Bell Atlantic reaches out globally

December 23, 1990|By Leslie Cauley | Leslie Cauley,SUN GRAPHICS

What in the world is Bell Atlantic Corp. up to?

Given the company's emphasis on international expansion these days, a more appropriate question might be: Where in the world is Bell Atlantic?

The Philadelphia-based regional Bell has been looking more and more like a multinational company of late, setting up offices overseas, recruiting local allies and taking the pulse of Washington for hints on which international deals to chase and which ones to avoid.

It also has sent out hundreds of marketing representatives -- 900 at last count -- with a single mission in mind: to fatten the company's growing portfolio of international business.

Like a Lewis and Clark expedition team, Bell Atlantic's growing contingent of international salespeople has been dispatched to every continent but Antarctica to search out new accounts, said Michael Houghton, a company spokesman.

"And I wouldn't necessarily rule out Antarctica," he said. "If the right offer was made, we might do some business there."

That may not be far from the truth.

Bell Atlantic currently has a presence -- contracts or personnel -- in a dozen countries, including the United Kingdom, Belgium, Czechoslovakia and New Zealand. Marketing teams in more than a dozen other countries are laying the groundwork for future deals, part of Bell Atlantic's long-term strategy for enlarging the business and gaining a toehold in the burgeoning global communications market.

"We're looking at every acquisition opportunity that's out there," said Larry Grant, Bell Atlantic's director of investor relations. "How far we go to act on that opportunity is another matter, but we are looking at everything."

That would include everything from small consulting contracts worth less than $100,000 to billion-dollar buyouts of state-owned phone companies. Other possibilities are cable television franchises, satellite operations, cellular communication networks and construction of new networks.

Bell Atlantic executives point out that international activity is only one part of the company's overall strategy for expansion. But they concede that it is becoming increasingly important to Bell Atlantic's future financial health.

And no wonder.

With growth slowing in its core business -- local phone service -- ++ Bell Atlantic is going to have to look for other ways to boost revenues and squeeze out profits for shareholders in the years ahead.

But growth opportunities in the United States are limited, in part because of court restrictions imposed on the Bell companies during the 1984 breakup of the phone company. Those restrictions ban the Bells from a number of telecommunications-related businesses that the Bell companies have deemed critical to their future financial success.

Those restrictions don't generally apply abroad, where large-scale privatization efforts are under way. These once-in-a-lifetime conversions -- tantamount in scale to the breakup of American Telephone and Telegraph Co. in 1984 -- will open up many international markets to competition for the first time.

That has not been lost on Bell Atlantic, where Chairman Raymond Smith has publicly tagged the privatizations as "once-in-a-management-generation opportunities."

At least nine countries have already sold their government-owned phone networks. The most recent was Mexico, which earlier this month sold a controlling interest in its phone network to a consortium that includes Southwestern Bell for $1.76 billion.

A number of other countries, including Czechoslovakia and Hungary, have announced plans to follow suit, and there may be still more.

Many of the countries, including Mexico, are simply in need of basic phone service, the thing the Bell companies know the most about.

In the United States, for example, there are 50 phone lines for every 100 people. In Mexico, only five out of every 100 people have phones.

That translates into a lot of opportunity abroad for the profit-hungry Bell companies, said Jeff L. Sandler, a telecommunications analyst with County NatWest Security Corp. in New York City. "I think we can expect to see them do just about anything in this environment," he said.

Indeed, increased opportunity abroad has led some of the Bell companies into some unusual business deals overseas.

In June, Bell Atlantic announced a $2.4 billion deal with a fellow Baby Bell, Ameritech, to buy the New Zealand phone company, Telecom Corporation of New Zealand.

Bell Atlantic executives say the deal gives them toehold in the Pacific Rim, one of the fastest growing telecommunications markets in the world. The deal also paves the way for Bell Atlantic to enter neighboring Australia, which plans to open up its telecommunications industry to competition starting in 1991.

A second deal calls for Bell Atlantic and another partner, U S West, to rebuild Czechoslovakia's crumbling phone network. The high-profile project will give the American team an opportunity to use its management expertise and technical know-how to build a network from the ground up.

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