Excerpts: “AT&T Makes Local Phone Play with $48B Merger.”

  • Since his first days on the job in November, AT&T chairman Michael Armstrong apparently wanted to partner with TCI chairman and CEO John Malone.
  • Malone — whose sights will shift to control of Liberty Media Group and TCI Ventures Group — vowed that this merger won’t crash and burn, like his 1993 deal to sell TCI to Bell Atlantic Corp.
  • Malone will leave TCI having extracted $5.5 billion in tax-free cash from AT&T for his new deal vehicle: a combined Liberty Media Group and TCI Ventures Group, under the Liberty name. That comes from Ventures selling to AT&T its controlling stake in @Home Network, the National Digital Television Center and Western Tele-Communications Inc. ($2.5 billion); and AT&T’s own stock, which will come when an earlier deal to sell Teleport Communications Group closes ($3 billion).
  • Under the merger plan, Hindery would become president and COO of the planned AT&T Consumer Services Co., serving under current AT&T president and COO John Zeglis.
  • That company will be separated from the”wholesale” network-services operation, which serves business customers, by means of a new tracking stock.
  • As Malone said last week, Armstrong, who was chairman and CEO of General Motors Corp.’s Hughes Electronics Corp. subsidiary, is probably “the guy that, next to me, knows [the most] about tracking stocks and their appropriate use for shareholder value.”

Source: Multichannel News