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Rumor mill works overtime on spinoff, union

Speculation concerning various mergers and spinoffs are circling AT&T amid concerns over the telecom giant’s languishing stock price.

Separate reports have suggested that AT&T has considered merging its phone operations with British Telecom and that uber dealmaker John Malone wants to buy back his former cable empire and wrap it into a spinoff of AT&T unit Liberty Media.

Malone sits atop cash-rich Liberty ever since selling cable pioneer Tele-Communications Inc. to AT&T last year for $55 billion. Ma Bell padded those systems even further with the June acquisition of cabler MediaOne.

Now, the New York Post suggests, Malone may be angling to wrest the cable operations back from AT&T for incorporation into Liberty, which to date has operated primarily as an AT&T holding company for cable-programming investments.

That report last week followed an earlier one in which Malone, the biggest individual shareholder in AT&T, had criticized the conglom for being too “fruit salad” in its business approach instead of focusing on either apples or oranges.

Informal talks

The AT&T-BT speculation involves an article in the Wall Street Journal, which Friday reported that execs of the two telecoms have held informal talks about a merger. The two companies previously have partnered on the Concert joint venture, which offers phone and data services to corporate clients in various countries.

The various reports can be woven together into a plausible scenario, observers noted. AT&T could greatly increase its telephony operations with a merger with BT, while Malone would get back in the cable-systems biz bigger than ever and enjoy programming synergies with the Liberty portfolio.

“It’s still all total speculation, but I wouldn’t rule out movement in any direction,” mused David Davis, senior VP and analyst at investment firm Houlihan, Lokey, Howard & Zukin in Los Angeles. “People like Malone who are smart and crafty have historically taken great advantage by buying and selling when the money flow is to their advantage, so it’s not surprising if Malone is looking to maximize the value of his assets.”

An AT&T spokesman declined comment.

“We have a long-standing policy of not commenting on rumors and speculation,” spokesman David Caouette said. BT officials were not available for comment.

Ultimately, all of the speculation is traceable to the sluggish recent performance of AT&T stock. Its shares have hovered for weeks near a 52-week low and closed down 13¢ at $32.13 on Friday.

Liberty is an AT&T tracking stock, and its shares were off 63¢ at $22.25.

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