WASHINGTON -- SBC Communications' planned merger with Ameritech Corp., which would create the nation's largest local telephone company, has been conditionally approved by the Justice Department.

The department's action Tuesday removed a big hurdle to the merger, but it still must be approved by the Federal Communications Commission, which is reviewing the deal.Valued at $57 billion when it was announced in May, the merger would unite two local Bell companies that control 57 million phone lines spread through 13 states.

The Justice Department approved the merger as long as the companies sell cellular properties in each of 17 markets. Once that is done, SBC also can proceed with another deal to buy the cellular telephone operations of Comcast Corp.

SBC and Ameritech have agreed to the condition and will sell one of two cellular properties in each of those markets in Illinois, Indiana and Missouri. Markets include the major metropolitan areas of Chicago and St. Louis, the Justice Department said.

"Without these divestitures, consumers would have paid higher prices or received lower-quality services," said Joel I. Klein, chief of the antitrust division.

Consumer groups and long-distance companies wanted the Department of Justice to block the merger, arguing it would thwart local phone competition and thus the prospect of lower prices. They'll continue to pursue that option at the FCC.

"Divestiture of the cellular properties was a no-brainer. We are deeply disappointed that the DOJ didn't do a lot more than that," said the Consumer Federation of America's Mark Cooper.

The FCC, which has expressed doubts about companies' need to get big to compete, hasn't ruled out any options, including imposing conditions on the merger or blocking it. SBC and Ameritech, however, are confident the FCC will approve the deal.

Analysts believe the FCC will impose conditions, but Ameritech's general counsel, Kelly Welsh, said "it's too early to predict."

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San Antonio-based SBC Communications Inc. and Chicago-based Ameritech, supported by major telephone unions, said the merger would be good for consumers and competition. The merger, they said, will spur local phone competition and possibly lower prices, accelerate the roll-out of high-speed Internet access and data services and create jobs.

It also gives them the financial clout and efficiencies of size to provide local phone service in 30 markets outside their combined 13-state local region. Such a move would have SBC-Ameritech competing against fellow Bell companies.

Opponents contend the merger would create a too-powerful company that would discourage rivals from offering local phone and other competing services in SBC-Ameritech's local phone region.

The 13 states in the proposed merger are Arkansas, California, Connecticut, Kansas, Missouri, Nevada, Oklahoma, Texas, Illinois, Indiana, Michigan, Ohio and Wisconsin.

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