Even though American Telephone & Telegraph Co. will have to give up two-thirds of its holdings under the consent agreement reached with the Justice Department last week, it will remain one of the nation's largest companies, and the largest telecommunications firm in the world.
Additionally, for the first time in 25 years, the company will have the freedom to offer any business it chooses, including the highly profitable computer services which it has eyed but been barred from offering by the government.
As a result, most communications experts predict the company's future will be very bright, perhaps rosier than today.
"I'm not selling my stock," said former AT&T chairman John deButts in a telephone interview yesterday. "There's no question that the company will thrive. We have for over 100 years."
As chairman from 1972 to 1979, deButts had long argued that any breakup of AT&T would harm the telephone network as well as the company. But now, deButts said, the settlement calling for the largest divestiture in corporate history was "the right thing to do."
"This will enable us to participate in the telecommunications industry to an ever greater extent," he said.
The settlement, signed to end an eight-year-old Justice Department antitrust suit against AT&T, requires the company to spin off all local operations of its 22 local operating companies, including the Chesapeake & Potomac Telephone Co., a divestiture that AT&T says will amount to getting rid of $80 billion in assets.
The company's equipment subsidiary, Western Electric, its research and development operations, Bell Telephone Laboratories, and its long distance division would remain with AT&T. In return, a 1956 consent decree settling an earlier antitrust suit would be modified so AT&T no longer would be barred from entering any unregulated, non-telephone fields.
AT&T's chairman, Charles L. Brown, said yesterday that it was the government's agreement to lift that 1956 restriction that "was the main reason" he agreed to the Justice Department request for divestiture of the local operations.
"I think freed of the restrictions proposed by the '56 decree, there's just no question that the AT&T part of the split will really thrive," Brown said in a telephone interview. "I just think AT&T has had the kind of shackles on it that were unfair and unreasonable under the current competitive conditions."
Many financial analysts agree, adding that the new AT&T will have a substantial base from which to launch into new business areas.
Using AT&T figures, John Bain, an analyst with Lehman Brothers Kuhn Loeb Inc., figured that after the divestiture AT&T's assets will be just over $44 billion. The only larger company will be Exxon Corp., which heads the Fortune list of 500 manufacturing firms in terms of assets with holdings of $56.6 billion.
Additionally, by getting rid of the local operations and by keeping Western Electric, "AT&T will retain all of the most attractive features of the Bell System," Bain noted.
That should make AT&T "a better investment, even though a risker one," he said. "It will not be as secure because it will no longer be able to depend on the tremendous base of its natural monopoly revenue from the local operations, and thus it will be much more subject to competition and the natural business cycles."
Not everyone familiar with the industry paints such a glowing picture. Bradford Peery, vice president of the brokerage house of Paine, Webber, said he is concerned about AT&T being left with a fractured network and noted that Western Electric Co., the manufacturing arm, will lose some of the business it had historically depended upon from the operating companies.
Furthermore, in a company of more than a million employes, virtually all of AT&T's personnel who deal with customers work for the operating companies, and Brown admitted that filling that talent void after the divestiture will be an enormous mangement problem. "We surely will have difficulty maintaining or sustaining that talent and ability," Brown said.
Just how the new company will be structured and what specific activities it will undertake remained somewhat unclear, Brown said yesterday.
Brown acknowledged that the new AT&T will set up a separate subsidiary to market its unregulated activities, as long as its long-distance service remains regulated.
Additionally, he stated, although the company will be free to enter new fields, it will remain primarily in the telephone business.
It "will continue vigorously to pursue the forefront of telecommunications technology and supply basic technology and hardware to the long-distance business as well as to local businesses all over the world. That's the basic thrust of the AT&T future. That's where the bulk of our business is going to be."
At the same time, he said, AT&T will "obviously" also be in the terminal business, selling equipment to homes and businesses. Yet, Brown declined to say whether the company will offer electronic publishing or cable television services as many experts expect it to do. "I really am not going to speculate on electronic information and all the things that could happen," he said.
But Brown said one thing is certain. "We don't have any plans to divest anything else."