SBC Communications, Inc.

Product Details

Historical Context

SBC was one of the seven regional holding companies formed after the breakup of American Telephone & Telegraph Corporation's (AT&T) Bell System in 1983.

In 1982 AT&T and the Justice Department approved the consent decree that broke up the Bell System. AT&T agreed to divest itself of the Bell operating companies, and the department agreed to drop its antitrust suit. In 1983 Southwestern Bell Corporation was formed as the regional holding company for Southwestern Bell Telephone Company.

Ownership of Southwestern Bell Telephone Company was officially transferred to Southwestern Bell Corporation on January 1, 1984. SBC had three other subsidiaries: Southwestern Bell Publications, Inc., a directory publisher; Southwestern Bell Mobile Systems, Inc., in the business of mobile telephone service; and Southwestern Bell Telecommunications, Inc., focusing on marketing phone equipment to business customers. The new holding company's president, chairman, and CEO was Zane Edison Barnes, who had been president of the telephone company since 1973. SBC moved its headquarters into a new 44-story building in St. Louis.

Unlike some other regional Bell holding companies, which diversified into such fields as real estate and computer sales, SBC stuck with businesses closely related to telephone service. Through several acquisitions, it solidified its position as the largest directory publisher in the United States. It purchased Mast Advertising & Publishing, Inc., from Continental Telecom for $120 million in 1985. Mast was the 12th largest U.S. directory publisher and brought SBC a national sales force and an entrance into the publication of directories for independent telephone companies. SBC took its publishing ventures to the international market when its publications subsidiary in 1984 won a contract to be the Yellow Pages sales and collection agent for Telecom Australia.

Following a 1995 name-change to SBC Communications, the company combined its Southwestern Bell Telecom division, which provided telephone equipment, with Southwestern Bell Telephone Co. as a cost-saving measure. Under new federal rules customers were allowed to purchase local phone connections and phone equipment or systems from the same source. Under the 1984 breakup of AT&T, regional Bell companies had been required to operate their phone service and phone equipment businesses as separate divisions or subsidiaries.

In April 1996 SBC announced it would acquire Pacific Telesis Group (PacTel), an RBOC serving California and Nevada, for $16.5 billion. The two companies' service regions were not contiguous, but both had interests in phone service in and to Mexico. For the previous year SBC had $12.7 billion in revenues and 14.1 million local access lines, while PacTel had $9.0 billion in revenues and 15.8 million local access lines. The merger received the necessary approvals from SBC shareholders, the FCC, and the California Public Utilities Commission in 1997. SBC planned to build a cellular service in California as well as an Internet service. California accounted for an estimated 25 percent of all U.S. Internet users.

By 1998, the company was in the top 15 of the Fortune 500, and by 1999 the company was part of the Dow Jones Industrial Average (lasting through 2015).

In 2005, SBC purchased AT&T for $16 billion. After this purchase, SBC adopted the better-known AT&T name and brand, with the original AT&T Corp. still existing as the long-distance landline subsidiary of the merged company.

Related Collections