NEW YORK-The success of Bell Atlantic Nynex Mobile played a key role in prompting the recent merger agreement between Bell Atlantic Corp. and Nynex Corp., said Lawrence T. Babbio, Jr., vice chairman of Bell Atlantic.
Under terms of the April 21 definitive agreement, approved unanimously by the boards of both companies, Nynex stockholders will receive one share in the new company for each Nynex share owned. Bell Atlantic stockholders will receive 1.302 shares in the new company for each Bell Atlantic share owned.
The proposed new company has 1995 revenues of nearly $28 billion (including unconsolidated wireless revenues) and earnings of just more than $3 billion. It would be the second largest telecommunications company after AT&T Corp.
“If you could have been with us through this entire process of deciding whether to do a merger, it was the example of putting together a wireless operation that improved growth and revenues,” said Babbio, designated president and chief operating officer of wireless and global enterprises for the combined company. “It was very much a motivation for the merger because if we could do it with wireless, we have a fairly good chance to do it on an even larger scale with the merged companies.”
The proposed merger also promises to have a profound effect on the Bell Atlantic’s new cellular business. “As one of the world’s largest landline and wireless companies, we can be a single provider offering on a package basis a variety of services,” he said. “There’s no reason why we can’t offer wireless long-distance, and in the longer range find people anywhere they are in the world.”
One thing that won’t change is the headquarters of what is, for now, called Bell Atlantic Nynex Mobile. It will remain in Bedminster, N.J. “We probably will [also] create a holding company for Wireless and Global Enterprises, which includes landline long distance. As far as where its headquarters will be, we’re still looking at where our people are so we can minimize staff disruptions.”
PrimeCo Personal Communications L.P.-previously known as PCS PrimeCo-the partnership among Bell Atlantic/Nynex, U S West and AirTouch, will continue to be managed on a local basis out of its Dallas headquarters. “I don’t think our merger will affect that partnership,” Babbio said. “In some ways, it will simplify governance.”
Corporate headquarters of the new Bell Atlantic will be in New York, with significant operations continued in Boston, Philadelphia and Arlington, Va.
The new Bell Atlantic will own 100 percent of Bell Atlantic Nynex Mobile and 50 percent of PrimeCo. Worldwide, wireless customers total about 5.2 million, of which nearly four million are in the United States. Nationwide, the merged company will own about 107 million proportionate pops. Worldwide wireless holdings of the combined company will total just over 181 million proportionate pops, about half of them in high-growth international markets like Mexico, Indonesia and Italy.
As now configured, the combined companies have 133,000 employees. In announcing the proposed merger, company officials said about 3,000 employees, mostly in corporate and administrative management positions, would be laid off due to the merger. The layoffs and savings from operations systems and other administrative costs are expected to save $600 million annually by the third year after the merger deal is closed, they said. Ivan G. Seidenberg, chairman and CEO of Nynex, has said those laid off will be given first crack at new jobs generated by expanding business in the merged company, of which he will be vice chairman, president and chief operating officer.
“The proposed merger should not be approved unless it is clear that the parties intend to grow their businesses and open up job opportunities, rather than destroy jobs through consolidations and restructuring as we have seen from so many corporate mergers and acquisitions,” said Morton Bahr, president of the Communications Workers of America. “CWA will be an active player in deliberations by the Justice Department, FCC, state public utility commissions and state legislators in seeking to defend the well-being of our members and of telephone customers.”
Gary Miller, president of Aragon Consulting Group, St. Louis, predicted regulatory approval of the merger. “The real issue to be communicated to the unions is that Nynex is a weak RBOC (regional Bell operating company) in one of the most competitive regions in the country,” said Miller, whose firm serves as a marketing and management consultant to telephone companies. “If you are weak, you’ll attract competitors. Sprint, GTE, MCI, AT&T, all are bundling services. The merged Bell Atlantic will be a 2,000-pound gorilla, instead of a baby gorilla, competing with the other 2,000-pound gorillas.”
The key to the competitive question is whether services improve and prices decline due to the merger, Miller said. Technological advances may play as much or more of a role in price stabilization as economies of scale in the merged companies, he said.
“Nearly half the price consumers pay for long distance calls goes straight to the Bells in the form of fees they charge to access their monopoly local networks,” said Gerald H. Taylor, president and chief operating officer of MCI Communications Corp., in a prepared statement. “Study after study has concluded that those fees are set far above the actual cost of providing service.”
