Bloomberg. Bell Atlantic Says It's in Talks With Vodafone About U.S. Business Venture
(via VOD thread)
By Lisa Levenson
Bell Atlantic, Vodafone in Talks About U.S. Venture (Update5)
(Changes dateline; adds analyst comment under
``Convenience' subhead.)
New York, Sept. 13 (Bloomberg) -- Bell Atlantic Corp., the
No. 1 U.S. local phone company, said it's in talks with Vodafone
AirTouch Plc, the world's largest wireless-telephone company,
about a business relationship in the U.S.
New York-based Bell Atlantic, which will be the largest
wireless phone company in the U.S. after it buys GTE Corp., said
no timetable has been established for the talks, which Vodafone
disclosed last week, and there can be no assurance any agreement
will be reached. It said it wouldn't comment further until an
agreement is reached or talks end.
An agreement would give the companies a U.S. network capable
of competing with coast-to-coast wireless operators such as
Sprint Corp. and AT&T Corp. Vodafone AirTouch, based in the U.K.,
has wireless operations in the western U.S., while Bell
Atlantic's service area is primarily in the eastern states.
``It's a natural combination in terms of properties,' said
Mark Lowenstein, senior vice president at market researcher
Yankee Group. ``We've really come to a point where scale and
scope are critical to compete in the U.S. wireless market.'
The New York Times, citing people close to the talks, today
reported that the companies are close to an agreement to combine
their U.S. wireless operations into a separate company with a
market value of as much as $80 billion. The companies' boards are
expected to vote this week on the proposed combination, the Wall
Street Journal reported today in its online edition.
Vodafone AirTouch shares rose 31 pence, or 2.6 percent, to
1,224 pence. Bell Atlantic fell 1/16 to 62 1/2 in New York
Friday.
PrimeCo Venture
Bell Atlantic decided in April to break up PrimeCo Personal
Communications LP, its joint venture with Vodafone, after
Vodafone beat Bell Atlantic in a bidding war for AirTouch
Communications Inc., Bell Atlantic's original partner in PrimeCo.
The companies formed PrimeCo, which has about 1.3 million
customers, in 1994, agreeing to connect their networks to offer
nationwide wireless service.
Under the breakup plan, Bell Atlantic gained PrimeCo's
networks in New Orleans; Richmond, Virginia; and Miami,
Jacksonville and Tampa, Florida. Vodafone AirTouch got Chicago,
Milwaukee, Dallas, San Antonio and Houston, though it was left
without service in the eastern U.S.
Vodafone AirTouch Chief Executive Chris Gent told analysts
at a Sept. 3 meeting that the talks with Bell Atlantic had a 25
to 30 percent chance of succeeding, Morgan Stanley Dean Witter
said in a report to investors last week.
``Vodafone Airtouch as an independent entity is hindered by
not being able to compete on an equal footing' in the U.S.,
Morgan Stanley wrote. ``We believe that the most practical
solution is for Vodafone AirTouch to strike an accord with Bell
Atlantic.'
Convenience
A Bell Atlantic-Vodafone AirTouch linkup is ``exactly the
kind of move that we've been expecting since the battle for
AirTouch at the beginning of the year,' said Jeffrey Kagan, an
independent telecommunications analyst based in Atlanta. ``The
key to success for wireless services is coast-to-coast
connectivity.'
Without a national network, the number of customers who
either Bell Atlantic or Vodafone AirTouch can attract shrinks, he
said, because so many wireless-phone users want single-rate plans
with no extra fees for long-distance calls or service outside a
company's service area.
``It's in both of their strategic interests to put their
egos aside and do a deal so they can both have a national
footprint,' Kagan said.
If talks with Bell Atlantic fail, Vodafone is also
considering bidding for Omnipoint Corp., which operates in big
Eastern cities like New York, Boston and Philadelphia and agreed
in June to be acquired by VoiceStream Wireless Corp., Morgan
Stanley said in the note to investors.
Though Vodafone AirTouch could still cobble together its own
nationwide network without Bell Atlantic, an agreement with the
U.S. company ``probably puts them two to three years ahead of
where they would otherwise be in the U.S.,' said Kevin Lapwood,
an analyst at Charterhouse Securities in London.
Vodafone completed its $74.4 billion purchase of AirTouch in
June, giving it cellular networks on six continents, including a
system that stretches from Sweden to Greece in Europe.
Bell Atlantic has more than 7 million wireless customers in
the U.S., and will gain more than 5 million when it completes its
purchase of GTE early next year.
Yankee Group estimated wireless phone use in the U.S. will
grow more than fourfold by 2004, to 554 billion minutes of use
from 105 billion minutes in 1998, because of falling prices and
increasing quality. Wireless subscribership in the U.S. grew to
about 67 million at the end of 1998. |
