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AT&T Corp is preparing to take a radical tack in the way it does business by franchising its name and network for the first time to selected local and wireless carriers, according to the Wall Street Journal. The chosen affiliates would receive wireless licenses from AT&T and market services in their area under the AT&T name. In turn, AT&T would take minority stakes in the affiliates (of about 20%) with a view toward acquiring them later. Another key element of the new business plan, which is being presented to the company’s board on Friday by chief operating officer John Zeglis, is to focus most of the company’s marketing activity on the 20% of the population that spend the most money on telecommunications services. In an effort to become an all distance company, AT&T will implement a pricing plan for these valued customers based on the volume of calls they make rather than the distance they travel. The franchising initiative is expected to help the company reduce its capital spending from $9bn or $10bn to about $7bn and should help in the effort to reduce costs by $2.6bn by next year. Basically, the strategy would allow AT&T to use other people’s money to enter new markets. It’s estimated that otherwise it would cost about $30bn to build its own local and wireless networks. The new direction proposal, and how well it is accepted by the board, should also go a long way in determining if Zeglis can garner the support necessary to be named to succeed Robert Allen as chief executive. He has recently emerged as one of the frontrunners for the position. AT&T would not comment on any strategy change and stressed that it did not comment for the Journal story. A spokesperson would not confirm that any sort of proposal would be made at the regularly-scheduled board meeting.

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CBR Staff Writer

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