By Robin Gareiss, Nemertes Research

February 1st, 2005

Monday’s announcement that SBC (NYSE:SBC) will buy AT&T (NYSE: T) for $16 billion, pending regulatory approval, represents mixed news for enterprises. A combined AT&T/SBC has benefits—which could vanish if AT&T doesn’t retain significant strategic control of business services.

IT executives want secure, reliable, fairly priced IP-based services delivered across a converged (voice, data, wired, wireless) infrastructure. We believe AT&T understands this: Against a backdrop of declining overall revenues, AT&T’s IP and e-services business grew 11% last year, and the company’s CallVantage VOIP service is a strong market success.

The outstanding question is whether SBC understands this as well—and is willing to let AT&T’s management take the lead in shaping the combined company’s future. In Nemertes benchmarks, IT executives rate AT&T substantially higher than SBC in network-related areas such as reliability, performance, technology, and management tools. Although IT execs give SBC better scores in billing and SLAs, AT&T is clearly more of a strategic enterprise partner than SBC.

The complete Impact Analysis is available to Nemertes clients. For more information, please contact Chris Zimmerman at christine@nemertes.com