NEW YORK -- AT&T and Tele-Communications Inc. on Wednesday cleared the last major hurdles in their proposed US$48 billion merger, which will create a one-stop shop for phone service, Internet access, and cable television.
The deal won approval from the Federal Communications Commission and shareholders of both companies.
AT&T's planned purchase of TCI, the No. 2 cable television company, is expected to close shortly. The deal already received US Justice Department approval, but still faces scrutiny from a few municipalities and the state of California.
Together, AT&T (T) and TCI (TCOMA)will offer long distance and cellular phone service, cable television, and high-speed Internet access. AT&T, the No. 1 US long distance company, also plans to provide local phone service over TCI's cable TV wires.
Shareholders of New York-based AT&T and Englewood, Colorado-based TCI approved the deal in separate meetings near the companies' headquarters. The deal will end a quarter century of independence for TCI.
"It's been a hell of a run," TCI chairman John Malone told shareholders at a special meeting.
The FCC, meanwhile, approved the deal without requiring the companies to meet certain concessions sought by their rivals. Some Internet companies had urged regulators to require AT&T and TCI to grant open access to their high-speed Internet service to competitors.
Shares of AT&T fell 50 cents to $84.19 on the New York Stock Exchange. Shares of TCI gained 81 cents to $64.31 on Nasdaq. The combined company will trade on the NYSE.
AT&T said about 99 percent of the shares that were voted approved the merger. More than 72 percent of the outstanding shares cast a favorable vote, the highest level ever recorded for a company proposal in AT&T's history.
"Our shareowners have voted overwhelmingly in support of the AT&T and TCI merger and the benefits it will bring," AT&T chairman C. Michael Armstrong said.
"The merger is the key to making AT&T the 'any distance' company we need to be and our customers want us to be," he said.
The TCI purchase and proposed joint ventures with other cable companies will allow AT&T to provide local phone service over cable TV wires instead of traditional copper-wire phone networks.
Since the break-up of AT&T and the creation of the Baby Bell local phone companies in 1984, AT&T has lost control of the local phone lines that connect directly into customers' homes and businesses.
Using cable TV wires to provide phone service, AT&T can bypass the Baby Bell's phone lines, and the costly access charges, to reach customers.
FCC officials hope the deal will finally create substantial competition for the regional Bell companies that so far have had a stranglehold on the residential local phone market.
The merger "is likely to result in benefits for consumers, including a local telephony alternative for many residential customers now served only by incumbent local exchange companies, without creating competitive harm with respect to other services," the FCC said.
FCC approval followed a similar move by the Justice Department, which approved the transaction as long as the companies sold off TCI's wireless telephone investment.
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