GTE to Be Acquired By Bell Atlantic
(LOOKS like a done deal)
washingtonpost.com
By Mike Mills
Washington Post Staff Writer
Monday, July 28, 1998; Page A01
Bell Atlantic Corp., the Washington area's major local phone company, has
agreed to buy fellow telephone giant GTE Corp. for more than $52 billion, in
a deal that would create a company controlling one-third of all local phone
lines in the United States. An announcement is scheduled for early today.
The union would rank among the largest in a barrage of mega-mergers
reshaping the telecommunications industry. Companies are scrambling to
cut costs and expand their turf while preparing for a future in phone and
computer communications that is ruled by Internet technology
The phone company created from Bell and GTE would be second only to
AT&T Corp. in size, with combined annual revenue of $53 billion, profit of
$5.3 billion and 256,000 employees. It would keep the Bell Atlantic name
and New York headquarters and would control 62 million phone lines.
Its reach would extend across 40 states and the District, including Bell
Atlantic's turf along the northeastern seaboard, and GTE service areas in
major cities of California, Texas and Florida. It would have 10 million
cellular phone customers, or roughly 20 percent of the U.S. market.
Bell Atlantic provides most of the D.C. area's local phone service, with
major exceptions of Manassas and Prince William County, which are GTE
territory. Analysts said area customers would likely see little immediate
impact from a merger. Industry executives contend that over time, a union
would bring advanced services such as high-speed Internet access to area
homes more quickly.
The boards of both companies approved the deal on Sunday. Regulators and
shareholders also will have to approve the merger. Analysts predicted the
deal would face a contentious regulatory battle, as opponents argue it would
harm prospects for local telephone competition. At the least, many
speculate, GTE might have to get out of the long-distance business in
Virginia and Pennsylvania, because Bell Atlantic is barred by law from
offering that service.
GTE shares fell $2.18_ yesterday to close at $55.75, on speculation that
Bell Atlantic would pay a below-market price for the firm. Based on
yesterday's closing price, GTE's market value is $53.6 billion. Bell Atlantic
shares closed at $45, down 18_ cents.
Sources said yesterday that GTE stockholders would exchange each share
for a fixed number of Bell Atlantic shares, which was still under negotiation.
GTE Chairman and Chief Executive Charles R. Lee, 58, would run the new
company, while Bell Atlantic Chief Executive Ivan G. Seidenberg, 51, would
take over once Lee retires, sources said.
Spokesmen at Bell Atlantic and GTE declined to comment. |
