Over the weekend, AT&T along with Bell South Corporation, announced that a merger of the two companies would occur. AT&T is expected to purchase Bell South for $67 billion. Along with acquiring over 50 million Cingular Wireless customers, AT&T would also have 70 million local-line telephone customers, and nearly 10 million broadband subscribers spread across 22 states.
By combining the two leading wireline providers upper management for both companies believe this will only help speed up the progress made by both companies in the telecom industry. "This merger is a logical next step that creates substantial value for customers and stockholders of both AT&T and BellSouth," said AT&T Chairman and CEO Edward E. Whitacre Jr. "It will benefit customers through new services and expanded service capabilities. It will strengthen Cingular through unified ownership and a single brand. And we are confident that this is a merger we can execute, based on our track record with previous integrations and our experience working closely with BellSouth to create and build Cingular Wireless, and operate Yellowpages.com.
Projected that the purchase of Bell South will save the company $2 billion annually for the next three years and then $3 billion a year by 2010, the savings will come at a cost to current employees. Over the next three years 10,000 additional jobs are planned to be cut by AT&T. This is after the 13,000 that were already cut during the acquisition of SBC and another 13,000 for "operational initiatives".
As soon as the announcement of the planned purchase was made public on Sunday, Consumers Union and the Consumers Federation of America made it clear that they objected. With fears that all this merger could mean for consumers is higher prices, each group is expected to as the Justice Department's antitrust division to reject the deal. Even with fears that the merger could cause higher prices, experts say the deal should be approved by the antitrust division with minor condition changes.
