Today's AT&T's announcement to acquire BellSouth didn't come as a surprise, but a few numbers are just mind-boggling:
- 67 as in $67B price tag for BellSouth, nearly 7 times Wall Street's 2006
cash-flow forecasts, an 18% premium that AT&T is offering for each BellSouth
share. - 1600 as in $1,600 paid for each BellSouth's subscriber: 7.2M long distance, 9.9M local, 2.9M DSL, 22M wireless (40% of Cingular's 54M users).
- 310,000 as the number of employees who will work for the combined company if
the deal is approved. Tough times ahead if DT's negotiations are of any indication. - 130 as in $130B in annual sales for the new AT&T (Verizon Communications clicks at $75B), BellSouth's profits fell over 30% last year. AT&T will now be in the Top 10 Global 500. NTT, the second telecom company in the list, barely makes the top 20.
- 10 as in the 10th anniversary of the 1996 telecom act. 11 as the number of occurences of the word "Internet" in the actual text to compare to the 284 (broadcast) "Television"s. No mention of IP TV or VoIP.
- 22 as in the 22nd anniversary of the AT&T break-up. The purchase of BellSouth would recombine the former "Ma Bell" with four of the seven original Baby Bells regional telephone companies. Verizon is certainly looking at Qwest and Alltel to stay in the game.
Some of the $2-3B/year savings will come from data center consolidation.
AT&T and BellSouth together will need to integrate and manage the identities of 70M local, 30M long-distance, 10M broadband and 54M wireless customers on a convergent IP network. "Technology changes and convergence are shaping a new competitive dynamic and creating tremendous opportunity", said Duane Ackerman, chairman and CEO of BellSouth. AT&T is now creating a serious rival to the cable operators with the 10M broadband users (and the 54M Cingular subs) who could pay for TV services. That's a lot of eyeballs for content owners and advertisers.
As the newly combined telco giant is integrating networks and services, the billing, CRM and other OSS/BSS applications are going to require some significant re-architecturing to support subscribers and services. SBC and Cingular have been participating to OSS/J projects to integrate off-the-shelf software they bought overtime. More on how OSS/J can reduce Capex and Opex for carriers.
Finally, AT&T will apply a lot of its weight to the discussion of net neutrality.
AT&T is vehemently debating over the future of the Internet, and along with Verizon, wants to create a "toll lane" on the Internet, in effect charging content providers like Google extra for guaranteed service. Ed Whitacre (AT&T CEO) drew attention last year when he told Business Week magazine that "for a Google or a Yahoo or anybody to expect to use these pipes for free is nuts". There's a lot of room for participation here...
