Reasons for the M & A between AT & T and BellSouth Corporation

The M&A between AT & T and the BellSouth Corporation was motivated by several reasons. Martin (Martin, 2004) points out that the merger was expected to strengthen Singular wireless under the unified ownership, as well as under a single brand. Before the merger, BellSouth owned 40 per cent of Cingular Wireless. The merger would bring together the Cingular, AT & T, and BellSouth networks. This would offer a wide range of advanced solutions In addition, the merger was expected to create a more efficient and effective provider in video, broadband, wireless data and voice markets.

DePamphilis (DePamphilis, 2008) states that merging the companies aimed a streamlining the operations and ownership of the Cingular wireless, which they both owned jointly. This would ensure that the new company would be able to become efficient, nimble, and more innovative so as to increase its benefits to its customers.

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Furthermore, the merger would create a substantial value for the two companies’ stock holders and customers. This was meant to expand the company’s service capabilities and benefit customers by providing them with new services.

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Because the two companies were well run before the merger, they were considered to have strengths that would ensure they succeeded. Some of the strengths that BellSouth was considered to have included, an outstanding network, a deeply deployed fiber optic in its service area, and great and well performing employees. AT & T strengths would be complimented by those of BellSouth Corporation. This was expected to enable the new company to have its ability to provide more customers with innovate services improved, to improve the company’s profile, and to return substantial value to its customers.

The merger was anticipated to enable the new company to gain better capability in order to take advantage of tremendous opportunities shaped by convergence and technology changes. According to the Pre-merger Bellsouth Corporation Newsroom (bellsouth. mediaroom. com. Accessed on March 21, 2009), the new company would focus on offering businesses and consumers with innovative, great, and competitively priced services and products. By bringing together AT & T entry into IPTV and extensive fiber networks deployment by BellSouth, the consumers would be provided with an alternative to cable monopolies.

The financial performance of the company was expected to improve after the merger. This is because; three companies who were operating independently and separately would function as one entity. By having Cingular wire less, BellSouth, and AT & T come together; the synergies were expected to reach a $2 billion annual run rate in the second year after closing. Furthermore, the present value of the synergies expected after the merger would be $18 billion. According to Conyon et al (Conyon et al, 2002), one reason for this is due to the reduction in costs of operations and corporate staff expenditure.

The consolidation of operations and facilities would result to a single IP network. Expected reduction on branding and advertising expenses, and combining staff functions would reduce the costs of operation. The AT & T Inc. could then be able to increase revenues, reduce expenditure, improve AT & T overall growth, and free cash flow from the new company dividends. The expansion of the new company services after the merger was promoted by the need to provide broad base access to an estimated 10 million people, wireless services to 54.

1million customers, and landline service to about 70 million customers. The extent to which the M & A of AT & T Inc. and BellSouth was a success One way through which the merger of the companies succeeded is in streamlining the ownership as well as the operations of Cingular wireless. The aim of the merger was to bring Cingular wireless which both companies owned jointly under one entity and brand name. The merger succeeded in bringing together the AT & T, BellSouth, and Cingular wireless networks into one fully integrated wire line, wireless, and internet protocol network.

This has also succeeded in strengthening the services provided by AT & T Inc. Since the merger took place in 2006, technological changes have continued to be witnessed all over the world. As asserted by Cartright et al (Cartwright et al, 2006), these changes have demanded that companies take advantage of opportunities that are provided by these changes. Furthermore, the only way through which companies can compete favorably with others is by having a competitive advantage over other rival companies. The merger of the two companies into AT & T Inc.

has provided the company with an opportunity to take advantage of the opportunities resulting from technological changes. For instance, the BellSouth’s extensive fiber networks deployment and the great research and development in the AT & T labs have ensured customers benefit from innovation and expertise of the AT & T labs. This has enabled the merged company to introduce new and improved services and products to its customers. The removal of pay phones and AT & T’s deployment of over 20,000 internet hotspots in the US was attributed to the company’s ability to embrace new technology.

The success of the company in embracing new technology had the company honored during the Technology and Engineering Emmy Awards in 2008. The company was acknowledged for developing coaxial cable technology and keeping a large number of customers connected. In efforts to integrate the new company’s IP products into a single IP network, the AT & T Inc. has managed to move towards the convergence of three screens that are relied on by the consumers. The company can now provide computer, television and wireless devices service.

An increased financial return as a result of the merger has been witnessed in the new company. According to Stallings (Stallings, 2004), mergers are expected to yield good benefits for the companies’ stockholders. This has been achieved by the company due to reduced operation costs. Network and IT operations have improved the productivity of the company and has increased savings. Before the merger, the companies supported their brands through separate advertising campaigns. However, the merger has brought all products advertising under advertising campaign within AT & T Inc.

Updated: Apr 13, 2021

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Reasons for the M & A between AT & T and BellSouth Corporation. (2020, Jun 02). Retrieved from

Reasons for the M & A between AT & T and BellSouth Corporation essay
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