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AT&T open to talks
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September 27, 2001: 4:12 p.m. ET
Nation's No.1 long distance phone provider open to consolidation talks
By Staff Writer Luisa Beltran
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NEW YORK (CNNfn) - AT&T Corp. is open to discussions with other companies regarding possible consolidation, a person familiar with the situation told CNNfn.com Thursday.
A transaction is not imminent and any deal would have to enhance shareholder value as defined by the leaders of AT&T's board, the source said.
"AT&T is talking to anyone in the industry who wants to talk," the source said.
Telecom service providers have sought out partners as their shares have plummeted. AT&T's (T: up $0.60 to $19.30, Research, Estimates) stock has dropped 45 percent from its year high of $30 but surged nearly 5 percent Thursday. Sprint Corp. (FON: up $1.14 to $24.01, Research, Estimates) has dropped 24 percent from its 52-week high while one-time suitor WorldCom Inc. (WCOM: up $0.56 to $15.04, Research, Estimates) has shed 55 percent.
News of AT&T's policy comes as the nation's No.1 long distance phone provider has reportedly proposed a "merger of equals" with BellSouth. Such a transaction would call for AT&T to spin off its cable-television unit and then merge its remaining telecom business with BellSouth, BusinessWeek said.
Still to be resolved is the value of the transaction, as well as who would take over management, the magazine said. AT&T wants to seal the discussions by the end of October.
BellSouth CEO Duane Ackerman is interested if the price is right, BusinessWeek said.
However, the discussions could fall apart at any time. Also, another suitor could emerge.
Both New York-based AT&T and Atlanta-based BellSouth declined to comment.
In 1984, AT&T was broken up into regional Bell companies. BellSouth is the last of the original "Baby Bells" still operating by itself, a BellSouth spokesman said.
Shares for BellSouth (BLS: down $0.40 to $41.55, Research, Estimates) were relatively unaffected by the news Thursday.
Comcast back in?
Separately, AT&T Corp. may be back in talks with Comcast Corp. to sell its broadband unit. In July, AT&T rejected a $40 billion offer from Comcast Corp. for its broadband business. Since then, AT&T has held discussions with AOL Time Warner (the parent of CNNfn.com), Walt Disney Co., Cox Communications and Microsoft regarding its cable unit.
Comcast is expected to sign a confidentiality agreement soon with AT&T that will revive talks but it is still unclear whether the two sides will be meeting soon, a source told CNNfn.com.
Comcast has refused to sign the agreement because of a clause that would prevent Comcast from talking to other bidders. It is unknown whether the agreement will contain the clause, the source said.
Talks with AT&T are expected to begin shortly after Comcast signs the agreement, the WSJ said.
Shares for Comcast (CMCSK: up $0.57 to $35.87, Research, Estimates) gained nearly 3 percent Thursday.
Comcast could not be reached for comment.
Excite's problems
Meanwhile, bad news continues to mount for Redwood City, Calif.-based Excite@Home, the high-speed Internet service and content provider. Late last month, Excite could not meet its loan deadline to investor Promethean Investment Group LLC.
The high-speed ISP has been considering filing for bankruptcy protection since warning for the second time in July that it would need more financing. During the second quarter, Excite received $185 million in financing; $85 million came from AT&T and Promethean followed up with $100 million.
Now, the board of AT&T is considering bidding $250 million-to-$300 million for some of the assets of Excite@Home if the high-speed ISP does file for bankruptcy. Excite is expected to file for bankruptcy protection in the next two weeks, the Wall Street Journal reported.
Excite@Home could not be reached for comment.
In August, CNNfn.com reported that AT&T would consider buying the access business of Excite, the unit that provides high-speed Internet service, if Excite chooses to file for bankruptcy.
AT&T holds a 23 percent stake in Excite and has a 74 percent voting stake.
Shares of Excite@Home (ATHM: up $0.02 to $0.15, Research, Estimates) have dropped 99 percent from their year high of $14.68. On Thursday, the stock dropped a further 24 percent. 
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