SBC-Ameritech Merger Gets Tentative Approval

The Justice Department gave conditional approval Tuesday to SBC Communications Inc.’s planned takeover of Ameritech Corp. in a merger that would create the nation’s largest local telephone company.

The deal would combine two Baby Bells into a local telephone colossus that would control 57 million phone lines, almost one-third of the nation’s phone lines throughout 13 states.

The Justice Department approved the merger as long as the companies sell some cellular properties in each of 17 markets. Once that is done, SBC also can proceed with another deal to buy the cellular telephone operations of Comcast Corp.

Valued at $57 billion when it was announced in May, the merger still requires approval by the Federal Communications Commission.

San Antonio-based SBC and Chicago-based Ameritech, which have agreed to the condition, will have to sell one of two cellular properties in markets in Illinois, Indiana and Missouri. Markets include the major metropolitan areas of Chicago and St. Louis, the Justice Department said.

It is among the largest divestiture agreements involving a merger ever required by the Justice Department’s antitrust division. Federal restrictions bar a Bell telephone company from owning more than one cellular or wireless property in a market.

“Without these divestitures, consumers would have paid higher prices or received lower-quality services,” said Joel I. Klein, chief of the antitrust division.

By fusing the companies’ adjoining local phone territories, the merged company would control a swath of the Midwest from Wisconsin to Texas.

Shareholders of both companies have approved the merger, which the companies hope to close by midyear.

The FCC, which has raised questions about the need to get bigger to compete, is considering imposing conditions on the merger and hasn’t ruled out any options, including blocking it.