Any hopes Vodafone AirTouch plc had in linking up with Bell Atlantic Corp. to create a nationwide wireless footprint in the United States were likely dashed last week when the two agreed to split up jointly owned PCS operator PrimeCo Personal Communications and dissolve their joint venture meant to create a seamless nationwide network.
“We always hold out hope,” said Jonathan Marshall, director of corporate communications with Vodafone AirTouch. “We think it’s still an efficient solution to match their footprint with our West and Midwest footprint. I wouldn’t say they are doing much to foster such a partnership.”
Relations between the West and East Coast cellular carriers turned sour last year when GTE Corp. and Bell Atlantic announced merger plans. Vodafone AirTouch (then just AirTouch Communications Inc.) cried foul, claiming the merger would violate the PrimeCo partnership agreement as well as the TomCom agreement signed in 1994 to create a nationally competitive brand and seamless nationwide wireless network. Both agreements included non-compete clauses that prevented both AirTouch and Bell Atlantic from operating in the same markets.
After losing out to Vodafone to acquire AirTouch earlier this year, Bell Atlantic filed a lawsuit seeking to dissolve the TomCom agreement, saying TomCom’s objectives were never accomplished. Vodafone AirTouch filed a counterclaim seeking damages and the enforcement of the non-competitive clause.
The two companies told the Securities and Exchange Commission in April they planned to dissolve the PrimeCo partnership and divide the properties after Vodafone and AirTouch completed their merger this summer. Vodafone AirTouch officials had still hoped the two companies could establish some type of relationship that would give both a much-desired national reach.
“Essentially, we expect to continue the roaming relationship with AirTouch,” said Jim Gerace, vice president of public relations with Bell Atlantic Mobile. “We don’t anticipate the relationship expanding much beyond that.”
“We are still committed to building a national footprint,” said Vodafone AirTouch’s Marshall. “Options include purchasing spectrum or purchasing existing operations.”
Dennis Strigl, chief executive officer of Bell Atlantic Global Wireless, said in June he expects to see the Federal Communications Commission’s spectrum cap eased, allowing the company to purchase new or existing spectrum to enhance its footprint. Many companies in recent spectrum auctions may never build out systems and may be looking to sell out, the companies hope.
The settlement reached last week calls for Bell Atlantic to assume ownership of PrimeCo operations in the five major trading areas of Richmond, Va.; New Orleans; and Jacksonville, Tampa and Miami, Fla. Vodafone AirTouch will take over operations in Chicago; Milwaukee; and the Texas markets of Dallas, San Antonio and Houston. Other terms of the agreement were not disclosed. Separately, the two reached an out-of-court settlement of all litigation pending in a district court in California.
Both companies said they have not worked out whether the PrimeCo brand will remain. PrimeCo, the second-largest U.S. PCS carrier with 1.3 million customers, is known for its aggressive marketing push featuring a pink alien named Primetheus.
The merger between Bell Atlantic and GTE, expected to close later this year, will result in a company with an entirely new name and brand. Any branding decisions won’t be made until early next year, say people familiar with the merger.
“Competing values will have to be weighed,” said Vodafone AirTouch’s Marshall. “There may be ways of using both.”
