Such a deal would mark a further change in strategy for AT&T, which only a few days ago canceled a marketing agreement with DirecTV to distribute its direct-broadcast television service and digital satellite system equipment. Earlier this year, AT&T canceled its plans to launch a new generation of satellites, and shed some of its existing satellite operations.
According to USA Today, AT&T is said to be in the final stages of hammering out a relationship with @Home Network, a provider of high-speed Internet access over cable wires.
Tele-Communications Inc. (TCOMA), which owns about 45 percent of @Home, is said to have led the talks with AT&T. However, John Malone, TCI's chief executive, who was in Anaheim for the cable industry's annual Western Show, declined to comment yesterday on any discussions with AT&T, USA Today reported.
It's unclear exactly how much of @Home's equity AT&T will own if the deal is completed. The company may have to issue additional shares.
@Home stock gained 2-5/16, or 10 percent, to end the day at 25-7/8, up from yesterday's close of 23-9/16. Volume more than doubled average daily levels, with 1.3 million shares trading hands.
An AT&T-@Home deal may speed @Home's construction and marketing plans at a time when it faces increasing competition.
An AT&T deal also would follow @Home's recent agreement with Microsoft to jointly develop Microsoft-based software designed specifically for @Home's high-speed Internet access service. The companies will codevelop an @Home branded version of Internet Explorer 4.0 that will be distributed and supported by the @Home service and will incorporate Windows NT into the broadband network.
Matt Wolfrom, spokesman for @Home, said the company does not comment on rumors or speculation, and declined to discuss the USA Today story.
"That rumor came out of the Western Show, and a lot of talk comes out of these shows," he said.
Meanwhile, the stock of Teleport Communications has been on the move in December, gaining about 10 points, to 60, amid rumors the competitive local exchange carrier may be up for sale. Market speculation on Monday linked Teleport, which often has been cited as a potential takeover target, to GTE, but AT&T also has been mentioned as a potential suitor, analysts said.
Lamia Abu-Haidar and Reuters contributed to this report.