The acquisition of AT&T comes as a shot in the arm for SBC giving it a global footprint. It also acts as a symbolic reminder of the failed deregulation in the telecom industry.
History was rewritten on January 31, 2005 when SBC popularly known as Baby Bell acquired Ma Bell, AT&T in a $16 bn deal, thus, ending the legacy of AT&T which dominated the American telecom landscape for over a century. Ironically, SBC along with six other baby bells came into existence as a result of break up of AT&T in 1984. The cycle thus comes full circle for AT&T with the merger creating the largest US Telecommunications company.
The deal reflects the future of the rapidly changing US telecom industry, which is witnessing rapid consolidation and fast changing rules that will guide the future of communications. While the retail markets have become highly competitive with strong local players and other non-core players entering the market segment, the attention has shifted to enterprise customers who are more profitable.
The year 1984 holds historical importance for the US telecom industry as that was the year in which the giant AT&T was split into seven baby bells to create a market with diverse and competing players so as to give more choices and services to the customers. AT&T believing that convergence would be the key to growth tried to become a one-stop solution for all the services and for this reason acquired NCR (computers) for $7.4 bn in 1991, McCaw Cellular in 1994, the cable giant TCI in 1999, MediaOne in 2000, but ended up spinning or selling off all these assets as they failed to improve its business and eroded its profitability. |
