NEW YORK-Bell Atlantic Corp., GTE Corp. and Alltel Corp. signed an agreement last week to exchange wireless interests in 13 states, eliminating the overlapping cellular properties that would result from the combination of Bell Atlantic and Vodafone AirTouch plc, announced Sept. 21, the companies said.
Bell Atlantic and GTE will transfer wireless interests in 27 markets, involving 14 million pops, in Alabama, Arizona, Florida, Ohio, New Mexico, South Carolina and Texas.
Alltel will transfer interests in 42 markets, involving about 8.9 million pops, in Illinois, Indiana, Iowa, Nevada, New York and Pennsylvania, and pay about $600 million in compensation to Bell Atlantic, GTE and Vodafone AirTouch.
The companies said they also have signed a national roaming agreement that will allow their customers to roam on each other’s networks at reduced rates. All the companies use Code Division Multiple Access networks.
Kevin Beebe, group president of communications for Alltel, said the agreement gives Alltel five very strong regional clusters.
“The roaming agreement also gives us a path so that by the end of 2001, we will have an on-network cost structure for off-network traffic. Alltel will be the only regional wireless company in the U.S. that can say that,” Beebe said.
Covering more than 265 million pops, Bell Atlantic, GTE and Alltel will have 50 percent more coverage than both Sprint PCS and AT&T Wireless Services Inc., according to Beebe. Sprint has about 130 million pops and AT&T has approximately 170 million, he said.
About 700 Bell Atlantic and 1,000 GTE employees will be joining Alltel, while about 900 Alltel employees will join the new Bell Atlantic/GTE/Vodafone AirTouch venture, said the companies.
Bell Atlantic President and Chief Executive Officer Dennis F. Strigl will become president and CEO of the new venture.
PrimeCo Personal Communications President and CEO Lowell C. McAdam will become executive vice president and chief operating officer.
Edward Langston, currently chief financial officer of the USA/Asia Pacific region for Vodafone AirTouch, will be the new vice president and CFO, and Richard J. Lynch will continue as executive vice president and chief technical officer.
The merger of Bell Atlantic and Vodafone AirTouch’s domestic wireless operations is expected to be completed this spring, and the Bell Atlantic/GTE/Alltel transaction should be completed by mid-year, the companies said.
In related news, Bell Atlantic and GTE filed a proposal to meet the public-interest test with the Federal Communications Commission to complete the companies’ planned merger.
The proposal calls for the Internet backbone and related data business of GTE Internetworking to be transferred to a corporation that is owned and controlled by third-party public shareholders and operated independently of the merged company.
The merged company would only retain 10-percent equity interest with the option to increase its ownership interest to a controlling level once it receives sufficient relief to operate the business, the companies said.
The filing also included a package of commitments that will further promote the widespread deployment of advanced services, competition and help ensure that consumers continue to receive quality telephone services. These commitments are patterned closely after those that the FCC adopted in approving SBC Communications Inc.’s merger with Ameritech Corp.
The companies announced a proposal to invest $500 million for three years after merging outside of their traditional local service territories to compete with traditional telephone services offered by incumbent local exchange carriers or to provide advanced services to mass market customers.
The companies also said GTE would end its mandatory minimum charge on long-distance calls once AT&T does the same.
“The merger of Bell Atlantic and GTE is vastly different from other recent mergers,” said William Barr, executive vice president and general counsel of GTE. “It is neither a horizontal merger between actual competitors nor a lateral merger of adjacent regional Bell companies. It is a unique combination of complementary assets that will generate enormous public interest benefits.”
The FCC is expected to put the companies’ proposal out for formal comment with the target close of the merger at the end of the first quarter.
