Bell Atlantic aims to expand its horizons abroad

July 16, 1995|By Michael Dresser | Michael Dresser,Sun Staff Writer

What is a local and long-distance telephone company in the South Pacific, a cellular company by the Gulf of Mexico, a multimedia company by the Mediterranean and a satellite company operating over the Indian Ocean?

Bell Atlantic Corp.

Born in 1984 as a staid local telephone company for the mid-Atlantic states, the Bell Atlantic of the 1990s has turned into an avid globe trotter in the telecommunications industry. The Philadelphia-based company has made significant investments in New Zealand, Mexico, Italy and Indonesia, but its appetite for exotic cuisines is far from sated.

Last month, Bell Atlantic and France Telecom teamed up to make an unsuccessful run at 27 percent of the Czech national phone company. Undaunted, Bell Atlantic has now joined with British Telecommunications PLC to bid for 25 percent of the Belgian carrier Belgacom.

But journeying into foreign lands can bring hazards. That lesson was driven home over the past two quarters as Bell Atlantic was forced to take charges against earnings totaling $38.6 million because the Mexican peso crisis reduced the value of its investment in the Mexican cellular company Grupo Iusacell Mexico SA.

Bell Atlantic's global ambitions are largely driven by the erosion of its regional telephone monopoly -- a process that has only begun to cut into its revenue. Company executives know they have to look elsewhere for growth opportunities.

Alexander H. Good, a former assistant secretary of commerce for international trade in the Reagan administration, is the man Bell Atlantic brought aboard in October 1994 to make sure the company invests in the right "elsewheres" in the international market. As the president and chief executive of Bell Atlantic International, the 45-year-old Mr. Good leads an organization that represents a tiny fraction of Bell Atlantic's revenues but a large part of its future.

Mr. Good would not be specific about Bell Atlantic's goals in the world arena, but he said he would not be content with 10 percent of the company's revenue, which came to $13.8 billion in 1994. "I think we should be shooting for in excess of that," he said. "We want it to be as large as it can be as long as it's achieving our objectives."

Roaming far, wide

Bell Atlantic's global ventures are part of a trend among the regional Bell operating companies to roam far and wide in search of new markets. Their increased interest in foreign ventures comes at a time when many countries are dismantling their government-run telecommunications monopolies and seeking to modernize their often-decrepit phone systems.

Up until now, Bell Atlantic's global activities have ranked in the middle of the pack among the regional Bells, said Tedd Alexander, telecommunications analyst at Legg Mason in Baltimore. He said Bell South and U S West have been more aggressive in the international sphere.

But with the energetic Mr. Good aboard, Bell Atlantic is likely to redouble its international efforts.

"We believe Bell Atlantic is extremely well positioned to take advantage of the international marketplace because of what we bring to the party," Mr. Good said. "I would argue that we are probably the most efficient local telephone company in the United States."

But detractors say many of the regional Bell companies' global investments show they have more confidence than common sense. These critics contend that U.S. rate payers are, in effect, subsidizing the ill-advised gambles of innocents abroad.

"This kind of activity is what happens when people have money in a pocket and it's burning a hole in it," said A. Michael Noll, a professor of communications at the Annenberg School for Communication at the University of Southern California.

Mixed results

So far, Bell Atlantic's international track record has been mixed, with one apparent success, one rocky start and a smattering of ventures with records too new to judge.

The company's investment of $1.2 billion in Telecom Corp. of New Zealand has been almost too successful since it and Ameritech Corp. bought the privatized company from the government in 1990.

With a deregulated market and no effective competition in the local exchange, TCNZ has prospered. Its stock price has more than doubled since 1991, and Bell Atlantic has already recouped its original investment while continuing to hold on to 24.8 percent of the company. But the company's profits and dividends have soared so conspicuously that some New Zealand politicians are calling for reregulation.

"There's always an element of that wherever you go. That's almost a part of doing business in any jurisdiction," said Mr. Good.

In Mexico, there has been no problem of excessive dividends. Instead, Bell Atlantic has received a lesson in the volatility of markets in the developing world.

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