Bell Atlantic aims to acquire AirTouch

Bell Atlantic is in talks to acquire AirTouch Communications, AirTouch confirmed on Sunday via a press statement.

An announcement that Bell Atlantic will purchase wireless provider AirTouch for $US45 billion in stock is expected Monday, according to numerous press reports.

New York-based Bell Atlantic, already the largest local telephone service provider in the US, seeks to purchase the San Francisco-based provider of wireless communications in order to form a nationwide and international wireless network, according to a story in the New York Times, which quoted executives close to Bell Atlantic.

Bell Atlantic already has 5.7 million cellular customers on the East Coast of the US, according to the New York Times story, while AirTouch has 7.8 million customers in the US and more than 11 million worldwide. The AirTouch acquisition would give Bell Atlantic 13 percent of the US wireless market, and place it ahead of AT&T Corp., which has 10 percent, according to the Times report.

AirTouch has a number of partnerships in Europe and Asia that would considerably expand Bell Atlantic's network internationally. AirTouch owns interests in cellular, paging and personal communications services in Belgium, Egypt, Germany, India, Italy, Japan, Poland, Portugal, Romania, South Korea, Spain and Sweden and has an interest in the Globalstar satellite system for voice and data. AirTouch said it is the largest wireless company in the world based on the total number of customers served by its ventures -- 35 million total customers worldwide with more than 16 million of those based on partnerships.

It is precisely AirTouch's international businesses that are reportedly the most important, since they contribute half of the company's cash flow and are growing much more rapidly than its domestic business, according to a CNBC report.

The two companies already share an alliance, called Primeco Personal Communications, that provides wireless service in more than 30 US cities, according to CNBC.

The purchase price, if the deal is approved, is expected to be at a 10-percent premium over AirTouch's Thursday closing price of $72.43, according to news reports. Bell Atlantic's market cap as of closing Thursday was $83.8 billion, twice that of AirTouch, valued at $41.4 billion.

The AirTouch Board of Directors said in the statement that it has not approved the transaction and that significant issues still remain. The deal will also need the approval of Bell Atlantic as well as that of GTE, which has agreed to merge with Bell Atlantic. That merger is still pending regulatory approval. Reportedly, however, GTE officials support the deal, according to CNBC.

Because of the size of the deal, and because of the pending GTE merger, this purchase is likely to face heavy scrutiny.

Bell Atlantic, one of the "Baby Bells" formed when AT&T was broken up in 1984, has customers in New York and throughout New England.

The deal is expected to reduce the cost of cellular calls for roaming industrywide, according to analysts quoted by the Times.

Other companies reportedly interested in purchasing AirTouch were the UK's Vodaphone and MCI WorldCom, according to a report by the CNBC.

No further comment will be made by either party until negotiations are concluded, AirTouch said.

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