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AT&T-SBC Union Now Looks Possible
The key concern for regulators could be the overlap of the two companies' business and residential customers in SBC's territory. SBC is the nation's second-largest telecommunications company, after Verizon. It is the biggest local phone company in 13 states, including California, Texas and Illinois. AT&T remains the nation's largest long-distance company, with customers in all 50 states. Because of the national scope of the combined businesses, antitrust approval could require a difficult and lengthy review, the source said.
SBC has 36 million residential customers, but its business overall is eroding because of competition from wireless, cable-phone service, and other newer technologies. SBC is trying to sell more of its local and long-distance services to businesses, AT&T's core strength these days, by offering Internet phone service and packages of wireless and video services. SBC is negotiating to retain the AT&T brand, a source said.
AT&T is finding it more difficult to remain a stand-alone company. Last week, the company said it expected its $30.5 billion in annual revenue to fall by 15 to 18 percent this year as it exits its consumer business and loses small-business customers. The company, which cut its workforce to about 47,000 last year, plans to eliminate 5,100 more jobs this year.
Some analysts said the deal could shift AT&T's burdens to SBC.
Others say buying AT&T gets SBC into the business market quicker than it could on its own.
"It's a great deal for SBC, because AT&T is cheap and it has a great presence in the business market" and has relatively high margins, said Susan Kalla, an analyst with Friedman, Billings, Ramsey & Co.