The long-awaited venture will dwarf AT&T's (NYSE:T) wireless service in number of customers. The deal could also spur consolidation in the sector as more companies try to create national networks, an AT&T senior wireless executive said.
"I think all significant wireless carriers are going to
have to have a significant national footprint in the relatively
near future,'' said Jordan Roderick, executive vice president
for wireless products and technology in AT&T's wireless services
unit.
The joint venture will enable Vodafone and Bell Atlantic (NYSE:BEL) to offer a "a much more competitive service package,'' especially to corporate customers, he said.
'A fantastic deal'
Kevin Roe, an analyst with ABN AMRO, called the joining of
forces "a fantastic deal.''
The two companies will have the scale to be able to create
competitive pricing plans, especially for corporate customers,
and drive down equipment costs, he said.
Bob Wilkes, an analyst at Brown Brothers Harriman, said the
Vodafone move was part of a long series of mergers among
jostling telecom heavyweights.
He added that BellSouth Corp. (NYSE:BLS) and Ameritech Corp. (NYSE:AIT) could be
among potential future partners, since they share CDMA
technology. CDMA stands for Code Division Multiple Access and is one of the digital mobile phone systems.
The Bell Atlantic-Vodafone merger would create easily the
biggest U.S. mobile phone network, with 20 million customers.
AT&T has about 11 million customers, and Sprint PCS Group, the
next-largest system, has about 4 million.
Bell Atlantic will own 55 percent of the new company and
Vodafone, the world\'s biggest cell phone operator, will own the
rest.
Remnants of AirTouch
Bell Atlantic shares were up 5/8 at 64 1/4 in midday trade
and Vodafone's American Depositary Receipts were up 4 3/4 at
216 5/8. AT&T was up 1/16 at 45.
Bell Atlantic and Britain's Vodafone said they would fuse
their U.S. wireless businesses in a joint venture worth more
than $70 billion.
"This is part of an ongoing consolidation and I think there
will be more,'' Roderick added. The companies "can offer
nationwide service to corporate customers, which is one of their
reasons for the merger in the first place.''
The network that Vodafone inherited in its $62 billion
takeover of San Francisco's AirTouch in January covers most of
the U.S. western states. Bell's system covers most of the eastern United States.
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