FCC approves $16 bil SBC, AT&T merger

The Federal Communications Commission Nov. 1 approved the merger of the two companies, following last week’s clearance by the U.S. Department of Justice. Of the 36 states that also must approve the deal, Arizona, California and Ohio remain undecided.

Missouri competition

While the merger nears closure, San Antonio-based SBC has continued to vie for competitive classification in Missouri exchanges. Last week, the Missouri Public Service Commission approved SBC classification in 51 residential exchanges and 30 business exchanges, and in late September approved it in 26 residential and 45 business exchanges. SBC has 160 exchanges in Missouri.

Competitive classification allows SBC to raise or lower prices at its discretion rather than being regulated by the commission. However, SBC spokesperson David Moessner said the company has no plans to change its rates in the near future relative to either the merger or the new classification.

“We don’t expect any big changes to Missouri rates and services,” he said. “We asked for competitive status so we can respond to pricing trends in the marketplace. … Missouri is a very competitive marketplace.”

Job cuts

While officials say rate changes aren’t an issue, SBC plans to cut as many as 13,000 jobs in the next three years because of the merger. Moessner said the number is small compared to the 12,000 jobs cut annually due to attrition.

About half of the job reduction will come from network operations and information technology, about one-fourth of the reduction will be from business services, and remaining cuts will be from sales and support functions.

Pat Bly, regional director for SBC in Springfield, doesn’t anticipate any of the cuts to affect local employment, though there is no official word yet. About 350 of SBC’s 500 employees in Springfield work at either of the company’s call centers, and most other workers deal with infrastructure and installing underground networks.

“When we purchase AT&T, they’re complementary companies – we’re the local telephone company in 13 states, whereas AT&T really brings to our corporation large government and international contracts and a huge Internet presence,” Bly said. “(There’s) no redundancy, so I wouldn’t anticipate that there would be any effect here.”

AT&T name sticks

Negotiations for a merger had been ongoing for several years, but a survey of name recognition, showing that U.S. business awareness of AT&T was nearly 100 percent, essentially sealed the deal, Moessner said.

SBC will operate under the AT&T name, and terms of the agreement give AT&T stockholders consideration valued at $19.71 per share. At the time of closing, AT&T also will pay stockholders a special dividend of $1.30 per share.

Moessner would not disclose an estimated restructuring cost, but SBC will undergo a brand transition phase that “will take some time to implement,” he said.

SBC originated as Southwestern Bell in 1984 when AT&T divided its local phone business into seven regional Bell operating companies, or “Baby Bells.” In the last 20 years, SBC, expanded into the Midwest giant that it is today – a Fortune 50 company that offers phone, DSL and satellite TV services. SBC also holds a 60 percent ownership interest in Cingular Wireless, which serves 52 million customers.

Edward E. Whitacre will continue in his role as CEO and chairman of SBC, and AT&T CEO Dave Dorman will serve as the merged company’s president and a member of the board of directors.

[[In-content Ad]]