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To: SKIP PAUL who wrote (21145)	1/11/1999 6:08:00 PM
From: Ruffian	Respond to of 152472

4TH Superpower> Fourth Supercarrier? AirTouch Options Change Landscape By Bill Menezes An indelible change in the U.S. wireless industry is the only given in the trans-Atlantic bidding war that erupted last week over AirTouch Communications Inc. Unclear in the initial uproar over the record bankrolls being flashed at AirTouch was who would end up buying the nation's biggest and richest independent wireless carrier, and even whether AirTouch would emerge in one piece once the dust settles in the weeks or months ahead. But the chain of events that began with Bell Atlantic Corp.'s record $45 billion buyout bid, accelerated with last week's $50 billion-plus counteroffer from Vodafone plc and continued with reports of interest by MCI WorldCom Inc. spotlighted some virtual certainties about changes in the domestic and international wireless businesses: • Domestically, the AirTouch purchase may be the swan song for major independent wireless carriers with clustered regional footprints. Bell Atlantic's proposal, coupled with its pending $61 billion buyout of GTE Corp., would create a national wireless power rivaling those of behemoths AT&T Wireless Services Inc. and Sprint PCS. That significantly would advance the trend of major wireless networks being owned by wireline-dominated giants, which intend to offer integrated service packages to consumers and big corporate clients that are clamoring to use the same advanced digital voice and data products in San Francisco as in Schenectadyor some day, Seoul. "Regionally focused wireless companies can survive, and our models show they can be profitable if they're focused on a couple of areas," said David Kerr, vice president of wireless at the consulting and research firm Strategy Analytics Inc. "But at the other end of the curve, national players with economies of scale are in comfortable positions." • Internationally, Vodafone brought a one-two punch intent on transforming itself into an even bigger multinational player boosted by the addition of AirTouch's powerhouse foreign business. A Vodafone victory also would mark the most significant foreign ownership in the U.S. wireless market since foreign ownership rules were relaxed under last year's World Trade Organization pact. "We feel the most compelling aspect of this is not just national; it's global," said Andrew Cole, a manager of the consulting firm Renaissance Worldwide. "We're working right now with companies like NTT DoCoMo. You're going to see players like that enter the United States, and that makes the situation of the regional players tenuous." • What's left of the major wireless networks once AirTouch is bought could consolidate with head-spinning speed. The AirTouch offers quickly reheated speculation that national specialized mobile radio carrier Nextel Communications Inc. will be next to go, with wireless reseller MCI WorldCom the odds-on buyer according to Wall Street handicappers. BellSouth Corp., owner primarily of regional wireless networks, also may be pushed into the acquisition mode or risk being left out of the national wireless game. Becoming a national wireless player means more than offering flat, "one-rate" airtime plans with seamless national roaming and services: National carriers realize cost efficiencies in virtually every aspect of their business from squeezing manufacturers for lower prices through higher-volume contracts to gaining economies of scale in marketing and advertising. "This deal makes it apparent that scale and scope are what's necessary to make it in wireless," said Mark Lowenstein, vice president of the wireless/mobile communications section of the Yankee Group. "This is going to require a re-examination among the pure play [global system for mobile communications] players." • North American GSM operators have greater impetus than ever to figure out how to create synergies among their fragmented regional clusters. Ironically, Western Wireless Corp. and Aerial Communications Inc. were the first U.S. carriers to land significant foreign equity partners, although before the AirTouch bidding, the GSM group had not moved publicly to consolidate into a single entity. Western's plan to spin off its VoiceStream Wireless GSM carrier and Aerial's pending spinoff from parent Telephone and Data Systems Inc. have been characterized widely as possible preludes to a rollup of the GSM group. Also, Omnipoint Communications Inc. says it is nearing the end of its search for a strategic partner, which will ensure its survival and maybe pave the way for a hookup with other carriers. "As stand-alone companies, it's doubtful they will exist in the next 18 months," said Walter Piecyk, wireless analyst for PaineWebber Inc.