Bell Atlantic Corp., the No. 1 U.S. local phone company, said today it was in talks with Vodafone AirTouch PLC, the world's largest wireless-telephone company, about a business relationship in the United States.
The New York Times, citing people close to the talks, reported today that the companies were close to an agreement to combine their U.S. wireless operations into a separate company with a market value of as much as $80 billion. The companies' boards are expected to vote this week on the proposed combination, the Wall Street Journal reported in its online edition.
New York-based Bell Atlantic, which will be the largest wireless phone company in the United States after it buys GTE Corp., said no timetable has been established for the talks, which Vodafone disclosed last week, and there can be no assurance any agreement will be reached.
An agreement would give the companies a U.S. network capable of competing with coast-to-coast wireless operators such as Sprint Corp. and AT&T Corp. Vodafone AirTouch, based in Britain, has wireless operations in the western United States, while Bell Atlantic's service area is primarily in the eastern states.
"It's a natural combination in terms of properties," said Mark Lowenstein, senior vice president at market researcher Yankee Group. "We've really come to a point where scale and scope are critical to compete in the U.S. wireless market."
Vodafone AirTouch's American depositary receipts rose $10.75, to $205.56 1/4, yesterday, while Bell Atlantic shares rose $1.75, to $64.25.
Bell Atlantic decided in April to break up PrimeCo Personal Communications LP, its joint venture with Vodafone, after Vodafone beat Bell Atlantic in a bidding war for AirTouch Communications Inc., Bell Atlantic's original partner in PrimeCo.
Vodafone AirTouch chief executive Chris Gent told analysts at a Sept. 3 meeting that the talks with Bell Atlantic had a 25 percent to 30 percent chance of succeeding, Morgan Stanley Dean Witter & Co. said in a report to investors last week.
Without a national network, the number of customers who either Bell Atlantic or Vodafone AirTouch can attract shrinks, he said, because so many wireless-phone users want single-rate plans with no extra fees for long-distance calls or service outside a company's service area.
If talks with Bell Atlantic fail, Vodafone is also considering bidding for Omnipoint Corp., which operates in big eastern cities such as New York, Boston and Philadelphia, and agreed in June to be acquired by VoiceStream Wireless Corp., Morgan Stanley said in the note to investors.