WASHINGTON -- The U.S. Department of Justice today gave its approval to the combination of Bell Atlantic Corp. (NYSE: BEL) and Vodafone AirTouch Plc (LSE: VOD; NYSE: VOD) U.S. wireless operations, subject to a consent decree that calls for the resolution of overlapping wireless properties.
The agreement is a major step toward the launch of a new national wireless competitor next year, which will be further strengthened by the addition of the domestic cellular and PCS assets of GTE Corp. (NYSE: GTE), through the pending merger of Bell Atlantic and GTE. Including the GTE assets, the new business will be the largest U.S. wireless company, serving over 21 million proportionate wireless and 3.5 million paging customers in markets covering more than 90 per cent of the population.
The companies committed to address overlap issues when they announced the combination on Sept. 21, 1999. The resolution will be accomplished through dispositions of one of two competing properties in each market where an overlap would be created by the venture. The consent decree applies no other conditions to the transaction. The companies noted that the process of marketing overlap properties is already underway.
As a general rule, under the decree terms the three companies plan to eliminate wireless overlaps upon the closing of their respective transactions. However, for more than half of the properties -- which involve cellular to PCS overlaps -- the DOJ has granted additional flexibility to the companies. In those cases the companies have until the close of their transactions or June 30, 2000, whichever comes later. The DOJ also may permit up to two 30-day extensions to the deadline. Bell Atlantic and Vodafone are on track to close their transaction six to 12 months from the date it was announced. Bell Atlantic and GTE are aiming to complete their merger around the end of first quarter 2000.
The companies said the terms of the consent decree had been anticipated and give them time to dispose of the overlap properties in an orderly manner that will maximize the value of the assets and minimize the impact on customers. The decree also gives the companies the opportunity to retain 10 megahertz (MHz) of spectrum in areas where they choose to sell PCS operations.
The companies said they may swap the overlap operations for assets in markets where they have no local wireless presence.
The overlapping operations are estimated to serve some 3 million wireless customers in markets covering 49 million POPs. The conflicted markets are: San Francisco, San Diego, Cleveland, Phoenix, Albuquerque, Austin, Houston, San Antonio, Chicago, Seattle, Spokane, Cincinnati, Miami, Tampa, Ft. Myers, Jacksonville and Pensacola, Fla., Mobile, Ala., Anderson/Greenville, S.C., El Paso, Tex., Las Cruces, N.M and Norfolk/Richmond, Va.
The consent decree supersedes one reached in May by Bell Atlantic and GTE with the DOJ concerning overlaps between their wireless operations. All of the other necessary regulatory approvals for the wireless transaction are on track. The deal will also be submitted to Vodafone AirTouch shareholders for their approval and is subject to the receipt of an exemptive order from the Securities and Exchange Commission or other satisfactory resolution regarding the application of the 1940 Investment Company Act to Vodafone AirTouch Plc., and AirTouch Communications, Inc.
Bell Atlantic is at the forefront of the new communications and information industry. With more than 43 million telephone access lines and 10 million wireless customers worldwide, Bell Atlantic companies are premier providers of advanced wireline voice and data services, market leaders in wireless services, and the world's largest publishers of directory information. Bell Atlantic companies are also among the world's largest investors in high-growth global communications markets, with operations and investments in 23 countries.
Vodafone AirTouch, based in the United Kingdom, is the world's largest mobile telecommunications company. It has mobile operations in 24 countries on five continents, with more than 31 million proportionate customers. In the United States, AirTouch serves more than 9 million proportionate cellular and PCS customers in 25 states and 22 of the top 30 U.S. markets, including Atlanta, Chicago, Dallas, Detroit, Houston, Los Angeles, Phoenix, San Diego, San Francisco and Seattle.
With 1998 revenues of more than $25 billion, GTE is a leading telecommunications provider with one of the industry's broadest arrays of products and services. In the United States, GTE provides local service in 28 states and wireless service in 17 states, as well as nationwide long- distance, directory, and internetworking services ranging from dial-up Internet access for residential and small-business consumers to Web-based applications for Fortune 500 companies. Outside of the United States, the company serves customers on five continents.