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Thursday, 19 July, 2001, 05:51 GMT 06:51 UK
AT&T rejects Comcast offer

Leading US telecoms firm AT&T has rejected the offer made by cable giant Comcast for its broadband division.

The cable television firm made an unsolicited $58bn bid for AT&T's broadband arm earlier this month.

AT&T said that the bid "did not reflect the full value" of the unit and also expressed concern over the high proportion of voting power that Comcast would command.

If the merger had gone ahead, it would have created the world's largest broadband company with 22 million subscribers.

But the surprise offer has caused AT&T to rethink its plans to spin off its broadband arm and it will now examine other alternatives for the division.

End of AT&T?

The planned spin-off was part of a radical restructuring of AT&T to split the firm into three separate divisions.

Michael Armstrong, chairman, AT&T
AT&T chairman Michael Armstrong will reconsider plans for the broadband division
Some Wall Street analysts believed that the break-up of AT&T would lead to a series of takeovers and 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."

The company now says that it will "explore financial and strategic alternatives relating to AT&T Broadband, including the previously announced restructuring plans".

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.

Comcast disappointment

Comcast expressed its disappointment that its offer had been rejected.

"We disagree with AT&T Board's characterisation of our offer as inadequate," said the cable firm in a statement.

The statement went on to point out that shareholders had welcomed the proposal and that over $14bn has been added to the market valuation of AT&T since the offer was made.

Comcast also indicated that it is prepared to continue talking to AT&T, but has not yet shown any signs of raising its bid.

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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
29 Jan 01 | Business
Telecoms giant rings the changes
20 Apr 01 | Business
AT&T issues earnings warning
09 Jul 01 | Business
Cable giant bids for AT&T Broadband
11 Jul 01 | Business
AT&T mulls Comcast offer
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