AT&T, the US? largest telecomms carrier, is reported to be in merger talks with SBC Communications, one of the seven Baby Bell US telephone operators.
According to the 'Wall Street Journal', the combined force would create a company with $80 billion in annual revenues, 230,000 staff, and 60 per cent of the $80 billion US long distance market.
The merger would be worth $50 billion - representing the biggest marriage of telcos in history.
The combination of SBC and AT&T - MCI?s biggest rival - could upset BT?s indirect relationship with SBC. BT and SBC own 26 per cent and 15 per cent of France?s Cegetel, respectively. Cegetel was created by SBC, BT, Mannesmann, and Compagnie Generale Des Eaux, to be the second operator in France.
Apart from interests in Mexico, South Africa and Israel, SBC is present in the UK cable market. In 1995 it merged its cable television and telephony operations with UK cable company Telewest.
A merged company would combine the long distance telephony clout of AT&T with the SBC?s success in the local US market through brands such as Southwestern Bell, Pacific Bell and Nevada Bell.
However the deal could be blocked if the Justice Department sees the move as an attempt by AT&T to rebuild itself after its painful break-up in 1984. This led to the formation of the seven regional Baby Bells, and AT&T was forced to concentrate only on the long-distance market.
The merger is unlikely to present any major impact on the European market. Instead AT&T will probably put thoughts about European expansion on the back burner and concentrate on building up its local business, commented Ovum analyst, John Matthews. ?This would be a parochial deal which is focused on the US market,? he said.
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