Is SBC destined to acquire BellSouth?

Steve Rosenbush

A new report by telecom analysts The Precursor Group suggests that telecom giant SBC may trie to acquire BellSouth shortly after SBC closes its acquisition of AT&T. The deal is expected to close by the end of this year.

The report, which is available only to subscribers, says SBC is bound to run into conflicts with BellSouth after the AT&T closes, and that acquiring BellSouth is the easiest way to resolve them. SBC and BellSouth are partners in the wireless venture Cingular. SBC will find itself competing with partner BellSouth once it owns AT&T, because AT&T operates in BellSouth's territory.

The idea of bears some similarity to Sprint's recent buyouts of small partners that stood in the way of its merger with Nextel.

It makes strategic sense, and it would give SBC significantly more scale and scope than its eastern-based rival, Verizon. In fact, it's not clear that Verizon would stand by and let SBC acquire BellSouth. Industry sources have long suggested that Verizon might be interested in making its own run at BellSouth.

In either event, a deal would help resolve questions about how BellSouth plans to compete on its own in the face of ever-larger rivals. The answer: It doesn't have to.

Before it's here, it's on the Bloomberg Terminal.