Announces Break Up Of Company
SAN FRANCISCO (AP) _ Pacific Telesis Group, one of the largest of the Baby Bells created by the breakup of AT&T eight years ago, on Friday became the first to announce its own breakup, spinning off the wireless phone business.
The announcement, which came after the stock market had closed, will create two telecommunications companies free to pursue ventures that had been restricted under the antitrust provisions that broke up AT&T.
The PacTel Group, which now controls both PacBell and PacTel, will let go of PacTel Corp., which oversees the wireless operations including PacTel Paging and PacTel Cellular.
″Our industry is going through a revolution,″ said Sam Ginn, chairman and chief executive officer of PacTel. ″Much of what drives this decision is what you believe about the future, not the past.″
In April, the Board of Directors announced it was exploring the possibilities of breaking up the company.
Ginn said the move was a financial decision which will allow the two companies to ″seek their own destiny.″
The plan must still be reviewed by several regulatory agencies, including the Federal Communications Commission and the California Public Utilities Commission.
Ginn said the move was expected to be made without cost to shareholders, pending a favorable tax review by the Internal Revenue Service.
The split, the first among the ″Baby Bells″ that were created with the breakup of American Telephone & Telegraph Co., is expected to be complete within a year, Ginn said.
The profiles of both companies were expected to ″remain fundamentally the same,″ Ginn said. He also noted that no employee layoffs were expected.
Under the plan, PacTel wireless companies will oversee PacTel Cellular, PacTel Paging, PacTel Teletrac and international operations.
PacTel Cellular is one of the nation’s largest providers of cellular service with more than 534,000 subscribers, and PacTel Paging, one of the biggest companies with more than 474,000 units in service.
PacTel Group will oversee PacBell, which provides phone service to more than 22 million customers in California, PacBell Directory and Nevada Bell. The three subsidiaries account for more than 90 percent of PacTel’s revenue.
Last year, PacTel had profit of $1.02 billion, $2.58 a share, on revenues of $9.9 billion.
AT&T officials in a statement said the move was ″a dramatic affirmation of the appropriateness of a telecommunications industry structure that separates local telephone monopolies from competitive businesses.″
C. Lee Cox, who will be president of wireless operations, hinted the company may enter the long distance market. In 1984, PacTel was prohibited from offering long distance service, part of the constraints imposed by the breakup of AT&T.
The spinoff ″leaves us free to do that if we wished,″ Cox said.
Ginn will be the chief executive officer of the new PacTel Wireless, Cox, currently president and CEO of PacTel Corp. will become president of the new company and Lydell Christensen, executive vice president and chief financial officer of PacTel Group will become the CFO of the new company.
Philip J. Quigley, president and CEO of PacBell will head PacTel and Bill Downing will become the CFO and treasurer of PacBell.
In New York Stock Exchange trading Friday, PacTel stock closed at $44.37 , down 50 cents.