Skip to main content

News

Search News

Topics
Date Published Between

For the Media

For media inquiries, call CWA Communications at 202-434-1168 or email comms@cwa-union.org. To read about CWA Members, Leadership or Industries, visit our About page.

SBC/Ameritech Plans to Grow, Not Downsize, with Merger

The telecommunications industry is undergoing more change, as SBC Communications announced plans to acquire Ameritech, creating what is expected to become the biggest local phone company in America with operations from California to Connecticut.

The $62 billion stock swap deal would leave just four remaining Bells out of the original seven, all born in 1984 as a result of the breakup of the old "Ma Bell," the one-time nationwide Bell System.



The SBC-Ameritech merger eclipses by some $20 billion the largest previous telecommunications acquisition - WorldCom's announced plan to take over MCI Communications Corps. It is the second-largest merger announcement in history, trailing the Travelers Group's $70 billion takeover of Citicorp.



CWA President Morton Bahr's immediate reaction: "It would be a good merger, for CWA members and for consumers," although he acknowledged that the biggest telecommunications merger in history should expect tough scrutiny from the Federal Communications Commission and the Department of Justice.



CWA Vice Presidents Ben Turn of District 6, Tony Bixler of District 9 and Jeff Rechenbach of District 4 also expressed satisfaction with the prospective merger. Rechenbach, whose district encompasses the Ameritech region and who entered into negotiations with the company the very day the plan was announced, told CWA members, "CWA's relationship with SBC has been positive in recent years, and I trust that this will open the door for similar relations here with Ameritech." He offered assurances, however, that "we will be protecting the interests of our members as we monitor this (regulatory) process very closely."



SBC's CEO, Edward E. Whitacre will run the new company, and Richard C. Notebaert, chairman of CEO and Ameritech will continue to run Ameritech in its home territories. Both pledged that no layoffs would result from the merger.



SBC's announcement, in fact, indicated that "the total number of employees is expected to rise over the next few years," as the company increases not only its existing lines of business but also expands into new territories and "new opportunities in data, long distance and other new services" open up.



Some viewed the SBC-Ameritech marriage announcement as just another step along a path that will be dotted with more mergers and acquisitions in the months and years ahead. Whitacre himself has said that the SBC-Ameritech deal will provide "us with a lot of financial strength we don't have otherwise. We're just not big enough to go out and take on the rest of the world....There will be four or five global players - we've seen it in the airline business, automobiles and banking. SBC wants to be one of those global players."



By the time the merger formally comes to pass, crossing several regulatory hurdles, SBC hopes to be in a position to serve customers in all the top 50 U.S. markets and increase its potential customer base to 180 million people.



The merger will produce a "national-local" synergy, allowing the new company to compete against local and long distance telecommunications companies, competitive local exchange carriers, and global competitors, the companies said in a formal announcement of the merger.



Anticipating that the merger will receive close scrutiny from regulators, the companies say they still expect the deal to close within a year.



"We recognize that we need the support of regulators for this transaction to be approved. We are committed to listening to any concerns they might have and to working with them to promptly resolve any issue," Whitacre said in a formal statement.



FCC Chairman William E. Kennard refused to "prejudge" the merger but told Mike Mills of the Washington Post: "They're going to have to demonstrate to me that this is going to result in pro-competitive benefits to the American public."



SBC, headquartered in San Antonio, Tex., now includes the old Southwestern Bell territory (Missouri, Kansas, Arkansas, Oklahoma and Texas); Pacific Telesis Group (California and Nevada), which SBC added a year ago, and Southern New England Telecommunications Corp. (Connecticut), a deal that is still pending. SNET is not a Baby Bell.



Ameritech, based in Chicago, is spread over the upper Midwest, including Ohio, Michigan, Indiana, Illinois and Wisconsin. Brands include Ameritech Pages Plus, Ameritech Internet, Ameritech Yellow Pages, Ameritech Capital Services, and Ameritech SecurityLink.



CWA represents 76,000 of 118,000 employees at SBC Communications and another 31,000 of 73,000 on the payroll at Ameritech.



Once the deal is complete, the companies plan to expand into 30 U.S. markets outside the 13-state local region, offering local, long distance, Internet and high-speed data services.



New markets for SBC will include New York, Baltimore, Washington, D.C., Boston, Atlanta, Denver, Philadelphia, Miami, Phoenix and Seattle.



CWA and SBC recently completed negotiations on a new contract and CWA and Ameritech bargaining opened May 11.