Fortune. Bell Atlantic vs. Vodafone When Telcos Snarl: A Wireless Spat Gets Ugly
Julie Creswell
The connection between Bell Atlantic and
newly merged Vodafone AirTouch has a
bit of static these days. Earlier this year,
Bell Atlantic CEO Ivan Seidenberg tried to
buy AirTouch, but the California wireless
provider opted for a $69 billion offer from
U.K.'s Vodafone. When the deal closed in
June, a spokesperson told FORTUNE that
the Baby Bell would dissolve PrimeCo, its
1994 joint venture with AirTouch, to
create a nationwide network. Yet almost
a week later, Vodafone AirTouch CEO
Chris Gent told FORTUNE that no one at
Bell Atlantic had bothered to give him the
news. In fact, said Gent, he was hoping
to speak with Seidenberg about
continuing the venture.
PrimeCo may not be dead. Vodafone
AirTouch needs to pair with Bell Atlantic
to avoid the expense of building an East
Coast network. Bell Atlantic may have its
own reason to keep PrimeCo alive. To
build a national wireless network, Bell
Atlantic plans to use assets from its
proposed $74 billion purchase of GTE. But
in certain markets, taking over those
assets would violate a noncompete
agreement it has with AirTouch. To honor
it, Bell Atlantic might have to divest up to
$5 billion in assets, says John Bensche, a
wireless analyst at Lehman Brothers. Gent
says a court fight can be avoided: "If we
can find a way to extend [PrimeCo], we
could think about waiving the
noncompete agreement." Brinkmanship is
something neither side can afford. "Bell
Atlantic and Vodafone have to realize the
enemy isn't each other. It's AT&T, Sprint,
Nextel, and the consolidation of GSM
carriers," sighs Gartner Group analyst Bob
Egan. "Vodafone and Bell Atlantic are still
a pretty nice fit." Just not a match made
in heaven.
Vol. 140, No. 3
August 2, 1999 |
