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Summary:

AT&T chief executive Ed Whitacre, affectionately referred to as “King Ed” by me, and “Mr. T” by others has always been of the school of thought that breaking up Ma Bell back in 1984 was a mistake. He has done his best to rectify that by […]

AT&T chief executive Ed Whitacre, affectionately referred to as “King Ed” by me, and “Mr. T” by others has always been of the school of thought that breaking up Ma Bell back in 1984 was a mistake. He has done his best to rectify that by gobbling up three out of seven Baby Bells – Ameritech, Pacific Bell, and more recently BellSouth – and merging them with his SBC. Of course along the way he picked up the remnants of a proud company called AT&T.

His splashiest move came last move when Mr. T bought BellSouth for $67 billion in cash, and about $22 billion in proportionate debt. Result, a giant phone company, the biggest in the world with over 71 million access lines, 54 million wireless customers, 9.5 million broadband lines and over $98 billion in sales.

I got together with Niall earlier this week and tried to do an analysis of the deal, its impact on Verizon and cable providers. Of course there are implications for start-ups, especially those in the telecom space. What it means for network neutrality, Yahoo and Google. Hopefully you can tune in.

This week’s PodSession, Return of Ma Bell is 21 minutes long. You can download it here. PS: guys there is a big surprise at the end of the podcast!

  1. Om,

    It’s actually an all-stock based acquisition, which I’m sure you’re aware of. Hey, it’s human to err. :)

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  2. ronald, they are assuming about 20 billion or so in proptionate debt as well, so the total deal works out closer to $90 billion. yeah, it is a $67 billion in stock deal, one one level. it is human to over look as well, :-)

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  3. Om, Congratulations on Google News. That’s awesome.

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  4. Om, you make it sound as if the deal is done. I think the feds are going to have to scrutinize it a lot more than previous deals.

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  5. oh with someone like chairman martin at fcc, little or no opposition to the deal. i think it is clear that the lack of competition between BLS and T makes it easier to approve than anything else thus far.

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  6. Om, a classic podcast after a long time. Havent really listened to your Web 2.0-ish centric material in a while(Blogs, RSS, Social Networking etc), but i have always been a fan of your big telecom news and analysis- RBOCs eating each other and anything else that walks by, cable cos entering voice through the back door, equipment makers running scared- now all that makes for a very interesting read. I am sure everyone agrees that consolidation and stability would be good for the industry in general.

    A little bit of my own analysis: Now it’s just a question of when Verizon would buy buy out Vodafone’s stake and not if. Vodafone would get a very good deal when that happens. They might make a pitch for Alltel after that. Really dont see them going after Qwest (rotten) or Sprint (DOJ). Maybe AT&T might buy out Qwest after a while. It would be interesting to see how AT&T and Verizon compete with each other in the business segment. Any thoughts on that?

    ..and finally, congratulations on getting into Google News! :-)

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  7. I agree with Moo – Qwest and Embarq (Sprint landline) are bad choices – what’s to be gained with those territories? Alltel landline falls under the same category. Alltel wireless doesn’t make sense because their value is so high and Alltel will most likely not like it. They’re serving everyone in roaming because they operate GSM and CDMA networks. Verizon needs to save its cash to buy Vodafone. Verizon doesn’t need more bleeding landline business, it needs to take the remaining $ that is going over the pond to Mr. Sarin.

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  8. Om

    Does it really make any difference since the telephone is quickly being absorbed by the computer? Skype and SIP are computing technologies. Maybe these AT&T/Bell South guys are really only a “pack of hunger dogs” fighting over the telephone scraps. If any of us were in their positions would we do any different?

    This is not about technology. I pay Ed $85 per month for phone service that one day soon I will cancel. The merger is more about decreasing telephone revenues that soon will not cover the huge fixed cost of maintaining the “last mile” and one man’s ego.

    Wireless is an answer, but for how long? There are too many players and too much new technology for AT&T’s profits to last.

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