After days of speculation, Excite@Home Corp. and AT&T Corp. are finally confirming talks have been held regarding the future of AT&T’s stake in the cable Internet provider.
In brief statements issued Thursday evening, AT&T (T) said it is considering a number of options. The company confirmed talks have been held with unnamed third parties, although the statement stopped short of saying AT&T is looking to unload its position.
“The exploration of alternatives remains at the very preliminary stage and at this time, AT&T has not made any decision to pursue any particular alternative or transaction,” the company said.
Excite@Home (ATHM) also released a similar statement although it was even shorter on details.
America Online Inc. has been at the center of the rumor mill this week. Speculation has had the Dulles, Va.-based Internet giant buying Excite@Home. AT&T would then reportedly buy back @Home’s cable Internet service. AOL has long looked for a way to bring high-speed access to its 18 million members, but has found it difficult to penetrate homes served by cable modems. As a way to hedge its bets, the company has also cut several Digital Subscriber Line deals with regional Bell operating companies across the country.
On Thursday, The Los Angeles Times reported AT&T had sent a proposal calling for a split of the company to Excite@Home’s board of directors. That report came after AT&T broadband chief Leo Hindery told Reuters news service the company has held no discussions. Hindery even went as far as to call recent speculation “absurd.”
AT&T is the largest shareholder in Excite@Home, with a 26 percent stake. However, the company controls 58 percent of the voting rights. Other major shareholders include cable operators Cox Communications Inc. (COX) and Comcast (CMCSA).
The proposal may hit a road block as the newspaper also reported Cox would likely oppose any deal to split Excite@Home.
Frederick Moran, Internet analyst at Jefferies & Co, said any deal reached might not end up including AOL and might also take longer than recent reports have indicated.
“Should Excite@Home uncover a possible strategic venture, it’s quite possible it wouldn’t necessarily include AOL. It’s also quite possible AOL eventually does a deal with AT&T that doesn’t include Excite@Home.
“Much speculation has surrounded Excite@Home. Clearly, they want to drive shareholder value, but there are a lot of barriers to putting these types of deals together. Therefore, there might not be news as imminently as the press has speculated,” Moran said.
