NEW YORK-AT&T Corp. announced Friday it has postponed indefinitely a plan to create a separate
class of stock that would have tracked its wireless business and the cable TV business it gains when it acquires Tele-
Communications Inc.
However, to allow investors to understand its “sum of the parts value,” AT&T
said it would report future results by business segment.
“The acquisitions and investments we’ve made over
the last year will transform AT&T from a company dominated by a single product line, long-distance voice, into a
leader in a new generation of advanced communications, information and video services,” said AT&T Chairman
C. Michael Armstrong.
“But we have to be able to fully integrate these assets to deliver their true value to our
customers. That’s why we have decided to consolidate our acquisitions before considering the creation of a tracking
stock (for cable and wireless). We believe that’s in the best interest of our customers and our
shareowners.”
John C. Malone, chairman of TCI and poised to become a director of AT&T and one of its
largest shareholders, concurred.
“AT&T represents a unique set of complementary assets (to TCI). Making
sure these assets are operationally integrated before adding the complications of a separate tracking stock is the right
thing to do,” Malone said.
“I am personally extremely pleased with this decision, and I am confident
TCI’s shareholders will agree.”
However, as part of the TCI merger, AT&T said it would proceed with a plan
to issue a tracking stock to shareholders in TCI’s programming and ventures units, the Liberty Media Group and TCI
Ventures Group. This tracking stock would “continue such holders’ economic interests in the units now
represented by those shares,” AT&T said.
“The Liberty Media Group’s business will be managed
separately and will not be consolidated with the assets of the other AT&T groups.”
AT&T’s announcement
about the tracking stock accompanied a statement saying the carrier has filed a TCI merger proxy with the Securities
and Exchange Commission. Provided it receives SEC clearance, AT&T will ask its shareholders to approve the TCI
merger at a special meeting Feb. 17. At least 50 percent of AT&T’s outstanding common shares must be voted in favor
of the TCI acquisition.
The U.S. Department of Justice approved the AT&T-TCI merger plan Dec. 30 after the two
companies agreed that TCI would sell its entire stake in Sprint Spectrum L.P. over a five-year period.
AT&T and
TCI have said they plan to use TCI’s cable network to offer telephone and high-speed Internet services. A coalition of
Internet and communications companies, including U S West Inc., asked the Denver City Council Jan. 4 to require the
AT&T-TCI combination company to offer open access to its network in order to preserve competition among Internet
service providers.
As part of AT&T’s announcement Jan. 8, Armstrong also said the company’s board of directors
has authorized the repurchase of up to $4 billion of AT&T common stock, provided it receives SEC approval to do so.
The company plans to buy back the shares, given appropriate market conditions, before the merger close date, which
AT&T hopes will occur by the end of the first quarter. It then will re-issue the repurchased shares as part of those to be
issued for TCI.
“In addition, the board has announced its intention, following the completion of the TCI
merger, to declare a three-for-two split of the company’s common stock,” Armstrong said.
In a three-for-two
split, AT&T shareholders would receive one additional share of stock for every two shares they own on the record date
of the split.
“This split further demonstrates our confidence in AT&T’s continued growth. (Since AT&T
stock) is the country’s most widely held stock, [the split] will ensure that each share is affordably priced.”
