New York, March 5: AT&T Corp is planning to acquire BellSouth Corp, according to several people familiar with the negotiations who asked not to be identified because of the sensitivity of the talks.

A merger of two of the four remaining Bell phone companies would represent a huge step towards recreating the monopoly that existed in the phone business before the old AT&T was broken up in 1984.

The companies are expected to announce a deal as early as Monday. AT&T is expected to pay about $65 billion for BellSouth, the country’s third largest phone company, which operates in a nine-state region in the Southeast. The price represents a 25-30 per cent premium for BellSouth shareholders.

The combined company would have more than $125 billion in sales, 70 million local-line phone customers and nearly 10 million broadband subscribers.

Spokesmen for AT&T and BellSouth declined to comment.

A deal between AT&T, formerly known as SBC Communications , and BellSouth has been talked about for months. Together, the companies own Cingular Wireless, the country’s largest cellphone carrier, and they jointly own Yellowpages.com, an online directory business.

In November, SBC became the country’s largest phone company when it acquired AT&T and took its name. BellSouth has largely avoided mergers and acquisitions in recent years.

Any deal would have to be approved by regulators. That process would most likely take about one year to complete.

Though the combined company would dwarf its next nearest competitor, Verizon Communications Inc, regulators have shown growing tolerance in recent years for ever-larger mergers.