Telecom Consolidation Rings Up Story Angles for Business Reporters

By Kevin Sweeney
March 8, 2006 12:09 PM

The implications of AT&T's acquisition of BellSouth are being closely watched across all regions of this country. Depending on the geography, the angle of the story takes various directions.

With jobs on the line, competition on the defensive and the discussion of a possible telecom monopoly, there are many facets to this story.

For the Southeast and Midwest, the $67 billion stock deal rings truest for employees of both AT&T and BellSouth. With hints of as many as 10,000 job cuts in the offing, reporters are taking the pulse of telecom workers.

"AT&T, formerly SBC Communications Inc., has 189,850 employees across the country, including 13,000 Michigan workers," writes Alejandro Bodipo-Memba in the Detroit Free Press. "A former commissioner with the Michigan Public Service Commission said Monday the acquisition will result in the loss of Michigan jobs if the AT&T-BellSouth deal closes as expected in early 2007."

Walter Woods of The Atlanta Journal-Constitution addressed the impact on the office market of Atlanta, headquarters of BellSouth. With the threat of layoffs comes the vacancy of suites.

"BellSouth, a huge company with 15,000 employees in the metro area, owns and occupies a giant-sized local office footprint," Woods writes. "Midtown's office market, like the rest of the metro area, has been improving after all-time lows in 2001. But BellSouth's reorganization could put more vacant space on the market."

One point to keep in mind: though there have been few cautionary flags raised, the Federal Communications Commission and the Justice Department still must approve the deal.

Should that approval be reached, the headquarters of AT&T in San Antonio will be a stronghold for the telecommunications industry. The San Antonio Express-News focused on the merger itself and potential changes in market share.

"The deal would give the merged company control of four of the seven 'Baby Bell' phone companies created in 1984 with the federal breakup of the AT&T monopoly," according to Express-News business writer Sanford Nowlin. "The merger would give AT&T a local phone and data network stretching to both coasts and a market capitalization of more than $99 billion, analysts said."

For other major players in the industry, the competitive pressures are already taking shape. Reporters in locations home to these companies are speculating on possible reaction.

Qwest, which holds a majority market share out West, is firmly planted back at the drawing board in gaining traction amid a climate of consolidation. Jeff Smith of the Rocky Mountain News reported on speculation about a possible takeover of Qwest.

"Some analysts said the nearly $15 billion debt load, combined with Qwest's recent surging stock, makes the company too expensive to be acquired right now," Smith says. "Last week, Qwest Chief Executive Dick Notebaert said the Denver telco would consider buying a company outside the telecommunications field."

Reports in the Northeast, dominated by Verizon, raised concern over how much consumers will be paying for basic services.

"While it won't directly affect costs or service for Verizon customers, the merger could still wind up hitting wallets," Keith Reed of The Boston Globe reports. "Telephone and Internet customers have enjoyed years of declining rates due to competition."

An analyst Reed spoke with indicated that further consolidation could put an abrupt halt on such price declines.

With its merger with SBC just finalized last year, AT&T's planned acquisition of BellSouth underscores just how ripe the telecommunication industry is for M&A activity. This is one sector that touches practically every business section and consumer in the country.

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