Rohit's nukkad

Sunday, June 24, 2007

AT&T becomes Cingular or Cingular becomes AT&T

In this ever changing world of business, mergers, takeover are everyday stories. But Cingular and AT&T(American Telephone and Telegraph company) fiasco is one story you won't want to miss out.
Those not familiar with Cingular, it is one of US major cellphone service provider company along with Verizon, T-Mobile etc while AT&T is a telecom giant. In 2004, Cingular acquired AT&T mobile services for $41 billion. To announce the major purchase there were series of advertisements explaining how Cingular is now the largest wireless network in the US. However in late 2006, it was announced that AT&T is taking over Cingular and changing all Cingular customers to AT&T, with ads having a tag line as "Cingular now the new AT&T". So isn't it a little weird that a company (AT&T in this case) whose wireless division becomes part of a big cellphone company and just two years down the line the cellphone company gets accuired by the same company.
Well to know more about this acquisition we need some history lessons. In 1984 the US justice department forced AT&T to split into different regional companies since till then it had a monopoly over the telecom industry. Hence AT&T was broken into several regional bells or "Baby Bells", while AT&T took care of the international calling services. The original Baby bells were
  • Ameritech
  • Bell Atlantic (changed later to Verizon),
  • BellSouth,
  • NYNEW,
  • Pacific Telesis,
  • Southwestern Bell
  • US West.
Among the Baby bells, Southestern Bell, based in San Antonio, Texas acquired Pacific Telesis, Ameritech and couple of other regional companies in the late nineties and in 2002 changed its name to SBC, mind you this is not an acronym for Southwestern Bell Corp. it doesn't stand for anything.
In 2000 Southwestern Bell(SBC) combined its cellular services with BellSouth (another Baby bell) to form a company Cingular with SBC having 60% hold in this new company. Then in 2004 Cingular purchases the wireless division of AT&T which was started in 2000 for $41 billion. However AT&T wanted to keep the brand name hence Cingular has to change all the new and existing customers of AT&T cellphone service to Cingular. Then in 2005, SBC purchases it former parent AT&T for $16 billion. So now SBC which has a major share in Cingular which, purchased AT&T wireless division and now has also purchased AT&T. After the merger was approved SBC again rebrands to AT&T.
But wait AT&T had the AT&T wireless brand name so now SBC and BellSouth decide to market the AT&T as the cellphone service rather than Cingular (making sense) in some markets.
Then to add to this fiasco, in 2006 new AT&T ( former SBC) announces the purchase of BellSouth for $67 billion, so now it has total control of the Cingular brand name and decides to phase out the Cingular brand completely and change it to AT&T.


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