THE gates opened to a new wave of mega mergers in the US telecommunications sector yesterday as SBC Communications and Pacific Telesis Group agreed to merge in a $16.7 billion (£11 billion) deal, becoming the second largest company in the sector behind AT&T.

The linkage of the two regional Baby Bell phone companies is the most dramatic deal since Congress deregulated the industry on February 8th, and analysts believe it is a harbinger of similar gigantic combinations to come.

SBC said the merger would create the second largest telecommunications company by market value in the US, and the merger is the first of its kind between two former Bell System companies. The merger gives the companies greater size and financial power to offer a broader range of services, something made possible by the law.