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AT&T Unlikely to Budge With FCC on Merger Deal
The Wall Street Journal
Tuesday, November 21, 2006

HANOI -- AT&T Inc. expects to get approval of its $80 billion takeover of BellSouth Corp. from the Federal Communications Commission by the end of the year without having to make further concessions.

"We've struck the deal about a year ago. We said it will be closed in this calendar year. It proceeds very well on the calendar. We have great optimism in what we are doing with the FCC," Chris Rooney, AT&T senior vice president, told Dow Jones Newswires Saturday.

"Right now we are still very optimistic to have it finalized in the fourth quarter," he said on the sidelines of a gathering of business leaders as part of the Asia-Pacific Economic Cooperation summit in Vietnam.

Negotiations between AT&T and the two FCC Democratic commissioners, Michael Copps and Jonathan Adelstein, who are refusing to vote in favor of the deal, are likely to restart in the next two weeks.

The fact that the company is publicly stating it won't likely make any further concessions in order to win over Commissioners Copps and Adelstein could make those negotiations difficult.

Mr. Rooney's remarks came two days after the U.S. Senate confirmed Kevin Martin as FCC chairman for a five-year term.

According to two people close to the discussions, the confirmation makes it more likely that Mr. Martin will take steps to unrecuse fellow Commissioner Robert McDowell, obliging him to cast a vote on the approval of the merger.

Thus far, Mr. McDowell has excused himself from the proceedings on the grounds that his former employer -- the Competitive Telecommunications Association, or CompTel, a lobby group -- has publicly commented on the merger.

This has left the commission in deadlock with the two Democratic commissioners Copps and Adelstein.

Mr. Rooney said he doesn't regard Messrs. Copps and Adelstein as opponents of the deal.

"I wouldn't say they are opposing the approval. I would say that they are certainly being very judicious and very rigorous," Mr. Rooney said.

The two Democrats refused to vote for the merger on concerns over the dominant position AT&T would have in wired-line, DSL and wireless markets, although the company has offered a number of concessions such as cheaper rates to business customers.

Last month when the Department of Justice unconditionally approved the buyout, Mr. Adelstein said the department "took a dive on one of the largest mergers in history just to avoid further court scrutiny."

Asked if he thinks there is room for AT&T to make more concessions to meet such concerns, Mr. Rooney said: "No. There is room always for dialogue. When you have dialogue, you can decide how you want to establish a certain situation."

"It doesn't necessarily mean there is going to be further concessions; maybe packaging of current concessions or repacking....We have offered quite a fulsome concession package in the current situation," he said.

Mr. Rooney said AT&T's acquisition strategy is paying off, after the company's profit jumped 74% to $2.17 billion in the third quarter from the same period last year.

"We are very, very positive about synergies we have been able to bring out of the business. We are positive about the growth we see across the world," Mr. Rooney said.

AT&T has said it expects its profit to grow at double-digit rates next year, assuming that its purchase of BellSouth is approved.

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