What company took over AT&T?
Originally known as American Telephone & Telegraph Corporation, or just AT&T for short, the corporation was purchased by Texas-based Southwestern Bell Corporation in 2005 and renamed AT&T Inc. Comprising $16 billion, this was among the biggest mergers in history at the time. More specifically about the agreement and the participating firms here.
AT&T History and Background
AT&T had a rich history behind it which started in 1877 by Alexander Graham Bell who invented the telephone. In the subsequent decades, the associated company which evolved into AT&T, established a more or less monopoly of telephone services within the United States. Through an antitrust case, AT&T was divested in 1984 into smaller entities known as “Baby Bells”. The Baby Bells were responsible for the local and regional telephone services, but AT&T concentrated on long-distance services, new technologies, and corporate communications.
In the subsequent two decades, AT&T Internet tried to rebuild some parts of its monopoly through mergers and acquisitions. In 2005 the company was ready again for the large merger deal this time it was facing the other end and getting acquired.
SBC Communications History
Originally one of the "Baby Bells," formed after AT&T's divestment in 1984, SBC Communications originated in Southwestern Bell Corporation. Consumers of Southwestern Bell came from Arkansas, Kansas, Missouri, Oklahoma, and Texas. The early years of the 2000s and the 1990s saw Southwestern Bell purchase the other Baby Bells under the SBC Communications moniker.
By the early 2000s, SBC had expanded greatly in scale and ranked second in the United States in terms of revenues, just behind AT&T. Closing the biggest purchase in its history, SBC paid $16 billion to buy the long-distance business AT&T Corp in 2003. SBC Company decided to keep the AT&T brand name for the combined company throughout the due course of the merger.
Specifically, in 2005 SBC acquired yet another big acquisition: $16 billion worth of former parent firm AT&T Corp. In terms of scale, this merger was the largest one in the history of telecommunication. The deal combined much of the previous AT&T monopoly and assigned SBC responsibility for AT&T's sizable business services division.
Following the deal closed SBC adopted the AT&T name and trademark and created the new AT&T Inc. The business stayed under this moniker even during later acquisitions including the 2015 purchase of DirecTV. Even now, the AT&T name dominates the telecom industry even after the original AT&T Bell system broke apart in 1984 owing to antitrust rules.
Why did SBC buy AT&T?
The several reasons SBC had for aiming to acquire AT&T in 2005 included:
1. Capture Market Share and Range – By acquiring AT&T, SBC could immediately increase it is customer base and at the same time, increase the services that it could offer. AT&T’s acquisition included over 50 million local phone lines, 38 million long-distance customers, and nearly 2 million business customers.
2. Obtain Access to More Services – SBC was mainly in local and wireless phone service before the merger. SBC saw how the acquisition of AT&T was beneficial; AT&T’s property in long-distance, broadband internet, and networking solutions expanded SBC’s service portfolio.
3. Global Infrastructure – SBC allowed it to leverage AT&T’s global fiber optic network service that was operational in over 200 countries. This infrastructure turned SBC/AT&T into more of an end-to-end, one-stop carrier.
4. Cost and Operational Synergies – SBC thought that if functions and operations were integrated with AT&T, then there would be significant long-term cost benefits and operational efficiencies. There could be direct connections through the network and one can get rid of duplicated staff/departments.
Globally the acquisition of AT&T for $16 billion in 2005 was a large check. However, it provided the former Baby Bell SBC the power to acquire the resources and facilities of one of the most significantly developed telecom companies in the world. It put AT&T Inc. at the position of the leading communications provider in the United States – a position the company has occupied to this date for nearly 20 years. Since the acquisition was first announced, the merged company has been reaping the benefits of a larger customer base and a more extensive range of services in the two decades that followed.
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