BBC Homepage World Service Education
BBC Homepagelow graphics version | feedback | help
BBC News Online
 You are in: Business
Front Page 
World 
UK 
UK Politics 
Business 
Market Data 
Economy 
Companies 
E-Commerce 
Your Money 
Business Basics 
Sci/Tech 
Health 
Education 
Entertainment 
Talking Point 
In Depth 
AudioVideo 



The BBC's Mark Gregory
"AT&T is the lumbering behemoth of US telecommunications"
 real 28k

Monday, 9 July, 2001, 20:55 GMT 21:55 UK
Cable giant bids for AT&T Broadband
Comcast and AT&T logos
Cable television company Comcast has made an unsolicited bid for the broadband arm of the leading US telecoms firm AT&T.

Comcast, in a letter to AT&T chairman Michael Armstrong, said it would offer $44.5bn (31.5bn) for the broadband business.

The move, which would create the world's largest broadband business, follows months of talks between the two firms.

But AT&T said in a statement that it had "no plans" to sells its broadband business, the largest in the US, boasting 16 million subscribers.

"We recently had some informal conversations with Comcast at their request," the AT&T statement said.

"However, those conversations never led to any concrete proposals and there is no truth to the rumour that we agreed on valuation."

The firm added that it would evaluate Comcast's bid, and act "in the best interests of the shareholders".

'Higher value'

The bid comes only a week after Comcast, the third ranking cable TV firm in the US, bought AT&T Broadband's Baltimore cable network for $518m.

Michael Armstrong, chairman, AT&T
Michael Armstrong: has overseen AT&T shake-up
And it preceded by hours the spin off of AT&T's wireless division in the first stage of a plan which proposes splitting the telecoms giant into four quoted firms, of which AT&T Broadband would also be one.

Comcast claims its offer gives AT&T shareholders "dramatically higher" value than will be achieved under current plans, an assessment agreed on Wall Street, where AT&T shares finished up almost 12% at $18.70.

Shares of Comcast fell 8.4% to close at $39.24 on Nasdaq, amid concerns that buying AT&T Broadband would hurt Comcast's earnings and that such a deal would face intense regulatory scrutiny, analysts said.

End of AT&T?

Comcast's move, nonetheless, came as little surprise to Wall Street analysts, some of whom believe that the offer heralds the demise of the AT&T brand.

"The big question since AT&T announced [its] break-up was which unit was going to be the first to be acquired," said Jeffrey Kagan, an independent telecoms analyst.

"AT&T will cease to exist a year or two from now. All the pieces will be gobbled up and the AT&T brand name will be a nostalgic memory in the history of America business."

Jeffrey Wlodarczak, analyst at CIBC World Markets, said: "I think most people were expecting Comcast to wait until the spin-off was complete and then make a bid.

"It is a little surprising that they felt they needed to move more quickly. Comcast made no secret of the fact that they believed they can run these [AT&T] assets better."

World's biggest

The merger of Comcast with AT&T Broadband would create the world's largest broadband communications company with 22 million subscribers.

AT&T Broadband, already the sector leader in the US, includes cable operations and joint ventures such as the high-speed internet unit Excite@Home.

Any deal is expected to face scrutiny from US competitiveness watchdogs.

Search BBC News Online

Advanced search options
Launch console
BBC RADIO NEWS
BBC ONE TV NEWS
WORLD NEWS SUMMARY
PROGRAMMES GUIDE
See also:

09 Jul 01 | Business
BT could scupper AT&T restructuring
20 Apr 01 | Business
BT 'to ditch AT&T venture'
25 Oct 00 | Business
Shake-up at AT&T
26 Feb 01 | Business
Vodafone in line for Japan deal
29 Jan 01 | Business
Telecoms giant rings the changes
20 Apr 01 | Business
AT&T issues earnings warning
Internet links:


The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.


E-mail this story to a friend

Links to more Business stories