AT&T, TW close to phone deal
Pact will allow phone service through cable wires
"The two sides are continuing to talk. They are close to an agreement but nothing is imminent," the source said.
AT&T and Time Warner declined to comment.
The two companies are expected to set up a joint venture that would be 75% controlled by AT&T, analysts and industry sources said.
Shares of Time Warner gained $2.31 Wednesday to $111.875. AT&T, the most active issue on the New York Stock Exchange, added $2.56 to $69.50, building on gains seen Tuesday after the phone company announced plans to buy IBM's global network.
AT&T, which agreed in June to buy cable television giant Tele-Communications Inc. for $48 billion, has said it expects to forge additional relationships with cable companies by year's end.
AT&T's planned purchase of TCI would allow it to provide local telephone service to about 1/3 of the U.S. using TCI's cable television wires instead of traditional copper phone lines.
AT&T has said it needs deals with other cable companies to reach the rest of the country. Those relationships could include commercial partnerships, joint ventures, equity investments and acquisitions, AT&T has said.
Time Warner first acknowledged in July it was in talks with AT&T about a potential partnership.
In addition to Time Warner, AT&T is expected to forge deals with Comcast and Cablevision Systems, analysts said.
