AT&Ts FIRST BITE: Next Moves Could Be @Home, TCI Deals

AT&T Corp.'s $11.3 billion merger with TeleportCommunications Group is likely to lead shortly to more major deals aimed at helping cableoperators to accelerate network upgrades and to spawn local telephony services.

Tele-Communications Inc. president and chief operatingofficer Leo J. Hindery Jr. declined to comment on any further AT&T deals, saying,'This is just another pickle out of the jar.'

But sources indicated last week that while the TCG deal isan hors d'oeurve, the main course could come in the form of an investment in @Home Networkand a cash infusion into TCI to accelerate network upgrades and to spawn both IP (Internetprotocol) and HFC (hybrid fiber-coaxial) telephony.

TCI, Comcast Corp. and Cox Communications Inc., which holdroughly 95 percent of TCG's voting power and 66 percent of its equity, approved theall-stock transaction last Thursday, as did AT&T's and TCG's boards of directors.

During a press teleconference last Thursday, AT&T andTCG executives repeatedly declined to discuss whether the TCG move will be followed byother deals to enter the residential telephone market via TCI.

<p> <strong id="d9e25-10-b">TCG Facts</strong> </p><p> </p>

Route Miles


Major Metropolitan Markets


Initial Public Offering Price


Jan. 8 Closing Price


Fiber Miles


1996 Revenue

$283.4 million

Source: Teleport Communications Group


In the merger, which is expected to close this fall afterpassing regulatory inspection, each share of TCG stock will be exchanged tax-free for0.943 AT&T shares.

Sources close to the deal said AT&T has also negotiateda side agreement under which it will 'infuse' revenues into TCI that the MSOwill then use to upgrade its cable networks in major metropolitan areas. That deal hasalready been struck, and it is now in the hands of attorneys with both sides, sourcessaid.

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