It now seems likely that SBC, one of the biggest US local telcos, will mount a US$16bn takeover of AT&T, the once monolithic US flag carrier. AT&T's inexorable demise has been charted, we must claim, with a certain knowing immodesty, by TelecomRedux (click here or here for past reports from October 2004 and January 2005 respectively). If 'Ma Bell' falls to one of her 'Baby Bells', it will be the most Oedipal takeover in the history of modern capitalism.

Basket case?
Shorn of its mobile arm, following the demerger of AT&T Wireless in 2001 and its subsequent takeover by Cingular Wireless (owned by SBC and BellSouth) in November last year, 'rump' AT&T is today not much more than one among many in the domestic long-distance and international telecom markets and a well-established player in the corporate account field. In the latter context, AT&T remains a 'conservative' choice for 'Corporate America' — much like IBM in the field of IT services. Nobody ever got fired… etc.

As if to confirm this, just yesterday AT&T clinched a contract worth up to nearly US$5bn over four years with the Tennessee Army National Guard. “When we combine the security and reliability of our network with the AT&T BusinessDirect portal, we’re a very formidable competitor”, said Lou Addeo, president of AT&T Government Solutions; “we’re very pleased the Tennessee Army National Guard has entrusted us to build this network.”

Whether this sort of business justifies AT&T's market capitalisation, which stood at US$15.2bn at the beginning of this year, is a moot point. If, as suspected, it's not, then even the diehards among AT&T shareholders are likely to take the money and run. AT&T has acted the role of a classical 'widows and orphans' stock that many of the widows are no longer with us and the orphans have grown up sufficiently to produce orphans of their own.

Architect of its own demise
It might have escaped your notice that Philip Johnson, the architect responsible for the iconic AT&T headquarters building in Manhattan, passed away on Tuesday of this week, aged 98. Now it appears that the equally iconic AT&T, aged 120, is unlikely to outlive its chosen building partner by long.
Jim Chalmers