The Titans Of Telecom Face Off
Tuesday, March 7, 2006
One started out as an engineer in Lubbock, Tex.; the other as a cable-splicer's assistant in the Bronx.
From those humble beginnings, AT&T Inc. Chairman Edward E. Whitacre Jr. and Verizon Communications Inc. Chairman Ivan G. Seidenberg have built the two biggest U.S. telecommunications companies.
With Sunday's announcement of AT&T's agreement to buy BellSouth Corp. for about $67 billion in stock, Whitacre, 64, capped a career that has transformed what was once the smallest of the Baby Bells, Southwestern Bell Corp., into the largest local-phone and wireless company in the country.
What immediately followed was speculation about what Verizon's Seidenberg, 59, might do next to one-up his biggest competitor for more than a decade. He has already said publicly that he'd like to buy out Vodafone Group PLC's 45 percent stake in Verizon Wireless, the second-largest U.S. mobile phone company.
For years, since Whitacre was the head of Southwestern Bell Corp. and Seidenberg was running Bell Atlantic and before that Nynex, the two have outdone each other through a string of mergers, acquisitions and partnerships.
People who have followed Whitacre's trajectory describe him as unusually aggressive and competitive, fond of the bold stroke and seldom given to self-doubt afterward.
"It's a sport. It's a competition. In this business, scale really matters," said Reed Hundt, a former chairman of the Federal Communications Commission who has dealt with both men over many years. "It's like NFL linemen. You want 'em big, you want 'em fast, but most important, you want 'em big."
The aim of the AT&T-BellSouth merger is to strengthen AT&T for what is shaping up as a battle against the cable companies to sell consumers bundles of video, high-speed Internet, wireless and traditional land-line telephone service. The deal, if approved by regulators, would also give AT&T full control of Cingular Wireless, the nation's largest mobile phone company, which it runs as a joint venture with BellSouth.
San Antonio-based AT&T yesterday said it planned to cut about 10,000 jobs, through attrition where possible, as part of $18 billion in cost savings it projects from the merger with Atlanta-based BellSouth. AT&T's stock price slid 97 cents, to $27.02, as the market digested the merger, while BellSouth's rose $3.04, to $34.50. Verizon shares rose 15 cents, to $33.73.
The AT&T-BellSouth merger, which will give the combined company local-phone service in 22 states in the South, Midwest and West, immediately raised questions whether Verizon would try to buy another Bell.
Michael H. Salsbury, a telecom lawyer with Chadbourne & Parke LLP who was a former top executive at MCI Inc., said Seidenberg would continue with his basic strategy and dismissed speculation he might bid for heavily indebted Qwest Communications International Inc., the main local phone company in much of the West.
"If you had a dollar to invest and you were Ivan Seidenberg, would you invest it in Qwest or in wireless? Where would you get a better return? Wireless." Salsbury said.