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AT&T to buy three
wireless systems

Bloomberg News

NEW YORK -- AT&T Corp., the largest U.S. long-distance telephone and cable-television company, agreed to buy wireless phone systems in San Francisco, San Diego and Houston for $3.3 billion to cut the cost of carrying calls.

U.S. law limits the wireless capacity a carrier can own in a market. Bell Atlantic Corp., which combined its U.S. wireless operations with Vodafone AirTouch Plc's in April, and GTE Corp., which has agreed to be bought by Bell Atlantic for $83.3 billion, are selling systems in these three cities to comply.

Wireless carriers are consolidating and swapping licenses to expand their coverage areas.

This lets them carry more calls on their own networks, which is cheaper than paying to use those of rivals. AT&T, for example, owns wireless systems in Los Angeles and San Francisco, and its customers travel between the two.

The purchases may cut earnings 2 cents to 3 cents a share, AT&T said. It did not specify a period. The transactions will add 1.3 million customers, AT&T said.

The company ispurchasing the 47 percent of the San Francisco system it doesn't own from Vodafone.

It's acquiring the San Diego system from GTE and the Houston system from PrimeCo PCS, formerly a venture of New York-based Bell Atlantic and Vodafone.

The Bell Atlantic-Vodafone combination, named Verizon Wireless, has about 17 million cellular-telephone subscribers and about 4 million paging customers.

Verizon will have about 24 million wireless phone users when the GTE transaction closes later this month.

In Hawaii, GTE Wireless will become part of Verizon Wireless.