This might be a positive for FRO stock today!
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Mon, 27 Jul 1998, 7:36am EDT
Bell Atlantic, GTE Reported to Be Discussing Merger Worth Up to US$55 Bln
Bell Atlantic, GTE Discuss Possible Merger, WSJ Says (Update2) (Adds no comment from GTE in 2nd paragraph; Bell Atlantic's and GTE's position in U.S. market from 7th paragraph; analyst comment in final paragraph.)
London, July 27 (Bloomberg) -- Bell Atlantic Corp. and GTE Corp. have held talks about a possible merger, valued at as much as $55 billion, that would cover one-third of the U.S.'s local phone lines, the Wall Street Journal reported, citing people familiar with the discussions.
Ivan Seidenberg, president and chief executive of Bell Atlantic, declined to comment. GTE spokesman Bill Kula also declined to comment on the report.
In European trading Bell Atlantic shares rose 1 1/4 to 46 1/2 and GTE shares rose 1 to 59.
The report, which says a union would have $53 billion in revenues, follows on the heels of news that AT&T Corp. and British Telecommunications Plc, the No. 1 telephone companies in the U.S. and U.K. respectively, will create a venture with $3 billion in assets to offer voice, data and Internet services to big, global companies. The report said Bell Atlantic and GTE could make an announcement as soon as this week, although it said the talks may still collapse.
U.S. phone companies have embarked on a frenzy of talks about mergers and acquisitions since deregulation in 1996 broke down barriers between local and long-distance communications there. Nevertheless, U.S. phone companies that offer local communications, which includes Bell Atlantic and GTE, are prohibited from providing long-distance calling to their customers until they prove their markets are competitive. AT&T, operates in the local market by buying time from other companies and reselling it to customers.
James Sawtell, European telecoms analyst at Deutsche Bank, said the joint venture between AT&T and BT is likely to force other companies around the world to form alliances as quickly as possible. ''It quickens the pace of consolidation,'' said Sawtell.
Bell Atlantic operates a virtual monopoly in the local communications market in the North East region of the U.S. GTE, which also sells local phone services, would give Bell Atlantic an new bridgehead into the market for long-distance communications. Bell Atlantic was created out of a merger between Bell Atlantic and Nynex Corp. Any new move to buy or merge with another company would require regulatory approval.
Still pending approval is a proposed combination of SBC Communications Inc. and Ameritech Corp.
GTE has lobbied European and U.S. regulators to block WorldCom Inc.'s plan to buy MCI Communications Corp., the No. 2 U.S. long-distance phone company, for $49 billion.
Analysts said GTE has become an eligible partner for many U.S. and international phone companies. ''I think that GTE will probably be looking very closely at its options and deciding where to go,'' said John Matthews, an analyst at Ovum Ltd., a London-based telecommunications consultancy. ''I could see a scenario in which they go for both a U.S. and an international tie-up.''
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