BellSouth – AT&T Merger Talks Fail

Yesterday I discussed a little about how wired telcos are suffering under increased pressure from VoIP, cable operators, cellular, and straight-up competition. I singled out AT&T as a carrier that should not have divested its wireless arm, which has a promising future. To continue on that topic, BellSouth has recently walked away from merger discussions with AT&T. Actually, it wasn’t so much of a merger as BellSouth buying the nations oldest and most venerable telco. That twist may surprise some, but it gets worse: the reason BellSouth walked away is that it thinks AT&T is asking too much $$ for itself. BellSouth figures, why buy now when the stock price is in steady decline. We may or may not see these talks re-ignite in the future, but for now AT&T is suitor-free. It’s ironic to think of how things have changed since the government forced the breakup of AT&T: who knew at that time that the profits of Long Distance business would erode, and that owning the last mile would prove to have more enduring value (I bet some sages predicted this). We never expect spinoffs to do so well: Joanie Loves Chachi never measured up to Happy Days, yet the Baby Bells have outshined their parent.

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