A slew of history-making telecommunications mergers over the past two years will likely shape the industry for years to come.
Although the total number of companies involved is small, the stakes are high:Only a few days after Daimler-Benz announced a record-shattering $38 billion takeover of Chrysler, SBC Communications announced a deal nearly twice as large to take over Ameritech Corp. If it goes through, the merger will create a company with a customer base of 180 million.
This merger comes on the heels of SBC's January acquisition of Southern New England Telecommunications for $11.3 billion. The merger was under intense scrutiny from AT&T because the two companies already had a lock on their respective local markets.
Also in January, AT&T did a little shopping of its own snatching up competitive local exchange carrier (CLEC) Teleport Communications Group for a reported $11.3 billion. Coincidentally, Teleport had just spent close to $2 billion in its acquisitions of CERFnet Services (California Education and Research Foundation Network, an original participant in National Science Foundation Network) and ACC, a CLEC. This move was an attempt by the long distance giant to flex its muscles in response to WorldCom's proposed buyout of MCI.
The November '97 WorldCom/MCI merger came as a surprise to some when the company outbid British Telecommunications PLC by a whopping $9 billion. It was only eight days earlier when BT had a $21 billion offer for MCI on the table, and it was only 15 months previous when WorldCom laid out $14.4 billion for MFS Communications Co., Inc.
But while SBC, WorldCom and AT&T battle it out for telecom supremacy, a few smaller companies have begun firefights of their own.
GTE, in May of 1997, purchased BBN Corp. for $616 million. The local exchange carrier didn't stop there however. GTE proceeded to pour $485 million into Qwest Communications Corp., in exchange for use of the company's 13,000 miles of fiber-optic cable.
Qwest has been doing some investing of its own as well. By acquiring LCI International, Inc., Qwest has strengthened its position in the telephony/carrier marketplace and made huge strides towards the completion of its gigantic OC-192 Synchronous Optical Network. Qwest has decided to lay two sets of parallel cable in creating its network - one is the live fiber-optic cable, and the other lies empty in anticipation of a future technology.
