BellSouth, AT&T closer to deal

BellSouth shareholders approved selling to AT&T, a deal that would expand the reach of the nation's largest telecommunications provider.

BY SCOTT LEITH

posted Saturday July 22, 2006

Cox News Service

BellSouth is getting closer to slipping into history.

The company held a special shareholders meeting Friday in Atlanta to vote on a planned buyout by AT&T. It wasn't close, as 97 percent of shares cast went in favor of the deal, according to the preliminary count.

At BellSouth's event, which lasted just half an hour, a handful of people told of their worries about the acquisition, while Chairman and CEO Duane Ackerman reiterated his reasons to support the merger. Although several hurdles remain, Ackerman said the deal appears to be on track to close sooner than expected.

The deal should be done in the fall. In an interview following the meeting, Ackerman said the time frame could range from late September to sometime in December.

Friday's votes, while anticlimactic, were still an important step in the process of folding BellSouth into AT&T. The deal, initially valued at $67 billion, was announced in early March.

AT&T will pay 1.325 of its own shares for each BellSouth share.

The deal would expand the reach of the nation's largest telecommunications provider and put the companies' wireless joint venture, Cingular, under one roof.

SPARKED OPPOSITION

The continued growth in AT&T's power has provoked debate and sparked some opposition, but the merger received easy approval from shareholders. Remaining hurdles involve getting sign-offs from the Federal Communications Commission, the Justice Department and six U.S. states, including Georgia.

Florida's Public Service Commission approved the transfer of some BellSouth assets to make way for the merger in June, declining to hold a full-blown hearing on the merger's impacts in the state.

Some smaller telecommunications companies had argued the merger would severely limit competition by other phone carriers and raise prices for consumers.

In papers filed with the government, AT&T and BellSouth have said that allowing the parent companies of Cingular Wireless to merge will help eliminate challenges they now face in managing the nation's largest cellphone provider.

The companies said Cingular has been successful, but increasingly faces challenges from its management structure. AT&T owns a 60 percent stake, and Atlanta-based BellSouth the rest.

The merger also would provide efficiencies for the combined company, AT&T and BellSouth have said.

JOBS CUT

AT&T has said it plans to cut up to 10,000 jobs, mostly through normal turnover. The workforce reduction would take place over three years.

When the company is acquired by AT&T, the BellSouth name will disappear. Atlanta will lose the company's headquarters, although Southeastern operations will still be run from the city. Cingular Wireless will stay in Atlanta for at least five years but will be renamed.