Partners Could Ring Up More Dollars From AT&T-BellSouth Merger

Announced Sunday, the $67 billion all-stock transaction between AT&T and BellSouth is expected to close in about a year pending federal regulatory approval, the companies said. The deal also would put ownership of Cingular Wireless in one set of hands: AT&T now owns about 60 percent of Cingular, and BellSouth owns the balance.

The acquisition will give AT&T an extended local presence in territories currently served by BellSouth, and agents of AT&T will be able to sell to those areas using a single telecom vendor, said Quy Nguyen, CEO of Allyance Communications Networks, a master agent and AT&T partner in Irvine, Calif.

"It gives us more visibility. And purely from a strategic network perspective, [AT&T is] getting a lot of local presence that BellSouth has always had and been strong in," he said.

The merger deal would give AT&T a seamless reach into BellSouth's territory without having to negotiate with a third-party carrier for access, according to Nguyen. As a result, AT&T should be able to cut additional operating costs that, in turn, could reduce the cost to agents and improve margins for voice and data services, he noted.

"[AT&T] won't need two channel managers where one will do, and that will lower cost," Nguyen said.

BellSouth had recently unveiled cost-cutting plans. In December, the Atlanta-based company said it would begin laying off 1,500 of its managers.

If the merger deal goes through, AT&T will no longer have to pay for last-mile access to customers in BellSouth territory, noted one master agent, who requested anonymity. That would save AT&T a significant amount of money, which it could use to lower prices and step up competitive pressure on rivals like Sprint Nextel, Qwest Communications and Verizon Communications, which recently completed its merger with MCI, he said.

AT&T, too, is the product of a recent merger, with SBC Communications and AT&T Corp. finalizing their union in November. The consolidation of the large telecoms could spell more opportunity for smaller carriers such as Masergy and Level 3 Communications, the master agent said. In a world where common business practice often calls for several bids on a prospective account, customers that have fewer big carriers to choose from will probably look at more smaller carriers as they shop for the best deal, he said.

"I think this is going to help smaller, niche [bandwidth] providers. They will look at fewer big guys, meaning they will look at more smaller ones," the master agent said. Any downsizing or cost-cutting moves by the combined AT&T-BellSouth also could end up lifting sales through partners, he added.

Allyance’s Nguyen said the AT&T-BellSouth merger likely will mean little change in the way customers and agents deal with Cingular. AT&T and BellSouth have kept their distance from Cingular to allow the wireless carrier--the nation’s largest--to operate without any interference from the telcos, he said.