IRVING, Texas and WEST DES MOINES, Iowa - GTE and Iowa Network Services (INS), Inc., today announced an agreement in which INS will purchase 280,422 domestic access lines from GTE in Iowa. The transaction is the most recent in GTE's previously announced initiative to sell approximately 1.6 million telephone lines in the United States. Financial terms were not disclosed.
GTE and INS described the transaction as one that will enable each entity to better concentrate on core markets and create both immediate and long-term value for their investors. The INS purchase involves 296 GTE telephone exchanges and 384 GTE employees in Iowa.
INS intends to create a new company, Iowa Telecommunications Services (ITS), which will operate the local exchanges. INS will be joined in the ITS investment by Touch America, Inc., a wholly-owned full service telecommunications subsidiary of the Montana Power Company of Butte, Montana. With this acquisition, ITS will become the second-largest local telephone company in Iowa.
"ITS will be an Iowa-based, customer-oriented, full service provider of quality telecommunications services," said William P. Bagley, INS President and CEO. "Advanced services, such as local Internet access, will be offered as soon as the properties change hands. INS worked hard to be sure these exchanges would be owned and operated by Iowans here in Iowa."
INS, based in West Des Moines, is owned by 128 Iowa independent telephone companies and provides telecommunications services to over 147 independent companies and more than 400,000 people in some 300 Iowa communities. INS is also the general partner in Iowa Wireless Services which provides personal communication service (PCS) covering 2.3 million residents of Iowa. At present time, INS companies have over 300 employees serving the people of Iowa.
"Completion of this agreement - in addition to other recently announced wireline deals with Citizens Utilities, the Alaska Telephone Exchange Acquisition Corporation, and CenturyTel - represents continuing significant progress toward GTE's goal of generating more than $3 billion in proceeds from the sale of some selected wireline properties," said John Appel, president-GTE Network Services. "The price GTE is receiving in Iowa is generally in line with the other announced transactions."
On May 27, Citizens Utilities agreed to purchase 186,839 GTE customer access lines in Arizona, California, and Minnesota. The same day, the Alaska Telephone Exchange Acquisition Corporation, Inc. (ATEAC) agreed to buy all of GTE's 20,564 access lines in Alaska. On June 29, CenturyTel signed an agreement to purchase all 213,651 of GTE's access lines in Arkansas.
Proceeds from the sale of GTE's wireline properties - as well as GTE Airfone and GTE Government Systems - will be used to help reduce the debt from GTE's recent purchase of Ameritech wireless properties in Illinois and Missouri and for investment in other future strategic initiatives.
Approximately 180 GTE employees in Grinnell, Iowa, are excluded from the transaction and will continue to work for GTE. These employees work in the company's Centralized Toll Investigation Center, Data Base Administration Center, and Network Security Center - all of which are national centers that are considered to be essential to GTE's future success.
The deal does not affect GTE's offering of long distance, Internet and wireless services to Iowa consumers.
Sale approval is required by the Iowa Utilities Board, the Federal Communications Commission, and the U.S. Department of Justice. The closing of the sale and transfer of GTE operations to INS is expected to be complete by early 2000.
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 the United States, the company serves customers on five continents. Additional information about GTE can be obtained at http://www.gte.com
About Touch America
Touch America, based in Butte, Mont., is a wholly-owned telecommunications subsidiary of The Montana Power Company, providing long distance services, private line services, Internet, and business telephone equipment throughout the Upper Midwest and western United States since 1983. The company's 15,000-mile digital fiber-optic network employs the most advanced telecommunications technology available today. The company plans to have an 18,000-mile network by year-end 2000. Touch America offers a full line of long distance services, as well as dedicated voice, data, video services and frame relay solutions. Touch America's equipment services include design, installation, and maintenance of PBX and key systems. The company also offers construction management oversight of the installation of fiber-optic systems.
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Editor's Note:Maps of the affected exchanges can be obtained by selecting Iowa Maps.