MobileMedia to Acquire MobileComm from BellSouth for Nearly $1 Billion
TRENTON, N.J. (AP) _ MobileMedia Corp. bolstered its position as the nation’s second-largest paging company Thursday by acquiring BellSouth Corp.’s paging network, including its MobileComm subsidiary, for $945 million.
The deal is the largest in the paging industry, where several established players have combined in recent months as new companies jump into the business and technology makes new services possible.
A key attraction for MobileMedia are MobileComm’s two-way nationwide paging licenses. MTel Corp.’s SkyTel subsidiary is expected to begin the first two-way service next week, allowing customers to send brief responses back to the people who page them.
MobileMedia is the second-largest paging company with 2.1 million subscribers and MobileComm is No. 3 with 1.7 million. Together, they will have an estimated $560 million in revenue.
``They will provide some serious competition for PageNet, the largest carrier,″ said industry analyst Ann E. Lynch of BIS Strategic Designs in Norwell, Mass.
Plano, Texas-based Paging Network Inc., often called PageNet, has 5.4 million subscribers.
The agreement calls for BellSouth to become a reseller of MobileMedia paging services, ensuring that the Atlanta-based regional Bell operating company remains a full-service communications company.
BellSouth expects to record an after-tax gain of about $350 million as a result of the deal. The company’s stock rose $2 to $72 on the New York Stock Exchange.
Stock in Ridgefield Park, N.J.-based MobileMedia rose $1.37 1/2 to $27.87 1/2 on the Nasdaq Stock Market.
The companies bring different strengths to the merger, analyst Lynch said. MobileComm has focused on developing nationwide service while MobileMedia, which primarily provides regional paging, has moved ahead in devices like alphanumeric beepers that can receive a brief message.
Barry Sine, analyst at SBC Capital Markets in New York, said MobileMedia’s fixed costs will remain the same after the merger. But it will be able to eliminate duplicate staff and transmission towers and get a better price on bulk orders for pagers it leases to customers, he said.
The combined company will have ``a sales presence in 85 of the top 100 markets, an extensive retail distribution network that encompasses more than 15,000 stores and the most efficient back-office in the industry,″ Gregory M. Rorke, chief executive officer of MobileMedia, said in a statement.
The deal is the second for MobileMedia in the last two weeks. On Aug. 31, the company completed a $188.5 million acquisition of Dial Page’s paging operation, which boosted its subscriber based by 360,000.
PageNet and SkyTel already operate nationally. AT&T Corp. will soon have a national paging operation through the same division that operates its new cellular business. MCI Communications Corp. re-sells paging service of both PageNet and SkyTel and has been expanding at a rate of 60,000 customers a month.
``All this heat of new players and new products is forcing consolidation in the industry,″ said David Goodtree, analyst at Forrester Research in Cambridge, Mass.