AT&T to Cut 10,000 Jobs if Bell South Merger Approved
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AT&T says its plan to acquire BellSouth would result in the loss of about 10,000 jobs. That's out of a work force of about 315,000. Most of the jobs will be eliminated through attrition. The company also says it expects the $67 billion deal to be wrapped up in a year, with no significant opposition from federal or state regulators. Consumer groups say if the deal goes through it will go a long way toward recreating the old monopoly phone system that regulators broke up in the early 1980s. NPR's Jim Zarroli reports.
JIM ZARROLI: One day after AT&T's acquisition of BellSouth was announced, Wall Street got a chance to weigh in on the deal, and it was less than impressed. AT&T's shares fell, and some analysts say they thought AT&T might be paying too much. Still, AT&T Chairman Ed Whitacre betrayed no doubts about the deal during a morning web cast.
EDWARD E: Let me just say this is a great day for three great companies. It's a great day for AT&T, it's a great day for BellSouth and it's a great day for the terrific wireless company we jointly own, Cingular Wireless.
ZARROLI: Whitacre's choice of words was a sign of the central role that wireless played in this deal. The merger will unite the two owners of the country's largest wireless company. Blair Levin is a former chief of staff at the Federal Communications Commission and an analyst at Stifel Nicolaus.
BLAIR LEVIN: AT&T and BellSouth jointly own Cingular. That is their most important asset. They are like a couple that has been living together and then they buy a house together. It shouldn't shock you if they decide to get married. And that's precisely what happened here.
ZARROLI: But there is more to this marriage than wireless. The merger will create the country's largest telecommunications company by far, with 70 million local phone customers in California, the Southwest, the Midwest and the Southeast. It will also be a major player in Internet, business services and long distance. And it will be in a stronger position to succeed in new areas like video delivery. Critics noted yesterday that the new company will look very much like the AT&T of old, which was broken up by federal regulators in the early 1980s. And several consumer groups are complaining that the deal is anticompetitive and will ultimately hurt consumers. Jeff Chester heads the Center for Digital Democracy.
JEFFREY CHESTER: Now, what we hope to do is to sort of put this kind of campaign together using the merger that's going to force the FCC or Congress, either through an antitrust review or through general policy, to impose some kind of safeguard.
ZARROLI: Chester's group promotes broadband access, and he is most concerned that this deal will give AT&T a stranglehold over the lines that connect customers to the Internet. That means the new company could block or at least slow competitors such as Internet phone or video companies from reaching its customers. Former FCC chairman Michael Powell predicted that this issue, known as Internet neutrality, might be the one that regulators examine most carefully. Other than that, says Blair Levin, there is little reason to think that the Bush Administration will oppose this merger.
LEVIN: The government has already provided a roadmap for how it's going to treat these deals. Last year, the government looked at very similar deals with Verizon and MCI and SBC and AT&T, and the government, you know, took 20 issues and basically reduced them to about two, and then had very light conditions to address those issues. I think it will be the same with this one.
ZARROLI: Levin says because BellSouth and AT&T now serve different geographic areas, regulators are likely to conclude that a deal between them won't reduce competition. More than that, he says, regulators have made clear they see the telecommunications marketplace as plenty competitive already. With cable and Internet companies moving in on the local market, and long distance profits anemic, companies such as BellSouth and AT&T are facing competition that the old AT&T never dreamed of, and joining forces is one way to fend off the threat.
JIM ZARROLI, NPR News, New York. ..COST $00.00