Bell South Merger with AT&T

Abstract

During 2006, AT&T and BellSouth Corporation merged to emerge as an integrated provider in the wireless, broadband, video, voice, and data markets. The acquisition gave AT&T complete control of Cingular Wireless which was the country’s largest mobile telephone provider at the time. The combined firm had 58 million cell phone customers, 67.5 million phone lines, and 11.5 broadband users. The merger was a big step toward putting MA Bell back together 22 years after the breakup of AT&T in 1984. The combined company was able to speed up the convergence of new and improved services for consumers and businesses. The merger combined the R&D work at AT&T labs coupled with BellSouth’s extensive deployment of fiber networks for DSL and other broadband services. The deal was valued at $67 billion. The combination of the two leading wireline providers along with Cingular speeded up the progress in integrated wireless and wireline services. The merger allowed for closer integration of the combined firm’s closer integration of the company’s wireless, wireline and IP products and services over a single global IP network. This combination facilitated the convergence of three major components of integrated services-televisions, computers and wireless devices. The 247 day (−5 to +242 day) cumulative return analysis observes that the cumulative return for AT&T stock amounted to 29.8%. The average growth rate of operating revenue in the premerger period (2003–2005) was 0.7% while the average increase in operating income in the post-merger period (2008–2010) was 1.5%.