'New' AT&T to divide and conquer? Not likely, say analysts

AT&T - like BT - has been coming under increasing pressure to take action to turn round its fortunes.

But despite the dramatic move to split up into four different units - announced earlier today - the market thinks the giant telco has done too little, too late.

AT&T Wireless and AT&T Broadband, incorporating its cable television interests, will trade as independent stocks, while AT&T Consumer, its long-distance consumer operation, will be a tracking stock. AT&T Business, the business services arm, will be AT&T's principal unit. All of these will be in place by 2002.

The move is likely to leave unchanged the company's ventures with BT.

Courtney Monroe, vice president at analysts IDC, said: "This is a dramatic change, but it will take even more dramatic changes. It will have to do a lot more to really keep up with the way the market is moving. I'm not optimistic, but we'll have to wait and see."

Monroe believes that the business unit which will benefit the most from the break-up will be AT&T Business - essentially the core company - which could become more agile and which is in the high growth and high margin areas of data and IP.

The wireless company is also promising. Its revenues were up 36.6 per cent to $2.8bn and it has boosted the number of subscribers by almost 200 per cent to 15 million.

AT&T had made itself the largest US cable operator in a move to boost its long-distance telephone operations, but this caused regulatory problems and drew heavy criticism.

AT&T announced third quarter revenues almost unchanged at $16.98bn.