The combined company will have around $71 billion in revenues, the same as top US telecom Verizon Communications Inc. A merger will likely face antitrust hurdles.

SBC's acquisition of the No 1 long-distance carrier will include $14.7 billion in SBC stock and a special dividend of roughly $1.04 billion to be paid by AT&T to its shareholders when the deal closes.

SBC will issue 0.78 of its shares for each AT&T share, valuing AT&T at $18.41 a share. AT&T will then pay a special dividend of $1.30 a share. Combined, the deal would value AT&T at $19.71 a share -- no premium to its closing stock price on Friday.

The deal, which is expected to close by the first half of 2006, has already drawn criticism from analysts, who slammed $16 billion as too expensive for a company that has shrinking revenues and questionable growth prospects.

"AT&T's business doesn't seem that accretive or value added," said Greg Gorbatenko, an analyst with Marquis Investment Research.