Saturday, January 29, 2005

Ma Bell to be adopted!

No surprise to anyone following the sector, but SBC's reported bid to buy AT&T (T) is a symbolic undoing of the '84 breakup forced by trust-busters. The big crunch theory on how the universe will end may be real after all!

I have been a AT&T buyer in the last few months, especially after the yield crossed the mouth-watering threshold recently. It has been a takeover target all along, which was my initial reason for buying. At its recent closing of $19.7/share, it is now 22% above my average cost of $16.4/share. The final offer may be in the mid-twenties.

While Verizon sat on the sidelines during the Sprint/Nextel merger, it now has a chance to respond, by either outbidding SBC or going after the only other business-customer heavy player, MCI (MCIP). I own a few of MCI, added as a buyout and dividend play.

A few other mergers will happen in the next couple of years. A SBC - BellSouth combination has been talked about a few times in the past; they already jointly own Cingular wireless.

Someone will go after the remaining smaller/rural players like Qwest (Q), Rural Cellular (RCCC), Talk America (TALK), Dobson Cellular (DCEL) and Centennial Communications (CYCL). I own a few of Qwest, and waiting for a good pullback on the others.


At 6:42 PM, Blogger Jason said...

It seems almost unthinkable. It'll be hard to imagine Spaceship Earth at Disney's Epcot sponsored by SBC. If they're smart, SBC will adopt the AT&T identity, which is far more global and trusted around the world than SBC.

Great blog, btw :-)


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