FCC to Vote Soon on GTE, Bell Atlantic Merger
- 15 June, 2000 12:01
BOSTON (06/15/2000) - The U.S. Federal Communication Commission (FCC) has made no official decision on the merger between Bell Atlantic Corp. and GTE Corp., but commissioners should vote on the matter within the next couple of weeks, according to an FCC spokesman.
The merger of the two companies would create the largest local telephone company in the U.S., worth about US$150 billion, employing 260,000 people, and with 63 million local phone lines. The new company would be called Verizon Communications.
Four of the five FCC commissioners had committed to the deal Wednesday, according to a report published Thursday in the Washington Post, which quoted anonymous sources. FCC spokesman Mike Balmoris and spokespeople from the two companies declined to confirm the Post's report.
The merger was announced in July of 1998, but has been stalled by the FCC because of a regulatory conflict over proposed voice and data long-distance business services from the new company. In January of this year, Bell Atlantic and GTE agreed to spin off 90 percent of the GTE Internet backbone addition, creating a company called Genuity, as well as to divest $500 million of investments outside of GTE's local service area within three years of the merger's completion. [See "Bell Atlantic, GTE May Sell GTE's Net Interests," Jan. 28.] Both companies are cautiously optimistic that the merger will win FCC approval, according to spokespeople.
"We're in discussions with the FCC, and we've addressed their concerns," said Susan Buttai, a spokeswoman for Bell Atlantic. "We're confident that the merger will be approved by the end of the month."
Huge mergers like the US West Inc. and Qwest Communications International Inc. deal approved in March and the proposed merger of Sprint Corp. and WorldCom Inc. make other telecommunications vendors look to mergers of their own to survive, said Bob Bishop, GTE spokesman.
"There's no question; it's going to be a huge company," Bishop said of the GTE and Bell Atlantic deal. "The telecommunications market will eventually consolidate into three to five tier-one providers, nationally and globally, and some niche companies. A big company like GTE, like Bell Atlantic, needs that size and scale to survive."
Under terms of the merger agreement, GTE shareholders will get 1.22 shares of Bell Atlantic stock for each GTE share they possess. When the deal was announced, it was valued at $52.8 billion. GTE will become part of Bell Atlantic under the agreement, although company executives have insisted that the new company will be a merger of equal partners. [See "UPDATE: GTE, Bell Atlantic Agree to US$52.8 Billion Merger," July 28, 1998. ] GTE is based in Irving, Texas, and Bell Atlantic is in New York. Verizon will be based in New York, with operations in Dallas and other U.S. cities where GTE has offices, company officials said when they announced the deal.
GTE, in Irving, can be reached at +1-972-507-5000 or http://www.gte.com/. Bell Atlantic, in New York, can be reached at +1-212-395-3400 or http://www.bellatlantic.com/.