AT&T Concedes to FCC In BellSouth Deal
AT&T agreed last night to a number of concessions in its $85 billion proposed buyout of BellSouth. The telecom bellwether is hoping for approval by the U.S. Federal Communications Commission by the end of today – the final business day in 2006. Telecom analyst William Power was on “Street Signs” explaining what will happen if AT&T doesn’t make the deadline.
A couple of Democrats on the FCC have been pushing for a greater commitment by AT&T to network neutrality, an affordable standalone DSL service, and a reassignment of some wireless spectrum received in the BellSouth merger to an unaffiliated third party.
Power says AT&T has been focused on completing the deal – and willing to bend on some points – because if an agreement isn’t reached today, the company will have to refile its entire proposal in 2007. That will cost the company extra. Even so, failure to close the deal is “not the end of the world for the parties involved,” according to Power.
While the Robert W. Baird & Co. analyst doesn’t expect AT&T to match its performance in 2006 – it jumped 45% – he says there are a couple of reasons the stock price will still rise next year. The BellSouth deal gives AT&T 100% control of Cingular, and that’s its best-performing asset right now. Also, Power says there are some “merger synergy benefits” that will contribute to earnings upside, and that will drive up the stock.
The combined AT&T-BellSouth company will have total revenues of $117 billion and operate in 22 states.