NEW YORK -- Bell Atlantic Corp., the No. 1 U.S. local phone company, is in talks to acquire AirTouch Communications Inc., the nation's second-largest wireless phone company, for $45 billion in stock, CNBC reported yesterday, citing people close to the negotiations.
The acquisition, which may be announced as early as next week, would be the eighth-largest acquisition of all time. The price would represent a premium of 10 percent to 15 percent above AirTouch's stock price, which touched a record $75 a share yesterday, CNBC said.
Bell Atlantic declined to comment on the report and AirTouch officials were not immediately available to comment.
With AirTouch and its 16 million customers mostly on the West Coast, New York-based Bell Atlantic would be a step closer to having a nationwide U.S. wireless network.
Bell Atlantic is seeking a greater presence in wireless services because more people are using wireless phones for all their communications as per-minute prices decline and technology improves.
"Wireless is one of the key trends of the future," said Jeffrey Kagan, president of Kagan Telecom Associates in Atlanta. "This would allow [Bell Atlantic] to be a wireless Goliath."
It would also draw close scrutiny from regulators, who are studying Bell Atlantic's proposal to buy GTE Corp., the No. 3 U.S. local phone company.
"Regulators will go through it with a microscope," said Kagan. He said that means the companies may have to sell operations that are duplicated.
AirTouch and Bell Atlantic have a joint wireless venture in the United States, PrimeCo Personal Communications LP. In the wake of Bell Atlantic's pending GTE acquisition, the companies were discussing what would happen to the venture.
"My sense is that Bell Atlantic's priority is to get the merger through regulatory authorities, and this issue hasn't surfaced yet as one that they need to get resolved," he said.
Bell Atlantic may have to break the PrimeCo alliance to get regulatory approval for the GTE merger. If it purchases AirTouch, that may not be a factor.
By purchasing AirTouch, Bell Atlantic would greatly increase its wireless presence overseas.
While many U.S. wireless phone companies are seeing slower growth in sales and customers, AirTouch isn't because of its international operations.
AirTouch added 1.09 million customers in the third quarter, including 735,000 customers from international ventures -- twice the international additions of a year ago.
In the third quarter, AirTouch's net income rose 59 percent to $213 million, or 30 cents a share, from $134 million, or 18 cents a share, on a pro forma basis a year earlier.
Revenue rose 24 percent to a record $1.96 billion from $1.58 billion.
AirTouch plans to add more than 3 million customers, raise operating cash flow by 25 percent from a year ago while holding capital spending to an increase of 5 percent from $1.7 billion in 1997.
AirTouch said it has 16.1 million customers worldwide, up 35 percent from a year ago.
Pub Date: 1/01/99
DATELINE: NEW YORK