ATLANTA-Speculation again surfaced that BellSouth Corp. and SBC Communications Inc. will announce the merger of their U.S. wireless assets as early as this week, creating a competitive wireless footprint with more than 16.5 million customers.
The possible merger deal comes on the heels of BellSouth’s announcement that it filed a registration statement with the Securities and Exchange Commission relating to its plans to create and issue a series of common stock to track the performance of its Latin American businesses. BellSouth serves more than 6.2 million customers in Latin America.
The most recent speculation stemmed from The Wall Street Journal, which reported last Thursday that “people close to the situation” said the two telecom companies were in the final stages of talks. Both companies declined to comment.
Jon Dorfman, analyst with The Strategis Group in Washington, D.C., believes the speculation to be true. The recent merger of Bell Atlantic Mobile’s and Vodafone AirTouch plc’s U.S. wireless assets has raised the bar in terms of national wireless coverage, and Dorfman said a merger-although not necessarily with each other-is inevitable for BellSouth and SBC if they want to remain competitive.
“Partnering limits the amount of money you have to put out there in terms of spectrum and upgrading networks, and the Bell Atlantic/Vodafone merger threw down the gauntlet in terms of footprint,” Dorfman said. “You basically fall into one of two categories-you can either be a pretty major nationwide carrier or a smaller regional carrier. BellSouth and SBC were caught in between the two.”
BellSouth has been contemplating a merger for quite some time, but was hesitant to make a move until it found the perfect fit. BellSouth told RCR last May it was holding out for a deal that would have the most positive impact for its shareholders.
“In every other deal that has happened, we have been privy to those and decided not to get involved because we didn’t feel at the time that they would produce a positive return for our shareholders. As our chairman has said, we don’t have a go-it-alone strategy,” Jeff Battcher, BellSouth spokesman said.
If Atlanta-based BellSouth and San Antonio-based SBC were to merge, their combined wireless assets would be second only to those owned by Vodafone AirTouch and Bell Atlantic Mobile, which together boast more than 20 million customers. The combined BellSouth/SBC assets would be in 40 of the nation’s top 50 markets, with the majority of BellSouth’s customers in the Southeast, and SBC’s customers scattered throughout the West, Midwest and southwestern United States.
Dorfman noted BellSouth’s and SBC’s wireless properties make a good fit in terms of the different regions they occupy, and both companies employ Time Division Multiple Access and Global System for Mobile communications technology.
