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Last Updated: Monday, 6 March 2006, 10:24 GMT
AT&T in $67bn BellSouth takeover
AT&T store in New York
The takeover will 'reunite' AT&T with BellSouth
Leading US telecoms firm AT&T has agreed to buy smaller rival BellSouth in a deal worth $67bn (38.2bn).

Under the deal, AT&T will gain full ownership of Cingular Wireless, America's biggest mobile phone firm.

The takeover will create a new giant in the US telecoms sector, with a market capitalization of $165bn.

It will also see BellSouth returning to its old stable. It and several other operators - dubbed the Baby Bells - were spun off from AT&T in the 1980s.

Back to the future

"This is essentially re-creating the old AT&T," said Tim Ghriskey, chief investment officer of New-York based Solaris Asset Management.

"It will strengthen two companies that aren't particularly strong. The industry needs that consolidation to make them stronger against competing technologies."

Man holding a mobile phone and wads of US dollar bills
The potential profit makes the US phone market very competitive

A combined AT&T and BellSouth will have operations in 22 US states.

The deal will consolidate ownership of Cingular Wireless, whose main US mobile phone rival - Verizon Wireless - is part-owned by Britain's Vodafone.

AT&T currently owns 60% of Cingular Wireless, while BellSouth owns the remaining 40%.

Analysts expect Cingular to be rebranded under the AT&T name once the deal has been closed.

The takeover will also enable the new AT&T, which was itself taken over by former Baby Bell SBC Communications in November last year, to extend its reach in the south east of the United States.


AT&T's takeover over BellSouth marks the latest upheaval in America's fiercely competitive telecoms market.

Verizon Wireless parent company Verizon Communications last year snapped up operator MCI - formerly the bankrupt telecoms giant Worldcom - following a drawn-out bid battle with rival Qwest.

Traditional telecoms operators have also been feeling the heat from firms offering cable and internet telephony services.

Under the AT&T deal, which has yet to be approved by regulators, BellSouth shareholders will receive 1.325 shares of AT&T common stock for each common share in BellSouth.

What the deal means for US telecoms

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