Could AT&T Give Up On The BellSouth Merger?

Rumors, Conspiracies, etc.

from the deep-pockets dept

The AT&T-BellSouth merger still hasn’t been approved by the FCC, and despite the company line that it will eventually go through (and without additional conditions at that), there’s some speculation that AT&T could walk away from the deal (via Broadband Reports). It’s not because of regulatory issues, but rather because the cost of the deal has apparently gone up some $17 billion since it was announced in March, translating into a hefty premium for a company which, like AT&T, is burdened with slow- and no-growth businesses, and a long, expensive transition to new products and profits. One of the biggest motivations behind the merger seemed to be to unite Cingular under a single owner, particularly with a view towards offering fixed-mobile converged services. But given the underwhelming possibilities AT&T has raised in this area, it’s quite possible that Cingular might be better off standing on its own, where it’s free to pursue deals with any fixed-line or broadband operator, rather than be tied to AT&T and its overarching strategy of just using all its products to force people to keep their landline subscription. It doesn’t seem likely that BellSouth and AT&T hooking up would be particularly beneficial to consumers, but a spun off Cingular could make things pretty interesting in the wireless market. Cingular remains the star asset of this merger deal, and despite the increase in cost, it would be surprising to see Ed Whitacre let it go.