WASHINGTON -- After a decade of deal-making, the phone industry is running out of buyers and sellers.
The latest deal, AT&T Inc.'s agreement Sunday to buy BellSouth Corp. for $67 billion, would remove one of the few major targets left in the phone business. BellSouth, the dominant local carrier in the South, may be the best-managed phone company in the United States.
Its key asset, though, was its 40 percent stake in the fast-growing Cingular Wireless, the nation's biggest wireless phone provider. Since AT&T owned the other 60 percent, it made perfect sense that those companies were most likely to merge next. Industry analysts have been predicting such a move for several years.
If BellSouth is removed from the picture, the most attractive takeover candidate would probably be Sprint Nextel Corp. Other promising targets could include Alltel Corp., T-Mobile International AG or even Qwest Communications International Inc. Shares of those companies rose in trading yesterday.
Beyond those companies, the pickings are slim. Most major phone companies already have been snapped up - the most recent being the old AT&T Corp., MCI Inc. and Nextel Communications Inc. Some of the potential targets, however, could present regulatory, technological or financial hurdles.
After it acquired Nextel this past summer, Sprint solidified its spot as the third-largest wireless firm in the United States, with expected revenue of more than $46 billion in 2006, according to Thomson Financial.
The Nextel deal reduced the number of national wireless carriers to just four from six a few years ago.
Yet any deal that cuts the number to three would certainly face intense scrutiny. Regulators would be particularly wary of a deal involving Sprint and the No. 1 and No. 2 wireless carriers, AT&T and Verizon Communications Inc.
As it stands now, only Verizon, the dominant carrier in Maryland, could be considered a possible suitor. AT&T will be busy integrating BellSouth, and then there's the technological hurdle: Cingular Wireless, owned by AT&T and BellSouth, runs on a different standard of transmission than Sprint Nextel. Solving that problem could cost a bundle.
Verizon is technologically compatible with Sprint, but Verizon has its sights set on acquiring full control of its own wireless business.
