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Thursday, Sep. 3, 1998
SBC-SNET merger approved
Connecticut accepts $4.4 billion accord
By BRIGITTE GREENBERG
Associated PressNEW HAVEN, Conn. -- Connecticut regulators on Wednesday approved a $4.4 billion merger that would allow a Texas telecommunications giant to swallow the nation's oldest local phone company, even as the smaller company is wracked by labor troubles.
In acquiring Southern New England Telecommunications Corp., San Antonio-based SBC Communications Inc. gains a foothold in a region now dominated by Bell Atlantic Corp. SNET executives have said that the dominance of giant telecommunications companies forced them to look for a merger with a larger company.
SBC is the dominant local carrier in the Southwest and West Coast, operating under brand names including Southwestern Bell, Pacific Bell, Nevada Bell and Cellular One. SBC has more than 116,000 employees and reported 1997 earnings of $1.47 billion on revenues of $24.86 billion.
SBC also has struck a deal to acquire Chicago-based Ameritech, which operates in Illinois, Indiana, Ohio, Michigan and Wisconsin.
In a joint statement, SNET and SBC called the decision Wednesday by Connecticut's Department of Public Utility Control ``great news for Connecticut, for SNET customers and employees and for share owners of both companies.''
Attorney General Richard Blumenthal and officials from the state Office of Consumer Counsel had sought to block the merger, or at the very least, make the deal contingent upon rate reductions for customers. The agency did neither.
A consultant hired by the attorney general had predicted shareholders would reap more than $200 million in savings, and Blumenthal wanted those savings passed on to customers.
``Connecticut consumers were clearly shortchanged by this shortsighted, ill-advised decision,'' Blumenthal said Wednesday.
He also was concerned that SBC would discontinue SNET's newly-introduced cable television service, Americast, which currently has about 18,600 customers in select Connecticut communities. In 1996, SNET was the first business in the country to be granted a statewide cable franchise, and SNET officials said they intended to have the state completely wired for cable service by 2007.
However, SBC has previously eliminated similar cable operations in California and Texas, and state regulators declined to require that SBC maintain the cable service beyond two years after the merger.
SBC spokesman Larry Solomon would only say the company will evaluate Americast's profitability once the merger is complete.
The deal, to be done in a stock swap worth an estimated $4.4 billion, still requires approval from the Federal Communications Commission. The companies hope to win that approval by year's end.
State regulators said they would require SBC to maintain staffing levels in Connecticut. SNET employs roughly 9,000 people, and SBC has pledged to increase the number to nearly 10,000. SBC will maintain SNET's headquarters in New Haven and operate under the SNET name.
The approval came during a strike by 6,300 operators, technicians and customer service representatives against SNET. The employees with the Connecticut Union of Telephone Workers and the Communications Workers of America began picketing Aug. 23 after negotiators failed to reach an agreement on wages and health benefits. Negotiations were scheduled to resume at 2 p.m. Thursday.
CWA union organizer Russell Davis said the merger approval had been expected but the contract still must be hammered out with SNET. SBC has promised to abide by whatever pact SNET reaches with the unions. CWA represents about 75,000 SBC employees across the country.
``We are now in the process of working with other union members at SBC to pressure SNET to come back with an offer we can accept,'' Davis said. ``Our main concern is that as part of the merger agreement, there is an improvement in the labor climate. We're looking forward to a better labor environment under SBC than under SNET.''
Founded in 1898, SNET is the main provider of local phone service in Connecticut and controls about 30 percent of the state's long-distance market. Earnings last year were $192.8 million on revenues of $1.9 billion.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web