Cellular phone giants to merge

June 30, 1994|By Michael Dresser | Michael Dresser,Sun Staff Writer

Bell Atlantic Corp. and Nynex Corp., two of the seven Bell companies created in the breakup of AT&T, announced today that they will merge their cellular phone businesses to create a unified wireless network stretching from Maine to North Carolina.

Philadelphia-based Bell Atlantic, the regional giant whose wired-line territory includes Maryland, will be the dominant partner in the combined company -- controlling a 62.35 percent interest compared with New York-based Nynex's 37.65 percent.

Raymond W. Smith, Bell Atlantic's chairman and chief executive, made it clear that his company regards the merger as only the first phase in creating a national wireless network for personal communications services (PCS).

"We expect to add new partners to our national PCS alliance," he said in a statement released this morning.

Together, the two companies have cellular systems in a region with a population of 55 million that includes 7 of the nation's top 20 markets, including New York, Boston, Philadelphia and Baltimore-Washington.

The combined company will be the fourth-largest cellular communications provider in the United States after McCaw Cellular Communications Inc., Southwestern Bell Corp. and GTE Corp.

The merger puts the merged company in a strong position to compete with other giants in the wireless business -- including the alliance of MCI Communications Corp. and Nextel Communications Inc. and the proposed combination of AT&T Corp. and McCaw Cellular Communications Inc.

"We will, this company, build the wireless lane of the information superhighway," Mr. Smith said at a news conference in New York. He said Larry Babbio, Bell Atlantic's chief operating officer, would head the management committee of the new venture, which has not yet been named.

The deal represents an extension of an existing relationship between the two companies, which have been jointly operating a cellular system serving New York and northern New Jersey for 10 years.

In a statement issued by Bell Atlantic, the companies said they will pursue an aggressive strategy of acquiring licenses for additional space on the wireless spectrum when it is auctioned by the Federal Communications Commission later this year.

Mr. Smith said he expects the market for wireless communication to grow from 6 percent of the population to 35 percent of the population within the next 10 years.

Nynex Chairman William Ferguson called the combination a "win, win, win situation."

Mr. Ferguson noted that the combined region includes one-third of the nations' Fortune 500 company headquarters and the seat of the national government. The residents of the region commute more than any others in the country, he said.

"It must be a great market because of all the competitors who come in here to compete in the communications arena," Mr. Ferguson said.

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