American Telephone & Telegraph Co. yesterday proposed a major restructuring that ultimately could form the Bell System's 22 local operating companies into seven regional corporations.
Under the plan, Chesapeake & Potomac Telephone Co. would be joined with Bell of Pennsylvania, Diamond State Telephone Co. of Delaware and New Jersey Bell Telephone Co. as one of the regional corporations.
However, C&P and all other Bell System local operating companies will continue to operate under the same name and in the same territory as they do now, apparently in an effort to keep the reorganization as little noticed as possible by AT&T customers.
AT&T stressed that the plan was tentative, but added that it was unlikely to be changed significantly. As now planned, AT&T shareholders eventually will see their stock split among AT&T and the seven regional concerns.
The reorganization plan immediately was attacked by General Telephone & Electronics Corp., AT&T's biggest independent telephone competitor. GTE said it wanted the Bell System broken down into 22 different companies. If that occurred, GTE would be the nation's largest local telephone company. The proposed shakeup is the first step AT&T must take to comply with the landmark divestiture agreement it signed Jan. 8 with the Justice Department to end the government's seven-year antitrust suit against the Bell System.
The agreement requires AT&T to divest itself of local operations of its 22 local operating companies, about two-thirds of the Bell System's assets. In turn, the government has agreed to lift the restrictions imposed in 1956 that have kept AT&T from entering the computer-processing business or any other unregulated activity.
Although the agreement will probably not be approved by a federal judge for at least another four months and the divestiture will not have to become effective until 18 months after that, AT&T Chairman Charles L. Brown said the reorganization plan was drawn up now to help the company "proceed with our planning."
The plan sets the stage for AT&T to make a host of more complicated decisions involving the division of its $125 billion of assets and its million employes among AT&T and the divested local companies.
The reorganization scheme was approved unanimously Thursday by the heads of all Bell operating companies. "We considered all equations, ranging from setting up a separate company for each state to creating a single national company," said C&P President Robert Allen.
"A single company would have re-created the size and power that has some of the same antitrust infirmities that led to the Justice Department case," Allen said. On the other hand, a separate company for each state created "concerns about the financial strength of single independent companies, each having to raise capital in a very capital-intensive business," Allen added.
After reviewing reorganization schemes that would have resulted in six to nine regional companies, the presidents ultimately selected seven regional corporations, with each having assets around $15 billion and annual revenues near $6.5 billion.
The Mid-Atlantic region, which includes all four C&P companies--Virgnia, West Virginia, Maryland and the District of Columbia--will have assets near $14.7 billion with annual revenues of $6.7 billon.
The other regional companies will be made up of:
* New England Telephone & Telegraph Co. and New York Telephone Co. with assets of $14.8 billion and annual revenues of $7.7 billion.
* South Central Bell and Southern Bell with assets of $18.5 billion and annual revenues of $8.1 billion.
* Illinois Bell, Indiana Bell, Michigan Bell, Ohio Bell and Wisconsin Telephone Co. with assets of $15.3 billion and annual revenues of $7.1 billion.
* Southwestern Bell with assets of $13.3 bilion and annual revenues of $5.8 billion.
* Mountain States Telephone and Telegraph Co., Northwestern Bell and Pacific Northwest Bell with assets of $13.4 billion and annual revenues of $5.9 billion.
* Pacific Telephone & Telegraph Co. and its wholly owned subsidiary The Bell Telephone Co. of Nevada with assets of $13.3 billion and annual revenues of $5.8 billion.
To oversee the local companies in each region, a new holding company, with a chief executive officer and board of directors, will have to be created. There will be no corporate linkage betweeen the regions, AT&T said.