$67B AT&T, BellSouth Merger Will Cut 10,000 Jobs

SAN ANTONIO & ATLANTA, March 6, 2006 -- The $67 billion merger agreement announced yesterday between AT&T Inc. and BellSouth Corp. would eliminate 10,000 jobs over the next three years, AT&T executives said today. The merger would also mean four of the seven so-called "Baby Bell" companies have reunited with the former "Ma Bell."

The merger combines three companies: AT&T, BellSouth and Cingular Wireless, which is co-owned by AT&T and BellSouth. The deal is expected to save $2 billion a year beginning in 2008 through the reduction of duplicate operating costs, such as advertising, and staff. Following the merger, the combined company would be known as AT&T, with the corporate headquarters staying in San Antonio. Cingular's headquarters will remain in Atlanta, as will the combined company's Southeast regional telephone company headquarters.

Richard Lindner, AT&T senior executive vice president and CFO, said the proposed 10,000 job cuts are in addition to the previously announced 26,000 positions being eliminated as a result of AT&T's merger with SBC Communications last year. His comments were made during a live webcast this morning with investors, industry analysts and members of the media. "We expect integration of this merger, which involves three companies -- AT&T, Bellsouth and Cingular -- will result in an overall incremental force reduction approaching 10,000, and that is over a three-year period, from 2007 to 2009," he said. He said he expects the job cuts will be made through attrition; there are a total of 317,000 employees between the three companies, with AT&T having approximately 190,000; BellSouth, based in Atlanta, Ga., having about 63,000 and Cingular 64,000.

Together, AT&T and BellSouth would have a telephone and data network that stretches from Connecticut to California, and it means the former "Ma Bell" AT&T has reabsorbed four of the seven original Baby Bell regional telephone companies that were split off in an antitrust court settlement in 1984: Ameritech, Pacific Telesis Group, Southwestern Bell and BellSouth. The deal, which still needs regulatory approval, would leave only three major phone companies in the US: AT&T, Verizon and the much smaller Qwest Communications, which serves customers in western states.

Under terms of the agreement, approved by the boards of directors of both companies, shareholders of BellSouth will receive 1.325 shares of AT&T common stock for each common share of BellSouth, a deal currently valued at approximately $67 billion. Adding in assumed BellSouth and Cingular debt brings the total cost of the transaction to $89.4 billion. The merger, which is subject to approval by shareholders of both companies and to other customary closing conditions, is expected to close within approximately 12 months.

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