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Wednesday, 25 October, 2000, 13:46 GMT 14:46 UK
Shake-up at AT&T
AT&T chairman C Michael Armstrong
AT&T: "companies won't have to compete internally for capital or attention"
US telecoms giant AT&T is to split into four separately traded companies in its biggest shake-up for 15 years.

The business will be split into four units - wireless, broadband, business and consumer - by 2002.

The widely anticipated restructuring reverses a previous strategy aimed at building a fully integrated communications company offering local, long-distance, wireless telephone and internet services in one package.

The restructuring also appears to spell the end of tentative moves towards a closer alliance with British Telecom.

Better comparisons

Chairman C Michael Armstrong said in a statement the plan would create "companies that don't have to compete internally for capital or attention".

"Shareowners should get the full value of their investment because investors will be better able to evaluate the financial performance of each AT&T company and compare it to its competitors," he said.

AT&T Business - to be listed on the New York Stock Exchange - will be the principal company and license the AT&T brand to the other three entities.

How the earnings add up (Q3)
Business, $7.1bn, +2.5%
Consumer, $4.7bn, -10.9%
Wireless, $2.8bn, +36.6%
Broadband, $2.4bn, +10.8%
Source: AT&T
The wireless and broadband cable television units will trade as independent common stocks. The consumer telephone unit - a struggling business which has been seen as holding back AT&T's share price - will become a tracking stock, under its parent AT&T Business.

AT&T's statement made no mention of any plans to deepen its relationship with BT.

But it said AT&T Business would retain its 50% stake in Concert, an international communications joint venture with the UK firm.

Media reports in August had suggested the two firms were considering merging their business services units.

Corporate upheaval

AT&T has experienced several radical corporate upheavals since losing its status as the US' national telephone monopoly.

In 1984, after a court ordered the firm to be broken up, AT&T spun off its local telephone businesses into seven separate units - known as Baby Bells.

Several of the Baby Bells have since merged.

Four years ago, AT&T voluntarily separated off its telecoms equipment supply unit and its Bell Labs research unit as Lucent Technologies.

At the same time, it also created NCR from its computer division.

Profits fall

Plans for AT&T's latest restructuring emerged as the company announced a 12% fall in third-quarter earnings.

Profit, excluding one-off items, dropped to $1.44bn, or 38 cents a share, compared with $1.63bn, or 50 cents a share, in the corresponding period last year.

Sales of communications services to consumers were 11% down at $4.67bn as increased competition and price wars continued to hit AT&T hard.

Sales to business customers increased 2.5% to $7.11bn.

The company said it had 750,000 more wireless subscribers than a year ago. Wireless revenue jumped 36.6% to $2.8bn.

Cable-based telephone subscribers stood at 350,000, up from 224,000 in the previous quarter.

Broadband revenue increased 11% to $2.4bn.

Overall turnover was 3.7% higher on the period at $16.98bn.

See also:

23 Oct 00 | Business
18 Aug 00 | Business
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