PacTel/SBC Merger Approved by Public Utilities Commission

On Tuesday, exactly one year to the day after the proposed Pacific Telesis and Southwestern Bell Company (SBC) merger was announced, the Public Utilities Commission (PUC) gave final approval, by a four-to-one vote, to the massive $16.5 billion deal. PacTel owns and operates the San Francisco-based Pacific Bell which provides telephone service to most of California.

The terms of the merger require that the newly combined company refund $214 million to consumers and set aside another $50 million over five years to bring new telecommunications technology to communities that have been historically underserved. Pacific Bell currently serves 77% of the state.

The merger is the first in what some industry observers expect to be a series of mergers and acquisitions in the arena of telecommunications providers as a result of the recent ground-breaking deregulation law passed last year. In preparation for an increasingly competitive environment, more established telecommunications companies are attempting to restructure their organizations through mergers and acquisitions in order to better compete on the open market.

Representatives of both SBC and PacTel claimed that the merger would help them create an additional 1,000 new jobs in the state, allow them to create four new headquarters operations located in California, and would produce a $100 million annual benefit to the state's economy.

Volume 4, Bulletin 11 -- April 3, 1997