Related topics

Ameritech Sells Cellular Units

April 5, 1999

CHICAGO (AP) _ Ameritech Corp., looking for federal regulators to bless its planned merger with SBC Communications, is selling nearly half of its cellular interests to GTE Corp., the phone company that’s seeking to merge with Bell Atlantic Corp.

The $3.3 billion deal is the latest move in an industry scramble of acquisitions and alliances aimed at luring corporate customers _ the most profitable portion of the telecommunications market _ with national and global networks that offer a wide array of calling, Internet and media services.

``SBC-Ameritech and Bell Atlantic-GTE are gathering assets to compete with the AT&T’s and MCI Worldcom’s of the world,″ A.G. Edwards analyst Joseph Eshoo said Monday. ``It’s coming down to four large international telecom carriers who will be competing aggressively for the best customers.″

The deal announced Monday would make a combined Bell Atlantic-GTE the biggest U.S. wireless carrier with 13 million subscribers, including 1.7 million Ameritech customers in the Chicago and St. Louis areas and northwest Indiana.

While the addition of those areas would give Bell Atlantic-GTE a presence in two-thirds of the largest U.S. markets, AT&T and Sprint PCS would remain the only carriers that currently offer nationwide cellular service.

Ameritech said the sale of the cellular properties is contingent upon gaining regulatory clearance for its acquisition by SBC.

The Justice Department recently gave the green light to that deal with the condition that the two Baby Bells sell off wireless properties in areas where they have overlapping operations that would dominate the market.

But last week, the government’s top telecommunications regulator said he has ``serious concerns″ about the deal, which would create the nation’s largest local phone company.

Federal Communications Commission Chairman Bill Kennard sent letters to SBC and Ameritech on Thursday asking to hold talks this month to explore ``whether it would be possible to craft conditions″ addressing his concerns.

The properties being sold to GTE will be operated by Georgetown Partners, a minority-owned firm that will own a 7 percent stake in the acquired businesses, which will keep the Ameritech name for an undisclosed period of time. Some 1,700 Ameritech employees would be transferred to GTE.

``This sale demonstrates that the SBC-Ameritech merger will bring substantial new competition into the Midwest (and) broaden the ownership of these properties to include greater diversity from the community,″ Ameritech chief executive Richard Notebaert said Monday.

Chicago-based Ameritech and San Antonio-based SBC announced their intent to merge last May. The proposed stock swap, now worth more than $60 billion, has the approval of shareholders from both companies, as well as the support of key unions.

The deal also must be cleared by the Illinois Commerce Commission and the Public Utilities Commission of Ohio.

Shares of Ameritech rose $2.37 1/2 to $62.62 1/2 in trading on the New York Stock Exchange.

Update hourly