NEW YORK (Reuters) - Bell Atlantic Corp. said Thursday it will take a stake in Metromedia Fiber Network Inc. as part of a $2 billion deal that will give the giant U.S. local telephone operator access to a key nationwide fiber optic data network.
Under the deal, Bell Atlantic will pay Metromedia $550 million for the use of its network -- in 50 major U.S. metropolitan markets and several cities abroad -- for 20 years.
Bell Atlantic will also take a 9.9 percent stake in New York-based Metromedia for $700 million in newly issued shares at $28 per share. It will also buy about $975 million in debt securities, which if converted into stock at $34 per share, will increase Bell Atlantic's investment in Metromedia to about 19 percent.
Metromedia said it will use the investment to accelerate the growth of its network, which can be used to transmit data, voice, video and multimedia communications, both in the United States and abroad.
The news was released before the markets opened Thursday. Wednesday, shares of Bell Atlantic closed at 66-11/16 on the New York Stock Exchange and Metromedia ended the day at 31-1/4 on the Nasdaq.
``This relationship extends our data network and advances our strategy to be a nationwide and global provider of leading-edge communications services,'' Bell Atlantic Chief Operating Officer Larry Babbio said in a statement.
Bell Atlantic and other major U.S. local phone companies are in race to capture the growing wireless as well high speed Internet access markets across the United States.
Last month, Bell Atlantic agreed to a joint venture with Britain's Vodafone Air Touch Plc that would combine Bell Atlantic's East Coast wireless telephone operations with Vodafone's West Coast business.
Bell Atlantic is also in a $53 billion deal to buy GTE Corp and has said it will fold GTE's wireless assets into its Vodafone venture, which would create one of the nation's largest mobile phone company with 20 million customers.
This deal, said Babbio, ``complements the reach of the GTE national backbone network and our new wireless venture with Vodafone.''