The President speaks.
Remarks by Raymond W. Smith
at the special meeting of shareowners in Richmond, Va., on Nov. 8, 1996
Good morning, ladies and gentlemen. It's delightful to be here in the Commonwealth of Virginia and its beautiful capital,
Richmond.
I am delighted to welcome you to this Special Meeting of our shareowners. The sole purpose of this meeting is to obtain your
approval of this great merger of Bell Atlantic and The NYNEX Corporation.
In combining our two great companies, we will write a new chapter in telecommunications history. We're pleased that you took
the time to participate in this very important part of the merger process.
* * *
Let me begin by saying that both Bell Atlantic and NYNEX are as excited as ever about this merger. As new markets open up
and our industry becomes more competitive, we think this is the right strategic move at the right time.
I'm happy to tell you that two days ago in New York City, the shareowners of NYNEX approved the merger by a 96 percent
vote.
Now, it's our turn.
I won't take the time to go over the terms of the transaction, which are described in the proxy statement you received several
weeks ago. I will review with you the four main reasons why the new Bell Atlantic will provide greater choice for our
customers, greater opportunity for our employees, and greater returns for our investors.
Reason number one is market presence.
The new Bell Atlantic will serve the most information-intensive region on earth -- a region that contains some of the world's
premier financial, media, entertainment and political centers.
Our combined territory is loaded with knowledge workers, telecommuters, Internet surfers and -- in the near future -- early
adopters of interactive technologies. These high-value customers are already making their presence known in our business.
Demand for data connections, on-line applications and vertical services is driving strong volume growth in our core businesses
and strong earnings results for both Bell Atlantic and NYNEX.
Reason number two is scale and scope.
This merger will create America's largest local exchange carrier and second-largest telecommunications company -- a company
with enough resources to compete against AT&T, Deutsche Telekom, and other global giants.
Just this week, British Telecom announced it will purchase MCI for more than $20 billion. You can bet they are preparing for a
full-scale assault on the American market.
We think regulators in this country should look at this proposed transaction very carefully. While Bell Atlantic welcomes fair
competition in our markets, competition is restricted in the British market. Thus a British Telecom / MCI combination has an
unfair advantage.
We would be happy to compete with the British if the United Kingdom were to reciprocate by opening their markets on the
same terms required of local companies here in the United States. This means British Telecom would have to:
Number one -- meet the 14-point competitive checklist in the Telecommunications Act of 1996;
Number two -- unbundle and permit resale of the various components of its telephone network, just as we are required
to do;
And number three -- enter into the negotiation and arbitration of interconnection agreements with potential competitors,
just as we have to.
None other than MCI testified that these are the minimum requirements for opening local markets, so I'm sure they will agree to
them without question in Britain.
* * *
We believe that in the final analysis, the new Bell Atlantic will be a strong player in this new era of global competition. To fight
the big boys, you have to "bulk up."
That's what our merger will accomplish. Our $27 billion telephone business will cover about a quarter of the United States
market. On top of that, we'll be addressing a $20 billion long-distance opportunity in our combined region.
Our wireless business is one of the world's largest, covering almost 54 million potential customers in the United States and
more than 180 million worldwide. Domestically, no company serves as many customers with both local landline and wireless
connections as will the new Bell Atlantic.
Internationally, our ventures in Europe, Latin America and the Pacific Rim account for about a tenth of the value of our two
companies -- and that proportion is growing fast. These enterprises include Bell Atlantic's very successful investment in
Telecom New Zealand and the significant presence NYNEX is building in the United Kingdom.
Reason number three -- revenue and cost synergies.
Revenue growth in our industry is no longer driven merely by access line gains. Real growth will come from selling not only
connections, but high-value service packages to increasingly sophisticated customers. For example:
High-speed data lines bundled with Internet access and long-distance;
Caller ID with data base software;
Video services with wireless telephony;
Or any combination of the above.
The new company will address the high-value customer with a single brand name -- Bell Atlantic -- and with business units that
target specific customer needs. Our new organization will enable us:
To step up our research and development;
To develop new products faster;
To create new, more efficient sales and distribution channels;
To speed the development of long distance, Internet, video and other new businesses;
And to improve the quality of our service to customers.
On the cost side, we expect this merger to produce expense savings of at least $600 million and capital savings of $250-$300
million per year largely as a result of common billing and operating systems.
Stronger revenue potential and significant cost savings will translate into improved cash flow, better earnings prospects, and
enhanced financial flexibility in becoming that major global player that you know we have to be.
Finally, reason number four -- this merger will result in one of the strongest teams in the industry. Bell Atlantic and NYNEX
have worked together many times before -- and in big ways. We built Bell Atlantic NYNEX Mobile, a wireless powerhouse
that improved revenue growth, profitability and service quality, proving that indeed, one plus one can equal three. We also
formed national partnerships to develop video programming and packaging and a national PCS (or, personal communications
services) business.
So, what do we have?
Market presence,
Scale and scope,
Synergy,
And a powerful combined team.
For these reasons, we believe we will be better able to accelerate growth in our traditional businesses, capture new business
opportunities, pay competitive dividends and maximize shareowner value as a result of this merger. Absent one-time closing
and transition expenses, we expect the new Bell Atlantic to boost recurring earnings per share right from day one.
Our shareowners apparently agree. (I don't like to steal your thunder, Al, but I will this one time.) While it is very important that
we conduct this meeting to make things official and to hear directly from our shareowners, I'm delighted to report that as of this
moment, more than 97 percent of shares tallied have been voted in favor of this historic combination.
We are on our way!
Our other approvals are also going smoothly:
To our knowledge, we're not facing opposition from the Department of Justice;
We've made filings with the FCC and with commissions in all our jurisdictions;
And states have scheduled hearings before the end of the year, with decisions expected no later than January.
Bottom line -- we're confident that we will close in the first quarter of 1997.
* * *
At that time, we will be ready to create a company with the resources, the skills, the opportunities and the commitment to be
the best communication, information and entertainment provider in the world.
Critical to fulfilling that vision will be our unwavering commitment to the communities we serve.
To improving education;
Supporting economic development;
Creating jobs;
And applying our advanced technology to social needs in general.
Here in Virginia, Bell Atlantic is building a broadband network that will connect all state and local government and educational
institutions reliably and economically. We'll have more than 50 sites on line by the end of this year.
We've embarked upon a seven-year, $7 million grants program to help Virginia's schools acquire the hardware for two-way
interactive video distance learning.
To the west of us, we partnered with the town of Blacksburg and Virginia Tech to create an electronic village, making
high-speed access and Internet services available not just to students, but to everyone in the town.
And here at Virginia Commonwealth, whose campus surrounds this theater, we're helping to create a "virtual university,"
supplying distance learning, telemedicine, and voice mail technologies that will continue to make this university great.
These are the kinds of initiatives we will continue to undertake everywhere the new Bell Atlantic does business.
* * *
Our merger plans continue to receive accolades from investment analysts on Wall Street. And we've won the support of key
customer constituencies -- including the National Urban League, Citizens for a Sound Economy, and various senior citizen
groups, minority councils and disability organizations.
To these and all our customers, to our employees and to you, our shareowners, I pledge to do everything I can to make this
merger a resounding success.
Thank you very much.
#### |
