AT&T and BellSouth held an investor call this morning to spell out more details surrounding their major merger. (Replay and slides are here.) It’s clear that AT&T is confident in the cost-savings and strategic positioning that will flow from the deal.
“I’m very confident our integration will go smoothly and our merger will be a big success starting day one,” AT&T CEO Ed Whitacre said. “The merger we’ve announced today is a very logical next step.”
The following are some of the key points raised during the call:
—The new combined company, which will bring together three existing companies and brands – AT&T, BellSouth and Cingular – will carry the AT&T name. The unified branding, in fact, is one of the big benefits the companies say will result from the merger.
—The purchase price represents a 17.9% premium to BellSouth stock holders. With debt carried by BellSouth thrown in, the actual cost of the purchase is $89.4 billion.
—AT&T’s board has approved a 400 million share, $10 billion stock buy-back program that will take place over the next 22 months. The $10 billion will be used to pay the premium paid to BellSouth’s stock holders in the all-stock transaction.
—More than 90% of the synergies comes from operational and capital cost savings, with 50% of operational savings come from reduced headcount. AT&T plans a nearly 10,000 incremental force reduction from 2007 to 2009 - job cuts that are above and beyond what the two companies were planning anyway.
—AT&T doesn’t anticipate any regulatory hurdles on the federal or state level, although it does expect five state reviews, as well other reviews related to long distance. With no expected government objections, the companies expect the transaction to close in 12 months.
—Given that BellSouth has been on a parallel track to build out fiber-to-the-curb technology, AT&T thinks it would be relatively easy to expand its Project Lightspeed video-over-VDSL initiative to BellSouth’s territories.
Cynthia Brumfield at 9:49 AM|Comments(0)
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