AT&T Corp. is
reportedly considering selling its WorldNet Internet provider unit to cable
ISP @Home Corp. to better position itself to compete with America Online Inc.
According to published reports, @Home would pay AT&T $1 billion in stock to
take over the service. @Home would then take over WorldNet’s 1.3 million
residential customers and the almost 1 million business customers WorldNet
got in its $5 billion buy of IBM Corp.’s network unit.
AT&T would still have control over WorldNet through its pending $40.9
billion acquisition of cable giant Tele-Communications Inc. AT&T would
still have controlling interest in @Home since TCI is the operation’s
controlling shareholder. When its buy of TCI is finalized, AT&T will assume
TCI’s 58 percent share of the voting stock in @Home.
However, AT&T is reportedly considering a number of alternatives and any
@Home takeover would not occur until the TCI deal is finalized. AT&T would
continue to operate WorldNet’s network and would jointly market the service
with @Home.
Reports say @Home already had its sights set on WorldNet when it announced
its $6.7 billion takeover of search engine Excite. Excite would provide information
services and programming to former WorldNet users once the deal is complete.
Representatives from all the companies involved refused to comment on the
various reports.
For @Home, the deal would mean a substantial boost in its customer base,
which now only numbers about 330,000 subscribers. As @Home expands its
cable service across the country, it would try to entice WorldNet’s dial-up
subscribers to upgrade to its cable modem service.
The deal would give AT&T a chance to get out of the low-margin consumer
Internet access business and concentrate on more profitable Internet ventures.
