AT&T’s cellular and paging division and its wireless equipment business will soon belong to separate and independent publicly traded companies under AT&T Corp.’s plan to completely restructure the organization.
AT&T Chairman Robert Allen announced the board of directors last month approved plans to divide the communications giant into three separate companies, focused on the respective areas of communications services, communications technology, systems and equipment and transaction-intensive computing, said AT&T.
“On the one hand, this is a very bold move,” noted Allen in a letter to AT&T employees. “On the other hand, with the dramatic changes in our industry, we now see it as the next logical turn in our journey since divestiture.”
Current shareholders will own stock in each of the companies.
“Our services and systems businesses are at the intersection of tremendous change and opportunity,” Allen stated. “This restructuring ensures that each can follow the path of greatest opportunity without worrying about bumping into each other along the way.”
Encompassed under the “AT&T” brand will be communications services including AT&T Wireless Services-formerly McCaw Cellular Communications Inc.-the current Communications Services Group, the AT&T Universal Card Service Corp. and newly formed AT&T Solutions, a consulting and systems organization.
Alex Mandl, chief executive officer of the Communications Services Group, will head the transition from the current structure to the formation of the communications services company. Allen will remain chairman and CEO of the communications company.
AT&T Network Systems, Bell Laboratories, Global Business Communications Systems, Consumer Products and AT&T Paradyne and Microelectronics will comprise the systems, equipment and technology company. Overseeing the transformation into this new company will be Richard McGinn, CEO of Network Systems Group. AT&T Corp. is considering issuing an initial public offering early next year for about 15 percent of the systems and equipment company’s shares.
Lars Nyberg, previously with Philips Electronics NV, was brought on board in June to turn around AT&T’s computing division, AT&T Global Information Solutions. GIS will concentrate its efforts in the financial, retail and communications computing sectors, in each of which AT&T said it holds a leading industry position. GIS will be launched as an independent company by spinning it off to AT&T shareowners, said AT&T.
Already fortified with a complete work force and global operations, each of the three companies is set to offer customers complete solutions, said AT&T. When and where it makes sense, the companies may establish commercial relationships with one other, added AT&T.
A fourth company, AT&T Capital Corp.-an equipment leasing and financial company-would be sold under the restructuring plan.
Each of the three groups to become separate companies will be assessed a market valuation by investment bankers outside the company, said corporate spokesman Jim Byrnes. Shareholders’ stock will be divided among those companies proportional to those valuations. While the communications services company will keep the name AT&T Corp., the other two companies’ names, which are not decided, will not include the AT&T name. AT&T said it aims to complete the transactions by year-end 1996.
