AT&T seeks sale of units

AT&T may soon craft deals with Comcast and BellSouth

		By David Schepp BBC News Online's North America business reporter

Former US telephone giant AT&T is in talks with a cable-television rival and a local phone company to sell off two of its business units, in what could result in the ultimate dismantling of the former "Ma Bell".

AT&T chief executive Mike Armstrong has proposed a merger of equals with regional phone company and former AT&T component Bell South, according to BusinessWeek magazine.

AT&T CEO C Michael Armstrong seeks a merger of equals with BellSouth

The deal seems more likely now that AT&T has all but finalised the sale of its cable TV unit - AT&T Broadband - to competitor Comcast.

Comcast first approached AT&T in July with an unsolicited $40bn bid for its broadband television business. AT&T rejected the offer.

Talking and shopping

AT&T has spent subsequent months shopping its cable TV business to other competing cable firms, including AOL Time Warner and Walt Disney.

The deal between AT&T and Comcast is far from a done deal and it has not been without some disputes over how the deal should proceed.

Comcast, for example, has balked at the idea of a collusion clause that might prevent it from bringing in other firms on the deal. AT&T disputes that claim and has said it seeks only to participate in any talks with other potential business partners.

AT&T has also been in talks with other telecommunications firms about selling its long distance and information technology (IT) businesses.

BusinessWeek reported on Thursday that AT&T was in talks with regional phone company Bell South, the only remaining original "Baby Bell" split off from AT&T in 1984.

The Wall Street Journal in its Friday editions, quoting people close to the matter, said that AT&T has also talked with other regional phone companies that include Verizon, SBC Communications and Qwest Communications.

Antitrust concerns

Myriad antitrust concerns await any deal between AT&T and regional-phone carriers. A potential merger between AT&T and SBC was mulled in 1997 but abandoned after it seemed certain the US Federal Communications Commission (FCC) would attempt to block such a deal.

AT&T is also pondering its investment in internet access and content provider Excite@Home, in which it owns a 23% stake.

AT&T is said to be considering buying certain assets of troubled Excite@Home, labouring under $1bn in debt, which some believe is soon to file for bankruptcy protection.

Excite@Home said on Tuesday it was cutting 500 employees, about 25% of its staff.