Financial Times, 4/15-Lex
Broken line
Three months on, the battle for AirTouch has produced its first casualty. Bell Atlantic has announced it will dissolve PrimeCo, its mobile telephone joint venture with AirTouch, as soon as the latter completes its merger with Vodafone. This is not entirely unexpected. After all, Bell lost out to the UK cellular operator in January's $60bn bidding war for AirTouch.
At the time, all sides professed continued enthusiasm for PrimeCo, which covers 41m people in the middle of the US, filling the hole between AirTouch's west coast presence and Bell's east coast franchise. AirTouch could buy out Bell's stake in PrimeCo but the move still has the effect of depriving both companies of a national wireless footprint when AT&T and Sprint are making hay with country-wide cellular coverage and one-rate tariff plans.
For Bell, however, other considerations are more important. PrimeCo's strict non-compete agreements potentially threaten its proposed merger with GTE, another big phone company, whose substantial cellular assets overlap with AirTouch and PrimeCo. Assuming that merger goes ahead, Bell will still have a substantial US footprint. Vodafone AirTouch, by contrast, will have at the very least to build its east coast presence piecemeal, either by buying small operators like Omnipoint or picking up left-over mobile licenses. This will take time and money the group would probably rather spend internationally.
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