Sunday, September 30, 2007

AT&T casts its gaze abroad Having completed its hard-charging rollup of telecom assets in the US and nothing left to buy in its own country, AT&T is now turning to the international market. The five-year campaign that allowed Baby Bell SBC to buy up AT&T Wireless, Bell South, Cingular Wireless, and AT&T's remaining long distance and business phone service assets, also ended, as you know, with SBC taking over the AT&T name and (slightly altered) its logo. With that banquet now safely digested, the company has a wandering eye, according to a Wall Street Journal article ("AT&T Again Is Calling Overseas", 9/28/07). The company had stepped backwards form its international commitments, and sold off assets in Latin America, India, and elsewhere to clear the decks for the US rollup. As the article puts it, AT&T's new chief executive officer, Randall Stephenson, is reversing course. He is setting his sights on acquiring companies abroad and offering telecommunications services across the globe to consumers as well as businesses. It marks a new era for what is the world's largest telecom company by revenue and market capitalization. It's interesting how Stephenson discusses AT&T unrelenting need for growth. ""I need multibillion-dollar revenue streams to move the needle, and I view this as a multibillion-dollar revenue opportunity." Those added billions are not available in the US, only incremental gains. For that reason, AT&T is making move in terms of buying spectrum and trying to form partnerships in India, Vietnam, the Gulf States, and China, all areas of rapid growth where the territory is still open. Of course, other companies have been doing the same, and UK-based Vodafone has already established a solid position in India with its purchase of Essar. AT&T, according to the article, is especially working on its already strong relationships with Fortune 1,000 companies, most of which now have operations in those companies and who need the same kind of outsourced telecom services that AT&T has been providing to US firms. While growth in subscribers remains strong in Asia, at some point even those markets will get saturated. Even as it s, the land rush is taking place in a land that already has a number of stable telecom providers who have a big head start. Then what will AT&T, Vodafone, and other acquisition-oriented oligopolies do? There is a sad day coming when annual growth will be limited to fewer than 5% and investors will howl. 7:46:11 PM

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