SBC (US)


Following its acquisition of AT&T, SBC Communications adopted the AT&T name in November 2005. The SBC regional brand was phased out in early 2006. 

The Southwestern Bell Company was created in 1984 as one of the seven Baby Bell telephone companies spun out of America's original telecoms giant AT&T. Like its six counterparts around the country it took control of AT&T's fixed-line, directory publishing and fledgling cellular services in its local market, defined as the five southwestern states of Arkansas, Kansas, Missouri, Oklahoma and Texas. For long-distance calls it was able to link in to AT&T's national backbone. 

In 1990, Edward Whitacre was appointed as CEO and he began a steady strategy of expanding the range of the business. The same year, Southwestern Bell was the first Baby Bell to dip its toes into the international arena, acquiring a small stake in Telmex of Mexico, that country's dominant telecoms provider. In 1994 the company shortened its name to SBC although it continued to operate services under the Southwestern Bell brand. Two years later, following deregulation of the US industry, SBC began extending its footprint into neighbouring states. It bought Pacific Telesis Group, the parent of Pacific Bell and Nevada Bell, in 1997. In 1998 it acquired Southern New England Telecommunications Corporation (SNET) as well as a founding stake in French telecom start-up Cegetel. Also that year it made a first effort to break into the long-distance market with a small stake in Williams Communications. Later, the group launched a mammoth $62bn bid to merge with Ameritech, another former Baby Bell and the local provider for Illinois, Indiana, Michigan, Ohio and Wisconsin. Following completion in 1999 each of these add-on businesses continued to trade under its own brandname. 

In 2000, SBC agreed a partnership with BellSouth, the former Baby Bell serving Florida, Georgia, Alabama, Kentucky and other markets, to merge their respective wireless interests to create a single operator, which began operations at the start of 2001 under the new name of Cingular. Also in 2000 SBC merged its existing internet subsidiaries with those of Prodigy Communications, the now ailing pioneer of online communications, in return for a 40% shareholding. Launched in 1984 as a joint venture between IBM, Sears and CBS, Prodigy had become the country's #1 ISP by 1992, but over the following years was rapidly eclipsed by AOL and Compuserve. In 2001 SBC acquired the remaining 60% shareholding in Prodigy. The same year it agreed a partnership with Yahoo to market broadband DSL internet connections. That partnership was widened to include standard dial-up in 2003.

At the same time, to counter fierce competitive pressure in local phone service, SBC pushed aggressively into long-distance communications, expanding its offer to customers in its core markets to include direct national connections, as opposed to routing these calls through another supplier. In the two years to 2004, the group more than tripled the number of long-distance lines to almost 21m.

In 2003 the group was rumoured to be exploring the possibility of a bid for DirecTV. That offer never materialized and instead SBC agreed an alliance with rival EchoStar at the end of the year. In 2004 the group won a short bidding war to acquire the country's #3 provider, AT&T Wireless, for $41bn in cash and $6bn of debt. That purchase catapulted Cingular into a position as the #1 mobile service by customers with around 46m subscribers and revenues of more than $32bn. The deal was completed in October 2004. However, as a regional operator, SBC's profile among corporate customers was weak. As a result, towards the end of 2004, the group opened negotiations to acquire its former parent AT&T. A deal was agreed in January 2005, under which SBC acquired AT&T for around $16bn in stock. The deal completed ahead of schedule in November 2005, and the merged business adopted the AT&T name. Subsequently, the new AT&T also bought its former partner in Cingular, BellSouth, to create a new national giant.

Prior to its capture of AT&T, SBC had already sold off almost all of its small portfolio of investments in international providers. It sold its shares in France's Cegetel to Vodafone in 2002, as well as its shares in Bell Canada. Other sales included minority holdings in Belgacom of Belgium (inherited from its acquisition of Ameritech), TDC of Denmark, Telmex of Mexico and Telkom of South Africa. 

Last full revision 23rd June 2016


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