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FCC approves AT&T's buyout of BellSouth

FCC approves AT&T's buyout of BellSouth

AT&T Inc. completed its $86 billion (euro65.3 billion) buyout of BellSouth Corp., the largest telecommunications takeover in U.S. history, shortly after the Federal Communications Commission unanimously approved the deal.
The FCC action came on Friday, one day after the company offered new concessions for consumers and competitors.
Lawyers for AT&T and the two Democratic commissioners who had opposed the merger hammered out a compromise, the details of which were released Thursday night.
AT&T promised to observe "network neutrality" _ not to favor Internet content providers who pay the company more money _ and to offer $19.95 (euro15.15) per month stand-alone digital subscriber line service. AT&T will also divest some wireless spectrum.
AT&T offered the concessions after a little more than a week of marathon negotiations with lawyers for the two Democrats on the commission, Michael Copps and Jonathan Adelstein.
The combination of San Antonio, Texas-based AT&T and Atlanta-based BellSouth will have operations in 22 U.S. states. AT&T estimates that about 10,000 jobs will be phased out over three years.
Combined, the companies generate about $117 billion (euro88.84 billion) in revenue and operate 68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest.
The buyout will also give AT&T complete control over Cingular Wireless, the nation's largest wireless telecommunications provider, which it had jointly owned with BellSouth. AT&T is also trying to roll out television service to compete with cable operators.
Adelstein said Friday he was pleased with the agreement.
"We got substantial concessions that are going to mitigate a lot of the harms that would otherwise have resulted from this merger," he said.
The reaction from Commission Chairman Kevin Martin, however, was decidedly negative. The chairman found some conditions to be "unnecessary" and said some "impose burdens that have nothing to do with the transaction, are discriminatory, and run contrary to commission policy and precedent."
Copps was cautiously optimistic, saying that the approval was "not a triumph for huge corporate mergers but a modest victory for American consumers."
Consumer advocates had opposed the merger from the beginning, but they put the best face on the compromise, especially on the issue of network neutrality.
Mark Cooper, research director for the Consumer Federation of America, said AT&T has pledged to protect "the free and open Internet."
The agreement came together 10 days after Republican Commissioner Robert McDowell announced that he would not vote, despite being authorized to do so by the FCC's general counsel. McDowell, a Republican, had decided not to participate because of his former position as a lobbyist for Comptel, a trade organization that opposes the merger.
Republican FCC Chairman Kevin Martin, who supported approval of the merger without conditions, had declared an impasse in the negotiations and was betting that McDowell would vote in favor of the deal and break a 2-2 partisan deadlock.
But with McDowell's firm declaration that he would not vote, the pressure shifted to AT&T, which had hoped to close the transaction by the end of the year, a development that put the two Democrats in a much stronger position.
Under the agreement, BellSouth shareholders will receive 1.325 shares of AT&T stock for every share of BellSouth stock. In March, when the buyout was announced, it was valued at $67 billion (euro50.9 billion). But thanks to a more than 25 percent increase in the value of AT&T's stock, the total is up to around $86 billion (euro65.3 billion).
The Justice Department approved the merger on Oct. 11, but it attached no conditions, a move that prompted outrage among many Democrats.
In an effort to gain the support of Copps and Adelstein, AT&T submitted a set of concessions on Oct. 13, but they were rejected.
The combination of San Antonio-based AT&T and Atlanta-based BellSouth will have operations in 22 states. AT&T estimates that about 10,000 jobs will be phased out over three years.
Combined, the companies generate about $117 billion (euro88.8 billion) in revenue and operate 68.7 million local phone lines stretching coast to coast across the southern United States and up through the Midwest.
The buyout will also give AT&T complete control over Cingular Wireless, the largest U.S. wireless telecommunications provider, which it owns in partnership with BellSouth.