AT&T's New CEO Takes Helm at the Telecom Giant
After an acquisition binge that transformed the smallest Baby Bell into a telecommunications heavyweight, AT&T is undergoing another change Sunday: a new chief executive.
Randall Stephenson, 47, rose through the ranks of AT&T and previously served as its chief financial officer and chief operating officer. He is credited with helping position the company so it could afford the buying spree that turned it into the nation's largest provider of traditional phone, wireless and broadband services.
Stephenson takes over for Edward Whitacre Jr. in time for what might be the most hyped telecommunications device launch in a generation, Apple'siPhone.
AT&T - whose wireless division was formerly known as Cingular - will be the exclusive carrier for the combination cell phone, portable music player and Web device when it launches in the U.S. later this month.
"Whatever your expectations are from this device, they are probably too low," Stephenson said in a recent interview. "It changes how we think about the PDA (personal digital assistant), the iPod and the cell phone interacting."
More than 1 million people have signed up through AT&T's Web site for a call when the iPhone becomes available, Stephenson said. It will be available in two models, priced at $499 or $599.
It's not clear how many of the devices will be available at launch, but Stephenson said, "I'll be really disappointed if there's not a shortage."
AT&T plans to grow through wireless, using that business segment to drive sales of its traditional phone, high-speed Internet and other services.
"The company is going to be positioned as a wireless-centered company," Stephenson said. "Once you have mom and dad and the kids on wireless, then you get them on broadband and television."
He said he doesn't plan major departures from the path San Antonio-based AT&T is following, after takeovers of BellSouth Corp., the Cingular Wireless business and the AT&T long-distance business. The BellSouth acquisition gave it full control of Cingular.
Most of the major consolidation in the telecommunications business is done, he said.
"No hard left or right turns. We've set the direction of this business over the last two to three years," he said.
AT&T's stock has been trading at five-year highs, but despite the excitement around the iPhone, Stephenson still faces significant challenges.
He'll have to finish the integration of BellSouth, an $86 billion purchase, and the AT&T long-distance business, bought for $16 billion in 2005, while trying to grow revenue in a wireless business that's facing heavy competition.
More competition will continue to come from cable, which is selling phone service along with TV and Internet. AT&T has responded with its U-verse television service, though the rollout has been slow and it won't be available in any of the old BellSouth territory until later this year.
Analysts say the rapid, wide-scale changes in the telecommunications business give Stephenson the reins of a company vastly different from the one run by Whitacre.
"It's not the same marketplace," said industry analyst Jeff Kagan, noting the 1984 breakup of the old AT&T Corp. - Ma Bell - was followed by an avalanche of new competitors and then consolidation. "He's inheriting a company that is a brilliantly put together company, and it's very profitable. But they're going into head-to-head competition with new companies that are also very profitable and very strong."
Kent Custer, an analyst for A.G. Edwards & Sons, said Stephenson, who began at Southwestern Bell in 1982, eventually rising to chief financial officer in 2001, has long been an influential force at AT&T. He became the chief operating officer of the company, then called SBC Communications, in 2004.
Since that time, the company has better positioned itself for growth, Custer said.
Traditional phone service remains under attack from wireless carriers and cable competition, but "generally, the business is in better standing than it was two or three years ago," he said.
Stephenson will have big shoes to fill. Whitacre, an executive who pushed change and managed deals others thought wouldn't get done, was an enormous force in the telecommunications business during his 17 years at the helm of AT&T.
"I've learned a lot from him," Stephenson said. "If you want to move the needle in this business, you have to think big."
Whitacre, a famously blunt Texan, offered Stephenson one piece of advice after the executive change was announced. It came in a text message: "Give em hell."