US regulators gave the final approval on Friday to AT&T Inc's takeover of rival BellSouth Corp, the biggest telecommunications merger in US history, saying it will lead to "significant public interest benefits."
The companies immediately said they had finalized the deal that establishes "a premier global communications company committed to driving convergence, continued innovation, and competition in the communications and entertainment market."
The newly enlarged AT&T "will be an engine for innovation, competition, and growth for our customers at home and abroad," said AT&T chairman and chief executive Edward Whitacre.
The Federal Communications Commission (FCC) gave its approval to the deal after the companies agreed to major concessions to break a deadlock.
The FCC, whose action followed approval by the US Justice Department earlier this year, said that the deal would help speed deployment of high-speed Internet in key regions, increase competition for advanced television services, as well as improving wireless service and emergency and disaster response operations.
The purchase, estimated at some US$67 billion when it was announced in March, and now worth some US$85 billion at current stock prices, would create the biggest US telecom group at a time when the industry is shifting its focus to high-speed Internet, television and wireless.
FCC chairman Kevin Martin and commissioner Deborah Tate said the merger makes sense in an era of rapidly shifting technologies, with telecom, Internet and cable television companies all racing into the same market.
"The telecommunications market continues to be a dynamic one. New technologies and services are continuing to transform every aspect of our lives," a joint statement by the companies said.
"The merged ATT/BellSouth promises to offer consumers a wider array of IP [Internet protocol] enabled services, including voice, data, wireless and video services," it said.
"In particular, the merger will enable the combined company to accelerate its deployment of broadband and IPTV in the BellSouth region," the statement said. "The merger also will enhance national security by creating a stronger and more efficient US supplier of critical communications capabilities."
Telecom analyst Jeff Kagan agreed that the changing dynamics of technology justifies the deal, and now AT&T can compete with cable telephone giants such as Comcast.
He said next year "will change the industry on a competitive level. Telephone companies and cable television companies are gearing up to compete in the biggest all-or-nothing battle we have ever seen."
AT&T announced on Thursday that, in the face of opposition of some FCC members, it would agree to changes in its plan, including allowing customers to obtain "standalone" high-speed Internet service at a low cost.
The company also agreed to adopt the principle of "Net Neutrality" which means it would not block or charge extra fees for Web services or sites, such as those operated by Google and Yahoo.
AT&T said it agreed to the changes "in order to break the impasse" even though some of the demands from merger opponents are still being debated in Congress and by other agencies.
The company further agreed to repatriate 3,000 jobs that are currently outsourced by BellSouth outside of the US, and hire at least 200 people in the New Orleans area which is rebuilding from Hurricane Katrina.
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