Monday, April 5, 1999

GTE to buy Ameritech
wireless stake

The $3.27 billion deal will give
Hawaiian Tel's parent a foothold in
20 markets in the Midwest

Bloomberg News


IRVING, Texas, -- GTE Corp., which is being acquired by Bell Atlantic Corp., agreed to buy about half of Ameritech Corp.'s wireless phone business in the Midwest for $3.27 billion in cash, accelerating a plan to provide cellular services nationwide.

GTE will add 1.7 million customers in 20 markets, including St. Louis, Chicago and elsewhere in Illinois, and gain access to 12.9 million potential customers. Investment company Georgetown Partners will buy a 7 percent stake in the Ameritech properties.

The purchase would boost GTE and Bell Atlantic's total wireless customers to 13 million, the most of any company in the United States, and help them compete with coast-to-coast providers like AT&T Corp. and Sprint PCS. Ameritech is selling the properties to eliminate overlap with SBC Communications Inc., clearing the way for antitrust approval of its pending $79.2 billion sale to SBC.

"A purchase that extends the eventual wireless footprint for Bell Atlantic-GTE is an absolute positive," said Scott Wright, an analyst at Fahnestock & Co., who rates GTE as a "buy." "These are important properties, particularly Chicago."

Chicago is the third-largest U.S. wireless market, behind New York and Los Angeles. The Ameritech Chicago unit was the first cellular company in the United States.

GTE, the parent company of Hawaiian Tel, said the purchase would be "slightly dilutive" to earnings per share in the first year, though the affects on the combined Bell Atlantic-GTE would be "insignificant."

The purchase will be financed with debt, GTE said.

The company, which has cellular networks in 17 states including Hawaii, said the purchase would boost its wireless customers by about a third.

Bell Atlantic lost a bidding war to Britain's Vodafone Group Plc to buy San Francisco-based AirTouch Communications Inc.

The purchase would have given Bell Atlantic a nationwide U.S. network, with operations in almost all of the top 100 cities.

Bell Atlantic Chief Executive Ivan Seidenberg in February said his company would look for other ways to expand coast-to-coast.

Today's sale includes all of the markets that the U.S. Justice Department said SBC and Ameritech must shed, and one market that Ameritech wasn't required to sell, said Ameritech spokesman George Stenitzer.

The companies agreed to sell the additional property in Vermillion County, Ill., because it's operated together with one of the other properties, he said.

Ameritech's sale to SBC is still awaiting approval from the U.S. Federal Communications Commission.

The boards of GTE, Ameritech and Georgetown Partners have approved the sale. Bell Atlantic has agreed to support the transaction.

Shares of Irving, Texas-based GTE closed off 56 cents to $60.19in New York Stock Exchange trading, while New York-based Bell Atlantic rose 12 cents to $51.87. Chicago-based Ameritech jumped $2.37 to $62.65 and San Antonio-based SBC gained $1.06 to $50.81.

E-mail to Business Editor

Text Site Directory:
[News] [Business] [Features] [Sports] [Editorial] [Do It Electric!]
[Classified Ads] [Search] [Subscribe] [Info] [Letter to Editor]
[Stylebook] [Feedback]

© 1999 Honolulu Star-Bulletin