Mergers, Acquisitions and Takeovers Case Study

Mega Mergers in US Telecomm Industry

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Abstract:

Until 1984, AT&T enjoyed a government regulated monopoly in the US telecommunication industry. In 1984, AT&T was divested into Baby Bells and the industry was opened for private player participation. By 1996, both the local and long distance industry was deregulated for the players. However, in 2005 two mergers were approved by Federal Communications Commission (FCC). SBC merged with its parent company AT&T for $16 billion and Verizon merged with MCI for $8.5 billion.

This case discusses how the merged entities with the help of their synergies would control the industry. It also discusses about proposed effects of mergers on price, quality and technological up- gradation of services. The case ends with a question whether the merged entities would serve the customers as before.

Pedagogical Objectives:

• To discuss the effect of mergers and acquisitions
• To analyse the effect of merger on various factors such as price, quality and future technological up-gradations of services
• To understand the synergies created by mergers and acquisitions.

Keywords : Mega mergers; US telecommunication industry; AT&T; SBC; Verizon; MCI;Mergers,Acquisitions,Alliances Case Study; government regulated monopoly; AcTel; FCC; local calls; toll calls; LATAs; cellular and wireless services; long distance markets; internet services; Baby Bells; Edward Whitacre; Ivan Seidenberg; US Justice Department; consolidation; mergers and acquisitions; market growth; globalisation; duopoly; price inflation; competitive advantage; market share

Contents : 
The US Telecommunication Industry
Divestiture of AT&T into Baby Bells
Bell System & Its Divestiture
Rate of return vs. Capital invested
US Local Call market share distributio