Vodafone, Bell Atlantic May Form U.S. Wireless Company Worth US$80 Billion
By Christine Harper and Kate Norton
Bloomberg
Vodafone, Bell Atlantic May Form U.S. Wireless Co. (Update3)
(Adds analyst comments from 4th paragraph.)
London, Sept. 12 (Bloomberg) -- Vodafone Airtouch Plc, the
world's largest wireless telephone company, and Bell Atlantic
Corp. are close to an agreement to combine their U.S. wireless
operations into a separate company with a market value of as much
as $80 billion, the New York Times reported, citing people close
to the talks.
Bell Atlantic, which will be the U.S.'s biggest wireless
telephone company following its acquisition of GTE Corp., would
own about 55 percent of the new company and Vodafone would own
the rest, the newspaper said. Vodafone declined comment; Bell
Atlantic couldn't be immediately reached for comment.
The agreement would give the companies, which acknowledged
last week that they're in talks, a nationwide network capable of
competing with coast-to-coast operators such as Sprint Corp. and
AT&T Corp. It comes just weeks after the two agreed to split
their existing wireless venture, PrimeCo Personal Communications
LP, leaving both with gaps in their U.S. coverage.
``Vodafone Airtouch as an independent entity is hindered by
not being able to compete on an equal footing' in the U.S.,
Morgan Stanley Dean Witter said in a report to investors last
week. ``We believe that the most practical solution is for
Vodafone Airtouch to strike an accord with Bell Atlantic.'
The companies have been working throughout the weekend to
determine the new company's value, who would run it and which
executives would be appointed to the board, the newspaper said;
an announcement could come as early as this week.
PrimeCo Venture
Bell Atlantic decided in April to break up the PrimeCo
venture after Vodafone beat it in a bidding war for AirTouch
Communications Inc., Bell Atlantic's original partner in PrimeCo.
New York-based Bell Atlantic, which has more than 7 million
wireless customers in the U.S., is in the process of buying GTE
Corp., which has more than 5 million wireless subscribers.
Vodafone AirTouch, left without service in the Eastern U.S.
following the PrimeCo breakup, confirmed on Sept. 6 it was in
talks with Bell Atlantic about a possible union. Chief Executive
Chris Gent told analysts at a Sept. 3 meeting that the talks with
Bell Atlantic had a 25 to 30 percent chance of succeeding, Morgan
Stanley said in the note to investors.
The companies originally formed PrimeCo, which has about 1.3
million customers, in 1994 and agreed to connect their networks
to offer nationwide wireless service.
Under the breakup plan, Bell Atlantic gained PrimeCo's
networks in New Orleans; Richmond, Virginia; and Miami,
Jacksonville and Tampa, Florida. Vodafone AirTouch won Chicago,
Milwaukee, Dallas, San Antonio and Houston.
If talks with Bell Atlantic fail, Vodafone is also
considering bidding for Omnipoint Corp., which operates in big
Eastern cities like New York, Boston and Philadelphia and agreed
in June to be acquired by VoiceStream Wireless Corp., Morgan
Stanley said in the note to investors.
Vodafone completed its $74.4 billion purchase of AirTouch in
June, giving it cell networks on six continents, including a
system that stretches from Sweden to Greece in Europe.
On Friday, Vodafone AirTouch shares fell 33 pence to 1,193p
($19.31). The company's American depositary receipts, each of
which represents 10 ordinary shares, fell 5 1/8 to 194 13/16.
Bell Atlantic fell 1/16 to 62 1/2. |
