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The proposed merger of AT&T and BellSouth could help to expedite and streamline operations at the companies mobile communications joint venture, Cingular Wireless, and potentially create new business opportunities for the firm, industry experts said.
Under the companies existing makeup, AT&T already had the majority share in Cingular, with 60 percent, giving it voting power in any decisions involving the boards of directors.
But ownership will simplify operations and help customers to integrate their wired and wireless services among other advantages, company officials said.
“This streamlines the management structure in terms of the way we respond to our owners,” said Mark Siegel, a spokesman for Cingular in Atlanta.
“Right now, each company has its own board and then there is a separate board that governs the joint venture,” Siegel said. “Now it will just be part of one company, with one set of share owners, and thats going to make decisions a whole lot easier.”
In terms of doing business with the wireless carrier, which boasts an estimated 54 million customers today, Siegel said that customers will benefit from unified service operations in the short term, and the creation of new products and services down the road.
“There is work going on to provide products that integrate in a seamless way wireless and wireline,” he said. “If you are a business customer, chances are good you want to deal with one person for all of your technology needs, and with this merger youll be able to call on one person for wireline, wireless, etc.”
However, the spokesman conceded that it will be a while before customers actually have this single point of contact, as there is currently no timeframe for closing the deal and the AT&T-BellSouth marriage will likely face detailed scrutiny from industry regulators.
For the time being, Siegel said, it will be business as usual for all the involved parties. The two firms have agreed that Cingulars headquarters will remain in Atlanta regardless of the proposed mergers outcome.
Industry watchers said that beyond the issue of decreased competition as the result of watching two major telecommunications players come under one roof, customers should benefit from having Cingular managed by one integrated company, rather than being controlled by firms that compete in other areas of their businesses.
According to Phillip Redman, analyst with Gartner, it makes sense for AT&T and BellSouth to pursue their merger right now because both firms are already going through major transitions.
AT&Ts current operations were formed through the $16 billion buyout of its former parent, AT&T Corp., by SBC Communications in 2005, while Cingular has absorbed the firms AT&T Wireless division, acquired by BellSouth and SBC, for roughly $32 billion in 2004.
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“I was surprised more by the timing of the deal than by the scope of it, based on all the work already being done by these companies to integrate their acquisitions,” Redman said.
“But, when you look at the whole thing it made sense to do it now in terms of reorganizing once, rather than multiple times down the road.”
Redman said that business customers should expect to see Cingulars prices stabilize and perhaps even go up over the next several years, rather than drop based on competition as they have for the last few years.
But he indicated that the firms increased ability to integrate wireless services with its combined parents wireline operations should present enterprises with a range of benefits.
“Eventually we will see disappearance of the existing wall between the wireless and wireline businesses, and they will begin to be sold differently in the coming years,” Redman said.
“I think its fair to say that we may not see pricing based on per-minute usage, especially in light of [Internet Protocol] technologies; the big companies, like the merged AT&T-BellSouth, will be able to look at their profit margins and find new ways to be flexible about how they sell various services.”
Redman said that the combined company should also be able to put wireless technologies on more of a “fast track” in developing converged services plans.
On a basic level, the analyst said that the merger should help boost Cingulars customer service operations, which he said have lagged somewhat notoriously in the past.
Yet Redman said that any improvement will not be realized overnight, as there will likely be a drawn-out examination of the merger by regulators who could place restrictions on how the firms begin pulling their various operations together and bringing those combined assets to bear on Cingular.
Another area where enterprise customers could stand to benefit from the tie-up is in the field of mobile business applications, according to Lisa Pierce, analyst with Forrester Research.
Pierce said that AT&T has been working hard to refine its own wireless applications strategy, which she expects to filter down into Cingulars operations over time.
“AT&T has been planning some pretty big things on the enterprise side, so, certainly the idea of becoming more integrated from the top down in terms of supporting wireless business services sounds beneficial, especially in terms of providing extensions for mobile ERP or CRM tools,” said Pierce.
“The combined companys ability to manage customers across a variety of delivery options, especially wireless, is very important; no one has a lock on that right now.”
The greatest benefit of the deal for enterprises will come from the firms ability to blend wireless and wireless services she said, as that is where customers are pushing the carriers hardest.
Whereas Cingulars marketing story was less clear than its rivals in the past, the analyst said the company will now have a very strong message if the deal is approved.
“Business customers love the idea of tighter synergy between fixed and mobile,” Pierce said.
“You have Sprint who has that down, and have Verizon that has struggled to integrate with wireless; now Cingular is no longer in the sort of weird place theyve been in for the last several years, and legacy AT&T customers will be exposed to greater wireless expertise.”