Some view Nynex as slower partner Firm's former rival Bell Atlantic seen as quicker to change

April 23, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

In the wake of the $22 billion merger announced by Nynex Corp. and Bell Atlantic Corp, a question: Is Nynex dumb and slow, as critics insist, or just the possessor of "low-hanging fruit" that competitors have scooped up in the early skirmishes of the deregulation-incited war in telecommunications?

Both views have their proponents, and, in any event, Bell Atlantic is seen as having adapted much faster and more effectively to the information and deregulation revolutions than its new partner.

Bell Atlantic is the one that proposed a merger (later called off) with a cable television company to create a cross-disciplinary communications giant, while Nynex is the one taking serious early licks in the competition to provide its basic local telephone service to Manhattan businesses. And so the comparisons go.

"A lot of the time when you talk with Nynex people, they just come up with reasons not to do things," said Daniel Briere, senior consultant at TeleChoice Inc. in Verona, N.J. "They have got a lot of really smart people. It's just that somehow things are not getting out the door and getting done."

RTC Mostly, these complaints revolve around two arguments. First, critics claim that Nynex has been slow to soup up its telephone service to provide integrated packages of services such as voice mail, call waiting and other services that allow much faster transmission of pictures and other forms of data over phone lines.

Second, they say Nynex has lost a big chunk of the Manhattan phone market in its first serious taste of competition to emerging local-access providers and private-network systems offered by competitors such as AT&T and MCI, and built a cellular phone business that was seen as a laggard before it merged with Bell Atlantic's cellular business in July.

"The general popular belief -- and I'm in the same category -- is that the management at Nynex is a little less swift," said Robert Gensler, telecommunications analyst at T. Rowe Price Associates Inc., a Baltimore mutual fund group that owns stock in both companies.

Chris Landis, another consultant at TeleChoice, said Nynex has lost 56 percent of its call traffic south of 56th Street in Manhattan -- the core of the highly profitable business market. The reasons: less than fully integrated products and often slow service.

But many dispute how fair it is to blame Nynex for all of its troubles.

Some, the company's defenders say, came about because Nynex and New York utility regulators have had a difficult relationship through the years, and because Nynex was not legally able to get into businesses such as equipment manufacturing that would have helped it compete for corporate local calling business.

They add that it was natural that Nynex would be the first of the regional Bell operating companies to lose business to new competitors because it has the juiciest turf to defend -- the corporate megalopolis of New York City.

A Nynex spokesman, who asked not to be identified by name, said the company had to wait almost three years for New York regulators to approve a proposal for rate reform that would let it keep savings from making the system more efficient, rather than rebate the money to consumers of existing services.

Last year, Nynex finally made such a deal -- in exchange for a five-year rate freeze for local service and reduced rates on intrastate long-distance calls. And that is only one of several changes shaping up Nynex lately.

Ivan Seidenberg, 49, became Nynex's chairman a year ago, and the company's shares have risen 38 percent, including reinvested dividends, over the past year. He boosted profits, improved labor relations and expanded internationally, analysts said.

Biggest mergers

1. RJR Nabisco Inc., merger with Kohlberg Kravis Roberts & Co., $25 billion, completed in 1989.

2. Bell Atlantic agrees to combine with Nynex Corp. in an exchange of stock valued at $22.7 billion, announced yesterday.

3. Walt Disney Co. buys Capital Cities/ABC for $19 billion in cash and stock, completed in 1996.

4. SBC Communications Inc. agrees to buy Pacific Telesis Group for $16.7 billion in stock, announced in 1996.

5. Wells Fargo buys First Interstate for $14.2 billion, completed in 1996.

6. Warner Communications Inc., merger with Time Inc., $14.11 billion, completed in 1990.

7. Kraft Inc., merger with Philip Morris Inc., $13.44 billion, completed in 1988.

8. Gulf Corp., merger with Standard Oil Co. of California, $13.4 billion, completed in 1984.

9. Chase Manhattan merger with Chemical Banking, $13 billion, completed in 1996.

10. Squibb Corp., merger with Bristol-Myers Co., $12.09 billion, completed in 1989.

11. AT&T Corp. buys McCaw Cellular Communications, $11.5 billion, completed in 1994.

12. Getty Oil Co., merger with Texaco Inc., $10.12 billion, completed in 1984.

13. Martin Marietta Corp. merger with Lockheed Corp., $10 billion, completed in 1995.

14. Paramount Communications Inc., acquired by Viacom Inc., $9.6 billion, completed in 1994.

Pub Date: 4/23/96

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