What happened to Southwestern Bell? The once prominent name disappeared, but the company itself still exists.
Southwestern Bell didn’t go out of business, it’s just changed its name twice since 1995. In its current incarnation, it’s worth $229 billion.
Origin of Southwestern Bell
Southwestern Bell came out of the Bell System, the local phone company wing of AT&T. In 1982, the Federal Government broke up AT&T for abusing its monopoly position after an 8-year-long court battle. The breakup took effect January 1, 1984.
AT&T’s agreement with the Federal Government split the company into two lines of business: the local telephone company, and the rest, including long distance service. Yes, you used to have to pay extra to call outside your local area.
The government further split the local telephone business into regional “Baby Bells.” Southwestern Bell was one of many Baby Bells. Southwestern Bell’s corporate headquarters was at 1010 Pine Street in St. Louis. In 1992, it moved its corporate headquarters from St. Louis to San Antonio, Texas.
While Southwestern Bell was the the largest of the Bell System subsidiaries as part of AT&T, it was the smallest after the breakup. That changed.
Is Southwestern Bell still in business?
In 1995, Southwestern Bell changed its name to SBC Communications, in an effort to reposition itself as something other than just a small regional phone company. Having spent much of the 1980s making acquisitions, the name was no longer appropriate.
And it spent the 1990s making further acquisitions, taking advantage of federal deregulation. Many of its acquisitions were other parts of the old Bell system.
Meet the new AT&T. Same as the old AT&T (almost)
In 1997, SBC Communications attempted to merge with AT&T, but couldn’t get FCC approval. The deal fell through, but the setback turned out to be temporary.
In January 2005, SBC Communications announced its intent to acquire its former parent company, AT&T, for $16 billion. This time, the FCC approved it, and the merger finalized in November 2005. The company quickly rebranded, adopting the AT&T name in reverse merger fashion. SBC became a subsidiary of the new parent company, but consumers rarely saw any name but AT&T. The new AT&T retained SBC’s corporate structure and its pre-2005 stock price history.
So Southwestern Bell didn’t go out of business. It just outgrew its original name.
At of May 2021, the new AT&T is a $229 billion company. The original AT&T was a $60 billion company prior to its breakup, so after adjusting for inflation, the new AT&T is bigger than the old one.