On Sunday, March 5, AT&T announced its intent to acquire BellSouth for $67 billion. According to Marketwatch.com's article, AT&T to pay $67 billion for BellSouth, the combined company will become "the largest phone company." It will have "70 million local phone customers, 10 million broadband users and more than 300,000 employees."
Big doesn't mean bad, though. Indeed, from an antitrust perspective, this isn't a terribly interesting deal. There is no geographic overlap between the parties in the market for local phone service. AT&T and BellSouth both offer wireless service, but they do it through Cingular, a joint venture in which AT&T owns a 60 percent interest. Because AT&T's majority ownership interest effectively gives it control of Cingular for antitrust purposes, AT&T's acquisition of the remaining 40 percent has no competitive significance.
Other factors militate in favor of relatively quick antitrust approval. The DOJ and FCC recently investigated and approved other deals in the telecommunications sector including SBC's acquisition of AT&T and Verizon's acquisition of MCI. Thus, the agencies should have a lot of current information about the relevant markets and how they operate.
In addition, the telecommunications market is vastly different from the days of the old AT&T. Today, cable companies compete against the SBC's and BellSouth's of the world to offer consumers local and long distance telephone service and Internet access. You have VOIP companies like Vonage competing in the telephone service market. And, you can't forget feisty, aggressive competitors like Verizon.
The only possible competitive overlap that might raise some competitive concerns is in the market for enterprise customers. It's possible that either the DOJ or the FCC could require some relief, e.g., divesting some lines, but it's doubtful that that alone would derail this deal.
