Friday, April 9, 1999

AT&T buying
Honolulu Cellular

A source says the Hawaii
company is being purchased
from BellSouth for
$160 million

By Russ Lynch


Hawaii's oldest wireless telephone business, Honolulu Cellular Telephone Co., is being sold to telecommunications giant AT&T Corp.

The 290 employees of the company were told this morning that owner BellSouth Corp. has agreed to sell the business, a BellSouth official said.

AT&T will offer them all positions and there should be no changes locally, said Gil Mendelson, Honolulu Cellular general manager. "They will become AT&T employees" and AT&T has no plans to move any operations out of Hawaii, he said.

The price was not disclosed. One source close to the deal told Bloomberg News that it will be about $160 million but Jeff Battcher, a spokesman at BellSouth's headquarters in Atlanta, said he had not heard that figure and did not know where it came from. Mendelson declined to comment on the price.

AT&T said in a statement that the ownership change, which should be completed in the second half of this year subject to regulatory approvals, will be good for customers.

Honolulu Cellular customers will be able to use their phones in 7,000 AT&T locations across North America and AT&T's mainland customers will be able to use their cellular telephones on Oahu and Maui, said Dan Hesse, president and chief executive officer of AT&T Wireless Services.

BellSouth said it wants to concentrate its efforts in expansion in areas where it can offer a number of services, such as local telephone lines as well as cellular, together on one customer bill.

BellSouth was a minority partner in Honolulu Cellular from the beginning in early 1986, when Honolulu Cellular and GTE Mobilnet became the first two companies awarded cellular licenses for Honolulu. In 1991, BellSouth acquired a majority interest in Honolulu Cellular and in 1996 became 100 percent owner.

It was on May 6, 1986 that Honolulu Cellular first showed off the possibilities when Glenn Umetsu, then-president of the company, made a phone call from Tamarind Square in downtown Honolulu to Hideto Kono, then-chairman of the Public Utilities Commission, while news photographers took pictures. In those days, cellular telephones weighed several pounds and the model Umetsu showed off had a retail price of $2,800. They soared in popularity in recent years, shrinking to cigarette-pack size or smaller and expanding in capability.

GTE Mobilnet put its service in operation in October of that year. Now there are six firms offering various types of wireless service in the islands. Honolulu Cellular declined to say how many customers it has but said it knows it is the leader in this market.

U.S. wireless companies are trading some markets and networks to create bigger clusters of operations in certain regions. BellSouth primarily provides wireless services in the southern United States, while AT&T is striving for wireless coverage throughout the country.

Bloomberg News contributed to this report.

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