Let's All Join Hands. Vodafone, Bell Atlantic In Swing
From the September 13, 1999, issue of Wireless Week
By Monica Alleven
The dance-a-thon between Vodafone AirTouch plc and Bell Atlantic Corp. appears headed for another round. Their
maneuvers have been the subject of intense speculation for months, mostly because a pairing of their U.S. properties makes
so much sense. Vodafone AirTouch, headed by CEO Chris Gent, owns mostly Western markets, while Bell Atlantic's
wireless division, headed by Group President and CEO Dennis Strigl, is heavy in the East.
Observers feared the two companies wouldn't get back together after relations became strained earlier this year, with
Vodafone outbidding Bell Atlantic for AirTouch, a nasty lawsuit over a non-compete agreement and a disbanded joint venture
in PrimeCo Personal Communications LP.
So it came as music to the ears of many investment analysts last week when Vodafone AirTouch confirmed it once again was
engaged in talks with Bell Atlantic. The news came as no surprise, however, since Vodafone AirTouch has maintained it
wanted to stay in cahoots with Bell Atlantic--though the latter's public enthusiasm has been harder to discern.
Bell Atlantic wasn't publicly discussing the negotiations last week, and Vodafone wasn't revealing a great deal of specifics,
either. Speculation had it the two would manage to strike a deal, most likely a joint venture, within two months. Some analysts
expect Bell Atlantic, given its history, will emerge the dominant partner, but others said a 50-50 joint ownership couldn't be
discounted.
For Vodafone AirTouch, a merging of U.S. interests with Bell Atlantic would give it the nationwide footprint it needs to
compete with AT&T Wireless, Nextel Communications Inc. and Sprint PCS. Other options are to acquire smaller CDMA
companies or the spectrum of struggling licensees. Vodafone AirTouch says there's no urgency to remedy its U.S. footprint
situation; many of its markets now offer national pricing plans competitive with those of AT&T, sometimes at lower price
points.
What's in it for Bell Atlantic? Some argue Vodafone AirTouch stands to gain more than Bell Atlantic, putting the latter in a
stronger bargaining position. After all, Bell Atlantic soon is likely to have the wireless properties of GTE Corp., which will add
the desireable San Diego and San Francisco markets to its footprint. The combined entity will have more than 12 million
domestic plus 4 million international customers. It won't have Los Angeles, though, or a lot of other cities between the coasts.
Yet Vodafone has some 28 million customers worldwide, and Bell Atlantic has made clear its desire to grow internationally.
Aligning itself with Vodafone AirTouch in the United States could provide a stepping stone for Bell Atlantic to secure bigger
deals on a worldwide scale-- that's the acknowledged aim of future consolidation for many large telecom providers.
What else could be in store for Bell Atlantic? If it were to create a national footprint with Vodafone AirTouch, Bell Atlantic as
a whole might look more attractive to, say, MCI WorldCom Inc., the only major long-distance company without a wireless
play. Lehman Brothers analyst Blake Bath says a Bell Atlantic purchase by MCI WorldCom would make sense strategically
from a wireless, international, domestic wireline and Internet perspective, though he has not seen any serious moves by MCI
to follow through on such a deal. When considering dilutive, regulatory issues and strategic issues, "there really aren't any clean
solutions" for MCI WorldCom, he says. "I personally think the cleanest is to buy Bell Atlantic."
Under that scenario, the advantage for Bell Atlantic in a Vodafone AirTouch partnership could be the chance to pretty itself
up for sale.
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