AT&T Wireless Services Inc. and BellSouth Cellular Corp. have agreed to consolidate ownership of their jointly owned cellular properties in Los Angeles, Houston and Galveston, Texas, and have created a new management structure that will streamline operations, said the companies.
The new agreement calls for BellSouth and AT&T to fold the existing ownership interests in Los Angeles Cellular, Houston Cellular and Galveston Cellular, into a single company that will continue to own, control and supervise all three properties.
AT&T will contribute cash of more than $1 billion to the new company to be used for additional investments by the parties. Following the consolidation of interests and the cash contribution, AT&T will increase its ownership and will hold about 55 percent of the new company. BellSouth will own about 45 percent.
The new management structure allows AT&T to manage LA Cellular and BellSouth to manage the Houston and Galveston properties.
In addition, the companies say they have reached an agreement on certain roaming and interoperability arrangements aimed at creating a seamless, nationwide Time Division Multiple Access network. BellSouth spokesman Kevin Doyle said the two companies will receive favorable roaming rates when their customers roam in these markets. Both companies still must pay roaming fees in the three markets.
AT&T’s One Rate plan eliminates long-distance and roaming fees nationwide, and the company’s strategy is to acquire other carriers to fill in its footprint and avoid paying other carriers’ roaming fees. Analysts say the Los Angeles market is one of the largest roaming markets in the country.
Analysts also suggest the new ownership arrangement will better position the companies for future acquisitions. BellSouth seems to be focusing on its wireless property clusters in the Southeast, and could be a target of an SBC Communications Inc. acquisition, analysts speculate.
