AT&T's proposed $86 billion acquisition of Bell South, which would create the largest telecommunications merger in the U.S., has been stalled by the departure of Republican Robert McDowell from the FCC's panel of five. The remaining members form a deadlock of two Democrats, who want A &T to comply with certain conditions, and two Republicans, who are demanding no concessions. AT&T has refused to agree to the proposed conditions which include granting availability of high-speed broadband lines to all customers and reducing the rates its charges competitors for access to large-capacity data lines. McDowell, a former lobbyist for CompTel, a group of small carriers opposing the deal, has abstained from the vote for ethical reasons. Although FCC General Counsel Sam Feder gave McDowell permission to cast his vote, after consulting with the executive branch's Office of Government Ethics, McDowell resolved to "follow my own personal sense of ethics" and "disqualify myself from this matter." On the news of McDowell's abstention, shares of AT & T closed at $35.47, down 19 cents, while BellSouth fell 72 cents to $45.33.
• Sources: Wall Street Journal, New York Times, USA Today
• Related commentary: AT & T Considers Its Next Move, Will AT &T Let its Bid to Take Over Bell South Die? , AT & T Won't bend further to Get FCC Approval for the Bell South Deal, Justice Dept. Antitrust Chief: AT&T/BellSouth Merger is 'Straightforward Deal'. Conference call transcripts: Bell South Q3 2006, AT & T Q3 2006
• Potentially impacted stocks and ETFs: AT &T (T), Bell South (BLS). Competitors: Verizon (VZ), Sprint Nextel (S), Qwest Communications (Q) and Comcast (CMCSA). ETFs: iShares S&P Global Telecommunications (IXP), iShares Dow Jones US Telecom (IYZ), Technology Select Sector SPDR (XLK), Telecom HOLDRs (TTH) and Vanguard Telecom Services (VOX).
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