Wireless May Be Minor In Latest Big Deal

Mobile Phone News, August 17, 1998

While AirTouch Communications Corp. [ATI] is saying hold the phone to the Bell Atlantic Corp.'s [BEL] proposed acquisition of GTE Corp. [GTE], Cellular One Group President Dick Lyons said don't hang up on your current wireless provider expecting a sea change in national roaming competition.

"The wireline to the home is where most of their revenue is," Lyons said. "The wireless [operations of the two companies] is just an add on."

Wireless analysts predict that the merged Bell Atlantic Mobile (BAM) and GTE Wireless could create a cellular provider to rival AT&T's [T] national footprint (MPN, Aug. 3, p. 8). Bell Atlantic has agreed to purchase GTE for $52.8 billion in stock.

Lyons said Bell Atlantic and GTE are probably most interested in combining their local wireline capabilities, creating a larger provider of additional services such as Internet links and video delivery and positioning themselves for increased local service revenues. Regardless of whether consumers' wireline providers also offer wireless services with national roaming packages or whether a nationally recognized wireless brand such as Cellular One is their cellular carrier, consumers consider their telecommunications services to be local.

"It's all a local business with the ability to offer the service nationally with the level of local service," Lyons said. "We're still a local business to most people."

And it's several local markets that AirTouch is concerned about. AirTouch contends that the combination of BAM and GTE Wireless would compete with AirTouch in several California markets where GTE operates, including San Francisco and San Diego. However, AirTouch's joint-venture partnership with BAM in PCS carrier PrimeCo Personal Communications LLP precludes each company from operating in an area where the other already does.

BAM may negotiate with AirTouch to break up the PrimeCo venture to remove the potential roadblock to the merger. The joint venture agreement, however, requires the sale of any assets to be approved by both partners. The pact also requires each partner to dispose of any conflicting property within six months and prevents each from withdrawing from the venture.

BAM reported that the areas where the two carriers' coverage overlaps include a total of approximately 900,000 pops. BAM and GTE's cellular services overlap in Central New Mexico, while PrimeCo overlaps with GTE's network in Indiana, Florida and Texas.