BellSouth Disconnects AT&T Merger Talks

Regional telecom operator BellSouth has quit merger talks with long-distance provider AT&T after less than a week at the negotiating table.

It’s the second time in a year that executives came away without an agreement.

Officials from both companies wouldn’t comment on “rumor and speculation,” but the Wall Street Journal reported that BellSouth wasn’t willing to meet AT&T’s asking price of about $19 billion in cash and stock.

Industry watchers have thought the combination likely for years, a sentiment that was heightened after AT&T restructured last year and sold its cable business to Comcast .

AT&T, based in Bedminster, N.J., has seen its long-distance business erode as the Baby Bells and cable companies enter the market and consumers switch to cheaper national wireless plans.

On the corporate side, Ma Bell is battling a move toward Internet telephony providers, such as Vonage, as well as increased competition from MCI, which is poised to emerge from Chapter 11 bankruptcy protection.

Last week, AT&T posted its 15th consecutive quarter of declining revenue, and noted that is consumer business was hit especially hard.

In contrast, Atlanta-based BellSouth beat expectations in its third quarter, thanks to strong long-distance and digital subscriber line growth.

Unlike its fellow Baby Bells — Verizon, SBC and Qwest — Atlanta-based BellSouth has resisted multi-company buying sprees in recent years. That leaves it with the capital needed to pull off such a deal.

It’s unclear exactly why talks fizzled this time. Even if the sides could agree on terms, they would face a hard fight with federal regulators and consumer advocates regarding competition issues.

News Around the Web