AT&T; Stock Plan Links Wireless, Cable Units

In a move that could reduce shareholder opposition to its upcoming cable acquisition, AT&T; Corp. has dropped a plan to combine its residential long-distance and new cable businesses into a tracking stock that would trade separately from the parent company, according to analysts.

The move comes as AT&T; seeks shareholder approval of its $48-billion purchase of Tele-Communications Inc., the cable-TV giant.

Under the new plan, to be presented to securities regulators this week, only the cable and wireless operations would be included in the tracking stock. AT&T;’s traditional long-distance business would remain part of the parent company, along with the unit that provides telecommunications services to corporate accounts.

Analysts say the new structure aims to accommodate both the growth-oriented cable investors of TCI as well as the phone giant’s traditional shareholders, who expect steady earnings and dividends. Investors gave the deal a cool reception when it was initially unveiled in June. Traditional AT&T; shareholders wanted more protection from the money-losing cable businesses, while cable investors looked unfavorably on lumping the declining long-distance business into the tracking stock.

TCI President Leo Hindery will head the cable business, while AT&T;’s Daniel Hesse will oversee wireless, a person familiar with the plans said. Hindery and Hesse will both report directly to AT&T; President John Zeglis, who will head all consumer operations.

AT&T; shares rose $2.13 to $77.88 on the New York Stock Exchange, while Denver-based TCI rose $1.94 to $57.25 on Nasdaq.

Last week, the Justice Department approved AT&T;’s acquisition of TCI after the companies agreed TCI would sell its stake in Sprint PCS, a provider of wireless phone services controlled by Sprint Corp.