AT&T To Acquire Internet Services Firm For $300 Million

AT&T said Tuesday that it plans to buy ASP USinternetworking in a $300 million deal.

The telecom giant said the agreement, a cash-and-assumed-debt deal, is expected to close in the fourth quarter.

AT&T said in a statement that USi's ASP expertise will enhance its own enterprise service offerings. USi hosts and manages on-demand services and applications from leading vendors such as Oracle (including PeopleSoft and Siebel applications), Microsoft, IBM and Ariba. USi also builds custom e-commerce solutions.

Such an acquisition wasn't totally unexpected, industry oberservers said. Telcos have been looking to get into managed IT services for some time, and USi was one of the few remaining stand-alone ASPs, said Amy Konary, software analyst at research firm IDC.

Indeed, after the ASP boom of the late 1990s, many ASPs fell away or were acquired. For example, IBM bought Corio last year.

Plans call for USi to operate as a wholly owned subsidiary in AT&T's enterprise services organization under group president Forrest Miller. AT&T said it expects to retain USi's team and its domestic and international operations.

"The addition of USi's technology and expertise in applications management to AT&T's global reach, networking expertise and extensive hosting capabilities will broaden the range of solutions for our customers," Miller said in a statement.

USi Chairman and CEO Andrew Stern will join AT&T as CEO of the USi subsidiary when the acquisition is finalized, AT&T said.