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Telecom Deals Likely to Win OK

October 01, 2005|From Reuters

WASHINGTON — Antitrust lawyers at the Justice Department are in favor of approving two landmark telecommunication mergers without requiring major changes, sources close to the review process said Friday.

Lawyers at the department's antitrust division are inclined to approve SBC Communications Inc.'s purchase of AT&T Corp. and Verizon Communications Inc.'s acquisition of MCI Inc. on the condition that the companies divest themselves of a limited number of high-capacity lines serving business customers, the sources said.

Department lawyers, however, are not recommending that the government order sweeping divestitures like those called for by consumer groups and rival telecommunication companies. "It's going to be a much more surgical approach," one source said.

Verizon and SBC are the top two local phone companies. AT&T and MCI are the top two long-distance carriers and have extensive and lucrative business and government contracts.

Critics and competitors have argued that the deals would hobble competition in the market for business phone services and some have urged the department to force Verizon and SBC to sell all of the AT&T and MCI assets within their home regions.

Negotiations between the department and the companies are in their final stages, and an agreement is expected to be approved within the next several weeks, one of the sources said.

A spokesman for Verizon declined to comment on the Justice Department review. The Federal Communications Commission must also sign off on the deals.

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