AT&T To Buy BellSouth For $67 Billion

(CBS/AP)  AT&T Inc. is buying BellSouth Corp. for $67 billion in stock in a bid that further consolidates the telecommunications industry and would give AT&T total control of their growing joint venture, Cingular Wireless LLC.

The proposed purchase, announced Sunday, also goes a long way toward resurrecting the old Ma Bell telephone system, which was broken apart in 1984.

The merged company would have 70 million local-line phone customers and nearly 10 million broadband subscribers in the 22 states where they now operate. The deal appears to be the largest yet among U.S. telecom players.

In 1999, MCI WorldCom Inc. agreed to buy Sprint Corp. for an even larger sum, $115 billion, but that deal was blocked by federal regulators. Internationally, Britain's Vodafone Airtouch PLC paid $180 billion in stock for Mannesmann AG of Germany in 2000.

The sale, which is subject to regulatory and shareholder approvals, would give San Antonio-based AT&T total control over Atlanta-based BellSouth's nine-state network and its share of Cingular. AT&T currently owns a 60 percent share of the nation's No. 1 cell phone provider, while BellSouth has 40 percent.

The deal would substantially expand the reach of AT&T, already the country's largest telecommunications company by the number of customers served.

Together, the three companies employ more than 316,000 people, though that head count may fall as AT&T eliminates redundant operations.

After spending millions of dollars to rebrand AT&T Wireless Services Inc. stores as Cingular stores and hundreds of millions of dollars more on marketing the new Cingular after its $41 billion acquisition of AT&T Wireless in October 2004, Cingular will now become AT&T if the merger with BellSouth is completed.

The BellSouth name also would be absorbed in the deal.

"It's going to be confusing," said industry analyst Jeff Kagan. "This is the reinvention of the telecommunications industry."

CBS News correspondent Bianca Solorzano reports if the deal is approved, only three survivors of the AT&T breakup will remain. That could force more mergers, such as between Verizon and Qwest, if they are to have any chance to stay in the phone game.

AT&T will pay 1.325 of its own shares for each BellSouth share. Based of Friday's closing price of $27.99 for AT&T shares, that works out to be $37.09 for each BellSouth share, an 18 percent premium from the Friday closing price of $31.46 for the company.

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