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AT&T buys Cox, Comcast out of Excite@Home

Ma Bell agrees to trade approximately $2.9 billion in its stock for the ownership stakes the competing cable operators hold in high-speed Internet access provider Excite@Home.

AT&T agreed Friday to trade approximately $2.9 billion in its stock for the ownership stakes that competing cable operators Cox Communications and Comcast hold in high-speed Internet access provider Excite@Home.

The deal increases AT&T's ownership stake in Excite@Home to 38 percent, up from 23 percent. Ma Bell also will now hold a 79 percent voting interest in the broadband Net access company, compared with a 74 percent voting stake currently.

The number of shares AT&T issues will depend on their average price during a 30-day period that began in mid-December.

The transaction had been expected for months. Last March, AT&T gave Comcast and Cox the right to sell their stakes in Excite@Home to AT&T for $48 in exchange for greater AT&T control over the broadband company. But Excite@Home's stock has slumped with the rest of the tech sector and currently trades around $9 per share. Many analysts argued that the simple stock profits were incentive enough for the two cable companies to sell.

"We've been expecting this," said an Excite@Home spokeswoman. "This is mainly a financial transaction between those companies. It doesn't affect our business relationship with them."

Cox and Comcast sold their entire stakes in Excite@Home, leaving Cablevision Systems as the No. 2 stakeholder, see story: AT&T consolidates control over
Excite@Home with 21 million shares, or about a 5.2 percent stake. However, Comcast and Cox continue to have exclusive agreements with Excite@Home through June 2002, although they have an option to end them as early as December 2001, and have vowed to work with Excite@Home on a nonexclusive basis through 2006.

"There was no suspense in this sale. It was a foregone conclusion," said Cynthia Brumfield, president of Broadband Intelligence, an industry newsletter. "The question now is, how early do Comcast and Cox part with their exclusive affiliations?"