Wait a minute -- didn't the feds break up Ma Bell already? In the
latest, and biggest yet, deal to shake up the unsettled telecom industry,
highly acquisitive SBC Communications announced it would buy
Ameritech in a $62 billion stock swap. The combined entity would comprise
three of the original seven Baby Bells with more than $40 billion in annual
revenues, controlling some 57 million lines in 13 Western and Midwestern
states. Only U.S. West now stands between SBC control of nearly three
quarters of the U.S. Throw in telecom deregulation that should eventually
allow local phone companies to enter the long distance market even as
households are adding second and third lines for Internet access, and
suddenly San Antonio-based SBC is starting to look an awful lot like the
phone company of Lilly Tomlin's dreams. Wall Street was of course pleased with the news, sending Ameritech up $2.43 3/4 in early trading.
If the merger passes regulatory muster, it could signal the start
of a new round of combinations. Already AT&T and Bell Atlantic are both
eyeing BellSouth as an attractive dance partner. And Ameritech could give
SBC the muscle to realize CEO Edward Whitacre's long-held dream -- a
takeover of the mothership via a merger with AT&T.
Whitacre has said that in the not-so-distant future there will only
be room for a few players on the telecommunications landscape, and SBC
plans to be one of those. Paging Joe Klein -- maybe Microsoft isn't your
biggest headache after all.