AT & T chairman Mr C. Michael Armstrong has said his company will not renegotiate its deal to buy cable giant Tele-Communications Incorporated (TCI), despite last week's falloff in the value of AT&T shares that it would use to buy the company.
"There is nothing to renegotiate. The deal is done, signed, sealed and delivered," Mr Armstrong said after appearing before a Senate hearing on telecommunications and media industry mergers, according to a spokesman. "People are going to realise the inherent value in the growth that's ahead."
Investors have been skittish about the deal, mainly out of concern that AT&T will need to spend billions of dollars to upgrade TCI's cable television systems so they can offer Internet and telephone services.
The company's shares have been subject to a sell-off, driving their price down 14 per cent since the deal was announced on June 24th.
TCI has denied press reports that it wants to renegotiate, but many analysts believe that if the slide continues, TCI will press for a change, because the value of the AT&T shares it would receive would be lower.
Under terms of the deal, each party must pay the other a $1.75 billion (£1.2 billion) "breakup fee" if it backs out.
AT&T on June 24th said it would pay $48 billion in stock and assumed debt for the nation's second-largest cable TV system operator. That price tag now is around $44 billion.
TCI chairman, Mr John Malone, whose large stake in TCI preferred shares would be worth more than $1 billion based on AT&T's June 23rd closing price, has seen his own potential stake drop by more than $150 million as AT&T shares have fallen.
AT&T wants TCI's cable systems reaching 10 million households as a way to offer local telephone service in addition to video and Internet services without relying on Bell or other local carriers. Even before the AT&T deal, TCI has been planning to spend $1.8 billion on network upgrades.
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