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  • Bell Atlantic
  • Vodaphone AirTouch

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    Bell Atlantic, Vodafone Join Wireless Services

    By Yuki Noguchi
    Washington Post Staff Writer
    Tuesday, September 21, 1999; 12:30 p.m. EDT

    Bell Atlantic Corp. and Vodafone AirTouch PLC said today that they have agreed to a $70 billion joint venture that will create the nation's largest mobile phone company, with 20 million cellular users and 3.5 million paging customers.

    The agreement announced days after AT&T Corp. announced its $10 billion wireless phone venture with British Telecommunications PLC gives Bell Atlantic a 55 percent share in the new company. Vodafone, the world's largest mobile phone company, will hold 45 percent.

    "This agreement represents a major step forward in our U.S. strategy. In a market where penetration levels are relatively low but growth looks set to take off, gaining a nationwide footprint with common technology is of paramount importance in order to remain competitive," said Chris Gent, chief executive of Britain's Vodafone AirTouch, based in Newbury.

    The companies will combine the assets from Bell Atlantic Mobile, AirTouch Cellular, GTE Corp., PrimeCo Personnel Communications LP and AirTouch Paging, which will cover 90 percent of the U.S. population in 49 of the top 50 markets. The new company, which Bell Atlantic and Vodafone were not prepared to name this morning, will have 26 percent of the national market, but will have to divest some overlapping holdings to meet Federal Communication Commissions requirements. The transaction is expected to be completed in six to 12 months.

    The partnership introduces a new major player in the $5 billion U.S. wireless market, competing head-to-head with other national companies like AT&T and Sprint PCS, which control 12.9 percent and 5.7 percent of the market, respectively. The deal gives Vodafone the kind of coast-to-coast coverage it has been seeking since it acquired San Francisco-based AirTouch Communications Inc. in January. That deal gave Vodafone a foothold in the West and Midwest and 9 million U.S. wireless customers.

    "The main reason that Vodafone and Bell Atlantic are doing this is that the national providers are gaining share more rapidly" than the regional players, said Michael J. Balhoff, managing director of investment firm Legg Mason Wood Walker in Baltimore. "You're really going to have a juggernaut."

    The increased competition is good for consumers as well, who are likely to see more and better services, Balhoff said. "We've seen a fairly dramatic price drop over the past three or four years of 30 to 40 percent, [so] for the most part these companies are going to want to differentiate in terms of service rather than price," he said.

    The agreement also represents a rapprochement between Bell Atlantic and Vodafone, which were rivals in the bidding war over AirTouch. In the aftermath of Vodafone's victory, Bell Atlantic and AirTouch split up their wireless service joint venture, PrimeCo Personal Communications LP.

    Mel Marten, an analyst with Edward Jones in St. Louis, said Vodafone officials immediately approached Bell Atlantic after the AirTouch episode, but was rebuffed. Other analysts said they weren't concerned about that history. "Any rumored difficulties between these two companies shouldn't be a problem at all," said Kevin Roe, a telecommunications analyst for ABN AMRO in New York.

    © 1999 The Washington Post Company

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