Article Abstract:
SBC Communications's acquisition of Ameritech for approximately $62 billion alters the US telecommunications industry, with the new SBC emerging as the second largest domestic carrier in the US. SBC would become the leading local phone player, with control of 55 million lines, or around one third of the American market. Its business would span Detroit to El Paso, plus California and Connecticut. Most analysts expect the move to trigger more communications mergers, increasing the pressure on the remaining three regional Bell competitors to consolidate for survival. SBC would seek to expand into markets held by other Bells, including the key New York City and Albany markets, according to Chmn Edward E. Whitacre Jr. Industry consolidations have surged since the Telecommunications Act of 1996, whittling the number of Baby Bells from seven to four. The deal dwarfs Worldcom's industry record $37 billion acquisition of MCI, as well as Daimler-Benz's proposed $39 billion purchase of Chrysler in May 1998.
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Article Abstract:
SBC Communications said it acquired the Southern New England Telephone Communications Corp (SNET) for $4.4 billion in stock. SBC would establish itself in the region dominated by key rival Bell Atlantic, as SNET serves nearly all Connecticut residents. Expansion-minded SNET provides long-distance service to more than 800,000 of its 2.2 million local telephone customers. The non-Bell company, however, lacks the size and range of services to compete in the consolidating telecommunications industry. The deal could make SBC the first of the five regional Bells to enter the $80 billion long-distance telephone business. The FCC has prevented the Bells from selling long-distance service within their regions, saying they have not opened their systems adequately to potential customers. SNET does not require such a Federal review because it never was a part of AT&T. SBC covers seven Western states, including California and Texas.
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Article Abstract:
Acquisitions will continue to lead the telecommunications sector in 1998. No one knows whether financial markets will continue their surge in 1998, but a decline could slow the acquisitions pace. Companies frequently prefer stock acquisitions instead of cash, when accounting rules enable them to avoid big expenses. Deregulation and the desire to offer more services also are creating an environment that would allow the industry to surpass 1997's stunning deals. Among the top transactions in 1997 was Worldcom's successful $36.5 billion bid for MCI, which prevailed over bids from British Telecom (BT) and GTE. A key failure was AT&T's unsuccessful moves during merger discussions with SBC Communications. A record number of telecom deals will take place in 1998 and involve big moves by AT&T, GTE, BT and several regional Bells, according to Cravath, Swaine & Moore.
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