SBC in talks to buy AT&T for $15 billion-plus

SBC Communications Inc., the second-largest US regional phone company, is in talks to buy former parent AT&T Corp. for $15 billion or more, The New York Times and Wall Street Journal reported yesterday.

The talks, which the Times said executives described as "fluid" and "very, very sensitive," would re-unite SBC - a Baby Bell with some 50 million local-line customers - with its much-diminished former parent.

The paper put the value of the potential deal at more than $16 billion, a premium of at least nine per cent to AT&T's current value.

The Journal, citing people familiar with the negotiations, said executives of both companies had met intermittently for the past few weeks to discuss a possible combination, which would likely cost SBC well over $15 billion. Executives of both companies were holding talks last night by phone and in person, but no final decisions have been made, the Journal said.

The Times said the executives cautioned the talks could very well collapse. Many issues, including a final price, had yet to be resolved, it said.

AT&T and SBC could not immediately be reached for comment. The news comes after a rough year for fourth-ranked AT&T, which cut 14,000 jobs and wrote down its assets by $11.4 billion in 2004 in the face of competition from the Baby Bells.

SBC, by contrast, is on the rise after its Cingular Wireless joint venture paid $41 billion last October to take over AT&T Wireless and become the largest US wireless service company. SBC owns 60 per cent of Cingular, with BellSouth Corp. owning the remainder.

People close to the situation say Atlanta-based BellSouth is also evaluating its options, including possible deals with AT&T and MCI Inc. or others, the Journal said.