AT&T Inc. CEO Edward Whitacre, who turned SBC into the country's largest carrier and is one of the most polarizing and controversial figures in telecom, plans to retire June 3.
His long-time protégé, COO Randall Stephenson, will take over as chairman and CEO. Whitacre made the announcement Friday morning during a shareholders meeting in San Antonio.
“I leave with complete confidence in the future of our great company,” Whitacre said in a prepared statement.
The 65-year-old will receive one of the largest retirement packages in U.S. history – a pension totaling more than $158.5 million, according to news reports. Filings with the Securities and Exchange Commission show that AT&T also pays $122,000 annually for Whitacre’s personal benefits, such as country club fees and health care coverage. The company will continue to fund those perks in Whitacre’s retirement.
Under Whitacre’s Watch
Whitacre goes down in the books as the longest-serving CEO in telecom – 17 years overall. He has worked for the now-AT&T for 43 years. Whitacre became head of the smallest Baby Bell, Southwestern Bell, in 1990.
He did that in part through a series of calculated takeovers, including the buyouts of Pacific Telesis, Ameritech, AT&T Corp. and BellSouth Corp. The latter two mergers attracted intense controversy as smaller service providers and their associations, consumers and even lawmakers, feared the re-formation of the Ma Bell monopoly.
“Just like the Texan he is, Whitacre rode AT&T from the smallest to the largest of the Baby Bells,” says telecom analyst Jeff Kagan.
Whitacre was head of SBC Communications Inc. when it purchased long-distance carrier AT&T in 2005, but kept the well-known moniker. In late 2006, not only did buying BellSouth turn the new AT&T into the world’s largest wireline carrier, it also consolidated ownership of Cingular Wireless LLC under one roof.
Whitacre’s business strategy has served AT&T well. His leadership helped boost the company’s stock 46 percent in 2006 alone. But his style also turned him into a poster child for corporate egotism, especially when he sparked the debate over net neutrality with comments in a November 2005 edition of Business Week.
“Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it,” he told the magazine. “So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes? … For a Google or Yahoo! or Vonage or anybody to expect to use these pipes free is nuts.”
Those words set off more than a year’s worth of heated arguments on Capitol Hill, among consumer organizations and in the telecom industry. Matters have quieted since attempts to reform The 1996 Telecom Act failed last year. Telecom has been overshadowed this Congressional session by the Iraq War and the Alberto Gonzales scandal, among other issues.
How history judges Whitacre’s performance might also be affected by the success or failure of the now-AT&T’s IPTV efforts. That service, Project Lightspeed, was announced in mid-2004, when AT&T was still SBC Communications Inc. The company initially expected to hit 18 million homes by the end of this year. Executives have since revised that timeline to mid-2008. Project Lightspeed has been renamed U-verse.
U-verse encountered major delays in December, when, like Verizon Communications Inc.’s similar rollout, it ran into heavy opposition from municipalities reluctant to provide video franchises. It also continues to wrestle with back-office challenges.
AT&T has pursued fixed-mobile convergence as well under Whitacre’s watch. For example, it is offering wireless access to DVRs connected to U-verse.
Earlier this month, the company attempted to recharge the original’s AT&T’s global networking efforts by acquiring a stake in Telecom Italia. The company pulled out of those talks, however, once the news garnered passionate resistance from the Italian government and other entities. Given the huge growth in spending throughout Europe and Russia, industry experts expect AT&T will continue its global partnership efforts. The original AT&T teamed with Mexican operator Telmex 17 years ago; another venture between the original AT&T and the United Kingdom’s BT was shut down by 2002.
Walter McCormick, president and CEO of trade association USTelecom praised Whitacre for his "vision for a company that delivers the most innovative, cutting-edge services to consumers around the globe." He also said Stephenson "is an excellent choice to lead the company forward.”
Competitive carrier association COMPTEL declined to comment on Whitacre’s retirement. COMPTEL has repeatedly played the David to AT&T’s Goliath, taking a stand against nearly all of the carrier’s initiatives.
Who is Randall Stephenson?
Stephenson, 47, has served as AT&T’s COO since April 2004. An article in Forbes magazine earlier this year termed Stephenson as Whitacre’s “clone” and obvious successor.
Stephenson began his career at Southwestern Bell in Oklahoma City in 1982 in the IT department. By 1996, he had worked his way into the position of controller for SBC. Before becoming COO, Stephenson was senior executive vice president and CFO for SBC. The company credited Stephenson with reducing its net debt from $30 billion to “near zero” by early 2004. Once the balance sheets were cleared, SBC began its merger frenzy.
Then, in 2005, Stephenson was appointed to the new AT&T’s board of directors. He also served on the Cingular board of directors from 2001 to 2006, and as chairman in 2003–2004.
He sits on the board of directors of Emerson Electric Co. and serves as vice chairman of the White House’s National Security Telecommunications Advisory Committee.
–Bob Wallace contributed to this report
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