AT&T Corp.’s $11.5 billion acquisition of McCaw Cellular Communications Inc. is part of a grand plan to package wireless and wireline products and services under what is perhaps the most recognized brand name in telecommunications-AT&T.
“My confidence in this merger is bolstered by the fact that these two companies are such a logical, strategic fit,” said AT&T Chairman Robert Allen at a Sept. 20 press conference in New York. AT&T and McCaw closed the deal the previous day, after it was approved by the Federal Communications Commission.
“A full range of wired and wireless technologies is fundamental to AT&T’s global leadership in networking,” noted Allen.
But AT&T’s wireless rollout won’t happen overnight, and company officials do not know exactly how AT&T will integrate the Cellular One brand that McCaw has marketed.
“We hope AT&T will recognize the value Cellular One delivers to the cellular marketplace and should continue using the most widely known and widely used cellular brand in the United States…Cellular One,” stated the Cellular One Group.
One thing is certain: The marriage of the nation’s largest long-distance telephone company to the nation’s largest cellular operator makes for a formidable force in the wireless telecommunications industry.
Under merger conditions set by the Justice Department, New York-based AT&T cannot affix its name to McCaw’s 105 cellular systems until McCaw customers have the chance to choose a long-distance carrier.
The process, called equal access, will be phased in over 18 months. McCaw cellular systems in the Pacific Northwest will be the first to get to use the AT&T label next spring.
McCaw paging and wireless messaging services will adopt the AT&T name by year’s end. McCaw is the fifth largest paging company in the United States.
“By joining forces with McCaw, we are creating a company that can take wireless technology to places that it’s never been before,” commented Allen.
For example, AT&T said two-way acknowledgment paging services offered over nationwide 900 MHz narrowband personal communications services frequencies won by McCaw could be available next fall.
In addition, new 500 personal telephone numbers will enable AT&T paging customers to be contacted, regardless of location, indicating a voice-mail message has been left for them.
New software called “message flash” and “mail flash” will connect personal computers with alphanumeric pagers and be packaged with computers sold by AT&T.
“Very few times in history has an industry grown with a kind of momentum wireless communications has enjoyed and continues to enjoy,” said James Barksdale, McCaw president and chief operating officer who becomes chief executive officer of AT&T Wireless Services. The new wireless unit will be located in Kirkland, Wash., home of McCaw.
AT&T assumes $6.3 billion in long-term McCaw debt. AT&T also said its earnings will be reduced by more than 10 percent as a result of the 209 million shares issued to complete the merger and one-time costs associated with the transaction.
AT&T officials were vague about how the merger would effect McCaw’s 5,150 employees other than to say everyone will be needed. Craig McCaw, chairman and CEO of McCaw Cellular, will join AT&T’s board of directors.