The whole issue of cable-telephone could rise again.'Īrmstrong would not comment on possible future alliances with cable operators. 'Let's face it, there are only two wires into the home. 'I wouldn't be surprised if we saw further talks between AT&T and cable,' said Brian Adamik, an analyst for the Boston-based consulting firm Yankee Group. AT&T also may one day offer Internet-based telephone service to customers through their cable service. Cable operators, for example, could begin providing AT&T-branded Internet access over their cable lines. The deal would collectively give those cable firms a 10 percent stake in AT&T, which raises new possibilities for AT&T and the cable television industry. Its major shareholders include cable giants Tele-Communications Inc., Comcast Corp. Teleport is the largest independent 'competitive local exchange carrier,' with fiber-optic phone networks in 66 local markets nationwide, including Washington, Baltimore, New York and Los Angeles. The company is not yet profitable, but is expected to post revenue of $500 million in 1997. Teleport, based in Staten Island, N.Y., leads a new breed of local phone competitors that are invading urban markets to grab the most lucrative business customers from the regional Bell companies, GTE Corp. The companies expect the deal, which must be approved by regulators and shareholders, to close by fall. Teleport shareholders will receive 0.943 AT&T shares for each of their Teleport shares, putting the deal at $59 a share based on AT&T's closing price yesterday of $62.62 1/2 a share, up $2.62 1/2. 'This has competition and growth written all over it.'ĪT&T is paying for Teleport with its stock. 'It's going to permit us to be much more cost-effective as we go for that local business,' Armstrong said at a news briefing.

Using Teleport's local facilities, the company also would be able to reduce the fees it pays to local phone companies for access to local telephone customers. The deal also will give three major cable television companies, which are majority owners of Teleport, a collective 10 percent stake in AT&T.īy acquiring Teleport, AT&T can offer business customers local and long-distance telephone service, and data and Internet access, under its own brand name. 'AT&T and Teleport are going after the business market, which is where local companies make a lot of their money.'

'It's an indication that Mike Armstrong is serious about local competition and serious about getting moving,' said Anna-Marie Kovacs, an analyst for the brokerage firm Janney Montgomery Scott Inc. Michael Armstrong to revive AT&T, which has been slow to react to mounting threats to its core long-distance telephone business. The purchase, which was approved by the boards of both companies, marks the first major effort by new AT&T Chairman C. made its biggest move yet into the local telephone market yesterday by agreeing to acquire Teleport Communications Group Inc.

Teleport communications group