AT&T bids $58bn for MediaOne

AT&T last night announced it will bid $58bn for US cable company, MediaOne Group. AT&T is also proposing to take on $4.5bn in debt from the company.

MediaOne refused to comment on the bid, saying only that the proposal had been received and was being considered. The offer is 17 per cent higher than the bid made by US telecoms giant Comcast last month, which is still under review.

AT&T is taking advantage of a 45 day open period which MediaOne negotiated with Comcast, in which the cable company is allowed to consider other acquisition proposals.

In a written statement, AT&T CEO, Michael Armstrong, said the bid represented an investment in the future of a competitive communications market in the US. An AT&T spokeswoman mirrored this sentiment, saying AT&T is "no longer a telephones company but a communications company".

John Moroney, principal consultant for Ovum, said the deal is vital for AT&T's development. "If AT&T want to become a full service provider, then they have to increase their local presence. MediaOne can provide this local presence," he said.

Moroney added that the deal could have ramifications in the UK, where BT has a long-term strategic partnership with AT&T. He said BT may be forced into some kind of acquisition: "AT&T will want BT to deliver in Europe what MediaOne can deliver in the US - a 25 per cent market share."