The reported merger talks between long-distance company AT&T Corp and regional Bell SEC Communications Inc are now reported to have been cancelled. The headline grabbing possible deal, thought to have been worth around $50bn, when it was first reported by the Wall Street Journal in May has now been canned, according to the same paper. From when the story broke in May to the news of its termination neither company would confirm that any talks had taken place. In the meantime, AT&T chairman Robert Allen made a thinly veiled speech for consideration of such a deal ? which had already provoked a good deal of resistance and disbelief across the US telecoms industry. His speech was countered by reply from chairman of the FCC Reed Hundt who also without mentioning any AT&T/SBC deal specifically said that such a merger was unthinkable. With reports that a deal that was never confirmed has been killed the whole parade starts to take a different look. Either both companies were genuinely out of touch about how regulatory and the US telecoms industry in general would react to such a deal or both were just looking to test the water or gain competitive advantage about how the other company was preparing to enter the others key market. Both companies have different reasons for why the talks ended. According to the Wall Street Journal, SBC officials were enraged by Allen’s speech and subsequent letter to the Journal in which he maintained that AT&T would merger with a local telecom company to open up the local telecoms market ? something that the Baby Bells were working to prevent, he said, naming SBC-owned Pacific Telecom. AT&T sources, however, say that SBC quit rather than hand over to AT&T its plans to open up its network, which AT&T had made an important part of any negotiations. If SBC had given such a plan to AT&T it would have exposed the competitive posture of what could be its most formidable rival in the future. The deal was apparently initiated by SBC and ended by them as well. SBC chairman Whitacre placed a let’s-end-it call to AT&T Chairman Robert Allen last Thursday with both companies informing their respective boards on Friday.
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