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player ready...The merger mania gripping the telecom industry has pundits speculating widely about which companies may follow MCI, AT&T, Nextel and the rest down the acquisition highway.
BellSouth Corp., the financially healthy independent Atlanta-based Baby Bell, is perhaps the leading candidate in these musings. Many analysts are saying that a deal between Sprint Corp. and BellSouth could be next.
“There’s definitely more consolidation in the cards on the carrier side,” said Ragu Gurumurthy, a vice president with Adventis, the Boston-based consultancy. “BellSouth is one company to watch and so is Qwest.”
Gurumurthy said that the current carrier consolidation will inevitably lead equipment vendors to look into merger opportunities.
Van Cullens, chief executive at Westell Technologies Inc., the Aurora-based firm that supplies equipment to the telecom industry, agrees.
“As your customers get larger, you have to get larger too,” he said. “Whether we can grow fast enough organically or through partnerships is a question. Mergers are the other option. We have to keep our options open.”
Mergers and acquisitions among smaller carriers also are a matter of interest. Last month, Alltel Corp., the sixth-biggest U.S. cellular carrier, agreed to buy Western Wireless Corp., a Northwest regional carrier that owns the Cellular One brand, for about $4.4 billion in cash and stock.
Alltel’s move sparked speculation that U.S. Cellular Corp., the Chicago-based regional carrier could also become involved in a merger.
“Some people have asked if we plan to buy Verizon Wireless or Cingular,” said John Rooney, U.S. Cellular’s sometimes puckish CEO. “We’ve looked into it–given it great thought–and don’t think they’re well-run enough for us.”
More seriously, Rooney said he is focused on launching wireless service in St. Louis by summer or fall.
Yet any merger offers for U.S. Cellular wouldn’t be made to Rooney, but to LeRoy T. Carlson Jr. and his family, which control Telephone & Data Systems Inc., the Chicago firm that owns about 80 percent of U.S. Cellular.
“My job is to create so much shareholder wealth they wouldn’t want to sell,” said Rooney. “So if they got an offer they couldn’t refuse, it would be a very good price.”
Unwanted winnings: For the fourth year in a row, the telecom industry holds the dubious honor of generating more consumer complaints to the Illinois attorney general’s office than any other sector.
Out of a total of 24,050 complaints received last year, 3,538 concerned telecom.
Wireless service topped the complaint category, with some 848 gripes about poor reception, dropped calls and a complete lack of service within a customer’s home. That was followed by 745 complaints about local phone service and repairs.
Other complaints centered on long-distance service, violation of the Do Not Call list by telephone solicitors, problems with telecom equipment leased to businesses and difficulties with Internet service and online scams.
One notable trend: cramming and slamming, once major consumer problems, were lumped together with the 286 complaints labeled as “other.” Cramming is when charges are put on a phone bill without the customer’s knowledge; slamming is having the long-distance carrier changed without the customer’s consent.
Keeping a consumer complaint scorecard is a valuable exercise, said Illinois Atty. Gen. Lisa Madigan.
“It’s a roadmap that leads us to where we need to concentrate our efforts and resources,” Madigan said.
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