FCC Welcomes 'Ma Bell' Back
Just one day after AT&T Inc. (NYSE: T) offered to observe the principles of network neutrality, in its own way, the Federal Communications Commission (FCC) approved AT&T's proposed buyout of BellSouth Corp. (NYSE: BLS) (See AT&T Embraces (Some) Net Neutrality and AT&T, BellSouth Merge.)
Now AT&T, once broken up by the U.S. government because it was deemed a monopoly, has successfully put several of its old pieces back together in what is the largest U.S. telecom merger in history. These days, the FCC says a company with AT&T's size and scope promotes more competition in the enterprise, video, phone, and broadband Internet markets.
As part of the deal, stockholders of BellSouth will get 1.325 shares of AT&T common stock for each common share of BellSouth. Based on AT&T's closing stock price on Thursday, Dec. 28, 2006, this exchange ratio equaled $47.04 per BellSouth common share. Since the merger was announced, the market price of AT&T shares has jumped more than 26 percent and BellSouth's shares have climbed more than 48 percent.
The FCC's blessing was the last regulatory hurdle remaining for the two carriers to combine. The agency was previously deadlocked on whether the merger was a good idea. Now, the FCC's loudest voices, Chairman Kevin Martin and Commissioner Deborah Tate, said, "the Commission finds that this merger will further many of its broadband, competition, and public safety priorities and finds that the merger, on balance, will serve the public interest," in a joint statement released Friday afternoon.
The buyout, now valued at about $86 billion, was announced nine months ago. (See Ma Bell Is Back!) The combined company will still have its corporate headquarters in San Antonio and most of its executive management will come from the AT&T side.
— Phil Harvey, News Editor, Light Reading