Huge deal complicates industry's outlook

Article Abstract:

AT&T's acquisition of McCaw Cellular Communications will have manifold implications for the telecommunications industry. The two companies' stockholders will of course benefit. Likely losers include the regional Bell telephone companies, who will face an even more formidable competitor in the cellular services market once industry-leader McCaw is endowed with AT&T's deep pockets. AT&T is also likely to bypass the Baby Bells' local exchanges by directly linking its long-distance network to McCaw's local cellular one. Southwestern Bell may find an AT&T-controlled McCaw withdrawing from their Cellular One joint venture. Lin Broadcasting investors could profit now that McCaw has the resources to complete its acquisition of the company. Qualcomm may see AT&T-McCaw licensing its code division's multiple access technology, something McCaw alone resisted. Investors should beware its overpriced stock, however. Equipment vendor L.M. Ericsson will lose business from McCaw, but gain current AT&T customers for its cellular switches.

Radio & TV communications equipment, Finance, Telecommunications services industry, Telecommunications industry, Joint ventures, Market share, SBC, QUALCOMM Inc., Telefonaktiebolaget LM Ericsson, Regional Bell Operating Companies, Forecasting, Southwestern Bell Corp., Financial Analysis Software, Industry Analysis, Competition, Bell Regional Holding Companies, LIN Broadcasting Corp., LINB

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A.T.& T. plans to buy McCaw Cellular stake

Article Abstract:

McCaw Cellular Communications Inc is negotiating the sale of one-third of its stock to AT&T in an attempt to form an alliance with the largest long-distance carrier in the US. McCaw is the largest carrier of cellular communications in the US. The $3.8 billion purchase would be partly of super-voting stock, which would come from British Telecommunications PLC. This stock is not publicly traded and is apportioned 10 votes for every share, giving AT&T great control over McCaw with only a minority stake. Despite this measure of control, AT&T does not plan to change McCaw's management or take an operational role. Through the deal, McCaw would gain access to AT&T research into personal communications technology, a growth area in cellular communications. For its part, AT&T effectively would be able to sell its services direct to the public, with only McCaw as an intermediary, instead of losing a proportion of income to local telephone companies, with whom AT&T is barred from competing.

Cellular telephone services industry, Cellular telephone services, Telephone companies, British Telecommunications PLC, Strategic Planning, Telephone Company

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