AT&T; in Talks to Buy N.Y. Phone Firm, CNBC Reports

AT&T; Corp. is in talks to buy local phone company Teleport Communications Group Inc. in a deal that could be worth $10 billion, the CNBC cable network reported Thursday.

The deal would be AT&T;’s first big move into the local phone business since the breakup of the Ma Bell monopoly 13 years ago, and the first clear sign of its strategy under new chief executive C. Michael Armstrong.

Teleport offers local phone service primarily to businesses through its network of fiber-optic and traditional cable. It is the largest of the companies that have emerged in recent years to challenge the regional Baby Bells.

AT&T; spokeswoman Ruthlyn Newell said the company never comments on speculation about mergers or acquisitions. Teleport spokesman Roger Cawley also refused to comment.

Teleport’s stock, which has risen more than 50% in the last three months on takeover speculation, fell Thursday after CNBC said AT&T; might pay less than Teleport’s current market value.

Teleport shares were down $2.50 to close at $57.62 on the Nasdaq Stock Market. AT&T; shares slipped 68 cents at $57.12 on the New York Stock Exchange.

Nearly two-thirds of Teleport’s stock is held by three big cable television companies: Tele-Communications Inc. owns 28.5%, Cox Communications owns 22.4%, and Comcast Corp. owns 14.7%.

Merger talks between AT&T; and SBC Communications Inc., one of the Baby Bells, floundered earlier this year after a top regulator raised antitrust concerns in the combination. AT&T; was also said to be discussing a combination with GTE Corp., the nation’s largest local phone company.