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AT&T’s 2006 purchase of BellSouth was an all-stock acquisition announced at approximately $67 billion in equity value. The deal closed on December 29, 2006, giving AT&T full ownership of AT&T Mobility, then known as Cingular Wireless. The $67 billion figure is tied to the announcement-date share price; later filings report other values because they use different dates and accounting bases.

How the AT&T–BellSouth deal was structured

AT&T and BellSouth announced the agreement on March 5, 2006. It was structured as an all-stock merger: BellSouth shareholders were to receive 1.325 shares of AT&T common stock for each BellSouth common share.

Using AT&T’s March 3, 2006 closing stock price, AT&T said the exchange ratio represented about $37.09 per BellSouth share and a 17.9% premium over BellSouth’s March 3 closing price. AT&T’s shareholder materials described the equity value as approximately $67.1 billion using that same AT&T share price. AT&T’s announcement and BellSouth’s shareholder materials filed with the SEC provide the deal terms and announcement-date calculations.

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Why the transaction is described with different dollar values

The figures below measure different things; they are not competing estimates of one amount that stayed fixed. In an all-stock deal, the value of the shares changes with AT&T’s stock price, while an accounting transaction value can use its own calculation method.

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Figure What it measures Basis and timing
Approximately $67 billion (approximately $67.1 billion in shareholder materials) Equity consideration Announcement-date calculation using AT&T’s March 3, 2006 closing share price. AT&T, 2006; BellSouth shareholder materials.
Approximately $89 billion Total transaction value, including BellSouth debt net of cash and BellSouth’s proportionate share of Cingular external debt net of cash Announcement-date figure; it includes specified debt in addition to equity consideration. AT&T, 2006.
$66.798 billion Accounting transaction value AT&T’s 2006 annual report calculation, using an average AT&T closing share price over a period around the announcement, capitalized transaction costs, and other items. AT&T, 2006 annual report.
Approximately $86.9 billion Consideration received by BellSouth shareholders AT&T’s 2006 annual report valued the consideration using AT&T’s $35.75 closing share price on December 29, 2006, the last trading session before the merger closed. AT&T, 2006 annual report.

Thus, “$67 billion” is the concise announcement-date equity value, not the amount of cash paid or a closing-date valuation. The approximately $89 billion announcement figure adds specified debt; the annual-report figures apply different measurement methods or a later share price.

What regulators reviewed

The U.S. Department of Justice Antitrust Division closed its investigation on October 11, 2006. Its review covered areas in which AT&T and BellSouth competed, including residential local and long-distance service, telecommunications for business customers, Internet services, and the merger’s implications for future wireless broadband competition.

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The Antitrust Division concluded that the proposed transaction was not likely to lessen competition substantially. Assistant Attorney General Thomas O. Barnett said the division had determined it was “not likely to reduce competition substantially.” That was the DOJ’s conclusion about the proposed deal; it does not establish that the transaction had no effects in every market or for every consumer. The DOJ announcement describes its conclusion and review.

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Federal Communications Commission consent was also required to transfer control of BellSouth licenses and authorizations. SEC-filed merger materials listed FCC approval as a closing requirement. BellSouth’s SEC-filed merger materials set out that requirement.

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When the acquisition closed and what AT&T gained

AT&T reported that the acquisition closed on December 29, 2006. As part of the transaction, AT&T acquired BellSouth’s 40% economic interest in AT&T Mobility, formerly Cingular Wireless. AT&T consequently held 100% of AT&T Mobility. AT&T’s 2006 annual report records the close and ownership change.

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What the documented deal does—and does not—show

The official transaction and regulatory materials establish the exchange terms, reported valuation figures, regulatory review, closing date, and resulting ownership of AT&T Mobility. They do not establish a causal estimate of how the acquisition changed consumer prices or service quality. Those outcomes should not be inferred from the deal’s valuation or the DOJ’s competition conclusion alone.

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