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| Reaching out |
Washington, Jan. 1 (Reuters): AT&T has closed its $86-billion purchase of BellSouth Corp after getting final regulatory approval, in a deal that will widen its lead in US phone and Internet services.
The US Federal Communications Commission voted 4-0 to approve the deal after AT&T promised to maintain “network neutrality” of its high-speed Internet platform for two years, meaning it will not charge certain Web media providers more to carry data-heavy Internet content such as video.
It was one of several key concessions that the top US phone provider pledged late on Thursday to quiet concerns that the takeover would stifle competition. Some investors had begun to expect a delay into 2007 as talks with the FCC dragged on.
The San Antonio, Texas-based company also reaffirmed forecasts it gave when the merger was announced in March, saying it expected total cost savings of $18 billion from the deal, with $2 billion of that coming in 2008.
Shares in AT&T rose 28 cents, or 0.7 per cent, to $36.03 in after-hours trading. Since hitting a trough in mid-May, AT&T shares have climbed more than 40 per cent and closed at $35.75 on the New York Stock Exchange on Friday.
AT&T, which dates back more than 125 years to the invention of the telephone, has been trying to bolster its bottomline through acquisitions and expand into the television business as profits from traditional phone service have waned.
The company was formed in 2005 when local phone carrier SBC Communications Inc acquired AT&T and kept that name.
Now four of the seven companies that were spun off from the original AT&T in 1984 are back under one roof, and it includes 66.1 million telephone lines, 58.7 million Cingular Wireless customers and 11.6 million high-speed Internet customers.
That clout is viewed as key to profitability in a consolidating telecom industry, as everyone from cable operators to Internet phone companies offer combined voice, video and Web services.
AT&T’s concession on net neutrality was of particular note because it had strenuously objected to any restriction on how it charged for services.
