Bell Atlantic to acquire AirTouch
Bell Atlantic is in talks to acquire AirTouch
Communications, AirTouch yesterday confirmed in a
press statement.
An announcement that Bell Atlantic will purchase
wireless provider AirTouch for $45 billion in stock is
expected Monday, according to numerous press
reports.
New York-based Bell Atlantic, already the largest
local telephone service provider in the U.S., seeks to
purchase the San Francisco-based provider of
wireless communications in order to form both a
nationwide and an international wireless network,
according to a story in the New York Times that
quoted executives close to Bell Atlantic.
Bell Atlantic already has 5.7 million cellular customers
on the East Coast of the U.S., according to the New
York Times story, while AirTouch has 7.8 million
customers in the U.S. and more than 11 million
worldwide. The AirTouch acquisition would give Bell
Atlantic 13% of the U.S. wireless market placing it
ahead of AT&T., which has 10%, according to the
Times report.
AirTouch has a number of partnerships in Europe and
Asia that would considerably expand Bell Atlantic's
network internationally. AirTouch owns interests in
cellular, paging and personal communications services
in Belgium, Egypt, Germany, India, Italy, Japan,
Poland, Portugal, Romania, South Korea, Spain and
Sweden and has an interest in the Globalstar satellite
system for voice and data. AirTouch said it is the
largest wireless company in the world based on the
total number of customers served by its ventures -- 35
million total customers worldwide with more than 16
million of those based on partnerships.
It is AirTouch's international businesses that are
reportedly the most important, since they contribute
half of the company's cash flow and are growing much
more rapidly than its domestic business, according to a
CNBC report.
The two companies already share an alliance, called
Primeco Personal Communications, which provides
wireless service in more than 30 U.S. cities, according
to CNBC.
The purchase price, if the deal is approved, is
expected to be at a 10% premium over AirTouch's
Thursday closing price of $72.43, according to news
reports. Bell Atlantic's market cap at closing Thursday
was $83.8 billion, twice that of AirTouch's value of
$41.4 billion.
The AirTouch Board of Directors said in the statement
that it has not approved the transaction and that
significant issues still remain. The deal will also need
the approval of Bell Atlantic as well as that of GTE,
which has agreed to merge with Bell Atlantic. That
merger is still pending regulatory approval.
Reportedly, however, GTE officials support the deal,
according to CNBC.
Because of the size of the deal, and because of the
pending GTE merger, this purchase is likely to face
heavy scrutiny.
Bell Atlantic, one of the "Baby Bells" formed when
AT&T was broken up in 1984, has customers in New
York and throughout New England.
The deal is expected to reduce the cost of cellular calls
for roaming industry wide, according to analysts
quoted by the Times.
Other companies reportedly interested in purchasing
AirTouch were the U.K.'s Vodaphone PLC and MCI
WorldCom, according to a report by CNBC.
Neither party will make further comment until
negotiations are concluded, AirTouch said. |
