I added GTE to my telco portfolio yesterday along with SBC and NYN.
GTE, it seems to me, is the ideal takeover candidate and I think the
SBC deal might have just been smoke-and-mirrors because I think that
AT&T has wanted GTE all along, not to mention other carriers including
C&W as you just said. Excellent article in the Business Week that
just came (probably also on line) says that GTE is being eyed as a
takeover and that it's old weakness (the fact that it's spread out
all over the place in mostly suburban and rural areas) has become
its new strength: GTE has a bigger national "footprint" than any of
the other locals, including the RBOC's, and would be an ideal partner
for a national LD company. Also, since GTE is not bound by Greene's
consent decree as the Bells are, GTE has been taking LD customers and
has already got 1.3 million to switch over.
Compare that to MCI which is forecasting a loss of $800M on its efforts to get into the local markets and has also lost 4% more of
its LD customers. And T, of course, has lost half or more of its
customers since the '84 breakup.
Also, the court ruling against the FCC yesterday appears to give a
benefit back to the locals, especially the RBOC's and their "ally"
GTE at the expense of the LD's.
AT&T is getting desperate, as noted, and GTE not only has that much
desired national footprint but also has some very shrewd management.
As noted, T isn't being very well run right now but when the SBC play
was announced, T had already indicated it was willing to let Whitacre
run the company; if they go after GTE, you can be sure they'll sweeten
the pot. I expect to see this stock have a nice run back up and
through its old highs next week.
The one problem with GTE, as noted in the BW article, is the customer
service and public perception of the company--in a national study, this company came in dead last as the carrier of choice. If GTE can
get a grip and change that perception, this stock will really go up.
The announcement of the new hirings is a positive note but remember
that this company cut back so far over the last few years that it is
desperately short of qualified help--this is just a start. |
