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Sridhar Krishnaswami

Washington , Jan. 31

SBC Communications Inc will be buying out its former parent, AT&T Corp, for some $16 billion (Rs 6,700 crore), thereby paving the way for one of the nation's largest telephone companies.

The formal decision was arrived at during late Sunday night meetings between SBC and AT&T, with the latter's approval from its Board of Directors expected this morning.

The acquisition is still subject to regulatory and shareholder approvals and this is expected by the first half of 2006.

The San Antonio-based SBC is said to have some 50 million local telephone customers, mostly in the South and in the Mid West, besides having a 60 per cent stake in Cingular Wireless that serves more than 45 million customers.

For its part AT&T had the monopoly on the nation's telephone industry before it was broken up two decades ago in 1984.

The New Jersey-based company serves nearly 30 million long distance customers and had a reported revenue of $30.5 billion in 2004.

With SBC reporting a $40.5-billion revenue last year, the AT&T-SBC combine will still fall short of the $71.28-billion reported for 2004 by Verizon Communications.

"Today's agreement is a huge step forward in our efforts to build a company that will lead American communications revolution in the 21st century," said Mr Edward Whitacre, Chief Executive of SBC, making the point that the strengths of AT&T national and global networks, and SBC's expertise and skills in local exchange service, wireless and broadband will be combined making the new company a stronger US-based global competitor.

The corporate headquarters for the combined company will remain in San Antonio.

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