IP Telephony News Wrap-up for Jan, 31 2005

1. SBC to Acquire AT&T for $16 Billion
SBC Communications, a RBOC serving the western U.S., has agreed to acquire AT&T for $16 billion – surrendering Ma Bell’s independence since its founding by Alexander Graham Bell in 1875. SBC is scooping up the telecom giant just as it is facing huge changes in its business model – moving out of traditional local exchange due to UNE-P regulations set by the FCC last year, and emerging back into the marketplace with VoIP. Poor leadership at Ma Bell has kept the company chasing start-ups and RBOCs rather than leading with innovative technologies.

As part of the new agreement, AT&T shareholders will receive total consideration valued at approximately $19.71 per share, as well as 0,77942 shares of SBC common stock for each common share of AT&T. This exchange ratio is approximately $18.41 per share. The shareholders will also get a dividend of $1.30 per share. The acquisition has been approved by the boards of directors of both companies, but is still subject to approval by AT&T shareholders and regulatory authorities. Under good circumstances, the deal is expected to close in the first half of next year.

As a regional telecom provider, SBC serves up 52 million access lines to businesses and consumers including 5.1 million DSL lines. The company also owns 60% of Cingular Wireless, a national cell phone company, which has 49 million subscribers. AT&T has 24 million residential customers, and is a leading telecom provider for businesses and a top 3 provider of VoIP. As a combined company, the telecom behemoth will be second only to Comcast as a provider in the U.S. residential broadband market.

SBC Chairman and Chief Executive Edward Whitacre Jr. will remain in his current positions, while AT&T Chief Executive David Dorman will become president. AT&T gets three seats on the new company’s board, including one for Mr. Dorman. The new company will be based in San Antonio at SBC’s headquarters.

The move by SBC is consistent with Whitcare’s strategy, which is based on building its business by buying companies. Former AT&T CEO C. Michael Armstrong tried a similar strategy in the 1990s by buying up cable companies, but the plan backfired as the recession slowed growth and decreased the value of its investment.

SBC expects the transaction will be cash flow positive in 2007 and earnings per share positive in 2008. Currently, AT&t maintains $6 billion in debt. SBC has $26 billion in debt, excluding debt of Cingular Wireless.

SBC has 163,000 employees. AT&T has 47,000.

Some analysts have suggested SBC is paying too much for AT&T and that it could have acquired the company for much less in a year or so, as AT&T’s business environment has never been more bleak. Since ’98, Ma Bell’s stock price has dropped from a high of 105 down to between $13 and $20 a share over the past 12 months.

The reaction to this acquisition could lead to a wave of mergers between RBOCs, IXCs, and cable companies.



3. EdgeAccess Unveils VoSatellite Solution
EdgeAccess has introduced a new family of 2, 4, and 8 port VoSatellite residential or SOHO gateways that work in conjunction with the company’s vPEP softswitch to enable wireless service providers to offer VoIP services.


5. Global IP Sound Enhances Voice Processing Solution
Global IP Sound has released version 2.0 of VoiceEngine, the company’s packaged voice processing solution. The new release includes noise suppression, an enhanced jitter buffer and packet loss concealment (JBPLC) module, push-to-talk support, and improved reporting and measurement capabilities.

The new noise suppression element eliminates stationary noise such as a computer fan or noise generated from PC applications. The enhanced JBPLC module improves sound quality and minimizes latency, as well as automatically eradicates clock drift problems. The new reporting and measurement capabilities are based on integrated support for Telchemy’s VQmon/End Point. The technology detects packet loss and jitter buffer discard events; measures the distribution of lost and discarded pakcets; and integrates information into MOS and R factor call quality scores.

VoiceEngine is available in 3 configurations. All versions support both narrowband and wideband audio.

Global IP Sound

7. DSP Group Unveils Cordless IP Phone Chip
The DSP Group has introduced a cordless IP phone chip designed to support applications for digital cordless handset systems with multiple handsets, capable of supporting both multiple VoIP and circuit switched lines.

DSP Group

9. Uniden Introduces Cordless VoIP Phone System
Uniden America has introduced UIP1868, a 5.8 GHz cordless VoIP phone system that can support up to 10 handsets. The system supports one phone line, and one fax line, as well as calling features such as call waiting, caller ID, handset speakerphone, four way conferencing, DirectLink 2-way radio capability and do not disturb.

The vendor has said it has partnered with multiple VoIP service providers that plan to offer the system as optional CPE. The providers include Primus, BroadVoice, and SunRocket.

The UIP1868 will be available in the first half of this year.


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