MobileMedia to buy BellSouth wireless unit

September 15, 1995|By Bloomberg Business News

RIDGEFIELD PARK, N.J. -- MobileMedia Corp. said yesterday it will buy BellSouth Corp.'s MobileComm paging unit and nationwide wireless license for $945 million.

The acquisition is the largest in the paging industry, as companies try to expand their coverage to offer nationwide service. The sale will allow BellSouth to focus on potentially more profitable businesses.

The new company will combine the second-largest U.S. provider of paging services in MobileMedia with the third-largest in MobileComm. Together, they will have annual sales of $560 million and 4 million customers, trailing only Paging Network Inc. with 5.4 million paging customers.

"PageNet has been the dominant player," said Dorothy Salmon, paging analyst for MTA/EMCI, a Washington-based consulting and market research firm. "Now, here is somebody that can rival PageNet in terms of subscriber base, marketing and customer service."

Analysts expect more paging acquisitions.

"You need to get economies of scale so you can be the low-cost provider," said Jeffrey Hines, analyst at PaineWebber Research.

MobileMedia shares rose $1.375, to close at a 52-week high of $27.875 yesterday. BellSouth shares rose $2, to $72, also a 52-week high. PageNet shares dropped 7 cents, to $46.75

BellSouth will focus on its southeastern U.S. local phone market, expansion of its cellular business and international opportunities.

By selling its paging operations, BellSouth becomes the latest regional Bell company to shift its attention to potentially more profitable cellular or international opportunities.

Of the seven Bells -- Ameritech Corp., BellSouth, Nynex Corp., Pacific Telesis Group, SBC Communications Inc., U S West Inc. and Bell Atlantic Corp. -- only Ameritech and Bell Atlantic still have their own paging networks.

Atlanta-based BellSouth emphasized that it isn't exiting the paging business. Instead, it will resell MobileMedia's paging services.

BellSouth expects to post a gain of $350 million when the transaction is completed in early 1996. The deal is subject to regulatory approvals.

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