Telecom's Active '05 Set Stage For More; Consolidation Resumes; BellSouth appears to be the carrier getting most focus as potential target.(INTERNET & TECHNOLOGY)

Byline: REINHARDT KRAUSE

Expect no letup this year in the takeover activity that has reshaped the telecom market, analysts say.

One big question in 2006 is whether telecom firms that have aggressively expanded through acquisitions -- including AT&T (formerly SBC Communications), America Movil and Vodafone -- will stay active or stick to the sidelines.

A name often mentioned as a possible takeover target: BellSouth.

In the U.S., declining wireline services revenue has driven consolidation. More wireless deals are expected as phone firms pursue growth.

The recent telecom mergers, though, haven't excited investors. Most telecom stocks are lagging, and credit rating agencies are wary.

Mergers aren't a cure-all, says Richard Siderman, managing director at credit rating firm Standard & Poor's. "There's a limit to what increased size can do to counteract the intrinsic, secular forces affecting the industry," he said. "It's hard to say that rationalization and mergers make these companies necessarily better positioned. There are so many dynamics in telecom in terms of increasing competition, technology innovations and deregulatory forces. If you're the biggest local phone company in the world, that doesn't prevent Internet phone services or cable companies from getting into your territory."