of what existed prior to 1984 and for this reason I would find it extraordinary if federal regulators allowed it to happen," said telecommunications lawyer Mr David Aylward, president of National Strategies, a Washington consulting firm. "If they don't stop this, there isn't much anti-trust left in the country."
Citing sources close to the talks, the Journal said negotiators were discussing the financial aspects of the deal, along with the new company's management, its name and where it would be based.
"The discussions have grown very serious in the last month," a source familiar with the talks told the paper, which added that public confirmation could come soon.
Together, ATT and SBC have annual revenues of $80 billion and 230,000 employees. They would control more than 60 per cent of the US long-distance market and would dominate local telephone services in California and the western United States.
