News Analysis: Analysts weigh the strategy and potential effects of the high-profile merger.
Within minutes of final FCC approval of the merger between telecom giants AT&T and BellSouth, the wheels of change began turning to create a 22-state communications company that takes a big step in reassembling the old Ma Bell of decades past. The huge telecom monopoly broken up by federal edict years ago was again starting to stir.
But the world today is vastly different the one inhabited by the AT&T of yore. Todays biggest prize is Americas biggest wireless carrier, Cingular Wireless, until this week a joint property of AT&T and BellSouth. Now its completely owned by AT&T, and will soon be identified as such.
Of course theres a lot more to such a merger than a wireless company, despite the importance of Cingular. There are millions of wire line customers, a vast switching infrastructure, long distance services, and a wide variety of business services. For company owners, the overall picture is what matters. But still, wireless service was the biggest part of the big picture.
"The principle reason for the merger was to have complete control over Cingular," said Dave Passmore, research director of the Burton Group. Passmore said that AT&T is looking toward the future, getting ready to provide tomorrows offerings when theyre needed.
"More and more communications was going wireless, and the ability to sell service bundles to the enterprise, including a wireless component, was critically important to AT&T," Passmore said. "I think the valuation of BellSouth reflected as much the valuation of Cingular as anything else," he added.
Passmore said that a key strategy will be to offer bundled services to business customers that couldnt be offered in the past.
"What I think it means is that enterprises will now see greater bundling from AT&T with wireless and wire line," Passmore said. "They couldnt do that before. They want to eliminate the Cingular brand and sell those services under the AT&T moniker."
Click here to read more about Cingulars integration of AT&T technology.
However, theres a lot more to a telecom company than even wireless and wire line services.
"What were now able to offer with this combined Cingular and AT&T includes wire line, long distance, Internet, broadband, data networking, and now a complete portfolio of wireless voice and data services," said AT&T vice president of business marketing John Regan.
"Were now able to leverage the assets from AT&T such as the global IP network and security and hosting services and bring in more integrated play as it relates to wireless and wire line services," Regan said.
Regan said that while its too early to know exactly what new business offerings AT&T will have, hes certain that it will include integrated management portfolios for products such as managed security, remote backup and storage, and wired-wireless integration. "Well look to expand that because Cingular is now part of the family," Regan said.
Regan said that for businesses, integration is key. "Youll see even tighter integration. Were able today to offer a bundled solution in a single bill at a single price point," he said.
He said that in addition to offering new integrated services, AT&T is planning to continue its global communications offerings, where the company is already a major player. He said that while AT&T already offers services in every state in the United States, itll be able to do even more in states where it is resident, meaning in places where the company provides the landline and wireless services in addition.
Business as usual.