AT&T's $48 Billion Acquisition of TCI Clears Major Hurdle

The U.S. antitrust enforcers have approved AT&T Corp.'s $48 billion acquisition of Tele-Communications Inc. after the companies agreed to resolve competitive concerns by requiring TCI to sell its stake in Sprint PCS over a five-year period. This decision clears a significant hurdle for the merger, which must now be approved by the Federal Communications Commission. The settlement will ensure that the acquisition will not blunt the move towards a more competitive market in wireless services, according to Justice Department antitrust chief Joel Klein.

Key Takeaways:

• The Justice Department required TCI to sell its 23.5 percent stake in the Sprint PCS joint venture with Sprint Corp. to resolve competitive concerns about the AT&T-TCI merger.
• The settlement requires TCI to transfer the Sprint PCS stock to an independent trustee, who will have about five years to sell the stake.
• Measures have been put in place to promote competition between AT&T and Sprint pending complete divestiture of the Sprint PCS stock.
• AT&T hopes to complete the stock deal by summer, according to company spokesman Burke Stinson.
• The merger was announced in June and requires approval from the Federal Communications Commission.
• The tie-up would create the largest cable company in the country, pairing AT&T with TCI's 25 million subscribers.

Statistics:

• $48 billion: The value of the AT&T Corp.'s acquisition of Tele-Communications Inc.
• 23.5 percent: The stake in Sprint PCS that TCI is required to sell as a condition of the merger.
• 5 years: The period during which TCI must sell its stake in Sprint PCS.
• 25 million: The number of subscribers that TCI has.
• 18 3/4 cents: The amount by which TCI shares fell.

Sources:

• Francesca Leymann, Reuters, 1999 ("AT&T clears significant hurdle in TCI deal", no date mentioned)
• AP News, June 1999 (announcement of the merger)